Diana Clement: Financial incompatibility can end a relationship

Men and women seem to approach saving differently - and it can cause marital strife. Photo / 123RF

We all know men are from Mars and women are from Venus. And men can be feckless grasshoppers with their money - or so the stereotype goes.

The problem for many couples is money compatibility isn't always top of mind when Cupid's arrow strikes. Yet the hassles associated with financial incompatibility can end a relationship.

One may be a spender and the other a saver. Or one a saver and the other a gambler. Sometimes this doesn't become entirely clear until there are shared finances.

Together, managed well, the differences can be a benefit. It's a bit like building a team in an organisation. You need diversity. And it's one of the reasons why having a gender mix on corporate boards should be a good thing, says associate professor David Tripe of Massey University.

It's not as straightforward as men are one thing and women another. When it comes to personal finances there are all sorts of potential areas of difference.

It might be financial literacy, budgeting, attitudes to risk, credit scores, unequal pay, and so on.

What's more, society changes over time so there might be different balances between millennials and Gen Y-ers to their parents and grandparents.

On a very basic level, couples can argue about spending. What he sees as a "need" can seem like a frivolous waste of money to her and vice versa.

That applies to same-sex couples as well, of course.

One easy way around this on a day-to-day basis is to have a small amount of his'n'hers guilt-free spending money built into the budget.

One partner often leaves all the financial matters to the other. Should one die or begin misappropriating money it can be a real problem.

In the case of death, many partners are left not knowing where to start to run their finances.

When it comes to investing we can have very different risk tolerances. Knowledge is power and I suggest couples who feel they don't understand their partner's attitude to money should take a scientifically based risk-tolerance test, such as the ones at SavvyKiwi.co.nz or Myrisktolerance.com.

Another common assumption is that only a partner who is working needs life/income protection/trauma insurance to cover them if they die or can't work due to illness or disability.

A survey by AMP found only 13 per cent of men said they believe they can rely on their partners in the case of a sudden loss of income, compared to 37 per cent of women asked the same question.

Couples who feel they don't understand their partner's attitude to money should take a scientifically based risk-tolerance test.

The reality is if a non-working partner dies or is incapacitated due to illness their other half often can't work for a period of time or needs more money to pay for care. That could be for their partner or for children.

A survey by Perpetual Guardian found an imbalance between men and women in areas such as wills and powers of attorney.

It found:

• Women (72 per cent) are more likely than men (60 per cent) to think an Enduring Power of Attorney is important.

• Of Kiwis who have a will the female/male breakdown is 55 per cent to 45 per cent.

When it comes to paying back student loans the big problem is the gender imbalance in salary.

Ministry of Education research about student loan repayment noted women earn 7 per cent less than men after leaving university. This means women paying the minimum take longer to repay the debt.

Women, it would appear, are 8 per cent more likely to have multiple defaults on their credit history, according to Dun & Bradstreet.

That can be a real problem if you need to borrow to buy a house or a business, which is often called "good" debt. "Good", because if done wisely it will lead to an overall improvement in your financial situation.

As for retirement, women tend to be worse off. ANZ research for its Wise Women campaign found that on average, women are more likely to take more time out of the workforce, earn less than men, retire two years earlier and live longer.

Our societal stereotype is that men manage the money in a relationship.

Once upon a time they would come home on Friday with the pay in cash and give a chunk of it to their wives for groceries.

But in the modern world this isn't always the case.

What this all means is we shouldn't squabble about whether Venus or Mars are better at managing their money.

Instead, work together as a team for a better outcome.