According to an article I recently read on Yahoo!, 4 out of 5 divorcees have attributed finances as one of the reasons for the break-up. To be honest, I had to re-read this stat to fully understand. I mean, I knew that finances were one of the leading causes of divorce, but 80%? That’s definitely larger than I would have expected.
This article caused me to think about the different financial relationships out there. Why is it that so many couples can’t agree on the finances? You may have heard of the different personality types: sanguine, choleric, melancholy, and phlegmatic (these 4 are also described as influential, dominant, conscientious, and steady, respectively). Well, in conjunction with the personalities, I think each of us also hold a financial characteristic – we are either a spender or a saver.
What is your tendency? If you enjoy keeping cash in your wallet, enjoy free activities, or are just content to stay at home rather than venture out because the outing may be expensive, then you are obviously a saver. On the other hand, you might be the type that steps into a mall and struggles to walk out empty handed – everything just seems to scream “Buy Me!!” You might also often hear the phrase, “When are we ever going to use that?” from your significant other. And, if you need to have a garage sale every year just so that you can see the carpet again, I would classify you as a spender. I have obviously taken each of these to the extremes, but I’m sure that you have a tendency toward either spending or saving.
Now, since there are two people in every relationship, we could have three possible combinations: Saver and Saver, Spender and Spender, or Saver and Spender.
Saver and Saver
I personally think this is the most healthy combination. Each person in the relationship enjoys saving money for a rainy day; this naturally allows them to secure their future and be ready for anything that may happen. However, there could be a certain unhealthiness to this combination as well. Taken to the extreme, this couple may never go out to eat or enjoy the theatre; they might hardly ever go out at all. If this is you, learn to enjoy a little spending – it’s how great memories are made.
Spender and Spender
Watch out for this combination! This couple will most likely have the expensive cars, the ginormous house, and are more likely to offer big gifts to everyone they meet. From the outside, many people would think that they are millionaires, but in actuality, they have mountains of debt that continue to grow every day. If your life resembles the “Spender and Spender” example, you will definitely benefit from a budget. While you may have no trouble writing up a budget, sticking to it will be another story. Have your bank set up an automated savings transfer at the beginning of every month so you are not tempted to spend it. Also, I would suggest teaming up with some friends that could hold you accountable. Budgeting isn’t much fun, but when you do it with friends, you will be more conscious of your spending, and you’ll have fun discussing your successes and failures along the way.
Saver and Spender
While the “Spender and Spender” is a dangerous combination because it leads to massive debts, I suspect that the “Saver and Spender” would have the most arguments. These individuals each have their own ideas about money, which happen to be polar opposites, and then they attempt to share money. One of them obviously has no problem spending money on the “fun stuff”, while the other one tries desperately to control the savings account to make sure there’s something left for food.
I believe that the majority of couples find themselves in this category. I know my wife and I can relate. I’ve been pinching pennies since I was born (seriously, some lady gave me a $25 savings account when I was born because we shared birthdays, and I’ve been watching it grow ever since), and I feel that Dar more enjoys spending than saving (perhaps I only perceive this because I am an extreme saver). Don’t get me wrong, I married Dar because she was fun and I was not (a classic case of opposites attract), but having fun often results in spending money.
The most important tool in this situation is the budget. One person can propose the budget, but both of you must agree on it. There may be some tweaking before an agreement is made, but once it gets the seal of approval, that budget becomes the decision maker. This is the beauty of the budget; if Dar asks if she can buy something, I no longer have to be the bad guy and say “no”. I merely pull out the budget (that we’ve both agreed on) and consult it. If the purchase does not conform to the budget, then we can’t do it. If it does, then sure, let’s spend some cash.
Are you a spender or a saver? Why do you think so?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.