Liz Koh: Create guidelines for healthy spending

By Liz Koh

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Everybody's relationship with money is different.
Everybody's relationship with money is different.

One of the most important relationships you will have in your life is your relationship with money. Everybody's relationship with money is different. It can be influenced by things you learned about money when you were a child, your family circumstances when you were growing up, good and bad experiences with money, your values, how conservative you are, and many other factors. Your relationship with money is defined as your money personality and this will determine how easy it is for you to save and how willing you are to take financial risks.

The problem is, when two people get together, they are likely to have different money personalities and therefore different attitudes towards spending, saving and taking financial risks. It is not uncommon for one partner to carefully budget and set up good systems for managing money, only to have the other partner raid the bank accounts for non-essential spending. From the spender's point of view, the careful budgeter is being mean with their money and not allowing the spender to enjoy life. Failure to compromise is likely to cause ongoing disharmony in the relationship.

If you are a careful budgeter in this situation, it is important to recognise that it is not wrong to spend rather than save provided you understand and accept the consequences of your actions. Make sure the spender fully understands they are sacrificing medium- and long-term goals. Get agreement with your partner on long-term goals and how much money you will need to achieve them. Next, agree on some guidelines for spending and saving that will help with managing your money in the short term. If your partner is not willing to participate in or commit to this process, there is likely to be ongoing conflict in your relationship over money matters.

Liz Koh is an authorised financial adviser. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free of charge by calling 0800 273 847.

For free ebooks, see www.moneymax.co.nz and www.moneymaxcoach.com.

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