Ellen and Edward earn $28,000 a month, or an annual income of around $336,000 a year — more than triple their home state of Hawaii’s median household income.
But their high income doesn’t prevent the couple from having constant financial disagreements, they told money expert, author and self-made millionaire Ramit Sethi on a recent episode of his Money for Couples podcast. Their last names were not used.
Edward is terrified of ever returning to a poor financial situation similar to what he grew up in, while Ellen wants the freedom to reasonably spend their money without asking permission, they said.
“We are pretty financially well-off, and my brain does not compute that,” Edward said on the podcast. “Everything for me is a fire. A blown tire that’s $200, $300 is a huge deal for me.”
It’s not just emergencies, either. Edward oversees the all of couple’s finances, and Ellen said she has to get his approval to buy virtually anything, even everyday beauty products or essentials like her prenatal vitamins.
“I feel like every time I ask for anything … I have to over-explain why I need it for him to say yes,” Ellen said. “That constant, ‘let me ask,’ ‘let’s see what he says,’ ‘let me go in detail about why I need it,’ is not a good feeling.”
Here’s why their disagreements keep happening and Sethi’s advice for how to manage money together better.
How to manage money as a couple
Ellen and Edward aren’t bad partners, Sethi said. “More likely, it’s [a] bad structure” for how they manage their money.
The couple understands some basics of setting up a financial system that works for both of them, Sethi said, like the idea that they should have money dedicated to discretionary spending. However, Edward has been including items like prenatal vitamins in Ellen’s discretionary spending, which Sethi strongly disagreed with.
“You don’t just need a better budget. In fact, you probably don’t even need a budget at all,” Sethi said. “You need a better system that is built together.”
For both partners to start feeling better about money and hopefully have fewer disagreements going forward, Sethi offered three pieces of advice — and anyone in a similar situation can follow them.
1. Encourage your partner to engage with your finances
In Edward and Ellen’s situation, Edward handles all of the money, while Ellen is hands off. But as spouses and co-parents, both parties need to be treated as equals, Sethi said.
Sethi suggests the partner who has more experience with managing the household budget — Edward, in this case — encourage the other to get involved. He recommends telling yourself from “day one,” “I am not going to do this on my own. I want my partner to become good with money.”
2. Talk about money regularly
In the past, Ellen has avoided money conversations because she felt like her needs were dismissed and she didn’t understand where Edward was coming from when he worried about their finances.
Having regular money conversations could help them clear up miscommunications going forward and allow both partners to feel empowered to make decisions on how the family spends their money, Sethi said.
3. Find a structure that works for both partners
Ellen and Edward’s current system, in which Edward approves all of the couple’s spending, isn’t working for both of them. Sethi suggested they adopt a new structure together.
One idea: They could each have “no-questions-asked money” along with a joint account and work together to decide how much goes in each, Sethi said.
Additionally, they should create some general rules for money in their relationship, such as a no-debt policy or a limit on how long to spend flipping a house, which has been a point of contention in the past.
The couple needs to make a more concerted effort to work together and create a shared vision for their money or else they’ll “forever feel resentful, behind, insecure, unworthy, misaligned, sometimes even in danger around your finances,” Sethi said.
“Money is important,” he added. “My wish for you is that you give it the attention and respect that it deserves.”
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