We’re married but we have different ideas about debt and budgets

Everyone has different interpretations of what is reasonable when it comes to budgeting and debt. Disagreements around spending priorities, what the household can afford, and long-term financial goals is a leading source of relationship conflict and, perhaps not surprisingly the top cause of divorce in Canada. But it doesn’t have to be this way. 

Couples who are open and honest about their financial values and priorities early in the relationship are typically far more successful and enduring over the long run. Nobody will agree on everything all the time, but when it comes to something as consequential as money, there needs to be some common ground. More importantly, achieving shared objectives is only possible if there’s a willingness to compromise.

Early is better

The best time for spouses to have the talk is before moving in together. The next best time is right now. Spouses, hopefully see one another as partners in the journey to create a comfortable and enjoyable life together — and partners support one another through thick and thin. But they also deserve to know what they’re getting into and how one another’s financial life prior to the relationship will impact the household moving forward.

What pre-existing debts are coming into the relationship?

Individual debt brought into a relationship will remain the sole responsibility of the person who incurred it unless the other party agrees to take responsibility for it. However, large ongoing payments can still have a profound effect on the entire household’s financial wellbeing and what kind of lifestyle a couple can afford. 

Discussions on debt repayment should include what the debtholder plans to do about their debt and whether it will be the debtholder’s sole responsibility to pay it off. If the spouse without the debt agrees to help, what financial concessions will the debtholder make to recognize their contributions?

For example, they may commit to using the extra income available post-payoff to help build an emergency savings fund — or they may simply promise to not carry a balance on their credit card moving forward.

What are both spouses near- and long-term financial goals?

Everyone needs several short- and long-term financial goals to structure their spending and savings habits and help motivate their progress. Realistic goals are also a key part of building a consistent and effective household budget. While it’s not unreasonable for each spouse to have one or two individual goals — most goals should be shared and worked toward together.

Does the couple want to buy a house, go on a vacation, build an emergency fund? These discussions should happen somewhat frequently, and progress monitored through each budget cycle.

Who is responsible for what?

For all intents and purposes, marriage is an equal partnership. In the event of a divorce, all property and joint debts will be split 50 / 50. However, if one partner earns significantly more than the other it may not be realistic to take the same approach with the monthly expenses — or if responsibilities will be prorated based on income. If one partner does pay significantly more, it’s also important to discuss how both individuals plan to avoid any resentment or bringing the imbalance into arguments.

To blend or not to blend?

It’s common for many couples to pool their money into a shared bank account for expenses and spending. But many couples find maintaining their own bank account is a better way to avoid conflict and maintain a small bit of independence. It boils down to personal preference — ultimately both parties need to trust one another to do what is best for the household and their shared financial goals. Constantly reviewing a partner’s transactions is equally troublesome as constantly hiding transactions from a partner.

If the couple opts for a shared bank account, they need to decide who will be primarily responsible for the budgeting and planning. If there are separate bank accounts, can both people commit to keeping up with a regular budget and paying the bills on time? In either case partners must feel comfortable communicating and being transparent with one another.

What happens when one person’s spending gets out of control?

Life will not always be smooth sailing. Humans are prone to ill advised or impulsive spending, and there will invariably come a point where one spouse’s spending adversely impacts the entire household. Partners need to create safe spaces for one another to address these lapses in judgement without allowing the conversation to break down into conflict.

Trust is a critical component of overall financial wellbeing in a relationship and financial infidelity can rapidly erode an otherwise healthy and productive partnership. It’s not just what happens, but how both individuals choose to move forward that matters.

Are both individuals financially compatible?

The most enduring couples don’t necessarily agree on everything, but they do agree on the points that matter, such as the following

• Individual long-term financial goals such as retirement planning, savings and investments, and life insurance
• Joint purchases such as buying a home or a vehicle, and the maintenance costs
• The costs of childcare, education, and recreation (if both want children)
• Separate or joint bank accounts, or a combination of both
• Planning an emergency fund

Financial well-being is not always about how much a household earns, but what they decide to do with the resources at their disposal. Those that can make wise, thoughtful decisions together are in a much better position to weather whatever challenges and opportunities come their way in the decades ahead.