Money and Marriage: The Missing Manual
September 03, 2012It is commonly known that money is the leading cause of marital problems. As a financial planner working with couples for over 25 years, I have seen why. Couples often take the wrong approach to love and money, thinking that love and money don’t mix.
But they do. Both love and money are very emotional, but many people don’t approach their money discussions that way. They get out the calculator and spreadsheets to start their money meetings in a highly intellectual and technical way. Then couples end up fighting about not having enough money, what the other person is doing with it and how to get more of it.
There are some simple steps that can improve any couple’s relationship with money and ultimately with each other. Here they are:
Get on the same page. Discuss what you want to accomplish together but also your fears and concerns around money with the understanding it is an emotional issue. Many people feel a sense of scarcity around money so discuss both what you want to accomplish with your goals and also what you need to be secure. I once had a wealthy client who had hundreds of thousands of dollars invested but had an underlying fear that she’d end up in poverty so she and her husband decided to always keep a well funded “security fund” in an FDIC insured bank account. Her husband would have liked to have those funds invested in something to earn a higher rate but they compromised to have a balance that was a fit for both of them.
Respect each other’s shortcomings and be kind. I guess I should say accept each other’s shortcomings, but the word respect is more powerful so I would say “accept and respect” each other’s shortcomings and work on them together. For example, a young man I counseled was raised by parents that not only taught him to budget but helped him to learn to invest at an early age; he bought and sold stocks at age 12. He married a young woman who had a totally different background where no financial lessons were taught at all and in fact, one of her parents had a drug addiction, which drained her family’s finances so there wasn’t enough money to budget with. He was frustrated that she couldn’t stick to a budget but truly, who could expect her to? She didn’t have the background that he did. We all have shortcomings and challenges around money. I have found that recognizing them and working on them together with kindness and patience is a very effective approach for couples.
Set goals. Support each other to make both your common and individual goals happen. I found this to be very effective with my former financial planning clients and also in my personal life as well. A few years ago, my cousin was diagnosed with leukemia and was given five years to live. My husband and I were devastated and deeply moved. This event changed our outlook on life and our money. We figured, what good is money if you aren’t healthy enough to enjoy it?
As a financial planner, I have always taken the long view and saved diligently for retirement. After the sad news, my husband and I sat down and made a list of what we’d like to do if we only had five years to live (and were healthy enough to do it). My husband wanted to go on an Africa safari – his boyhood dream from reading David Livingstone’s and Teddy Roosevelt’s adventures in Africa. It wasn’t on my list so we saved for him to go and sacrificed for his trip of a lifetime. Making this list was a very powerful exercise and I recommend it or something like it to discover each other’s passions and build your finances around them into a dynamic and powerful way.
Put your goals in writing. Whether you are a do-it-yourself investor or work with a planner, putting together a written plan helps you stick to the strategies you’ve developed together. There is also something very powerful about putting a financial plan in writing in a document that you review together. There is a lot of work behind finalizing the plan – priorities determined and decisions made and it puts you and your spouse on the same page – literally!
Put the right person in the right job. Build your partnership around each of your skill sets rather than your roles. In my household, my husband manages the day to day finances much better than I do. He is very detailed oriented and has an amazing memory. He knows every American president and also who ran against him. He remembers which college most of the NFL players were drafted from (and I plan to tap into that knowledge when I draft my fantasy football team). This kind of a detailed person with a good memory does well with managing all the moving parts of several bank accounts and credit cards. I do the long term planning and investing since that falls better in my skill set and expertise.
Meet regularly. Just like any project, having periodic meetings and updates is essential. I think the regular meetings are the “make or break” for couples actually meeting their goals. Having regularly scheduled money meetings helps couples to reduce and even eliminate the emotional charge. It takes the pressure off. First of all, you can table a discussion or make a list of things to discuss at the next meeting so you can go on being a loving couple and enjoy your life.
There is also less pressure on one single meeting when you more scheduled. Everything doesn’t have to be solved in a day. This is key because couples who have taken out the emotional charge who meet regularly can monitor their money situation. They have the ability to react more quickly to financial emergencies and opportunities since the framework of communication is already established.
Finances are tied to almost every aspect of our lives but there is no money manual given to couples when they marry or decide to make a lifetime commitment. Truly couples really need to write their own manual. The steps can provide a framework to help them write a powerful financial plan to build an amazing fulfilling life together.
I don’t know about you, but that’s a manual I’d actually read.