Being part of a couple has many rewards. But there can be downsides too.
As a single it’s me, myself and I who makes the decisions. No arguments to be had there.
Few members of a couple would claim they never argue – some might say that would be boring anyway. The real challenges occur when the arguments are about money and if they occur too frequently. This can become stressful and debilitating.
Today we look at the three main reasons that retiree couples argue about their finances. And how seemingly ‘irreconcilable’ differences might be handled.
Have you ever had one of these accusations thrown at you?
- You spend too much!
- You are always giving our money to the kids!
- I’m better than you at handling our money!
Then read on …
1. You spend too much – or little
This commonly happens when one partner feels that they are managing joint finances competently, but this is undermined by the other partner’s overspending. What’s too much spending, anyway, you might ask? Understanding how to ‘pace’ your spending across your retirement journey is doable and admirable. But maybe it’s also useful to look at the reason why couples can have wildly different ideas of spending. It often goes back to our formative experiences and the resulting money personalities. One personality may tend to be more frugal as they are concerned what the future may bring. This personality is usually prepared to delay gratification in order to have a sizeable nest egg as a hedge against future needs. The other partner may veer toward the ‘You Only Live Once’ (YOLO) personality. This can be a constant attitude or become more prevalent at certain times.
We’ve all had that post-funeral moment, having farewelled a loved one, and walked out determined to live every moment to the fullest. This can lead to decisions to walk the Camino and hang the expense, or to head Outback for an extended adventure. ‘I could be dead tomorrow’ is usually the thought process behind such urges. And who is to say who is right and who is wrong when it comes to deciding what’s important?
Managing not one, but two peoples’ emotional connections to money is a fine art. Here’s some thoughts on how to have this discussion before it becomes an argument:
- Pre-empt the moment, by making a date night to discuss money before it is a sore point.
- Facts are useful and non-emotional. Do your sums. Know what you have, what you need to cover the basics, what you need for a higher comfort level, and what would be nice for occasional treats or splurges.
- Decide together what are the non-negotiables (e.g. health insurance, weekly dinners out, gym fees etc.)
- Explore what might be reasonable compromises on those expenditures that aren’t quite as easy to agree on (maybe a shorter annual holiday so an extra weekend break can be afforded, fewer coffees to cover some gardening help, or reviewing health extras so as to increase hospital cover?)
- Find one thing that matters enormously to each partner and try to agree on both items, thus ensuring a win-win.
The point here is not that you are likely to have a radical money personality change. The aim is to be totally candid about your finances together and come up with solutions that you can both adhere to. Then set another date where you just get to go out and have fun, without the arguments.
2. You are always giving our money to the kids
Many family budgets are not confined to our own households. They often stretch across other homes as well. Baby boomer parents are often accused of spoiling their children when they were young. This can be seen, too, in ongoing support for their now adult kids.
There are reasons for this, with the deposit once needed for a house blowing out from 4X an annual salary in the 1980s to 13X today. Support from the so-called ‘Bank of Mum and Dad’ can be a major reason why some younger people can get a foot in the property market.
But not all parents can always agree on the extent of the support on offer. One is usually a ‘softer touch’ than the other. It gets worse when some money transfers are made without both partners’ consent. How to ensure you are on the same page?
- Spoiler alert – again, this won’t work unless you are both 100% honest with each other about the requests from your offspring and how you’ve dealt with them until now.
- Negotiate what is a fair amount of support on which you can both sign off, for an agreed time.
- Share your decision jointly with your adult child (and their partner if that is appropriate) face to face. Discuss any concerns.
- Define what is on offer, whether a gift or loan, the terms and conditions including repayments, interest, and a timeline
- Create a written record, perhaps on a spreadsheet, so this can be updated as the funds are returned or reduced.
- Agree to an appropriate time to review and revise if this is a longer term arrangement.
3. I’m better than you at handling our money
This comes down to a knowledge imbalance. The old jokes about men not reading maps or manuals often resonate, but it doesn’t have to be gender-driven matter.
Many couples include one half who is more interested in finance and therefore more knowledgeable about managing income. Some people are simply not interested or think they don’t need to know a lot as their other half ‘has it covered’. But this is dangerous as it can disempower one of the couple. And there is no guarantee the ‘money fixer’ will always be there. It can also turn nasty if the ‘more knowledgeable’ partner pulls rank and takes over the decision-making, as this can quickly lead to resentment and disagreements.
How to even-up this imbalance?
- As well as a knowledge imbalance, this can be seen as a power imbalance. It’s not equitable and it’s far from ideal. It also places the more active decision-maker under more pressure to get all decisions right.
- Again, you will need to start with a full and frank discussion about the aspects of your finances that need to be understood by both of you and how to create a fairer division of the work involved.
- Start by agreeing on the basic knowledge associated with your household money management and any extra knowledge or information that may be needed
- Ensure both parties are across all access points and passwords for myGov and bank accounts, superannuation, investments, income streams and other money matters.
- Discuss upcoming financial decisions that may need to be made (reinvestments, levels of super drawdown, major expenditure) and ensure that each party has an input and that they are listened to.
- If old habits die hard and such discussions are difficult, it may be better to have a meeting together with a professional adviser, or accountant, who can guide your discussion and ensure it’s both fair and informative.
- There will probably be the need for more than one such discussion. The first will help set the ground rules. It’s a chance to ascertain the information you still need and further research you might both do in order to manage your affairs more equitably.
Calling in a third party to assist you to discuss your money management is not a sign of failure. It’s actually a smart idea and a sign that you are both prepared to be guided in the ways that will help you work together harmoniously.
The reward? You can reduce the stress on the ‘solo’ money manager in your home and increase the confidence and capability of the other half. If a problem shared is a problem halved, then money management shared has to be a good way to go.
How Retirement Essentials can assist
Are you a frugal or a YOLO? Either way, exploring how long your money will last is a great first step to finding common ground on spending goals.
Giving it all away? Maybe it’s time to stop. Again, accurate retirement forecasts will allow you to better understand what is a reasonable amount of support for others.
Need to get up to speed with joint finances? A consultation with an impartial adviser who can guide you through your retirement income journey will ensure you can confidently tackle any concerns together.
Any other questions?
If this article has prompted any related money concerns in your household, feel free to share your questions.