Understanding behaviors

Picture the mind of a spendthrift: “Such behavior is generally impulsive, with little thought on long-term consequences. Awareness of that generally shifts the behavior,” said Jay Shah, founder and CEO of Finwisor. In contrast, a tightwad may feel they can’t afford a partner who splurges, leading to feelings of lack or anger. “Unreleased energy builds up like a pressure cooker, causing eventual outbursts and damaging the relationship,” Shah explained.

Arouba Kabir, emotional and mental health professional and founder of Enso Wellness, noted that finances are often a significant source of conflict for couples. “It’s often about unclear conversations and unspoken expectations rather than controlling behavior or contributing less. A lack of open communication about financial expectations can lead to disharmony, subtly manifesting in other areas of life through irritation, nagging, and emotional distance,” said Kabir.

Does keeping a tab on finances down to the middle help the relationship?

Shah emphasized that financial boundaries are good and bad in the short term. “It feels good for the person setting them but bad for the one asked to control their spending. However, it’s healthy in the long run,” he said.

Scott Rick’s book, Tightwads and Spendthrifts: Navigating the Money Minefield in Real Relationships (January 2024), explores this dynamic. Rick, an associate professor of marketing, argues that spouses who differ greatly on the tightwad-spendthrift spectrum argue more and are less satisfied. He suggests “financial translucency” instead of full transparency, allowing partners a general sense of spending without detailed scrutiny to maintain individuality.

Shah explained that setting financial boundaries may initially feel suffocating but becomes beneficial as well goals and investments grow. “The initial discomfort is outweighed by the accumulation of wealth and appreciation for contributions,” he said.

Kabir said that understanding and communicating the impact of a partner’s financial behavior is crucial. “Communicating how their behavior makes you feel is the next step. Their past experiences must be the reason for their behavior. Once both the partners feel comfortable with each other, and accept them for who they are, gradually, these habits can change,” she said.

Find out what can help your relationship (Source: Getty Images/Thinkstock)

What is financial harmony within relationships and how to create it?

Aarti Chawla, a Mumbai-based relationship psychotherapist and life coach, emphasized the importance of setting boundaries for financial transactions and individual expenses to promote financial harmony, that is, not having daily conflicts over who is spending more. Shah agreed, highlighting the need for open communication about money to prevent conflict. “Start these discussions with a positive mindset, aiming for a healthier relationship and future. Respect each other’s perspectives and work together to find solutions,” he advised.

Kabir is of the opinion that understanding one’s relationship with money is crucial for clarity financial conversations in a relationship. Reflecting on how you have perceived, received, and given money since a young age helps. These early experiences significantly shape your financial perspective and behaviors, which you inevitably bring into your relationship. “Addressing these personal financial issues is essential before resolving financial matters within your relationship,” she said.

Chawla listed the following measures:

1) Define goals – as a couple and as individuals.
2) Allocate funds for both.
3) Prioritize your goals.
4) Have a backup plan/emergency fund.
5) Evaluate periodically and re-allocate.

Setting financial boundaries helps manage spending, even if one partner is a spendthrift. “Even if they go over the top, they have a clear picture of how to manage,” said Chawla. Clear communication about short-term and long-term goals and allocated funds makes transactions predictable and avoids surprises.

Arouba stressed on discussing finances early in a relationship, ideally by the third or fourth week. “Share your financial situation, including debts and income, to build openness and trust. Hiding this information can lead to distrust,” she warns.

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“Couple expenses” include household items, groceries, and rent, while “individual expenses” cover personal preferences like spa appointments. “With communication, they can define what is ‘normal’ and what happens in case of ’emergency’ when the expenditure is going overboard. This way the partner has a free hand on the ‘individual budget’ that is allotted,” said Chawla.

Experts stressed that openness about finances reduces conflicts. Arouba noted that money is tied to security and stability from a young age. Without open conversations, we might not feel secure, leading to distrust and underperformance in the relationship. Aligning financial goals with your partner promotes financial security.

In a relationship, it’s healthy to recognize there is no absolute right or wrong—only different perspectives. “Maturity involves finding a harmonious path and sometimes making compromises,” said Shah.

Financial harmony isn’t just about managing money; it’s about aligning values, fostering trust, and working towards shared goals. “Open communication, understanding, and mutual respect create a solid foundation for a fulfilling and prosperous relationship,” said Chawla.

Let’s find out the middle path (Source: Freepik)

Shah shared a ready reckoner for talking and dividing finances in the relationship

Open Communication: Have open and honest communication about financial preferences.

Discuss Goals: Set shared goals such as child expenses, home buying, retirement, vacations, etc.

Investing: Start investing together for the goals.

Budget: Set a budget for expenses – have clarity on what expenses will be borne by whom.

Expense Management: Create a joint account for shared expenses.

Review: Have review sessions at a set frequency to ensure that the agreed-upon things are being implemented.

Expert Help: Take the help of experts to smoothen the process or when confused.