Relationship Finances - Ft. @BowtiedF'er
An In-Depth Primer on Relationship Finances from our Resident Personal Finance Expert
What’s up guys, today we have an excellent post covering relationship finances from one of the most prolific and knowledgeable MF’ers in the Bowtied Jungle,
F’er is our resident “Personal Finance Expert,” and over the past few years has explained the A to Z of everything having to do with personal finance.
I have personally put into practice the tactics he writes about, and I personally vouch for his writings - I HIGHLY recommend all of you follow his substack - Fs I give.
Some of my favorite write-ups to date have been Boys 2 Men - Why We Need Manhood Rituals and Abundance Mindset - Dows it REALLY Work & How?
With that being said, many thanks go out to F’er for his work this week. This is probably one of the top 5 pieces of content posted on this substack, and I’m grateful for his great work.
Relationship Finances 101
Talking about money is taboo in our culture. And lots of couples avoid the topic of finances for far, far too long, to their own detriment.
In surveys, almost half of all divorces are caused by disagreements over finances. And if I had to guess, the stress of finances contributes to an underlying unhappiness that ultimately manifests in other issues people identify as the reason for a divorce.
In my opinion, outside of differing on the number of kids you want and strongly held religious beliefs, there is likely no other topic that is likely to derail a marriage/serious relationship as fast as finances.
Well, I am here to help you avoid this common pitfall. Here is a breakdown of finances and serious relationships.
Money Rules & Love
Let’s get this out of the way, anyone who claims there is some hard rule about money and dating is a LARP. “I’d never marry a girl who has student loans” or “I’d never marry someone who doesn’t make $X00,000” are silly.
Are you telling me that if a Margot Robbie look-alike who checked every box but happened to go to an expensive college wanted to be married to you, you’d say no?
Are you telling me that if a young Salma Hayek looking girl, who makes you feel like no one has before, is into you, but she wants to rescue puppies with cancer instead of chase money, you’d write her off?
[Pro-tip – her name is Mariela. She is actually a stripper. And most importantly, when she threatens to shoot you if you get one more late night text, you definitely don’t carry when you visit because she will try…but that’s a story for another day.]
Hard and fast rules don’t work because we are all people with different values and objectives.
Therefore, the first step is to identify how you feel about money. What are your financial goals? How strongly do you want to stick to them? How important are they to you? How do you want money to be handled in your relationship/marriage?
These are questions that you need to think long and hard about. We don’t have time for that here, so as a shortcut, do the following 2 tasks:
List your top 3-5 relationship values. These can be anything – ie your partner needs to be a certain religion, needs to want a certain number of kids, etc.
You just won $100,000, what do you do with that money?
Answer those questions before moving on
….
….
….
If you listed some sort of money/financial/retirement goal as a value that means you put a high importance on finances.
If you answered that you would save or invest that won money, it means you are a saver. If you immediately thought of all the things you would spend it on you are a spender.
The below isn’t scientific, but it is how we would view couples with different values and habits around money. Using the answers from above, find where you are on the top row of the table. Then read down the column to see what type of partner is likely the best fit.
Red areas are couples who are likely to have relationship issues around money.
Orange areas are couples who are in a danger zone
Yellow areas are warnings – you may align but you need to watch out for how your financial situation develops over time
Green areas are couples who likely align and have a positive money relationship
Again, not scientific and red doesn’t mean the relationship can’t work. But it does indicate that you need to be extra thoughtful and open with communication around how you plan and address your finances. If you pair a frugal FIRE person with someone who has their identity wrapped around having the nicest and most expensive stuff…there is going to be fights. One partner wants to save aggressively and be able to retire young while the other wants to YOLO it now.
The easiest combinations are when both partners are opposites, but have low importance on money over other values in life. A low importance spender and saver will balance each other out and be more willing to work on a compromise.
When should you discuss your finances with a partner?
In my opinion, right off the bat when things get serious. The better you know yourself, the better prepared you will be for having this conversation.
The more important money is to you, the earlier you want to have the discussion in a relationship. You don’t want to waste years with someone only to find out you are financially incompatible.
If you are a Financial Independence Retire Early (FIRE) guy…well first, reconsider FIRE since it is setting a lot of people up for living a meager life and still running out of money in retirement…but if you are a FIRE guy and you are with someone who is a big spender, that is going to be an issue. Imagine spending an hour clipping coupons to save $20, only to see your partner walk in with a new $500 purse. Even if it doesn’t lead to an immediate fight, you are going to grow resentful and over time.
Therefore, if finances are important to you, as soon as your relationship gets serious, have the talk of finances.
Even if finances are not important to you, it may be important to your partner and they may not be comfortable bringing it up. So open that door for them.
What Your Financial Future Life Looks Like
In general, men tend to be more frugal while women like the nicer things in life. Although, this isn’t always the case. We have family where the husband needs all the newest tech and toys and his higher-earning spouse is always worried about money. She wants stability and to travel but has neither as every month some new gadget shows up in the house. And every time we see them, she is disparaging him to family & friends in front of the dude. The relationship continues to get worse and worse. (side note – don’t shit talk your spouse)
You want to make sure that you and your partner share a similar vision for the future even if finances aren’t directly a deal-breaker. If you want to travel but your partner wants to be decked out in designer clothes and there is only enough money for one, someone is going to be disappointed.
Talk to your partner about your goals, your finances, and how to get there.
How Should You Manage Your Finances?
I am of the belief that once you are married, nothing is separate. Some people can make separate finances work. The wife even has a friend who splits the bill with her husband at dinner and they split the mortgage and utilities 50/50. But for most people, this isn’t sustainable.
Seems crazy to me.
For most of us, there will be a comingling of your finances after a certain point of getting serious. And once kids come into the picture, one spouse will take on more of the childcare duties which likely limits their financial progress. A great way to ruin a marriage is penalize them by letting the homemaker spend less due to making less.
Ideally, I think you need to be on the same page as to an amount of money for discretionary spending & investing every month.
For a budget, we like the 50/25/25 rule where you allocate
50% of your money to cover essential items like mortgage/rent, debt payments, utilities, and minimum living costs.
25% of your money goes to saving an emergency fund & investing for retirement.
25% is discretionary for all your other spending needs
If you make a combined $100k a year and taxes brings that number down to $84k, you have $7,000 a month, after tax, to budget with. This means $1,750 a month to spend at your discretion on entertainment, clothes, vacations, etc. How you divy up that amount is up to you, but this budget is a good framework to ensure you are covering life’s expenses, investing enough for your future, and leaving money left over to enjoy yourselves.
How to Talk About Finances
The short answer, just do it. Any partner should see it as a positive step if you bring up the subject and show that you are thinking maturely for the long-term.
I am a firm believer that the conversation you are scared to have is the one you need to have the most. What’s the worst that happens? You find out your partner and you are incompatible and avoid sinking more time into something doomed to fail…that seems like a win even in the worst case.
What if the finances are very different?
One common problem is if one partner makes significantly more money or has significantly more debt. This makes for a difficult situation as the better off person is likely to feel pressure to take on more of the shared expenses.
No matter which person you are, you need to think about what your expectations are and if it will work. For example, if you are financially well off and your partner isn’t, but you want separate finances, are you going to cause a riff by expecting them to keep up with your spending? Are you setting them back financially and building resentment by expecting them to pay for nice meals, vacations, entertainment, etc that you can afford but they can’t? Or are you willing to downgrade the lifestyle you can afford to one they can?
It could be my bias as I have always made multiples more than my girlfriend’s and now my wife, but at a minimum, if you want a nicer lifestyle than your partner can comfortably afford, you should view it as a cost of being with that person.
What if You are Already Fighting Over Money
This is a red flag. Marriage doesn’t solve problems, it amplifies them. You need to address the subject sooner rather than later.
Make a budget. Make a plan you can both stick to. And communicate openly to get on the same page. Some couples have a rule about asking for approval before a purchase over $X.
Again, it may work for some people, but I think it is just a control issue. If you and your partner agree on a long-term financial plan, and you can’t trust them to make good day to day decisions….either you have trust issues or they have control issues or both. If you need them to run every purchase over $100 by you because you can’t trust them, then how do you trust them to not make other decisions that are bad for your relationship? That isn’t a way to live. You both need to do some maturing and growing.
Conclusion:
There is a lot of basic financial stuff that can’t be covered in a guest post. For that, follow us at our substack where we post at least once a week:
But specifically to relationships and money, the advice I would give is:
Figure out your relationship to money
Talk early with your partner about money, finances, savings, and/or retirement plans
Make a budget and get on the same page for your spending and long-term goals
Don’t be unreasonable with a partner is in a different spot financially
Don’t be a slave to your plan – being in a relationship means both people need to compromise so be willing to re-evaluate and adjust as you grow with your partner
Closing Remarks
As I said at the start, this write up from F’er was basically perfect.
Seriously, I appreciate his effort, and I suggest all of you give him a follow.
Until next time 🫡
Great post F’er