Main image courtesy of Verve.

They say that money makes the world go round, but love will keep us together. And while that may be true, money also has the ability to significantly affect relationships throughout our life. We start from a young age to learn about money from the way our parents and our families talk about it (or don’t) and tend to take those practices and opinions into adulthood. While certainly not the only thing that can have an impact on the health of our relationships, money and how we manage it can end up having an impact on how we interact with people in our life.

If you’ve ever wondered how your money relationship can have an impact on your other relationships, keep reading because we’re going to discuss:

• How your relationship to money can have an impact on the other people in your life
• Ways to keep your money relationship healthy
• The role of financial literacy

How your relationship to money affects different relationships

Recognizing that money can have a negative or a positive impact on your relationships

While parents may not be aware of it at the time, their children are always observing their behavior, including their attitude toward money. Children as young as 7 have already grasped basic concepts when it comes to how their parents speak about and deal with money in the household. The behavior of their parents can lead children to internalize those attitudes and habits towards money and carry them into adulthood. This process of using parents as financial role models (for good or bad) is called financial socialization. 

Children take these cues about the right ways to budget, or how to curb splurging on expensive items, and start to enact them in their own lives. Their relationship with money will then have an impact on the other significant relationships throughout their lives.

Significant other or spouse

This is perhaps the most obvious relationship that can be impacted by money. One of the leading causes of arguments between couples is about money or spending habits. When two people live separately, they are responsible for managing their own finances, and treat their relationship towards money based on what they internalized as normal. However, they may meet and start a relationship with someone who has a vastly different perspective on finances. This can cause friction, especially when the couple move in and share an apartment or house together.

When you need to decide who pays for what, and what amount of money goes where, it can lead to disagreements. This is especially pronounced when one partner makes more than the other. If you can’t agree on how to spend your shared expenses together, the relationship probably won’t last. 

Couples in a relationship with money disagreements typically include those where:

• Money is tight. When two people do not make enough to make ends meet, it can cause a lot of strain in a romantic relationship. Deciding where to allocate funds to essentials or determining where the money to pay the bills will come from is stressful.

• Money is mismanaged. Some couples make enough money but that money is not managed properly. One partner could spend too much of it, while the other saves too much, or they could lack savings for an emergency altogether. Even though there is enough to pay the bills, money still seems to be short.

• There are financial secrets, abuse, or envy. These issues are rooted in bigger trust issues between partners. There should be no secret bank accounts, and one partner should not control all the financial decisions of the household.

Children

Although we tend to think that money only has an effect on our romantic relationships, it can also impact children. Like we mentioned earlier, children pick up cues from their parents when it comes to money and financial decisions. They also develop similar attitudes about how to speak about it and handle it. Parents who want their children to have a healthy relationship with money should start teaching them proper ways to handle it from a young age. 

This means actually talking about it (so it is not considered taboo) and including them in financial discussions. This will prepare them to acknowledge that money will be an important part of their lives, so they should learn the best ways to manage it.

Friends 

Money can also impact relationships among friends. Many people feel the pull to “keep up with the Jones’” and try to have all the latest and greatest items and experiences. Whether it’s new tech, an upgrade to the house, or an extravagant vacation to brag about on social media, the pressure to spend is real. When one member of a friend group doesn’t make as much as the others, it can put a strain on things, as they may not be able to keep up with the spending of their friend circle. This can lead to resentment, or worse, a loss of friends.

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Ways to keep money and relationships healthy

Keeping your relationship to money healthy can help keep the rest of your relationships in a good place. The key here is communication, which applies to all the types of relationships in your life.

• Make talking about money normal
• Let people know that you have spending limits or are working within a budget
• Understand that people have different perspectives when it comes to money management
• Share your financial histories and set goals together (for couples)

Why financial literacy is so important

Knowing how to manage money is key

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Having a good relationship with money comes back to financial literacy, and being confident in your own personal financial decisions. Having the know-how to properly budget, live within your means, and being aware of how to save and invest your money all make a difference when it comes to money management. When people, families, and communities are financially literate, they’re more likely to pass on their financial knowledge, which can benefit everyone’s relationships.