🎓 How Money Affects Relationships

How can money affect your relationships?

Did you know that for every 10 divorces at least 4 of them end because of money, or lack of money? Having money or not having money is not the problem itself but it is the poor choices and management of money that leads to tough relationships.

Money can affect your relationships in many ways but the worst situations are caused because of people’s lack of financial literacy. Over 40% of people in a relationship say that they have hidden purchases or expenses from a partner. This is because of the negative emotions we feel when discussing money.

In a tough financial situation or while making poor financial decisions money can become kind of taboo. Human brains are wired to avoid pain before anything else and the easiest way to avoid pain around money is by not thinking about it. As you can probably guess this is bad and will only make the long-term problem way worse.

We avoid emotional pain by avoiding the subject of money with our loved ones but in the process, we make our problems worse and develop mistrust. If we hide our money issues from friends and family we are just making our situation tougher and making our money issues cause problems in our relationships as well.

Let’s discuss how we can make sure that our personal finances do not negatively affect our relationships.

How to have financially healthy relationships.

Over 85% of people say that having similar financial goals and habits are key to success in a relationship. The important part of managing finances in a relationship is making sure that you both are on the same page.

The easiest way to make sure you are on the same page is with often and open discussions around financial goals and habits. You can even meet regularly to create a budget and spending plan for each month.

Over half of Americans say that budgeting is the most valuable financial skill they have ever learned. This is because it does not only help you save more, spend less, and prioritize spending it also helps people build trust in relationships when finances are involved.

Budgeting helps you better understand your spending habits and helps you hold each other accountable for your spending. It also encourages open conversations about spending and money in a productive way.

In the end, money can significantly hurt relationships if it is not treated properly. Budgeting and open discussions can significantly help people in relationships build more trust and understanding around money.

Why money does matter

As we discussed in the previous sections about how money can cause significant issues and distrust in relationships, money has a huge impact on our lives whether we like it or not. Not only does it affect our relationships it also can impact our physical and especially our emotional health.

People who properly manage their finances report a significant decrease in stress and anxiety compared to those with poor financial habits.

Good financial habits can decrease anxiety and also help you live a more full and fulfilled life. I have a quote in the footer of every newsletter I make and it says “Financial freedom is the ultimate investment”. I include this quote because money has the power to literally buy you freedom.

If you make wise and strategic investments over a sustained period you can build an investment portfolio that can produce more cashflow than your 9-5 job. Not only will this allow you to retire but it will also let you focus on what truly matters in life.

Let’s do a quick little example of two people with very different financial habits and try to think of who will be healthier, happier, and feel more fulfilled in life…

Person 1

• Always has only a few dollars in their bank account

• Has no clue where their paycheck goes every month

• Does not let their family know what they spend their money on (they don’t even know themselves)

• Buys a new expensive toy every month and is constantly concerned about keeping up with the trends

• Always blames other people and family for their own financial issues

• Always out partying and spending money on drugs or alcohol

Person 2

• Has 6 months of expenses saved for emergencies

• Knows why and where all their money is going because they budget every month

• Has open and honest conversations with their family about money

• Does not buy a new expensive toy every month but does find free things to enjoy every month (like nature)

• Does not care about trends or what other people think about them

• Takes control of their own financial future and never blames other people

• Spends quality time with family doing free or very cheap activities

Who do you think is happier, healthier, and has better relationships? You hopefully guessed person 2. This is because they have good financial habits and a clear direction in life. You can tell person 2 will be much happier but I have not even told you the whole story. Person 2 will also retire much sooner and will spend a lot of time contributing money and time to causes they care about.

Money itself is not actually that important, it is what we do with it and how efficiently we use our money that is truly important. More money can help with issues but will not solve them, good financial habits will though. Money means much less to the financially literate, it is the poor and financially illiterate that think money will bring happiness when in reality it is good financial habits and actions that bring us happiness.

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Other tools

• Yahoo Finance Best for economic news

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