Editor’s note: This is the first of a two-part Perspectives series on the role of financial matters in domestic relationships.
With Valentine's Day just around the corner, you may be planning a romantic dinner, chocolate, or flowers for your sweetheart. But a heart-to-heart talk about money could go even further toward a happier, lasting relationship.
Money ranked among the top three reasons that couples divorce, according to a survey by the Certified Divorce Financial Analysts association. About 22% of respondents cited “money issues/arguments” as the main factor in their divorces, trailing only “basic incompatibility” at 43% and infidelity at 28%.
They say opposites attract, right? That may be how savers end up marrying spenders. But, when it comes time to balance the checkbook, there may be some unexpected surprises. Another common problem is that in many marriages personal finances are not equally managed. Often only one partner pays the bills, which leaves the other spouse in the dark.
“I see more conflict in younger couples between 30 and 50. I guess by the time they reach 50, they've figured it out,” said Ann Minnium of New Jersey–based Concierge Financial Planning, LLC. “Usually one is hostile because he or she believes the other is overspending. Or there are questions from one spouse about 'where is all the money going—you pay all the bills?’ ”
There are some solutions, and you probably guessed it—they all start with open and honest communication.
For savers and spenders:
- Agree to disagree and recognize the other person's differing approach.
- Set a dollar amount that each can spend without consulting the other spouse. Anything over that amount needs a discussion, including about how it fits into the overall financial plan.
- Have individual accounts and a joint account for shared expenses. The spender can dip into their own discretionary spending account instead of the merged bucket of money.
- Track your expenses and review your budget. Be clear on where the spending is occurring, how much is coming in, and how much is going out. Set time aside to review this together. Make sure both spouses have full access and passwords to account information.
- Set financial goals.
Be respectful of your differences and find common ground with goals you can both agree on—whether it’s saving for a vacation, a new car, college tuition for your kids, or retirement.
“Having a discussion about those goals and prioritizing them goes a long way. That makes it easier to say no to something, because you are actually just saving it for something else,” Minnium said.
When one spouse is saddled with the financial chores, switch it up for several months and have the other spouse take over paying the bills. Yes, it may be a pain and it may be inconvenient, but it puts each of you in the other's shoes.
“If the spender is not the one doing the bills, the spender can see the effect they are having. Instead of just mindlessly spending, they can see the enormous credit card bill and what is available in the account to pay it,” Minnium said. “They can see the cash flow.”
Finally, be kind. Think about your style of communication. It may not be what you say, but how you say it. If discussions about money quickly escalate to yelling and fights, you may be communicating, but how productive is it? Dial things back a notch.
Money is a sensitive topic for many people. Try to avoid making openly judgmental or critical comments regarding a spouse's financial decisions without offering up suggestions or a solution.
Check Perspectives on Personal Finance next week as we discuss financial “infidelity” and “bullying” in domestic partnerships.