6 Steps to Navigating a Financially Incompatible Relationship

Money and spending discrepancies don't have to be a deal breaker.

Broaching the topic of finances with another person has become taboo—even with those whom we’re closest to. Many of us, understandably, are pretty hesitant to bring up bills and income with our parents and siblings, and talking salary or debt with our closest friends is a social faux pas, too.

And that hesitation rolls over into our romantic relationships as well, with many people avoiding bringing up finances with their significant others. Despite sharing a living space, spending countless hours together, splurging on vacations and splitting the phone bill with your other half, money issues are some of the biggest obstacles a couple may face—and one of the leading causes of stress in a romantic relationship. In fact, a survey by SunTrust Bank found that 35 percent of people polled considered financial stress the primary cause of friction in their relationship.

But it is possible to have a healthy, fulfilling relationship with a significant other who isn’t financially compatible, if you navigate the issues in a productive way. That means talking more about your finances and working toward compromise when it comes to major differences. Here are the issues that tend to cause the most friction—and how to navigate them effectively.

Salary Discrepancies

 So you make more than your partner or vice versa. A slight discrepancy often isn’t an issue, but bigger wage gaps can be tricky to navigate.

“A major salary discrepancy can be, or become, a big deal if the salary is associated with power in the relationship, or if the salary differential is utilized as a threatening tool or perceived as a threatening tool,” said Marty Martin, a psychologist specializing in behavioral finance and a financial coach at Chicago’s The Planning Center, Inc.

He noted that it can also be uncomfortable, unfortunately, if the female in a male/female relationship makes more money than the male. The pressure may not come from the man himself, but perhaps from his family and friends, he explained. In this case, it’s important to talk about those outside influences, both together and with those peering into your relationship, in order to clear the air.

The good news is that even if you have a major discrepancy in your relationship, you don’t have to let it become an issue. The key is to not connect money with power.

“If the salary differential is connected to power as it relates to making decisions, accessing resources, and symbolizing influence in the relationship, then this can be a barrier to happiness,” Dr. Martin explained.

This is true no matter the discrepancy; even if one person is working and the other doesn’t contribute financially. To help with this, discuss what feels fair in terms of contributions to the relationship and your joint livelihood.

“For example, if the husband works and the woman stays home full time, it’s important for the couple to communicate expectations the husband may have for his wife staying home with her work responsibilities around the house,” explained Wyatt Fisher, a clinical psychologist who specializes in marriage counseling. “The reverse can be true, as well. If the woman is making all the money, the couple would need to communicate expectations on the husband. The key is for both spouses to feel like their set up is fair and both are equally contributing to the overall functioning of their life together.”

Spending Habits

Your partner likes to splurge on travel while you prefer watching your savings grow. One of you may be on a first name basis with the mall associates while the other is tight with the investment banker. Spending habits can cause frustration in a relationship, especially if one person feels like the other is getting carried away. So how do you put an end to the weekly arguments or secret spending excursions?

“I recommend that couples set a spend threshold,” suggested Lana Axelrod,  MBA, founder of SageCouple, a company that helps young couples communicate about money and plan for their future. “This is literally the dollar amount at which you want your partner to stop and check in with you before buying something.”

Axelrod said that the trouble starts when you have different views on what a significant purchase is, but you don’t realize this or communicate about it.

“One of you doesn’t think twice about spending $100 without consulting your partner, while the other thinks that anything over $50 should be discussed. You argue because you haven’t figured out the simple fact that you have a fundamental misalignment in your views,” she explained.

The solution is to decide on what the spend threshold should be and, if they’re different, meet in the middle or respect your partner’s number. Always be forthright about your spending, as well, as financial infidelity can lead to distrust and cause major rifts in your relationship.

Saving Habits

Saving habits, naturally, go hand-in-hand with spending habits. It’s important to first communicate, and then act. Martin suggested facing this issue head-on and walking through each others’ “money history.” That includes current savings accounts, retirement funds, spending habits and debt.

“This is often revealing and provides a context for why the other partner saves or does not save,” explained Martin. “Second, the couple should sit down and agree upon common short- and long-term life goals and the resulting financial aspects related to these goals.”

Most importantly, though, both people need to feel like they are fully in control of their own finances, and should not threaten the financial freedom of their partner. This is easier said than done, of course, and takes incredible thought and patience, especially when habits are drastically different. Ultimately, what you need to work toward are those common goals you set.

Talking Debt

Come on, crawl out of that hiding spot … even if it’s the last thing you want to do, you need to talk about debt. With student loans at an all time high, and with all that pressure to keep up with the Kardashians, many of us walk around owing something to someone. Talking about your debt means you can work towards alleviating it together.

“All forms of debt impact the relationship, and especially if the debt was accrued before the couple was together,” acknowledged Dr. Fisher. “The couple must communicate about this debt, their feelings about it, and develop strategies on how to tackle it.”

If you’re the one bringing outstanding debt to your relationship, you should talk about the ways in which you’ll take on extra responsibility to pay off the debt pre-marriage, said Fisher. Relying on your partner to help you, even if that partner insists on helping, can create tension and place a non-earned burden on your significant other.

This is true no matter what kind of debt you’re talking about—student loans, car loans, and credit cards included. With that said, it’s important to note that not all debt is created equal. For example, student loans are often considered an investment in the future, and can lead to higher income and a more comfortable life. Major credit card debt, though, isn’t the same and can be a red flag about the way you, or your partner, manages money.

“If your partner has significant debt, ask what caused them to go into debt and what they are doing to pay it off,” urged Axelrod. “Remember that they may feel ashamed or embarrassed about it, so stay open-minded and supportive.”

Axelrod said that when dealing with debt, the most important thing you can do is create a plan of action and pay it off. This will empower you as individuals and as a couple, and give you common goals to work toward.

“Start by making a list of your debts, the total amount still owed, the interest rate and monthly payment. Next, agree on the debt you will tackle together versus individually,” she said. “I recommend the credit card debt stays with the individual. Then, prioritize the debt with the highest interest rate first and start paying it off as quickly as possible, while still paying the minimum balance on the other loans.”

Splitting Bills

“Moving in” has begun to creep into the dinner conversation, or you’ve already taken the plunge, and you’re ready to divvy up the bills. How you do that, though, requires more discussion than you may think.

“Splitting bills should be not be based upon the principle of equality because there are differences in wealth, income, and spending,” noted Martin. “However, splitting bills should be based upon the principle of equity, or perceived fairness, by both parties.”

In other words, you want to walk away from your discussion, and the end of every month, feeling that things are equal and fair. That depends entirely on your individual salaries, debts, and personal preferences.

How exactly do you do this? Follow these guidelines:

  • “If a couple has similar incomes and spending habits, they should go 50/50 on joint expenses, such as rent, utilities and groceries,” said Axelrod. “It’s fair and easy to track.”
  • “If one person makes more, then it’s most fair to split your shared expenses proportionately to your incomes,” said Axelrod. “So if you make 70 percent of the household income, you should pay 70 percent of joint expenses.”
  • Take into account each other’s preferences for spending. Maybe one partner insists on a cushy loft while the other is perfectly happy in a modest one-bedroom. Or maybe one person loves going to fancy restaurants while the other prefers to cook at home. Whoever has the more expensive taste should be OK picking up the higher share since that person is driving up the cost of your joint lifestyle, said Axelrod.