Ask the Readers: Reconciling Financial Differences with “Your Other Half”

by JT McGee

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How do you resolve financial differences between boyfriend and girlfriend, or husband and wife.I don’t know anything about this, so this is a great question for the helpful, intelligent people who read this blog. What do you do when your other half—spouse, girlfriend/boyfriend—has a totally different view of personal finance?

Let me give you some background:

My girlfriend and I have been together for four, almost five, years. A long freaking time, considering that I’m only 21. It’s pretty much understood that we’ll be getting married after we graduate and get our careers, etc., in order.

When this will be, I don’t really know. I enjoy the power trip from knowing I get to decide when to give her a massively overpriced piece of dinosaur dung! Back on topic…

The Differences

We see money in a totally different way. She sees spending potential. I see growth potential. She’s not super spend happy as in “I want to charge everything at 20% APR,” and I’m not exactly the kind of person to live on Ramen to max out a retirement portfolio.

She’s all about the whole flat trajectory kind of thing. Consume early and often, but save enough that you have a slowly improving standard of living.

As for me, I see the 20s as a period to get ahead—a time for serious asset accumulation to set a very nice path by the time we’re 30. I want to be “set for life” before I get grey hair.

If there’s anything I’ve learned from economics it’s that abstract charts solve everything. This may help put our differing views in perspective:

Differing viewpoints in how to spend a combined budget.

Income situation

Her: healthcare. Me: finance.

Making this short and sweet, combined earnings should be just fine. Living expenses here are so unbelievably low. Earnings potential for the two of us is above average.

Debt Situation

Pretty much zero.

Questions for you

  1. Do you and your significant other have money differences?
  2. What do you buy that gives you a good return in the form of a better standard of living?
  3. How can I meet in the middle with an emphasis on asset accumulation and maintaining a real standard of living? (If it were up to me, I’d live on $30,000 a year and invest the remainder.)

Photo by: Peter Pearson. Nope, that’s not us. 😛

{ 18 comments… read them below or add one }

No Debt MBA July 25, 2011 at 09:10

I love your graph. My SO are pretty close financially. Our big discussion is if we should take mini-retirements (SO) or suck it up, save and retire semi-early but permanently (me). Our finances are separate which helps a lot to avoid discussions around spending. My SO wants a standard of living that’s like 20% higher than what I shoot for which is within the realm of compromise. Also, we’re not afraid to buy indulgences individually. You want beer? Fine, you buy and enjoy it. I want fancy clothes? I buy them. SO wants a night on the town? I might stay in.

I wrote about how we manage money last week:
http://www.nodebtmba.com/2011/07/handling-money-as-couple.html

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JT July 25, 2011 at 11:24

Sounds like we’re in the same boat, NDM. Twenty percent +/- to our eventual budget really won’t make us broke. But if you earn 8% a year on the spending money, then you’re looking at a difference of 46X the actual difference over 50 years.

Long run costs are huge!

I like the whole split checking and savings thing, but I think she’d take it the wrong way. It’s one of those “trust” things, you know?

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Jonathan July 25, 2011 at 09:59

Fortunately, my wife and I agree on pretty much everything regarding finances, and we are both frugal and focused on growing our net worth and non-wage income to the point where we can live off of it. Our only source of mild disagreement is in giving – sometimes I get over-enthusiastic about it. For example, we just started attending a new church that currently meets in the pastor’s house. In order to get a building and have room to grow beyond 20 people, they need resources. My instinct is to step in and give generously for a while, which would be great, but would slow down our financial progress and would lessen our ability to give really generously down the road.

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JT July 25, 2011 at 11:33

The giving back portion of my personal finances is one that I haven’t paid enough attention to. My whole thing is that I feel like no one is going to take care of me should I be in need, and I’m too stubborn to ask other people for help. This may sound selfish, but I tend to error on the side of waiting to give until I know that I won’t every possibly be a recipient of aid. That means giving later, rather than sooner.

How involved are you in the decision-making? There’s a growing trend toward putting churches in leased commercial space, which is interesting to me. On the “mega-church” side of things, whole malls are being converted. On the small side, they’re popping up in strip malls where space is inexpensive.

It would seem to me that terms for commercial space would be excellent. I would wager that the community could offer to put in some elbow grease to get good leasing terms. Something they’d consider?

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Jonathan July 25, 2011 at 11:40

We definitely can have a lot of influence…the church is very small, obviously. Mostly young couples. And yes, a lease is definitely the direction for the time being. Possibly lease space from an existing church, but a commercial space would be an option as well.

Truthfully, you do sound selfish. We don’t give in expectation of receiving reciprocal help in our times of need, but give because we have been abundantly blessed relative to so many people in the world. Plus it helps keep our hearts from hardening and our attitudes about money somewhat humbler. Most of our giving benefits the poorest in various other countries through an organization we are deeply involved in, rather than giving to local causes.

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JT July 25, 2011 at 11:58

I think there may have been a communication error. I don’t give with the expectation of receiving anything, I give in the expectation of supporting causes that I believe in.

Giving, to me, is something that can be done routinely, but I won’t be donating a very significant part of my income until I know that I’m in a comfortable place myself. That may be selfish, but really, there are hundreds of thousands of seniors who probably gave away tens of thousands of dollars when they were younger, and now they have to decide whether or not to buy food, or prescriptions. I don’t want to be in that situation. I don’t think I will be, but I don’t want to be, either. This brings up another topic, which might be good for a new post.

I know I have a million more opportunities just having been born in the US. I spend more on a soda than billions of people earn for a whole days work. There is a lot that charity can do, and a lot that I’m willing to support, but the needs of those closest to me come first.

Even still, http://www.heifer.org/ always gets an end of the year donation from me. They’re international, and they do more than give people what they need; they give them assets (livestock) that can supply them with food for years. I’ll donate to it each year, just as I have, but I won’t be writing away 20% of my income any time soon.

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Jonathan July 25, 2011 at 12:04

Don’t worry, I wasn’t trying to criticize…and I do now better understand what you meant. We don’t give ourselves into the poorhouse, but we do respond to needs when we see them and we work hard to balance our long-term future with present needs. Part of our rationale there is that it’s a lot easier to give when it’s been a habit. We worry that if we were to scale way back now in order to accelerate our long-term financial goals, it would be easy to give in to greed and never start giving more. How do you ever decide that you’re secure enough? The truth is, even giving generously, we save more in a month than most people earn in a month.

JT McGee July 26, 2011 at 09:05

Making giving a habit does sound like a great idea. If automatic savings works, then so too should automatic giving.

Honestly, my best answer to your question is “good question.” I don’t know how I’ll decide. Really, post-grad we’ll be in a situation where we make >100k combined a year in a city with a median household income of $42,000. We could very easily give away half our future incomes and still live just as good as anyone else. So, yeah, you’re right, we can afford it.

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Harri @ TotallyMoney July 25, 2011 at 10:20

Your post could well have been talking about my boyfriend and I! I’m risk averse. He’s… well not. At all. He sees his twenties in the same way as you- a time to take risks and get ahead so we can kick back in our thirties. This makes me want to dive under the covers and have a little cry.

The fact is that he (and you) have a point- without independents and presumably without a mortgage, now’s the time to go out on a limb, do crazy things, maybe make a few mistakes along the way and learn from them. More importantly, for as long as I (and your girlfriend) keep our accounts separate from your’s (and my boyfriend’s) then it’s not really our prerogative how you handle your finances. It effectively comes down to respect for each other’s choices.

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JT McGee July 25, 2011 at 12:04

Thanks for your perspective on this, Harri.

Separate accounts seems like an interesting fix. I have a feeling she’d take it the wrong way, though. The longer I think about it, the more I like this solution. We’re just on two totally different levels with our finances. To me, finance is one of those intellectual pursuits that’s extremely interesting. To her, it’s just another thing to take care of.

The things that are important to her aren’t nearly as important to me. End of the day, it’s probably a good thing that we have very different interests. LOL

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krantcents July 25, 2011 at 16:37

My wife and I are pretty much on the same page. We are not too frugal, but that is after many years of saving enough for retirement and other things. We travel at least one overseas trip every other year and have a low key lifestyle. We place savings as a priority and live on what is left.

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JT McGee July 26, 2011 at 09:06

Traveling will probably be a priority for us, too. There are a few places I want to go, and I’m sure that we’ll both need the break every once in awhile.

Spend it where it counts, right?

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Ashley @ Money Talks July 25, 2011 at 19:37

My husband and I each get an “allowance” every month that is ours to spend how we see fit. We also create a budget each month together. I think communication and respect are critical to making it work.

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JT McGee July 26, 2011 at 09:08

Hmm, an “allowance,” interesting…

I’m cool with allowances, as long as I get to dictate where the rest of the money goes. LOL.

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Darwin's Money July 25, 2011 at 20:43

Nice chart! My wife and I are opposites; I don’t think she had the best role models growing up financially-speaking. My dad was cheap/frugal, whatever. So, since she makes most decisions like what we’re doing this weekend, who we hand with, heck, where my balls go, I make most of the financial decisions. I do have to reign her in now and then but we don’t fight over money. It’s OK to marry someone with a different financial outlook; we make it work.

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JT McGee July 26, 2011 at 09:14

Charts solve everything!

Yeah, the GF can run all parts of my life that I don’t have fun doing. I’m cool with that. Maybe that’ll be the trade. 😉 You decide where to go to dinner, I’ll decide how much to stockpile like US dollars are in short supply.

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101 Centavos July 26, 2011 at 07:29

Mrs. 101 has latent shopping impulses which must be reined in, especially with regards to fabric and other pretties for the house. I have my own vices. So, we limit ourselves to monthly allowances and try to save as much as we can. I think you and your GF make a good combination, money-wise.

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JT McGee July 26, 2011 at 09:10

Yeah, I’m sure it will be fine. Really, we’re in a good situation if our biggest disagreement is on how much gets set aside for the future. In the scope of all the problems we could possibly have, this one seems like a good problem to have, if you can say that.

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