There are those who faithfully set money aside for a rainy day, and those whose love of shopping and spending push their monthly budgets to the limit. But what happens when these two types fall in love and start their lives together. Can spenders and savers truly align their spending and saving habits as a team?
The answer is a definite “Yes. Maybe.” Recognizing and acknowledging their differences is a strong first step, followed up by a commitment to open communication and shared goals.
But the challenge may be tougher than it sounds.
To avoid such romance-killing behaviors, spenders and savers should consider committing to complete transparency. Soon after a couple begins discussing future plans and goals such as cohabitation or marriage, they need to begin speaking frankly about finances. Will they merge their money? How will they divvy up household expenses? How will they build up savings for major life events ahead? Are there spending habits that have to change?
The Lottery Test
Spenders and savers should discuss their different views on money: does it represent consumption today or security for tomorrow? Is “buying the best” essential to your well-being, or are the best things in life really free? Ask, “If we won $1 million, what would we do with it?” Have fun with this topic while you learn more about how each other thinks about money and the future.
To calculate how much you can spend and what you need to save, compile a list of joint family and financial goals. Include such milestones as saving for a home, preparing for children, funding the children’s education and investing funds for retirement. You’ll also want to account for irregular spending considerations, such as gifts or vacations.
Once you develop a list, put real numbers beside each item. How much money do you need to save for each category? When should you start saving, and how much can you afford to contribute every month? If you expect your personal incomes to grow over the next few years, discuss how much of that extra cash you can sock away. (Keep in mind that if you follow the traditional route of buying a home and having children, your expenses may rise faster than your income – just another reason to start saving sooner!)
These can be tough, complicated conversations. Young adults who have been waiting years to acquire the homes, cars and wardrobes of their dreams may find it difficult to postpone such indulgences in favour of down payments and RRSP contributions. The future, some may think, will look after itself. As a couple, however, you need to balance your goals and expectations, ensuring both partners feel heard, respected and treated fairly.
Progress and Perks
The key to working toward such tough decisions is to make the process fun. Instead of talking finances around the kitchen table, why not discuss it at your favourite restaurant? You can also establish rewards for your progress. Once you agree on each milestone, splurge on a concert or a show – to remind yourselves that money is essentially a means to an end.
Once you’ve laid out a plan, use automation to put it into action. Use online banking protocols to deposit money every month (or every payday) into different savings or investment accounts representing, for instance, your home-buying fund, vacation funds or RRSP contributions.
Promise never to touch these designated funds for everyday household expenses. If you find yourselves unable to make monthly contributions, revisit your plan and tighten your budget. If you need help, see a financial planner or credit counselor to get on track.
Above all, remember that you’re a team and that you’re in this together. To be successful, you need full transparency, no secrets. Keep asking yourselves, “How can we make this work, together?”