"Honey, let's talk about money"

by Grant E. Donnelly, Ximena Garcia-Rada, Hristina Nikolova, Michael I. Norton & Jenny G. Olson
Posted on June 03, 2020

Why you should have financial conversations with your partner during a pandemic

With the pandemic plunging millions of us into financial distress, partners around the world are forced to talk about money. More often than not, these conversations lead to more tension in the household, more discomfort and more anger. Our research confirms that talking about money is one of the most dreaded conversations amongst romantic couples. Financial conversations during a pandemic address many unpleasant topics. How should the couple allocate the money from the government stimulus check they received? What should they do if they miss out on family income because of COVID-19? What expenses should they cut if one or both partners lose their job?

While money conversations might be dreaded, the good news is that discussing money with your partner will probably boost not only your financial situation, but also the bond with your partner - if you approach the conversation in the right way. In our research, we find that money is difficult to discuss because it's everywhere. Day after day, we use money to buy things and services, whilst dedicating a lot of our time to acquire it. We squirrel it away for a rainy day, because money is a source of security when we have it, and a source of stress when we don’t.

Money, a hot-button issue

For our TFI project, in an initial study we conducted in February 2020, we asked people to compare money talk to four other conversation topics: quality time spent together, household chores, sex, and in-laws. Conversations about money were reported to be the greatest source of disagreement, and also the most serious topic to be discussed with one’s romantic partner.

The reason why money is so challenging to talk about is that it has the tendency to highlight unfortunate financial circumstances and less-than-ideal habits, with possibly long-term consequences. Decisions we make with money in mind often call attention to the fact that partners don't share the same immediate goals or longer-term perspectives and values, leading to more stress. Nevertheless, talking about money is nearly impossible to avoid. In our research, we find that in a typical week, couples have 4 conversations about money on average.

Not surprisingly, given the high potential for conflict, 6 out of 10 participants indicated that financial conversations with their romantic partner was difficult and challenging. However, our research shows that avoidance doesn’t particularly help your finances or your relationship: 2 of our studies show that couples who talk more frequently about their finances feel more satisfied with their relationship, and feel more relaxed about the way they manage their finances.

“Only 3 out of 10 people schedule a time to talk about money with their partner”

How to have a fully informed, mutually beneficial discussion about money

The current financial circumstances brought on by the global pandemic seem to compound these effects even further: as people’s underlying financial situation worsens, they feel less secure and more anxious and defensive. This is the ideal time to have regular, supportive conversations about money. So how can you and your partner benefit from healthier financial communication?

Planning seems to make all the difference: it's crucial to set aside a regular time slot to discuss financial matters together. This sounds simple enough, but in our studies, we find that only 3 out of 10 people schedule a time to talk about money with their partner. Couples might feel that scheduling a time or a day to discuss money might draw unnecessary attention to a sensitive topic, but it can actually help both partners prepare and anticipate the upcoming discussion.

For example, couples who reported scheduling a weekly ‘financial check-in’ compared to those who did not schedule such conversations reported greater satisfaction when talking about money. Increasing the quality of a financial conversation can make both partners feel heard, respected and on top of things. People who reported scheduling a weekly (or monthly) financial conversation with their partner reported that the conversation was more pleasant, understanding and constructive.

Another benefit of you and your partner both setting aside a specific time to discuss money is that the way you communicate about money will start to change. Instead of discussing the behaviour or decision of one particular partner, which is typically less collaborative (like how a certain someone decided to spend $200 on a pair of shoes, when the electricity bill wasn't paid yet), you'll focus more on joint decisions, which are typically more collaborative (like discussing how you could both work together to make ends meet in times of crisis).

As a consequence, you might also experience an interesting side effect that often comes with better communication skills: discussions of money focused on joint financial decisions might help establish shared goals, eventually leading to healthier relationships. While these initial results are promising, we are currently evaluating how financial goals are developed through conversation, and whether face-to-face conversations are more meaningful than conversations through text messaging or email.

Grant E. Donnelly is Assistant Professor of Marketing at The Ohio State University

Ximena Garcia-Rada is a PhD candidate of Marketing at Harvard Business School

Hristina Nikolova is Assistant Professor of Marketing at Boston College, Carroll School of Management

Michael I. Norton is Harold M. Brierley Professor of Business Administration at Harvard Business School

Jenny G. Olson is Assistant Professor of Marketing at Indiana University’s Kelley School of Business