Finance in relationships


Prudential’s US business, Jackson, offer some tips on communicating about finances in a relationship and creating a budget style that works for both parties.

Avoiding the communication breakdown

By Dan Martin, Center for Financial Insight, Jackson

I was planning to start this article out with a clever point about couples' dynamics using lyrics from the Led Zeppelin song "Communication Breakdown," but soon realized that there are only 57 unique words in the entire song, and it's possible that even Jimmy Page doesn't know what the song is actually about. Regardless, a communication breakdown is a phenomenon that can plague even the healthiest relationships, and finances are one common area in which this type of disconnect can occur.

In fact, it's possible that "the money" may be the greatest sticking point of them all. According to a recent study from SunTrust, among those who indicate they have relationship stress, finances top the list of reasons at 35 percent (followed by annoying habits at 25 percent).1 A separate poll from the American Psychological Association revealed that almost a third of adults with partners (31 percent) report that money is a major source of conflict in their relationship.2

Thus, while the jury is still out on whether or not money can buy happiness, it's apparently a polarizing component in most relationships. However, like most other points of contention in human relationships, communication can be both the cause of the issue and the potential solution. In this article, I offer a few tips to help make the finances a more positive part of the communication equation.

Money management must be a two-way street

Many successful relationships are built on compromise, and there are certainly experts out there (including the ubiquitous Dr. Phil)3 who believe that compromise is one of the keys to a healthy equilibrium for those in long-term relationships. However, a second school of thought in the psychology community believes that compromise between couples can result in a "lose-lose" situation in which neither party is happy with the solution. While both of these are possible outcomes in the case of financial disagreements, I would also add a third outcome: in some cases, even a financial compromise that satisfies both parties can be detrimental in the long run.

For example, compromise can be an excellent way to work out a schedule representing who stays home with the kids on Friday, and who gets to live it up at the local watering hole. The same can be said about taking turns raking the yard, doing the dishes, etc. In the case of the finances, a common compromise is for one partner to completely take over the management of the money, while the other takes over a task that they are either more skilled at completing or that the other partner is less interested in taking on. And don't get me wrong, this can and often will feel like a great compromise for both partners.

However, to understand the potential problem with this arrangement, just think about all of the knowledge and logistics required to manage finances for just one person, much less for a partnership. Financial products, topics and strategies can be very complex, and when you throw an online bank account, savings account, retirement account, investment account, mortgage payments and all of the other bills in the mix, it can be very difficult to keep track.

Even if the person "in charge" can handle this gigantic network of accounts, credits and debits effectively, what happens if (knock on wood, or faux wood for the thrifty crowd) they are incapacitated in some way or, even worse, gone? It's not a happy subject, but it's vitally important to plan for this possibility. If the unthinkable occurs, the last thing you will want to do is deal with money issues, and if you are not listed on each account and familiar with each online platform, accessing these funds can be extremely difficult.

Thus, while it certainly makes sense to let the more financially savvy partner take the lead on the finances (if they want the responsibility, that is), it is also important to remember that managing the money in a relationship is a two-way street. The "money person" in the relationship needs to make sure, at least periodically, that their partner understands the couple's current financial situation, understands the purpose of each account and is listed as an account holder, knows who to contact at each institution in case of emergency and has the login information and security codes required to access each account online.

On the flip side, the other partner needs to take at least a passive role in learning about the finances, and acquiesce to a boring conversation at least once per financial quarter. My colleague Marilynn Scherer, author of other Jackson articles, shared her creative approach to avoiding this emergency financial scenario.

As the "money person" in her relationship, every financial quarter, Marilynn updates and seals a hand-written letter including all of the information her spouse would need in case Marilynn is incapacitated. The letter can only be opened if the worst should happen, and only her spouse knows where the letter is kept. In addition to serving as a fail-safe for their relationship's financials, the letter helps the couple manage the risk of identity theft by leaving the information off increasingly vulnerable computer servers.

Make the dreaded financial conversation into an "event"

As the "money person" in any relationship knows, keeping their significant other apprised of the financial situation is easier said than done. My wife's eyes glaze over about three seconds into any conversation about our finances, and I can tell that she is likely already re-running the most recent episode of Veep or trying to guess the next ingredient basket for Chopped in her head.

Even people like me who are interested in finance (i.e., nerds) can become bored with certain topics or the way they are represented, so I completely understand her position. That being said, since we now know that both people in a relationship need to be on the same page when it comes to finances, it might make sense to get creative in terms of how you share financial information in your relationship.

One way to keep the financial conversation from falling by the wayside is to take a page out of your dentist's book and schedule the "meeting" well in advance. Your dentist knows that you are likely not looking forward to your next teeth cleaning, so they send a postcard to put on the fridge to keep the event top of mind; the same can be done for the quarterly financial conversation. However, just because the topic might be a little dry doesn't mean you can't have a little bit of fun with the "event." One idea might be to make the conversation a small part of a "date night." You can have the brief financial update over appetizers and a glass of wine, then cook dinner together and watch a movie.

Making the finances part of something fun could make it easier to endure, and even something to look forward to for both parties. You could also position the conversation as a precursor to a reward by scheduling a nice brunch, dinner out or a trip to Dairy Queen (I don't know about you, but I think about Blizzards pretty much non-stop) on the same day.  

These are just my own ideas, so I encourage you to find something that works for your relationship. If you can pull off an in-depth conversation once per quarter, you will thank each other for it down the road.

Create a budgeting style that works for both parties

The handling of expenses serves as the foundation for the majority of issues with money in relationships, as different spending habits can make it very difficult for a couple to balance their checkbook. Every one of us spends and saves in a unique way, and the way we handle money has been shaped and affected over our lifetime by a variety of different factors, including how our parents, peers and role models talked about money and managed their own funds.

Further complicating the issue is that there's no "right" way to manage money. For example, it's easy to condemn lavish spenders, but what if most of the money is going toward charitable donations or causes they believe in? On the other hand, those who save money to help reach future goals should certainly be commended, but it's also possible to be so frugal that saving to the penny can border on obsession and lead to relationship friction.

As such, a couple could reasonably be compatible in nearly every category, yet could represent both ends of the spectrum in terms of their style of money management. It's important to find a budgeting style that both parties can agree upon, as a balanced budget is always the first step toward healthy financial management. In other words, you can't strategically allocate your savings if you don't have any money left to save.

As with anything else, there are a wide range of different tools, resources and online platforms available to help investors budget on a daily, monthly, quarterly or annual basis.

I leave you with this...

Again, whether you choose to use the tips provided above or create your own process for strengthening the financial communication in your household, it all comes down to what makes sense for your relationship. In addition to having unique spending and saving styles, you and your partner likely have different communication styles. What works best for one may not work for the other, and vice versa.

The most important thing, then, is to find common ground and agree on at least the basics of how you will discuss and manage your collective finances. This will likely require some level of compromise which, as we know, can be a good thing if the consequences of the compromise make sense for the short and long term. At the most foundational level, just talking about the finances on a regular basis with your partner is a step in the right direction, as our brains are wired to respond to constant reminders.

To close, I wanted to share with you another Jackson colleague's take on how he views the finances in his relationship. As someone who grew up with a smaller amount of money in his household, he compares himself to a cactus, as this type of flora has adapted to need less water to survive. Conversely, he associates his wife, who grew up with more money in the family, to a palm tree, which flourishes with comparatively more nourishment.

With the linkage in finances that comes with marriage, however, both became aware of the need to change their financial behavior slightly to morph into a single entity, which he labels as a Joshua Tree. While still a xerophyte (an organism that needs a smaller amount of water to survive), the Joshua Tree is a combination of the cactus and the palm tree, responding positively to greater nourishment in a way that cacti and other desert vegetation may not.

Thus, the more we invest in something, the harder it may be to let it go (even if it turns out to be a terrible investment). I'm sure that you can think of a time where you continued to stick with something for the sole reason that you had already put a lot of money or effort toward its completion – we all have. And to be clear, sometimes that can be a good thing (i.e. finishing your degree, climbing a difficult peak, etc.).

However, the "sunk cost fallacy" can become an issue with saving money, because subconsciously, our minds may be thinking about the money we have lost in the past and urging us to try to get that investment back.


I think this analogy serves as an excellent reminder that, just like most other things, finances are generally shared in a healthy relationship. While it's important to understand the inconsistencies in your own financial behaviors as an individual person to help make an effort to make any necessary changes, it's just as important to think about your financial behaviors in the context of your relationship.

1 (February 4, 2015). Love and Money: People Say They Save, Partner Spends, according to SunTrust Survey.SunTrust. Retrieved from

2 (February 4, 2015). American Psychological Association Survey Shows Money Stress Weighing on Amercians' Health Nationwide. APA. Retrieved from

3 McGraw, P. (April 19, 2016). Opposites Attract, But Can They Last? Dr. Phil. Retrieved from