Money can be a shockingly complex topic in marriage. Deciding whether joint or individual accounts are wise, fairly dividing expenses, and agreeing on shared goals isn’t always easy. Add in different approaches to spending and saving, and the situation can be surprisingly contentious. But few things are as complicated as when one spouse asks to borrow money from another. If you are wondering, “Should I loan money to my spouse?” here’s what you need to consider.
The Existing Financial Dynamic
Typically, a spouse will only need to “loan” money to their partner if they are both living somewhat separate financial lives. For example, each spouse may maintain their own bank accounts, have personal sources of income, and formally divide expenses to ensure each one of pulling their weight.
Usually, when that sort of arrangement isn’t in place, all financial activities are joint ventures. As a result, loaning money to a spouse wouldn’t necessarily be part of the dynamic.
If you’re in the former category, then thinking of the money as a loan might be appropriate. If you’re in the latter, then it could be wise to explore why you consider the cash a loan. The idea that money is separate isn’t commonly part of your paradigm, so a deeper discussion may be necessary before moving forward.
Power Shifts in the Relationship
When one spouse loans money to the other, there is a change in the power dynamic. It causes one partner to be formally indebted to their spouse, and that can impact the nature of the relationship.
For example, if you are the one that loaned the cash, you may outwardly judge or question all of your spouse’s other spending before the debt is repaid. Since they owe you money, you might feel entitled to those opinions, even if they harm the relationship.
On the other side of the spectrum, your spouse may be plagued by guilt. It’s also possible that they’ll be ashamed that they had to ask for your financial help, even if you act amicably about it.
If your spouse is cavalier about the loan, you may become resentful. This is especially true if they fail to meet any agreed-upon repayment obligations, particularly if the unanticipated delays cause a financial hardship for you.
It’s important to acknowledge the emotional or psychological impact providing a loan can have. At times, it can profoundly alter the power dynamic in a relationship. By examining and understanding what may occur, you increase your odds of limiting its influence and otherwise keeping your relationship in a positive place.
The Impact of the Situation
While the financial situation that led your spouse to ask for a loan might technically be theirs to handle, that doesn’t mean that their struggle couldn’t impact you both. Even if you mainly maintain separate financial lives, there is always a degree of entanglement.
For example, if your spouse misses some kind of payment, your joint credit is damaged. Similarly, your total budget may end up derailed, causing difficulties for you both.
If the circumstances put a substantial amount of stress on your spouse, that’s an impact worth examining as well. Over time, their anxiety could harm your relationship, and avoiding that may be a wise move.
As you decide whether or not to loan your spouse money, do consider the impact of the situation on your lives. In some cases, that alone makes loaning the cash a good idea; it may be an act of self-preservation as much as anything else.
Whether Alternatives Exist
Since lending your spouse money can be risky, it doesn’t hurt to determine whether there are any other reasonable alternatives. This could include traditional approaches, like a personal loan from a bank, or other options, like your spouse starting a side hustle to increase their income.
At times, other approaches might not be viable. However, if they are on the table, you can explore them with your spouse. If one of them may work, it eliminates the need for introducing what can be an awkward situation into your relationship, and that’s worth considering.
The Loan Arrangements
Finally, before you decide whether you should loan money to your spouse, you need to determine what formal arrangements make you feel comfortable about the decision. Ultimately, you need to outline a repayment plan and decide whether you would want to charge interest.
Once you have an idea of what works for you, you’ll need to discuss it with your spouse. It’s possible they will agree with the arrangements. However, they might also view them as unreasonable or unfair.
In most cases, a mutually acceptable plan is necessary. Otherwise, one spouse could have strong negative feelings about the loan.
Additionally, you may want to formalize the agreement. While putting it down in writing may seem like overkill, it does make the expectations clear and ensures you both understand what is involved. The chance that there will be a misunderstanding goes down significantly, making what can be a challenging situation a bit easier to manage.
So, Should You Loan Money to Your Spouse?
Ultimately, lending money to a spouse is a personal decision. But it’s important to understand that the odds that it can harm your relationship are significant. You need to consider whether the formation of a rift or a change in the power dynamic make it worth the risk. In many cases, couples find that it isn’t.
However, if there is no alternative and the situation created by your refusal could substantially hurt you both, then it could be a necessary move. Just make sure that you both come together regarding the arrangement, and both feel it is fair. Otherwise, you may trade one difficult situation for another.
Do you think loaning money to a spouse is a good idea? Why or why not? Share your thoughts in the comments below.
- Why Couples Counseling Can Save You Money
- How to Save When Your Spouse is Financially Immature
- Should You Start Planning for Retirement Right After the Wedding?