Ellen and Edward earn $28,000 a month, or about $336,000 a year. That’s more than three times the median household income in my home state of Hawaii.
But their high incomes don’t prevent couples from constantly having financial disagreements, told money expert, author, and self-made millionaire Ramit Sethi on a recent episode of the Money for Couples podcast. Their last names were not used.
Edward fears a return to the same poor financial situation he grew up in, while Ellen wants the freedom to spend money rationally without asking permission.
“We’re pretty well off financially, but my brain can’t calculate that,” Edwards said on the podcast. “Everything is fire to me. A $200 or $300 flat tire is a big deal to me.”
Not just for emergencies. Edward manages all of the couple’s finances, and Ellen said she needs Edward’s approval to buy almost everything, including essentials like daily beauty products and prenatal vitamins.
“Every time I ask him for something, I feel like I have to over-explain why I need it just to get him to say yes,” Ellen said. “It doesn’t feel good to keep repeating, ‘Let’s listen,’ ‘Let’s listen to what he has to say,’ and ‘Let’s explain in detail why we need it.'”
Here’s why their disagreements keep happening and Sethi’s advice on how to better manage your money.
How to manage money as a couple
Ellen and Edward aren’t bad partners, Sethi says. “Maybe it’s the structure of how they manage their money.”
Sethi said he understands some basics of building a financial system that works well for both parties, including the idea that married couples should have money for discretionary spending. However, Mr Edwards included items such as prenatal vitamins in Ellen’s discretionary spending, which Mr Sethi strongly objected to.
“We don’t just need a better budget; in fact, we probably don’t need a budget at all,” Sethi said. “We need better systems that are built together.”
To help both partners start feeling better about money and hopefully have fewer disagreements in the future, Sethi offered three pieces of advice. Anyone in a similar situation can follow them.
1. Invite your partner to be involved in managing your money
In the Edward and Ellen situation, Edward controls all the money and Ellen is hands off. But as spouses and co-parents, they both need to be treated equally, Sethi said.
Sethi recommends that a partner with more experience managing finances, in this case Edward, come on board. From “day one,” he recommends telling yourself, “I’m not going to do this alone. I want my partner to be good at spending money.”
2. Talk about money regularly
Up until now, Ellen has avoided conversations about money because she felt like her needs were being ignored and couldn’t understand where Edward was coming from when he worried about money.
Having regular money conversations can help eliminate future conflicts and help both partners feel empowered to make decisions about how the family spends money, Sethi said.
3. Find a structure that works for both partners.
Ellen and Edward’s current system, where Edward approves all of the couple’s expenses, isn’t working well for them. Seti proposed that they adopt a new system together.
One idea is for them to each have a joint account with “no questions asked” money and work together to decide how much to put into each, Sethi said.
Additionally, you should create some general rules regarding money in your relationship, such as a debt-free policy and limits on the amount of time you spend building a home, which has been a point of contention in the past.
Couples need to make a more concerted effort to work together and develop a shared vision for money, Sethi said, or they will “end up feeling forever resentful, behind, insecure, unworthy, mismatched, and sometimes at risk when it comes to their finances.”
“Money is important,” he added. “My wish for you is that you receive the attention and respect you deserve.”
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