Avoiding and dealing with conflicts on financial matters: a guide

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1. Find out about each other’s affairs

At the start of a relationship, you quickly get to know each other’s views on topics such as marriage, children, where to work and live... Unfortunately, many people forget to talk about money too. Your financial values and priorities: this is a difficult topic to tackle spontaneously, but it is an important step in avoiding conflicts about money. The good news? It’s never too late to start talking about it. Whether you have had a relationship for 10 weeks or 10 years, discussing your financial values and priorities is the first step to aligning your financial affairs. First of all, it can be a good idea to dig into each other’s 'history' a little. After all, how we deal with money today is largely influenced by how we were brought up at home:

  • How did your parents deal with money? Are there any particular habits that you picked up at home?
  • What (financial) goals and dreams did you have before you met each other?
  • What does money mean to you: security for the future, a way to benefit from life, a means to survive, a way to measure success...? Has that always been the case?
  • Have you developed fears or concerns about money due to certain events?
  • And more...

If you understand your own background and that of your partner, you will probably also be able to frame each other’s 'unusual' behaviour better. For example, why one of you never gives anything to charity, or the other always wants to save everything for 'later'. During these conversations, don't just look for your differences, but also for the similarities that could help you integrate your values into joint financial goals (see point 4).

2. Let’s talk about money, baby

In addition to “major maintenance”, you can also avoid a lot of friction by regularly carrying out “minor maintenance”. The foundation of any healthy relationship is open and honest communication, and financial matters are no exception. Strive for transparency by having regular conversations about money matters. For example, schedule a monthly chat about money at a fixed time so that you both stay in touch with each other’s expectations, goals (see point 4) and responsibilities (see point 5). A monthly discussion can also help to identify and resolve any problems at an early stage. It is also an ideal time to update and discuss your budget (see point 3). Try to plan something nice to do after your 'meeting'; if you know you’re going to see a movie or go on a bike ride afterwards, it’ll feel less like a chore.

3. Joint treasurers

A joint budget is an effective tool to prevent financial problems and misunderstandings. A budget provides insight into your income and expenditure, and helps you set your financial priorities. By working together on your budget, you will feel more responsible and better able to discuss any problems more rationally. To create a budget, start by creating a summary of your monthly income and expenditure. Note down all of your fixed expenses, such as rent or mortgage, utility bills and insurance. Then allocate amounts to variable expenses, such as shopping, leisure activities and clothing. Make sure that you also make room to save and invest if necessary.

Use an app or spreadsheet to check that you are within budget. Also make sure that you both have access to all relevant common financial documents and accounts, even if one of you manages the money matters alone. Do you both hate budgeting? Then try it this way.

4. A plan for two

Setting and aligning financial targets is crucial to avoiding conflicts. By working together towards common goals, you strengthen your bond and avoid disagreements about spending. Discuss your joint (and individual) goals and make a plan to achieve them. For example, you can decide to save a certain amount to purchase a house, draw up a plan to pay off debts, make a trip around the world, etc. By operating as a team, you remain motivated to achieve your goals.

5. Who does what?

When it comes to financial responsibilities, couples don't always work as a team. Couples often divide tasks (one ironing, the other washing), and financial tasks are no exception. One partner, for example, may deal with paying the bills and handling tax returns, while the other focuses on other aspects such as investing. This can work perfectly, but sometimes it can also lead to misunderstandings or conflicts if you are have different outlooks.

To avoid this and create more transparency, one solution may be to regularly reverse the roles. One month, for example, one person may be responsible for drawing up the budget and the other for monitoring investments. You will then be able to switch tasks the following month. Another option is to distribute the roles equally, although this may require much more effort from both partners so you are aligned.

6. Separate or joint: the bank account dilemma

A common question that couples have is whether they should hold separate or joint accounts. Both options have advantages and disadvantages, and the best solution depends on your individual situation and preferences.

A joint account can make it easier to manage joint spending and goals, but can also lead to disagreements about how the money is spent (especially if you don't stick to a budget). Separate accounts give more financial independence, but can make it more difficult to pursue common financial goals and provide transparency.

A possible solution is to have both joint and separate accounts. You can use a joint account for joint expenses and goals, while you each keep a separate account for personal expenses and savings goals. This approach can provide a good balance between cooperation and independence.

7. Better prepared for unexpected situations

It is a good idea to create a joint kitty for unexpected expenses, regardless of whether or not you have a joint account. An 'emergency account' like this is useful because it offers certainty and reduces stress if you are having to contend with a setback such as a broken oven or an urgent repair. If you have such a buffer, it also enables you to focus on solving the problem rather than discussing how or who will pay for it. Ideally, such a contingency account should cover 6 to 12 months of joint expenditure, but the amount varies. Consider saving a little more if (one of) you have an uncertain income or have little insurance, if there are children, if you are a bit older and have more medical expenses, etc.

8. Money buys happiness

An often overlooked way to avoid arguments about money is to find ways for money to make you happy. There is no such thing as a magic formula, but the following guidelines can help you on your way:

  • Be generous: research shows that spending money on others makes you happier than spending it on yourself. Consider spending some of your income together to help others. Giving money to a charity is one way, for example, but your efforts do not necessarily have to be financial. Doing volunteer work together, or investing your time to help friends and family, can just as easily bring happiness to your relationship.
  • Buy time: use money to free up time for activities that give you satisfaction and joy. For example, consider hiring a cleaner, gardener or babysitter, so you have time for hobbies, outings, or other things that create positive vibes.
  • Go for experiences instead of things: travelling together or going to a concert can bring back great memories and create a connection. Tangible assets do not usually have the same ability to create a bond. By building up experiences, you will also learn about yourself and the world around you, whereas material things may offer less potential for your development as a couple.

This article does not contain any investment advice or recommendation, nor a financial analysis. Nothing in this article may be construed as information with a contractual value of any sort whatsoever. This article is intended for information only and does not constitute in any way a commercialization of financial products. Keytrade Bank cannot be held liable for any decision made based on the information contained in this article, nor for its use by third parties. Every investment entails risks such as a possible loss of capital. Before investing in financial instruments, please inform yourself properly and read carefully the document "Overview of the principal characteristics and risks of financial instruments" that you can find in the Document centre.

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