Author Katrina Shanks, CEO Financial Advice NZ. Article originally published in

OPINION: With inflation showing only a faint hint of easing and interest rates flatlining at best, there is little sign households will see any cost-of-living relief anytime soon.

And that’s putting a lot of pressure on bank balances and also on relationships – be it between partners, family, or even close friends.

There’s quite a bit of evidence to show this is a very real thing.

The latest reliable information I can find comes from a survey of more than 3000 New Zealanders, undertaken by the Commission for Financial Capability in 2020.

This found one in five people had relationship problems with partners, family, or close friends due to financial concerns.

The survey showed the 18-34 age group reported the highest degree of relationship strain due to money – a whopping 24 per cent reported this.

Interestingly, though those with little or no income (under $10,000 per year) were most likely to experience financially driven relationship problems (28 per cent), high income earners were certainly not immune.

The survey showed 21 per cent of those earning between $150,000 and $200,000 reported relationship stress due to money.

Thankfully, the issue decreased with age, with 21 per cent of those aged 35-54 experiencing problems, 14 per cent of those aged 55-65, and just 7 per cent of those 65 and over saying they still had arguments over finances.

Perhaps that’s down to us getting wiser as we get older (we’d probably like to think so!) and treating money with more respect. Or we learn from bad experiences and mistakes. Or perhaps we are more likely to listen to advice, be it from friends or professionals.

Whatever the reason, it’s good to see we can change and that there’s room for hope.

And though this survey is three years old, there’s no reason to think those trends have changed.

In fact, with the cost-of-living crisis following hard on the heels of the pandemic, they most likely haven’t.

It’s not just in New Zealand where this is an issue.

For example, a study by UK financial advisers Truist found finances are the number one cause of stress in a marriage, while in the United States, the Institute for Divorce Financial Analysis says money issues are the third leading cause (22 per cent) of all divorces there.

When our Commission for Financial Capability released their survey, they said there was a recognised link between financial stress and mental health issues, and effects that are exacerbated when money problems impact on our closest relationships.

“Good relationships with partners, family and friends support good mental health and resilience, but as opposites often attract in relationships, partners will have different attitudes and habits when it comes to money,” they said. “No two people will ever have the same experiences or earn the same amount; this can put strain on any relationship.”

So, what can couples do before financial tensions lead to relationship tensions – or worse?

Here are some ideas:

Actions you can take

  • Find common ground and define shared goals. Identify short-term and long-term goals together. These can include buying a house, saving for a trip, or planning for retirement. Having shared goals helps align your financial strategies and motivates you to work together.
  • Create a joint budget. This is crucial for managing expenses and ensuring both are on the same page. Allocate pots of money for essentials, discretionary spending, savings, and debt repayment. And make sure you update it regularly.
  • Set spending limits. Agree on spending limits for discretionary purchases. This helps prevent overspending and allows each partner to enjoy some financial independence without straining the overall budget.
  • Merge your accounts – or not. Decide whether to merge finances completely, partially, or maintain separate accounts. There are pro’s and con’s with each option so see if you can agree on which option fits your goals and give it a try. Many couples find it beneficial to maintain a joint account for shared expenses while also having individual accounts. This approach allows for autonomy while ensuring that bills and joint goals are covered.

Ways to get there

  • Be open and honest and avoid the blame game. The foundation of any successful financial partnership is communication. Both partners should be open about their financial situations, including debt, income, and financial goals. Regular check-ins will offer opportunities to discuss concerns and re-adjust goals.
  • Divide financial responsibilities. One of you could track expenses, the other could manage investments. Defining roles prevents misunderstandings and establishes responsibilities. Such a joint operation gives you both buy-in to the plan.
  • Review regularly. Regularly review your financial arrangement to ensure it still meets your needs and goals. As life circumstances change, you may need to adjust your approach to keep everything balanced.

Solving issues

  • Choose the right time. Find a quiet time by yourselves in a comfortable space where you can focus without distractions.
  • Be open-minded. Listen to your partner’s ideas and concerns without interrupting. This can help you identify the underlying concerns and find common ground.
  • Compromise and find middle ground. This is vital if you are to solve the problem. Try hard to seek solutions that contain elements from both perspectives.
  • Seek professional help. It might be helpful to get guidance or advice from a financial adviser or a counsellor. A neutral third party can often see insights and strategies that you are too close to see.

Managing finances as a couple requires effort, patience, and a willingness to collaborate.  You both need buy-in and, if possible, the same goal – be it a house, a trip or children.

Open communication, shared goals, and implementing strategic approaches to disagreements and financial merging will go a long way to helping you have a successful financial future.

Most importantly, be honest and transparent. That will make it easier to achieve your goals.

In my family, my husband and I have joint accounts for shared costs and have individual accounts for our discretionary spending. This works best for us as we have more accountability to ourselves for discretionary spending.

As my financial adviser would say, use the system that works best for you to ensure you can meet your long-term financial goals. Then he would add, “Katrina, a new dress does not require new shoes!”

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