When it comes to Marriage and Money, communication is the key
Money is well known to be one the most common causes of problems in a marriage. There are a number of different issues which can be a catalyst for such challenges. In today’s column we address six common money issues for married couples.
We all have different personalities and usually handle situations in life according to our inherent traits. However, in dealing with household finances I believe this would be better characterized as behaviors. Some people are natural savers, while others are natural spenders. It is best for couples to address these differences before commingling their finances. Many problems can be avoided by addressing these differences and determining what each spouse sees as a priority. Compromises will need to be made and parameters should be discussed before issues arise.
An example, was when I thought that my limit for spending without discussing a purchase with my wife should be a thousand dollars. She of course, thought something closer to one-hundred dollars was more in line. We came to a compromise and while I wouldn’t be purchasing season tickets without a discussion I could certainly buy tickets to a game without ending up in the dog house.
The mine, yours and ours approach
Applying this strategy would allow for each spouse to have their own spending accounts and a joint account for certain household expenses. For this to work expenses would be divided between the spouses. Couples may also determine some expenses be paid from a joint account. Deciding how much each would put into joint or separate accounts, which expenses each would be responsible for would need to be predetermined.
In my opinion this approach may lack unified goal setting and likely would reduce the power of working together. This approach could also be a mine field. Potentially a lack of transparency opens up the possibility of financial infidelity. It sounds like a better plan for roommates not a committed couple.
Always a sticky subject when commingling finances. Going into a relationship without understanding the pre-existing debt your new spouse brings to the table could be a setting for disaster. While that may be their responsibility, you are naïve if do not think this will affect your household finances and relationship. Know what debt each of you have and determine a game plan for paying that debt off. If you are not both on the same page now, it will likely become more divisive later if the debt service becomes unmanageable or bad feelings develop because of the that debt burden and its effects on the your finances.
New debt needs to be given proper consideration. Just because you have enough credit to incur new debt, don’t do this without discussing with your spouse and coming to an agreement beforehand. Of course we promote staying debt free as much as possible, but most of us are not able to purchase a home for cash. That said, showing up with a new sports car and a boatload of debt to boot, will not likely go over well.
This could also be referred to as the power play. This situation may occur in a single income household or if one spouse earns considerably more than the other, or perhaps one spouse has trouble finding work. The power play happens when the higher earner decides to make financial decisions without consulting the other spouse. After all they are the one earning the income right? Emphatically wrong! This certainly has the potential of growing animosity and resentment which would be disastrous for your relationship. A couple is well advised to avoid this.
Spending or lending money when it comes to extended family can certainly be a cause of marital strife. We all have different ideas about in-laws and outlaws. You might think that your family is fine but your spouse’s family, not so much. Or vice a versa. Someone can always have a dire need for financial help. Perhaps a legitimate need for financial assistance. Tread carefully. Navigating these waters is definitely a team sport for couples. Do not proceed without full spousal consent for an iceberg is coming your way.
Saved the best for last. Husbands and wives, men and women typically see differently on the issue of our children and household finances. Moms in particular want the best for their children and are willing to sacrifice for them. This is an innate trait for moms. It isn’t that dads don’t want the best for their kids, we just approach it from a different perspective. However, it comes down to lifestyle versus fundamental needs.
I am not talking about the day in day out spending requirements for children. Moms and dads can usually come to an agreement there. Rather I am talking about higher education. Over the years of my practice, I have had many conversations about saving for college. Moms want their kids to go to college. College is expensive, very expensive.
Many but certainly not all moms, will sacrifice saving for retirement in lieu of helping their children with college expenses. It is admirable but it is the wrong approach. Going to college is a lifestyle goal not a fundamental goal. We need to be financially healthy ourselves before we can help someone else out financially, even our children.
Fundamental goals are having a roof over our head, and saving for a comfortable retirement. Things such as starting a business, funding a hobby and paying for college education are lifestyle goals. Take care of the fundamentals and you will increase your chances of fulfilling lifestyle goals later.
The recurring theme here is to have open and honest communication about your household finances. Money is the single biggest issue couples argue over. Schedule a time for discussing priorities, be ready to compromise, and develop a plan to reach the financial goals you and your spouse have prioritized. This is critical to your financial success and quite possibly the success of your relationship. Until we talk again, be well.
Registered Representative offering securities and advisory services through Independent Financial Group, LLC (IFG), a registered broker-dealer and investment advisor. Member FINRA/SIPC. Dedicated Financial & Insurance Services and IFG are unaffiliated entities.