Marriage and money is a very rich topic where anything can go really wrong. There are all kinds of statistics out there that say money is the number one cause of divorce. Let’s take a look at the just some of the amazing ways money can wreak havoc on a relationship.
1. One person takes control of the money.
This is power move. One person in the marriage will assume responsibility for the finances, take over all the control. This can go so far as to denying the other partner, let’s say the wife, an ATM card or a credit card, and doling out cash on a weekly basis. The wife may have no idea where the bank accounts are, how much money the couple has, and no concept of how the retirement funds are being invested. No idea if there is a college fund for the children, no idea if the mortgage is being paid on time. Nada. This obviously, is not a marriage between two adults. This is a relationship between an adult and a child, where the child gets an allowance. Not ideal. Couples counseling is recommended for marriages that work like this.
At the less extreme end, one person will say, “Trust me, I’ll take care of it. I’m good at this stuff.” Over time, as one person makes more and more decisions independently of their partner, one person loses financial skills as the other gains them. The financial knowledge gets skewed, and if heaven forbid if the spouse with more financial knowledge suddenly dies. Then the spouse who is left doesn’t know where the accounts are, how to pay the bills, how financially safe or vulnerable they are. The surviving spouse no longer has the financial skills or knowledge to survive alone. Ideally, both spouses have equal knowledge of the household financial profile, and work together towards a secure future.
2. Spouse who makes more money is aggressive in getting their way.
Oy. This is no fun. This is actually abusive. A twist to this scenario is that the spouse that makes less money is compensates and becomes an emotional aggressor. Some people’s marriages devolve into a power game, constant effort to have the upper hand emotionally. It doesn’t have to be this way. Instead of competition, try partnership. Two words – marriage counseling.
3. Skewed views on retirement.
I definitely know people who don’t believe they will live very long. There may be a history of early death in the family, or somehow this notion just lodged in their mind. This belief may drive one person’s “live for today” spending, and cause much anxiety for a partner who is trying to save for retirement or college for children. Work it out. Get on the same page.
I once had a conversation about retirement investing, when it dawned on me that that this guy was only concerned for his own retirement, and not his wife’s. Part of the retirement plan was to loose her somewhere along the way. Forehead slap! Oh my God.
4. My spouse is not financially trustworthy, but it’s OK.
If you feel like your fiancee or spouse is not financially trustworthy, you are going to be the one to suffer from your spouse’s problems. There may be some weird codependent thing going on here – your spouse needs to be with someone responsible, and you need to be with someone irresponsible. Or you may have low self esteem issues and you are tolerating a lot of weird stuff in the relationship. Look this problem straight on. It’s relationship counseling for the both of you, or a lifetime of stress is going to be your fate.
5. Maintaining completely separate financial lives.
Prior to marriage, some people feel safer if they have a separate accounting of the assets they came into a marriage with. A lake house you inherited from your grandfather or a valuable painting or jewelry should remain yours if the marriage dissolves. Couples can sign a document listing separate assets that will not be divided in the event of a divorce.
I know of couples who split household expenses and have no idea how much money their spouse makes! They also have no idea how much debt their spouse has. I really don’t understand how a mutually assured retirement works in this situation.
It certainly is possible to maintain a bank account and investment accounts that your spouse does not have access to. But sooner or later, paying bills, sticking to a household budget, planning for retirement and other goals becomes easier with combined accounts. It is truly difficult to plan for a retirement together when two people are doing it completely separately.
Any individual bank account or non-retirement individual investment account can be changed into a joint account with some simple paperwork. There are a couple of different kinds of joint accounts. The easiest and simplest account is “joint tenants with rights of survivorship.” This means that if one person dies, the account will go to the survivor. Another kind of joint account is “Tenant in Common” means that if one person dies, half of the assets go to the survivor while the other half goes to the deceased estate. This is more typical when there is a lot of wealth involved, and could safeguard against a spouse being sued by estate beneficiaries such as stepchildren or other relatives. The bank or financial institution will present your options for joint accounts. Discuss with your partner the right option for you.
If you are not married, do not combine accounts! Your partner may have debts you don’t know about, and creditors can suck all the money out of the joint account without you giving consent. Or your partner can just empty the account and disappear. If your partner is pressuring you, run away!
6. Making your spouse feel bad for not earning more.
This definitely erodes the trust and safety in a relationship. Oh yeah. Comparing your partner to other people who make more money, stressing your partner out about asking for raises. Even going so far as saying, “I wish I could have a new fill_in_the_blank,” can make your partner feel terrible.
7. Saver vs Spender
This is an age old issue. A source of great tension between married couples. Some spouses do not try to rein in the other spouse’s spending. They do not feel comfortable being assertive and saying “your spending really bothers me” or they feel like since they don’t earn as much money, they don’t have a voice. It just silently drives them insane and the resentment grows. Or one partner may feel suffocated by the other’s miserly ways, and feel trapped where they cannot spend any money. Another option, is that couples can fight it out with screaming and violence. There are deep issues at play here. Once again, two words – marriage counseling.
There is also a practical answer to this spender saver tension, these reoccurring dramas. Make a household budget with monthly savings goals and each person gets an allotment of their own money to spend however they wish. It’s not easy to sit down and sort out a budget, but the peace a budget can bring may be nothing short of miraculous!
8. I’ll fly into a rage whenever we talk about money.
Amazingly, being angry doesn’t improve communication around money, or solve the outstanding money issues. The issue here isn’t even money, it is the quality of your marriage and your safety. If you don’t feel safe around your partner’s anger, get in touch with the local domestic violence resources in your area ASAP. If you believe this is something you can address together, seek out marriage counseling.
Years ago a friend of mine told me, “Make sure you understand your partner’s financial situation before you get married.” ummm. What? I can hardly be honest with myself about my financial situation! But seriously, marriage can be the first time in a person’s life where they had support and motivation in getting the money issues in order.
Here are some pointers on how to partner up on the money issue.
1. If you have not already done so, take a big step and create a household budget based on the combined incomes. See prior post on how to budget. Be completely transparent with your partner in all debts and all income sources.
2. Pay bills together at the end of each month, review balances in the credit card and bank accounts, discuss any budgetary goals for the next month. Congratulations! You are adults! It takes about half and hour. The deepened trust and partnership this monthly commitment makes is wonderful. You’re a team, you’re going to make it!
3. Make a list of all the financial accounts and keep it in a safe place. Bank accounts, retirement accounts, investment accounts, credit cards, anything that requires a monthly payment such as electricity or rent/mortgage, car lease/loan, car insurance, phone bill, school loans. Make sure each person knows how to pay the bills and the internet access to each account. Make a back up copy of the list of accounts, store it somewhere safe, and where each person knows where it is.
4. Trust, but verify. Get a credit report from one of the three major agencies (Equifax, Experian, TransUnion) for you and your partner. This way, you can be sure there are no hidden debts and your financial profile is like an open book to each other. Review each report for accuracy. Order credit reports on the first month of every year and check for accuracy.
5. Review beneficiaries on all accounts where you do not have joint ownership, such as retirement accounts and investment accounts. Always have a bead on your combined net worth.
6. Go pro! With your spouse, do a little research and find 3 reputable Certified Financial Planners (CFP) in your community. Meet with each one of them and select the one that is right for you. Before you go, make sure you read Erik Tyson’s “Personal Finance for Dummies” so you have a foundation from which to assess the trustworthiness of the advisor. For a couple hundred bucks, this person should be able to help you with your asset allocations in your 401K, give insight on ways to save and prepare for retirement and other financial goals. Meet with this advisor annually to keep yourself on track. If you have investments with this advisor, meet quarterly (every three months).
The purpose of a CFP is not to sell you insurance and investment products, but to help you come up with a game plan for the most secure retirement possible. If the CFP does try to sell you a product, do your own research online and in the library and see if this is the right investment for you. Ask trusted friends of family members if they have experience with this product.
7. For the sake of your children and close relatives, get a Trust and Will. Again, do some research in your community and meet with 3 Trust and Estate lawyers. Understand their fees and assess their experience in the field. Ask a business owner in the community, your doctor, or a friend who is a lawyer if they know of a good Trust and Estate Attorney. This is going to cost over a thousand dollars, but if you have a lot of assets this will definitely be worth it. You shouldn’t have to make changes too frequently. During the first month of each New Year, review your Trust documents together, to make sure you both didn’t forget what is in there.
8. Be kind to each other and have faith in the strong team that you are together.
This list isn’t comprehensive, but it’s a start. Every situation is different. As you become informed, you’ll discover what resources work for you. It’s a bit of a learning curve to being a financially competent adult and couple. Nobody ever talks about it or gives us tips on how to make it work. It is a tremendous stress reliever to have all the ducks lined up as well as possible. We can only do the best we can in this crazy world.