Judging by the number of articles written on the topic of money in relationships, it certainly qualifies as a hot-button issue.
Does money complicate relationships? In most cases, yes.
Could working towards a mutual financial goal strengthen relationships? I’d like to think so.
Although I’m not delusional: growing your wealth as a couple comes with its own set of unique challenges.
In my opinion, if a couple wants to combine their finances and build a better future together, several things need to happen first:
They need to be comfortable talking about money in a pleasant but matter-of-fact manner.
That means no raised voices, no judgments, and no veiled personal attacks. Equally importantly (I’ve observed this too many times), money issues shouldn’t be used as a proxy punching bag when one party wants to air grievances about something else that’s troubling them.
They need to be 100% transparent about their financial situations, including significant assets, debts and bankruptcy history.
Having debts (especially if they were taken on to buy assets or to further one’s education) shouldn’t be a deal breaker, but hiding debts could be. Always make sure that financial conversations start off on the right foot and in good faith, to avoid nasty surprises down the line.
They need to share similar spending habits and lifestyle expectations, or be willing to adapt.
Opposites attract. Spendthrifts might admire penny-pinchers’ discipline, while the penny-pinchers might find spendthrifts exciting to be around. We can’t always choose who we fall in love with, but I bet anything that couples could avoid many unnecessary fights by being on the same page about how each of them spends their money.
They need to share similar financial goals.
If a person wants to be a millionaire by the age of 38 but their partner wants to live a lavish lifestyle in their 30s and 40s (nothing wrong with that), bitter feelings of resentment could arise over these choices that are fundamentally at odds with each other.
Last but not least, they need to be equally willing and invested in achieving their financial goals.
It’s important to be in synch in terms of how each party contributes to ensure that their goals will be achieved within the set timeframe.
Challenges aside, there are major financial benefits to being part of a couple that merges finances, such as:
At the risk of stating the obvious, a lot of expenses that have to be taken on by a single person can be shared between a couple that lives together.
Among those are some of the big-ticket items like rent, mortgage, condo fees, property taxes, and utility bills.
Need a sofa for your living room? A single person has to buy one, a couple would also only buy one.
How about high-speed Internet? The same logic applies.
As a side benefit, tasks like grocery shopping, cooking, cleaning and home maintenance can be done more efficiently when 2 people are involved, saving each of them plenty of time to pursue other money-making activities (like doing overtime at work or driving for Uber).
Support and Motivation
Living frugally is tough. Have I been tempted to splurge a little from time to time? You bet.
But I didn’t, because my husband reined me in at the last minute and reminded me why we’re living below our means in the first place.
Without his support, I wouldn’t have made as much progress on the money front as I have, that’s for sure.
When couples combine their earning powers, they make more, save more, and build their nest egg faster.
A bigger nest egg + the power of compounding (exponential growth year over year) = awesome!
More Investment Opportunities
When you have more investable assets at your disposal (because of factors mentioned above), more investment vehicles are within your reach, including elusive ones like commercial real estate and private equity.
I mean, isn’t that the primary reason why people get married? Just kidding.
How Does Your Net Worth Stack Up?
At the end of the day, couples ― given all the financial advantages that they have ― should increase their net worth at a faster rate.
Is that really the case?
Thanks to Statistics Canada’s readily available reports, instead of speculating on other people’s finances to test this hypothesis, I downloaded official survey results, compiled them into neat tables, and wrote this blog post.
If you’ve read my post How Does Your Net Worth Compare With The Average Canadian?, then you know I’m a fan of net worth data.
So without further ado, here’s the average net worth of Canadian couples at different stages in their lives:
Unsurprisingly, the average net worth grows steadily until couples reach retirement age.
Although it’s also interesting to note that, accumulation of assets seems to slow down mildly after people reach 54, presumably because a portion of people is retiring (or semi-retiring) or changing their life priorities around that time.
The two tables below provide a more detailed breakdown of average assets and liabilities (only including the most interesting data) of Canadian couples. Enjoy!
Average Assets of Canadian Couples:
Age Group Cash Principal Residence RRSP, RRIF, LIRA TFSA Vehicles
Under 35 years $27,581 $420,856 $38,938 $11,119 $34,474
35 to 44 years $34,856 $722,723 $104,440 $12,452 $50,394
45 to 54 years $48,496 $944,659 $221,343 $20,753 $63,654
55 to 64 years $85,547 $834,965 $318,452 $34,162 $61,731
65 years and older $98,187 $721,071 $297,471 $45,409 $41,396
Average Liabilities of Canadian Couples:
Age Group Mortgages Line of Credit Credit Card Debt Vehicle Loans
Under 35 years $259,429 $10,644 $5,486 $16,959
35 to 44 years $377,403 $19,479 $6,956 $21,361
45 to 54 years $329,463 $36,384 $8,768 $21,890
55 to 64 years $199,137 $36,252 $7,218 $15,358
65 years and older $67,357 $19,482 $2,888 $6,388
Want to track your own net worth? Feel free to download my net worth spreadsheet.
Does anyone want to chime in on the topic of money in relationships? Be my guest!