Consumer Corner: How honest should you be about your finances with your partner?
Partner? Corner: Be About How Honest Should You Finances With Your Consumer Your
We have been brought up to believe that successful relationships are based on trust and honesty. These we are told are the foundations of happiness and longevity. Many aspects make up the quest for trust and honesty and money is certainly one of these but one that often can be overlooked in terms of how important it is to manage in a relationship.
Money can be a tricky one to navigate. Often the case will be that one person earns more than the other which will present questions around how much does each person contribute to the running of the house, who pays for dinner when you go out or should you save on your own or together? Many people will have heard tales too about a ‘running away fund’. A joke parents will have told but behind the joke there is a seriousness to it - is it worth having your own fund for yourself or does that make you dishonest in a relationship?
Leah McMahon, a financial advisor with Castle Capital Financial says that financial honesty among couples varies among each couple.
“Some couples are open and upfront about what they earn, spend, owe and save while others are a little more elusive about what they owe and save. It seems to be a personal choice but as a financial planner, I believe financial honesty is important in a relationship.” There can be many benefits to financial honesty in a relationship such as its ability to build trust among a couple.
“In relationships, whether personal or professional, financial honesty fosters trust. Being transparent about your financial situation prevents misunderstandings and builds a solid foundation for collaboration and mutual support.” Being honest about your financial affairs also helps to prevent debt and financial trouble. When individuals or couples are not open about their financial habits or struggles, they may overspend, accumulate debt, or fail to save for the future. Honesty helps in creating realistic budgets and making informed financial decisions.
Ms McMahon also says that honesty helps to promote healthy communication as being honest about money encourages open dialogue, helping you navigate financial goals, investments, or challenges together.
“This is especially critical in partnerships where shared goals like homeownership or retirement is concerned. Hiding financial struggles can lead to significant stress and anxiety.
“On the other hand, addressing financial issues openly can lead to practical solutions and emotional relief. As a financial planner when I work with a couple, I adopt the viewpoint that their share in the household running costs is relevant to the level of income they bring to the household rather than saying each person contributes 50 per cent of the running costs regardless of the level of income they bring to the household.” Couples may choose to save together or separately and this is perfectly fine, says Ms McMahon as long as each person is honest about their savings pattern when it comes to a particular goal they’ve agreed on.
The portion of someone’s income after they pay their bills and save is considered the ‘Fun Fund’ and can be spent however they wish.
“The view points on how honest couples should be with their discretionary income varies but if you are on track with your household running costs and savings then you are allowed to enjoy your discretionary income and spend however you see fit.” When it comes to the level of debt someone may be carrying Leah says that she feels as a financial planner it’s important for couples to be open and honest. “Financial pressure can affect relationships therefore being honest about this allows you to speak to your spouse and put together a plan to reduce this pressure.
“There are factors that influence the level of financial honesty between couples, the most obvious being how long you’ve been together. I don’t expect my clients to discuss their financial position on the first date but I do think when you make the decision to either marry or move in together then financial honesty is expected.” John Lowe, of the moneydoctors.ie says that the first and most important step for anyone in a relationship is to open a dialogue with their partner.
“If you don’t communicate you won’t know what they are thinking and they won’t know what you are thinking.” He says that his advice is to have a gentle discussion in which you discuss topics such as your values and what you think is important, any assumptions that you might have or your dreams and desires.
Mr Lowe also says that if you have a money secret you need to tell your partner and you should try and pick your moment well and don’t be afraid to say sorry.
“If you start by saying you have a confession to make and that it may shock or anger them, the conversation is likely to be less acrimonious.”
He also advises that couples should remember that it is only money and the important thing is that there should be honesty in your relationship.