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Money and Relationships

Feb 16, 2022 | Episodes, Personal Finance | 0 comments

This episode of the The Money Compass podcast was published on 16th February 2022. You can listen again by heading to our episodes page, or on your favourite podcast player.

In this episode, Julie and Emma discuss how your relationships with other people are impacted by your money mindsets and your money decisions.

Episode Highlights

  • Lots of factors can put a strain on a relationship, with money being a big factor. It’s especially likely to be an issue if boundaries are not set from the start.
  • You can avoid potential strains in a relationship by communicating about your finances. Like almost any issue in a relationship, the solution is knowing where you both stand from the start. Consider whether you will pool all of your money together in joint accounts or whether it is more sensible to have separate accounts.
  • Make sure both people in the relationship understand the financial set up so if anything does go wrong then one person isn’t left in an uncomfortable circumstance, like being in debt or spending all their money on something they don’t want to. The key is being accountable and ensuring you are both always on the same page about money even if your money mindset differs.

Rediscover the conversation

Julie Hunt
Morning Emma, how are you today?

Emma Knights
I’m very well, a little bit tired. Not going to lie is bit early for me still.

Julie Hunt
I know the 7am podcast recordings are going to start taking it out of you.

Emma Knights
I hate to say it but it’s nearly quarter to eight. We’ve been drinking tea for so long that time has passed that quickly.

What’s good about February in your eyes Julie?

Julie Hunt
Well, it’s my birthday in February. But when I was little, I always used to get dumped in February when I was little in middle school/high school.

Emma Knights
So why did you always get dumped in February?

Julie Hunt
February is a really expensive month, with my birthday on the 10th and Valentine’s Day on the 14th, it was almost like, oh, hang about do I want to make a financial commitment to this relationship.

Emma Knights
It is a big commitment, a birthday and Valentine’s within four days of each other.

Julie Hunt
I’d sometimes get asked back out again at the start of March. At least Raph doesn’t ask for a divorce every February, that would be very excessive if he did. So I think my favourite day in February, which actually isn’t in February this year, is pancake day.

Emma Knights
How is it not in February?

Julie Hunt
I think it’s all to do with Easter being quite late this year, so all the dates have moved. Shrove Tuesday is actually the 1st of March, so definitely pancakes in the office.

Emma Knights
What’s your favourite pancake topping?

Julie Hunt
Sugar and lemon, however, when we’re in Rhodes, I always have like this orange one with cinnamon and that is amazing. I think that when we go to Rhodes later in the year, you will have to try it.

Anyway, moving on. Today, we’re going to be talking about relationships and money, which kind of follows on quite nicely from money mindset from the other week. We’re not just talking about your relationship with money, but also how your relationships with other people are impacted by your money mindsets and your money decisions.

So, Emma I know that you’ve had an interesting relationship in the past, which money had quite a big impact on? Do you want to give me a little bit of a lowdown on it?

Emma Knights
Yes, I can. So I was in a relationship with someone who was very much the kind of person that as soon as they had money in their pocket, it started to burn a hole and needed to be spent. There was always something that needed to be bought, whether it be some clothes, a motorbike or whatever it may be, there was always a need to buy something. It couldn’t just sit in a bank account and build up nicely ready to build or buy something bigger. It always had to be spent as soon as it can was accounted for, and it was gone.

I always found that quite difficult because from a very young age, I’ve saved everything and squirrelled it away and put it out of the way and never spent any of it. I remember one significant time that I really felt uncomfortable was, he suddenly said let’s go look at cars and I thought, well, I don’t really need a new car, but we can look. So, we went and looked at cars, and then I actually did fall in love with a car that I saw. I was like, okay, let’s buy it. But then it wasn’t a case of, well, I’ve got this money, you’ve got this money. It was a case of ‘what money have you got?’ At the time, the biggest sum of money I had was what my Nanny had given me when she passed away, so inheritance that I’d put in the separate account, and I’d always kept it separate.

She told me to go travelling and do whatever I wanted to do with this money. But that was the only money I then had to buy this car and I felt really awkward about whether to use that money on the car or not. I did it, and don’t get me wrong, I still have the car and I still really like my car so it was obviously well worth it. But in my eyes, I still think, well did I spend that money on what she wanted me to spend it on? So it’s just a bit of a tricky one.

We had very different views about how money should be used and what it should be spent on and how quickly it should be spent, and it does eventually get to you. I tried to change my ways but I couldn’t do it because to me my money mindset and my relationship with money was the right way and this was the wrong way.

I’m not saying that there is a right or wrong way, but you can get very stuck in your ways and it’s difficult for someone to change who you are and how you are with money. So, money has had a very interesting impact on that relationship, I think.

Julie Hunt
So obviously, you were lot younger then. So, looking back now, the more you know about money mindset – do you think that a saver or a spender can live together in harmony?

Emma Knights
I think they can. But if it was me in that situation, again, I would treat it very differently. Being quite young in a kind of first relationship, I thought let’s have all of our accounts as joint accounts, so all of our money was joint. So I had a lot less control over it. Because, yes, my money went into there, and his money went into there, but he could spend it at a much quicker rate than I could.

Julie Hunt
Then it gets into a bit of a contest, doesn’t it?

Emma Knights
Yes so in my eyes, if I were in that situation, again, I would definitely have a joint account for joint bills and things to come out of, but then I would want to have a separate account for our own money. So if you want to spend all of your money on whatever you want to spend it on, that’s absolutely fine. If I want to save my money, that’s absolutely fine too. But you’ve got to come to a compromise when it comes to something that you’re saving for together, maybe a house or a holiday. Just because I’ve been saving my money, it doesn’t mean that I’m going to spend it and buy things for you because you haven’t been able to.

So it’s just a case of thinking about how that relationship is going to work if you do keep money separate.

Julie Hunt
Ralph and I didn’t have joint a joint bank account until we actually got married and then the only reason we had a joint bank account then was because we had people who gave us cheques addressed to Mr and Mrs. Hunt. We were like, oh, what are we going to do with these? We have nowhere to put them.

Emma Knights
People think it is nice giving cheques at weddings in joint names. It’s like no, that’s just a difficult thing because then I also have to change my name really quickly on my bank account.

Julie Hunt
Absolutely, actually, it was quite a traumatic story. I bank with first direct and I have to say they have always been absolutely fantastic and amazing, apart from this one incident.

First Direct, have really strict rules on who’s allowed to join. I’ve had my account for years, so they were less strict back then. But nowadays, they’re really, really strict so when I asked if we could have a joint account even though we both had single accounts with them, they actually turned us down! So I was quite upset by this, as you can imagine, I believe there was a rant involving burnt out cars and things like ‘how dare you not give me a bank account’. I woke up in the middle of a night about two o’clock in the morning and realised I had a savings account, which I never used. I’ve just rung them up at two o’clock in the morning, because that’s one good thing about First Direct, they answer the phone 24 hours a day. I said can I add my husband to my savings account? They said yes of course you can.

Emma Knights
Wow. That’s one way around it.

Julie Hunt
So I found my way around it at two o’clock in the morning. It was a bit of an interesting experience. I think with saving and spending you should definitely have a different system in place and also, I think the big thing about any relationship is to be able to communicate.

I think when you’re younger and you’ve got a partner who’s a lot older, which was in your case, it’s can be quite difficult to put across your point of view.

Emma Knights
Yeah, and I think you sometimes think well, they must have done this before, so they know what they’re doing. So you put your trust into someone with more experience.

Julie Hunt
I think also this happens a lot to people who aren’t as confident with money. We see a lot of people, certainly in the olden days, I say the olden days, but we have a lot of elderly clients who we go and see and a lot of the time it’ll be a case of the wife will bring the cake and cups of tea through while the husband sits and has a conversation about their finances.

Emma Knights
I always find that very uncomfortable. I’m like, oh, is she not going to come and sit with us, but it’s just traditional.

Julie Hunt
Yep. And I think that tradition has changed a lot. Definitely. I mean, I don’t think we’re still in that kind of thing. To me, it worries me because if anything ever happens to the husband, the wife is going to be completely lost because she’ll have absolutely no idea what’s actually going on with the finances. Yeah, I think we see that a lot.

So I think that’s important, even now I see women like my age, your age, who are like, “Oh no, my partner deals with all that I don’t get involved” and we have stories of people getting divorced and it’s like, well, what do we do now? I know we’ve seen that with our clients, we’ve had people come to us and say, you know, can you look after my sister, she’s got divorced, she’s never managed the money, you know, her husband has always done it. So he was bringing money into the family home, as now like, what how did she survive on this, and over the years, I think we’ve seen well, more than one of those kinds of cases.

Emma Knights
Definitely, it’s scary, isn’t it that you can be so reliant and vulnerable, because you have always just trusted someone else to do it for you. It’s just a case of being accountable and taking responsibility of money and knowing what to do with it.

Julie Hunt
So it’s certainly empowering yourself really, as a female, to understand the finances. And also the other way around, I mean, let’s not just say it’s just females in those situations. It’s not as often we see it being the man who has no idea, and the woman runs the nest, but it does happen. We have seen cases like that as well.

Emma Knights
I’ll be honest, that’s my mum and dad, my dad just comes in and says, “have you got a card, I need to pay for this”. He doesn’t even keep a card in his wallet or anything. He literally has nothing. Or even if he goes online to buy something, it’s only recently that he’s learned how to use Pay Pal or putting card details in or anything. He’d always just hand over the laptop or the iPad to my mum and say, “can you pay for this for me?”, because she’s the one that has always looked after the accounts. He earns the money. And she basically manages it and looks after it for them.

Julie Hunt
Luckily, she’s not a big spender.

Emma Knights
That’s very true. I do try and make her spend it sometimes, but I can’t do it.

Julie Hunt
Otherwise, your dad would have to work twice as hard than what he actually is.

So I think one of the things we talked about before is that your money mindset is kind of set from the age of seven. So you’re very much influenced by the people you grew up around, so your parents and other people like that. So from the other side of the coin now, we’re a in relationship, you know, you’ve got people, and we’ve talked about different people in different mindsets here, spenders and savers.

What happens, if you manage to have that relationship and communicate and live together in harmony, then you decide to have children?

Emma Knights
Yeah, that can have a massive impact can’t it. I think you’ve got to then think about what you’re doing, and what you’re then going to pass on to your own children. Is that what you want them to believe? And how you would like them to manage their money moving forwards? Or do you need to do something to change your ways to make sure that you maybe have more of a positive impact on their life?

Julie Hunt
Yeah and I’ve certainly seen cases where people have changed their own money mindset, when they’ve had children, because they’re aware that they don’t want their children to have the lives that they’ve had.

They don’t want their children to be spending money all the time and living hand to mouth – where the money comes in, it goes straight back out the door again. There’s no savings, they haven’t ever bought a house, they basically struggle the whole time. And they have children and think, I don’t want my children to have that kind of mindset.

So sometimes the arrival of children can be a positive thing on your personal money mindset, even if they do cost a fortune. But it’s also a case of what you’re going to do when you’ve got different mindsets. I’ve got a friend and the mum is a spender, the dad is a saver. The child will go to one, he’ll say no, that will be the saver, and then the child will go to the spender, and they’ll say yes. So you’ve then got very conflicting messages when you’re bringing up children.

Emma Knights
The children, as they get older, I think they know that they can play you off against one another to almost get what they want.

Julie Hunt
Yeah, dad is going to say no, but Mum will definitely say yes. Then also that causes conflict in your relationship. So it’s like another money element to your relationship that you haven’t ever considered.

Emma Knights
There’s extra stress added to the relationship.

Julie Hunt
What if you want your child to go to private education or to pay for university, you want to have that money saved up for them, whereas the other person is burning through it at a fast rate of knots?

Emma Knights
Yeah, there’s got to be a balance there, hasn’t there? Between living for today and living for the future?

Julie Hunt
I completely agree with that, and I think that’s what we look at when we talk about planning for the future. Having a plan is great and saving all your money, but literally having no life while you’ve been saving for something, you know, you’ve still got to enjoy yourself as well. And it might take an extra year to get to a target or the goal you’re aiming for. But you know, it’s got to be a realistic target a realistic goal and a realistic plan.

Emma Knights
Most definitely. So not only are children a big stress on relationships and things, but debts can be a big thing as well.

So I’ve got an interesting story about somebody that I know here. They got married and so I’d known one of these people for quite a long time and he had been bankrupted in the past. He still wasn’t very good with money, even to the point that at one point he had asked me to look after a credit card for him, just so he didn’t spend money on it. He wanted to have it there for an emergency, supposedly, but didn’t want to have it too easy to access, because he knew that he wasn’t the greatest with money.

So he met someone else who was very good with money, she saved all the time and they got married. Happily ever after, you would think. Unfortunately, not, because it then turned out after they got married, that yes, he had given me some credit cards to look after, and had given her some credit cards to look after. But there were multiple other credit cards that he hadn’t given to anyone to look after.

And I think it’s very sad that some companies take advantage a little bit that if you use a credit card, they then increase your credit limit. And I think he saw that as a goal of ‘I need to spend more money’, and he racked up more and more debts, and she knew nothing about it. So unfortunately, that one did end up in a divorce. Because how can you carry on? You believe that when you get married, that you’re trusting each other, but that’s such a big secret that puts such a stress on that relationship. All because he didn’t have the control over his money.

Julie Hunt
That’s really sad. And there’s lots of stories. I mean, I know somebody who found out on her wedding night that her husband, who she had just married, had forged her signature on loans. They actually are still married, but I’m not sure if I would have been, I think an annulment might have happened there. So that must be real true love. They’re always in debt, never in a situation where they’ve ever got any money. But they live the high life, you know, nice car, nice jewellery, nice holidays. But always, always in debt, no plan for the future.

Emma Knights
I think as well, debt, the way we’re talking about, it always end, well, not your story, but usually it ends in divorce and things like that. But I don’t think it has to, I think people can change their ways. But it’s just a case of understanding why you do that, and the reasons behind it, your own relationship with money can be changed to help your relationship with another person.

Julie Hunt
I think probably the most important key out of all of this is to communicate with your partner and keep your money separate. Because you know, you can also have a joint account, where you put your money for your bills, if you’ve got a big financial commitment together. But actually keeping the money separate, if you’ve got a spender and a saver together, you’re never going to feel like Emma felt, like ‘I can’t spend it as fast as that person could spend it’, because then it’s a bit of a vicious circle, because it’s your money too.

Emma Knights
Yes, you begin to realise that everything that you’re working so hard for isn’t materialising into anything that you personally want.

Julie Hunt
It’s all being spent on being drunk down the pub or spent on new toys, and you’re just not getting anything yourself. So therefore, you find yourself turning in towards that kind of area.

But there is positive stories out there for savers and spenders living together in harmony. It is all about communication, and it is all about keeping your money separate and just working on your relationship. Like with all things in relationships, money’s just another area that you need to work together and basically talk through and make sure you’re both in agreement. Now I think that is all for this week, Emma.

Emma Knights
I think it is, we went a bit deep on relationships there.

Julie Hunt
I know. I know. Definitely. Hopefully, you all enjoyed listening. We’ll see you soon.