You and your lovebug have determined you're totally compatible after talking about whether you want to have children, whether the toilet paper hangs from the front or the back and whether you're Team Pepsi or Team Coke. That's awesome, but have you determined how compatible you are financially?
Let's say Jack and Diane make a similar salary. Diane has a small bank account, no retirement income, a brand new car and new furniture in her apartment. By contrast, Jack has a fully vested retirement fund, a healthy bank account and a nine-year-old car.
It's not hard to see that Jack and Diane view money differently.
Whereas Jack is all about saving for retirement and rainy days, Diane prefers creature comforts. If the couple makes enough to both save and spend, great. But if the couple has to choose or they cannot agree on how much to allocate to each, well…
This potential financial stalemate is why it's important to determine financial compatibility before you sign the lease on an apartment or cut the cake at the wedding reception. Although compatibility in regards to religion, political affiliation and children is important, financial incompatibility most often leads to divorce. Identifying whether you're financially compatible or not isn't the magic cure, but it can give you a fighting chance.
Typically, there are two types of people, the Savers and the Spenders. According to the above scenario, Jack is a Saver while Diane is more of a Spender. Both camps have their extremes and their moderates. For example, an Extreme Saver might save every free dime they have, with possible detriment to their health and safety. They tend to eat cheap processed foods over healthier meals or drive a car in need of repairs rather than a new vehicle. Extreme Spenders don't save anything, sometimes to the point of foregoing financial responsibilities in order to buy what they want.
It's obvious that an Extreme Saver and an Extreme Spender are not financially compatible and could face some serious issues down the road. But those types of issues are relatively rare since both can generally be spotted almost immediately (think Alan Harper meets Peg Bundy). In most cases, it's two moderates or a moderate and an extreme that will meet and have to work through compatibility issues. Moderates in both camps save and spend, it's just a matter of priorities for them. If they both agree on how to save and spend money and on how to handle financial matters, then things are fine. But if there's a disagreement, that's when the ability and willingness to compromise comes into play.
Going back to Jack and Diane, let's pose these three questions:
1. Should a couple maintain a joint checking account or keep personal finances separate?
• Joint accounts
• Separate personal accounts, but a joint account for household bills
• Separate accounts and each pays an equal portion
2. At what amount does a person need to consult his or her spouse before making a purchase?
• $100
• $200
• Never
3. One of you gets a bonus from work. What do you do with it?
• Spend it
• Save it
• Save some, spend some
Savers and Spenders might agree or vehemently disagree on answers to these questions. With the first question, Jack might want to know where all the money is at all times – so he might push for a joint account. On the other hand, Diane might not want Jack to know the extent of her spending so separate accounts would be ideal. Considering the second question, Jack might consider $200 an exorbitant amount to spend without consulting his spouse, but if the expenditure is for new tires or another necessary item, Diane might not bat an eye before writing out a check.
In reality, it's the third question that tends to cause the most battles beyond not having enough money to make ends meet. Spenders want to spend, Savers want to save and sometimes the twain just never meets. The decision can come down to who earned the bonus, which can lead to contentious results and create serious resentment that lingers throughout the relationship.
This is why is it's important for a couple to determine their financial compatibility early on. The sooner the problems are identified, the sooner compromises can be worked out and agreements put into place to handle these matters. Having the information needed to handle difficult situations regarding money is a much better approach than "winging it" and discovering you have a serious, possibly relationship-ending issue.
~ Glen Community Support
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