3 ways to deal with money in relationships
Scenario 1: Aarthi is wondering –
“Oh, I could really use that money now to pay off these huge medical bills. But how do I ask Priya to pay me back the money I loaned her when I know she still has financial troubles? Wish there was some way I could talk to her about this without hurting her.”
Scenario 2: Preethi is angry at her husband-
“Not again. Akash has swiped his card for buying the expensive gadget, especially in the month end, without telling me. To top it, he hasn’t been keeping track of expenses or paying his credit card bills on time. Not done. I cannot be quiet about this anymore. But…”
Been there, felt that? Not once, perhaps many times. You are not alone.
Handling money with others
We all face money dilemmas on a daily basis, which make us cringe and want to run away from such situations. Sometimes, money matters can bring out either the best in us or make us the monsters we dread. If the issue is small, we try to brush it under the carpet and if not, it blows up. Either way, the damage is inevitable. Why?
Simply because of the underlying emotional attachment we have with money and how the emotion impacts the way we approach money matters. Our attitude towards money can come into play, albeit subconsciously when we transact with people close to us. Before we look at how best to deal with money in relationships, it would help to get clarity on our own attitude that could potentially impact the way we handle such transactions.
The truth about money
How often has the thought crossed your mind, ‘If only I had more money, all my problems would have been solved.’ Is that the truth? If you don’t know how to deal with it, no amount of money is ever enough.
Also, money comes with the baggage of trust. More so in close relationships. A recent survey conducted showed that only 30% of Indians trust their partners regarding money issues. Whether among friends, family or between couples, money can change equations in relationships overnight, sometimes irreparably.
Being money mindful
Does that make money matters and relationships incompatible? Not necessarily. By being mindful about a few aspects, dealing with money can be easier. Here are the three ways, to get you started.
- Know your money values
Understanding your attitude towards money, in other words knowing your money values is like laying the premise. Think about your risk appetite (the level of risk you are willing to accept given your income and responsibilities), your willingness to save and your day to day spending habits. All of them determine how you approach money with others.
Recognising how money impacts your emotions will allow you to be in better control of situations. For example, offering a loan to a close friend (which can get messy and emotional) can be objectively based on your spending habits and risk appetite. If you have high expenditures and cannot take any chance to lose the money, you might want to think again.
And if you do lend money, perhaps only offer only what you can afford to lose and don’t stretch yourself. To deal with money in any relationship, the first ground rule is to establish your own money values. If these are clear, money matters will not be as awkward as you are made to feel.
- Know who you are dealing with
With friends and family, we lend, borrow and sometimes even invest together. One way to avoid regretting this is to know more about the person before transacting. Sure they may be family, but do you know their money behaviour? More importantly, will you be comfortable with the way they deal with the money in question?
For instance, if you send money to your brother to pay your parents’ medical bills, would it upset you if he spent a portion of it to buy himself a mobile phone? What would bother you more? The ‘misuse’ of money or that he spent the money without asking you?
In other instances, have you felt hostility in your close relationship when you have borrowed money and even returned it? Could it be because the money was returned later than the lender expected? For some people, not having the money returned by the time of need makes them feel like not having received the money at all. So how you handle financial transactions is at least as important as the transactions themselves.
While there are no guarantees how people may react, knowing the other person well enough gives you the information to determine your own course of financial action.
- Communicate honestly
So you know about your own attitude to money and the other person well enough – time to connect the dots. You cannot play safe always and there might be times when it gets difficult to balance both relationships and money. Being honest in all your relationships about money will remove the unnecessary rift that financial dealings usually trigger.
If you can’t pay back the money to family in time, make sure you are able to keep them informed. Tell an adult child straight forward why you can’t loan the money she asked for. If money is borrowed it would be a good idea for both parties to set a return date, especially with informal relations where a written agreement may not be in place. There might be momentary unpleasantness which is better than breaking the relationship or losing money.
Money and people, both are needed in life. Choosing one isn’t an option and balancing them both is not an easy task. Know how you feel about money, be honest, and explain your reasons for a particular financial choice to those close to you. Being straight forward is the one way you can secure your finances and maintain relationships as well.