Household financial management is key to a healthy relationship

Statistically many marriages are ruined by money or for financial reasons, which can be anything from having a limited income to disputes over spending or priorities.

That is why the way partners plan their household financial management is a key to having not only a healthy relationship but also a functional financial standing. Once a couple is split by their financial views into two camps working against each other, the results rarely are positive. In addition, this less-than-constructive approach could hardly lead to growing income or investment.

It is not surprising, however, to see married people having conflicting views over financial priorities, which are typically shaped by social backgrounds and personal preferences. What’s surprising is seeing this major issue left to brew until it ruins a marriage or someone’s financial life.

Here are a few points that families should consider when they manage their finances.

Know and understand

It is important to understand and recognize your partner’s financial priorities, even when they don’t make much sense to you. This understanding can go a long way in your ability to make compromises and empathize with this person’s needs. In addition, this understanding in itself can be a trigger for similar thoughts. Remember there is no actual right or wrong when it comes to personal preferences. So be open about the differences and discuss them with respect and recognition.

This process should also bring to your attention a different point of view that might be, in reality, complementary to your thinking rather than contradictory. That is why listening to the other person’s point is the first step toward building a sound financial structure for your family.

Set joint priorities

While it may be hard and unreasonable for both parties to give up their personal priorities, it should be acceptable to both parties to agree on a set of joint priorities, which may include children education, retirement funds, home ownership, insurance payments, etc. When you can come with these major goals that both you don’t want to compromise, you will be sure that at least these priorities are secured and met.

The agreement also should reach areas related to how the two of you manage your income and debt. For example, you may agree on limiting new debt or, at least, on talking and discussing any additional debt before taking it out. Having both of you involved into critical financial decisions makes you both accountable to each other and forces everyone to take ownership of the final decision and its consequences.

Plan and save together

It is not uncommon for a spouse who feels disconnected and insecure about how the other spouse is managing the family money to begin to stash savings aside for a rainy day. When one or both parties adopt this strategy, the problem is far from solved. In fact, these secret savings may be taking a toll on the family finances and, at a certain point, it will be become difficult to bring this money back.

Instead, what partners should do is to talk problems over and figure out ways where savings and investments are known and agreed on – even if one party feels the need for a compromise. The more the family resources are brought together, the better the returns should become immediately and in the future.

Cultural aspects

In many families, who makes financial decisions is a determined by social expectations, especially when it comes to issues such as investments and savings. These individual expectations should be communicated clearly as early as possible, because if you’re uncomfortable with a spouse making – or not making – financial decisions, this should be a source of stress in itself. In addition, when couples disagree on each spouse’s role and power, the underlying struggle may lead to erratic financial decisions that cost the family its financial stability.

The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.