Financial interdependence vs codependency
This blog discusses what it means to be financially interdependent from our podcast season 2 episode 1.
The Power of Financial Interdependence vs. Co-dependence in Relationships
There’s an important distinction between interdependence and co-dependence in relationships, particularly when talking about money.
Co-dependency involves a reliance on another person to the extent that it negatively affects one's life. It often results in one person giving up their autonomy and power in the relationship, and in terms of money, becoming financially dependant on the other. This often accompanies an unhealthy power imbalance.
Interdependence, on the other hand, is about sharing roles and decisions while maintaining a sense of self and autonomy. It involves making joint decisions and compromises without losing yourself in the process. It’s not ‘giving yourself away’ but cultivating self-worth and healthy mutual respect.
How a healthy partnership can become codependent
In a codependent relationship with money, one partner usually becomes the sole earner while the other handles caregiving duties. This setup can lead to the non-earning partner feeling disempowered and dependent, with little say in financial decisions. This type of relationship may have occurred due to a myriad of factors, including but not limited to:
The expectation or belief of the earner that because they earn the money, they have more say in what happens to it.
The expectation or belief of the caregiver that because they don’t earn the money, they don’t have equal say in what happens to it.
These things are often unsaid or not communicated well. They usually stem from what was modelled to that person in their formative years or what their cultural traditions dictated. It may also be subconscious, so they may not even realise this is what they expect at all, until after a codependent situation has developed.
In Australia, the paid parental leave lasts for a certain number of weeks and employers may or may not also offer leave on top of this. From 1 July 2024 Parental Leave Pay is $915.80 per week before tax. Read more about it here: https://www.fairwork.gov.au/leave/parental-leave
The financial independence, or feeling of ‘say’ for the caregiver slowly erodes over time as the pay no longer comes in. This could happen to the point that when that money runs out, they feel like they just can’t speak up or have a different opinion to that of the money earner anymore. In this stage of the relationship, conditions like ‘What I say goes’ or ‘You have to’ arise on the part of the income earner – usually just in the course of time, without conscious thought or malicious intention. Sometimes it may be just a shared subconscious belief between the couple.
Alternatively, if both people in that relationship are able to access the household income account before the caregiving begins, maybe the caregiver still feels as though they have some degree of ‘say’. But if the caregiving period begins and both people still have separate income accounts, at this point, access to money is suddenly cut off as parental leave pay finishes and is used up.
So how does a codependant live in this type of financial relationship? Maybe they are given an ‘allowance’ by the income earner, or a credit card, or maybe they have to ask each time they want to use money. In these scenarios, the caregiver becomes financially dependent and subsequently, financially stuck in the relationship.
With one third of Australian marriages ending in divorce, and financial stress being the leading cause, its evident money is a significant area of relationships that require clear and open communication, planning, and being on the same page. Relationships Australia 2019, CBA 2023
The importance of interdependence
In contrast, interdependence allows for a more balanced dynamic. Both partners are actively involved in financial matters and share responsibilities. This approach fosters open communication and equal decision-making, leading to a healthier relationship dynamic. Some examples of how this might look:
Discussing and planning out how money will be handled when only one partner is earning.
Having clear money goals for short, medium, and long term, and a list of money priorities on how they will achieve those goals.
Both being paid into the same joint bank account so they can manage their household income as a team and both maintain access all their money.
Agreeing on something like a weekly ‘discretionary spending money’ allowance which they pay themselves into their own separate bank account and can spend this guilt-free on whatever they like.
Both names on the title when they purchase land together.
Both have access to their income, home loan, and savings accounts.
There’s a clear plan for the caregiving season and how they will move forward financially as children grow up.
Practical steps towards interdependence:
To cultivate interdependence, it's crucial to communicate openly about money and ensure both partners have a say in financial decisions. This includes understanding your financial situation, knowing how money flows in and out, and being actively involved in financial plans, goals, and actions.
Traditional gender roles can influence financial dynamics within any relationship. It’s the man who goes out to work to earn the pay and manage the finances, and the woman who stays home to raise the children and keep the house. But that is not necessarily what happens today.
One partner may take only a short amount of time out of the workforce, or they may be able to take a longer time, but how long should not dictate whether or not they have a say in the household money at home, or how much sway they have. Considering in the case of relationship breakdown, even superannuation is measured and carved up in order to accommodate for the equality of a partnership.
“Mindfully breaking free from traditional gender roles can empower individuals and couples alike to create a more balanced and fulfilling relationship. Striking that unique balance between couples that works for them. By participating in equal financial decision making, couples can create a more equitable and sustainable relationship and role model financial healthy relationships for their children.”
To summarise, the important elements for creating interdependency
Open and honest communication: Having a regular time set aside to discuss money. Both voices are heard and respected. Couples can foster a sense of equality and mutual respect in their relationship with this approach, leading to a stronger and more resilient bond and understanding.
Accessing the household money: Having access to the income itself.
Understanding your financial position: Knowing your financial position, your expenses and your income, your debts and your asset position. Having understanding and decision making power when it comes to the money flow, where it comes in and how it is divided up against spending and saving priorities.
Making joint decisions and planning: Both parties being actively involved in financial plans, goals, and actions. Partners in an interdependent relationship collaborate on financial decisions, ensuring that both voices are heard and compromise is achieved to move forward on the same page.
Start by understanding each other’s money personality
Your money personality impacts things like your impulses and behaviours, and every personality comes with both positives and negatives. Getting on the same page as your partner might be sitting down together and taking the Money Personality Quiz, and discussing things like the challenges you want to overcome in your own behaviour with money.
“Being honest and vulnerable when talking about money is hard, and it can bring up a lot of emotion. But it’s important in order to move forward together with a foundation of mutual respect and trust. ”
Recognising and taking action before codependency develops
In the podcast, Mel highlights the biggest enabler to maintain ones financial power even within a relationship is to never ‘give up’ or ‘let go’ of their earning capacity – to maintain their own independence when it comes to income. This is one way to maintaining the caregivers own contribution to the household and feeling they have their ‘seat at the table’ when it comes to having a say about the household money, retaining their decision making power.
Practical things that could help with this are:
While income is still being earner by the caregiver, put a chunk of it aside to ‘save’ and use when not earning, and paid parental leave runs out. How much? Depends on the cost of living expenses and the other partners income. Planning for anything big or out-of-the-ordinary like a car upgrade, a renovation, etc during this time is also important.
Keeping in touch with employers during parental leave, including;
Having a plan to return to work including specifics like when that will be, how many hours, and what the person will be doing upon return.
Having daycare picked and organised early-on, by doing tours and arranging the Child Care Subsidy application and paperwork.
Keeping options open like considering upskilling or studying while on parental leave which may create a higher income or a different area of work.
Mindfully building a support group for the caregiver while they are stepping back from work to spend time on their family.
A note on empowering yourself financially
At The Money Collective we strongly believe that it’s important to maintain a certain level of self-sufficiency and independence, regardless of your relationship status. Darlene discussed how for her, it is essential to have a plan in place in the case of a relationship breakdown, highlighting that financial resilience means a lot to her within that scenario.
In Conclusion
We encourage you to reflect on your own relationship dynamics. Are you leaning towards interdependence or co-dependence? By fostering open communication and shared responsibility, we can strive for healthier, more balanced relationships.
What are your thoughts on this topic? Have you experienced interdependence or co-dependence in your own relationships? Let's continue this conversation and work towards building stronger, more resilient partnerships.
Listen to the full podcast here: https://www.themoneycollective.com.au/podcast
This article provides general advice only. It does not take into account your objectives, financial situation or needs. Before acting on any information provided, you should consider the appropriateness of the information and the nature of the financial product in regards to your objectives, financial situation and needs. We recommend discussing your personal situation with a financial professional.
Blog article by:
MEL PEARCE
Financial Wellbeing Consultant and Co-Founder
The Money Collective