Financial planners and psychologist have attempted to determine the role that emotions play in our ability to manage money. While some seem to think we have little or no control over our emotions and therefore have little or no control over our money, others will take the opposite extreme to insist that we can exert total control over our choices by using a rational thought process. The truth is probably somewhere in the middle.

Humans tend to be rational creatures and attempt to make good choices. However, there are times our emotions skew our ability to accurately and appropriately determine what choices are available, and there are other times we don’t have sufficient information to make the best choice.  Regardless of the situation, allowing our emotions to control our thinking will generally reduce the potential for making good decisions.  

When applied to our personal finances, we’re learning that emotional choices relate more to what the money represents rather the money itself, which means it’s really more about meeting an emotional need than the actual good or service purchased.  Emotional spending tends to be an expensive, short-term solution with long-term consequences. 

Perceptions Versus Reality

Our perceptions about money tend to be closely related to the messages we received from our parents about the role of money in their lives. If they openly fought over money, we may have learned that managing money was a point of contention or confrontation rather than a cooperative effort in a marriage. If they never discussed money openly, we may have learned that money issues should be kept secret and never talked about in our own family. And if they talked openly about their personal finances, we would tend to have that same expectation of our spouse. That makes it easier to explain how two people in exactly the same financial situation will respond differently.

Having an open, honest discussion with a spouse or future partner about money certainly is not the most romantic topic; however, it may be the key to maintaining a healthy relationship and one of the pillars for building a good marriage.  Differences in people’s perception and use of money is often cited as the number one reason for divorce. In other words, it’s not the lack of money but our emotional ties to money that create the problem.  

Money Talks

Understanding that we all perceive money a little differently can help facilitate a healthier discussion about financial matters with our spouse or significant other.  Following are a few tips to help you get started and hopefully find common ground.

Set a specific time to talk. Selecting a time that is good for both of you and even working together to prepare an agenda will help set the mood.  It will also help avoid the potential of blindsiding your partner with a discussion about money, especially if the two of you have different ideas about managing your finances.

Begin by talking about goals. The idea is to talk about positive outcomes rather than focusing only on the negative. You may have individual goals as well as family goals, so write them down and help each find a way to meet them. Be willing to listen to one another’s ideas, and resist saying “no” while listing your goals.

Show your love and respect. We all make mistakes; blaming your partner will only create more dissention and problems. Being aware of your own flaws allows you to be more understanding and caring. You will accomplish much more having a calm, relaxed discussion instead of trying to be right.

Be honest. A recent national survey found that 36 percent of men and 40 percent of women in a married or cohabiting relationships admitted they lied to their spouse about how much they paid for an item. Even the simplest little white lie can create mistrust and can quickly get out of control. Being honest also means being honest with yourself. If you have a spending problem, recognize it and work together to find solutions.

Recognize differences. Men and women often approach problems differently; the same is true for money. Women tend to see money as a security issue while men tend to have a higher risk tolerance. If you reach a point where you cannot agree on a financial matter, it might be best to seek the advice of an impartial third party such as a financial planner or counselor.

Discuss the tough topics. No one really enjoys talking about life insurance, wills or end of life issues. However, having a plan in place will be a great comfort when the time comes. Pre-planning will also reduce the potential for costly emotional decisions.

Agree to talk regularly. Sitting down together to monitor your financial situation will help keep you focused on meeting your goals. Schedule a time to meet monthly or quarterly to reassess any changes or celebrate any successes.

Sue Lynn Sasser, PhD, is a Professor of Economics at the University of Central Oklahoma.