Financial Incompability

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James and Sarah has been married for about five years now. Before they met, James worked in a bank and earned about N4 million per annum while the wife earned about N3 million naira per annum. James offered the wife, Sarah, a monthly housekeeping allowance of N200,000 per month (i.e. N2.4 million per annum) to buy groceries and take care of small household expenses while he took charge of other basic household expenses such as rent, utilities, fuelling/maintenance of both the cars and generator, and other regular expenses such as telephone, internet, cable TV bills etc.

Over the last one year, the couples have been going through a rough patch because Sarah feels that the husband James is not been fair in his financial dealings. According to her, as a well informed and educated lady earning her own income/salary, the money was rightfully hers and should be spent at her discretion.

James on his part believes that since the wife works and earns a decent salary (compared to his), that she should be able to contribute, at least 20% to the household expenses, even though she earns about 43% of the total household income.

Their first child will be starting school next month and James has requested that both of them should contribute towards the child’s school fees. This the wife has kicked against and threatened that she will rather get a divorce than contribute to the children’s school fees. She thinks that once she starts contributing towards the first child’s school fees that it will be an endless cycle as it will continue in that same fashion for all the children. They currently have three children together.

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Financial incompatibility is not just about how much a couple earns, it is about money habits. Incidentally, most of these habits are noticed quite early, often before the marriage but because we always assume that we are marrying for love, and not for money, we often ignore the incompatibility signs.

While dating, we usually observe signs such as:

  • Impulsive purchases of things; relevant or irrelevant;
  • Showing off by refusing to spend money on even the most basic goods, and leaving restaurant tables with over 20 percent tip for the server.
  • Bragging about investments and how they will hit it big next week based on an unrealistic and get-rich-quick investment investments;
  • Being uninformed about anything finance and money management.

Finding a compatible spouse is paramount to achieving financial independence and freedom as a couple. One of the available options in checkmating financial incompatibility is to plan ahead by creating a budget of your potential expenses/ outflows and agreeing on how to fund it; using each individual’s bank account or a joint bank account.

Whichever, method you may chose, it is good that you agree if operating an individual or joint account is suitable for you or not. The key objective is that the couples should strive for the same goal which is creating a stronger marriage while maintaining financial responsibility. There are many arguments for and against operating joint accounts. While some agree that it creates a sense of unity that is vital to their relationship, others believe that it separate accounts allow each the ability to retain their independence, thereby strengthening the relationship. The choice is entirely yours.

Whether joint or separate accounts, both parties should be accountable for the money and no party should go begging from the other. Possibly keep track of your finances.

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A quick guide will be:

  • If you and your partner have similar views on money, investing, and saving, then it will be good to open joint accounts.
  • If one or both of you is a shopaholic, a joint account with the mandate “both parties to sign” or “co-sign option” activated;
  • If you have different finance, investment or money strategies, avoid the joint account options. After all, why create a potential source of conflict?
  • No matter each party’s position, keep a debit or ATM card accessible between the two of you in case of emergencies.

Can Financial Incompatibility Create Problems

Financial incompatibility can create lots of problems if not addressed. The fact is that in almost all the cases, the problem is not usually about how much the couple earns but on the couple’s priorities and spending habits.

If you are in a relationship and spot a red flag, it is better to face the warning sign at the beginning of a relationship, before it becomes a bigger issue in your life, address it and agree on the way forward. Most researches have pointed to the fact that finances are the leading cause of stress in long-term relationships, with 35 percent of respondents saying that money is a major source of conflict within their relationship. The issue appears to become worse as couples get older, with 44 percent of respondents between the ages of 44 to 54 stating that money is the single biggest cause of conflict within their relationship.

Although the survey did not identify the reason why financial conflict is higher within that age bracket, it is understandable that couples over 40 years tend to have more financial obligations such as mortgages, children upkeep, saving for school fees, aging/ sick parents, planning for retirement, personal health bills etc. Often, the couples income do not rise in tandem with the increasing expenses thus exposing, most likely, previously existing challenges.

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Another challenge with financial incompatibility is the risk of divorce. In another study, it was observed that money-related conflict was one of the top three causes of divorce, along with infidelity and basic incompatibility (which incidentally is related to money habits).

Deal or No Deal

Can financial incompatibility be a deal breaker in a relationship?

The answer is a Yes and a No, depending on who is involved and the person’s view on life.

It is always good for each person to develop his/her personal “deal-breaker” parameters in any relationship.

A healthy relationship requires that both parties share the same values, vision, and habits about wealth creation, finance, spending, saving and investments. While it may be difficult to get someone who fits exactly into each other’s ideas on money matters, the most important thing is that the couple’s general vision on money matters is within range of one another. You do not need to be identical financial twins to succeed; as long as the two of you are not too far apart on the money matters, there is a strong chance that you are in for the better.