How We Avoid Money Fights In My Marriage

February 14, 2018

Many years ago while attending a wedding, I overheard the couple’s accountant (it was a HUGE wedding where literally everyone the couple knew was invited) tell them that the best way for them to manage their money was to just, “go all in, combine it from day 1.” The couple looked skeptical, and for good reason — what works for one couple when it comes to money very rarely works for the next.

The truth is that there is no right or wrong way to manage money in a marriage — the perfect way is the way that works for your specific relationship. And what works will most likely evolve over the years as your marriage changes. However, there are basically three different ways to do it, each with its own pros and cons. Here they are:

Method 1: Go “all in” and combine everything

Plenty of couples choose to do this and it works great. For others, putting everything in one pot leads to endless fights about differing spending and saving priorities. Regardless, the most important key to success if you choose this method is that both partners know what’s going on with the money and that you agree on your financial goals.

My husband and I were in our late 30’s when we married, so this was not even something we considered at the outset. However, as we are celebrating our third anniversary, we are definitely getting closer than when we first married.

Pros of going “all in”

No worrying about who pays for what
Easier to budget
Could save a “spender” from him/herself
Easiest to manage — if one person likes handling the money more than the other
Harder to hide financial issues from each other — forces honesty
Forces you to get on the same page with financial goals

Cons of going “all in”

No autonomy — you can’t surprise each other with gifts
Potential for fights about perceived over-spending or differing priorities
Could put one person in a power position if the other person doesn’t get involved in the finances
Can lead to resentment if one partner brings a lot of debt into the relationship

Who it works best for

Younger couples who haven’t yet had a chance to establish habits and mindsets
Families with one working spouse and one spouse who cares for the family — no need for an “allowance”
Couples with nearly identical money personalities, especially if both are savers
Situations where money is tight — no room for over-spending, so you feel like you’re ‘in this together’
Couples where a spender requests that a saver help him/her to be a better saver (not so much if the spender isn’t on board)

Method 2: Keep everything separate

There are people out there who will tell you that couples who keep all their money separate are headed for failure and that they must have something fundamentally wrong with their relationship. My parents, however, are a testament to just how untrue that is — for 45 years they have kept their finances separate, divvying up the household expenses according to who has the financial capacity to handle it. The key to this method’s success is that they still have shared goals and they never go into big purchasing decisions without consulting each other.

Pros of keeping it separate

Complete autonomy
No need to justify spending (or saving)
Helps ensure both partners know how to handle cash flow
Avoids fights for couples who have opposite money personalities
Can prevent issues surrounding debt that’s brought into the marriage

Cons of keeping it separate

Allows for money secrets — could lead to trust issues
Potential for resentment if there is a large income disparity
More challenging to work toward common financial goals
Shared expenses can be complicated

Who it works best for

Couples with kids from prior relationships
Couples who have established financial habits and don’t want to change
Dual career couples with ample income

Method 3: Hybrid using three accounts

This is probably the most common method I see these days among peers, and also the method my husband and I use. We have a joint checking account where we pay all of our shared expenses, including the obvious things like housing and utilities, but also food and entertainment, as long as we are both benefiting. We contribute proportionately to this account, which can be a little complicated to figure, but once the numbers are set, we only have to adjust them when there’s a big change to income or expenses. For example, I carry my husband on my health insurance through work, including contributing to a Health Savings Account, so he puts more into our bills account to make up for the reduction in my paycheck for covering our healthcare.

Pros to the hybrid method

Still gives autonomy while allowing shared expenses to be shared
Feels fair — we both have about the same left over each month to spend on what we want
Avoids fights about differences in spending — I like to spend money on wine and Athleta clothing, my husband prefers to spend his on bourbon and concerts
Keeps us both engaged in the household finances

Cons to the hybrid method

Can get complicated figuring out how much you each contribute to shared stuff, especially if there’s an income disparity
Expenses outside the norm such as vacations or home maintenance require discussion about who will pitch in extra to cover
Doesn’t necessarily solve for common fight areas, like gifts — we agreed that gifts for family would be a joint expense, but we have differing ideas of how much to spend
Could lead to resentment if one partner tends to save all his/her “extra,” while the other partner spends
Still have to designate one person to be “in charge” of the joint expenses to ensure you’re not making double payments

Who it works best for

Dual income couples where income is pretty equal
Couples who want to ease in to combining finances
Couples who just can’t get on the same page about discretionary spending, although they are on the same page about what they can afford with shared expenses

Non-negotiables for everyone

Regardless of which method you choose, it’s essential that you both have a clue what’s going on with all the money coming in and out of your house. I’ve seen too many situations where the “non-money” spouse ends up in a panic trying to figure things out because the “money spouse” is gone, either due to death, divorce or even just a traumatic accident. It’s up to both of you to make sure that should something happen to one of you, the other would be able to quickly get up to speed and manage the household expenses.

One final way we avoid money fights

The only money fights that we’ve ever had have been when I’ve sprung a financial question or decision on my husband over breakfast or in the car — he wasn’t prepared to discuss it at that point, and therefore tended to react negatively regardless of the question. We quickly learned to designate what we call “office hours” to discuss stuff like this. It’s a standing appointment on our shared iCalendar, and we keep a running agenda of what we need to discuss in the notes.

Setting aside time to specifically discuss financial issues gets us both in an open and trusting mindset and that has made all the difference. Currently on our agenda: taxes, planning an international trip, adopting a dog and completing some household repairs. These may not be specifically about money, but they all involve money and are areas we may have differing ideas or opinions.

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What To Do If Your Spouse Has Bad Credit

June 26, 2017

Have you generally been financially responsible but your spouse or fiancé has made some bad financial decisions? Are you worried that your spouse will drag you down financially, or if you can make the debt and/or bad credit go away quickly? If so, you aren’t alone. Debt and poor credit scores are the norm.

According to a study from CFED, 56 percent of American consumers have sub-prime credit scores, which means they don’t have access to the best interest rates for mortgages, credit cards and car loans. Debt is a way of life for most Americans, says NerdWallet in a 2016 American Household Credit Card Study, with the average amount of credit card debt for those who carry it totaling $16,748. Over 44 million Americans have student loan debt, with 11.2 percent of borrowers delinquent or in default.

Does that sound familiar?

For better or worse

If you have a financially mixed relationship, I’ve got some tough love for you: even if you aren’t legally responsible – although in community property states you will be – it’s still your issue to deal with, too. Marriage is a legal partnership, not just an emotional and spiritual relationship. The only way to deal with debt or credit problems – either your spouse’s or yours — is for both of you to face them head on. If you don’t, it’s only going to get worse.

Excessive debt can drag down your financial life as a couple and lead to a cycle of low financial wellness, where you live paycheck to paycheck without building up emergency savings or saving for retirement. Plus, let’s face it – it can lead to some nasty fights! It’s best to prioritize paying debts as a married couple, even if they aren’t yours, because marriage is also an economic relationship. Each partner affects the whole.

Stop blaming your spouse

Do you plan to stay married? Ok, then stop blaming your spouse for the situation you are in as a couple. Let it go. Blame and shame are not going to move you forward, and may actually make it much, much harder to negotiate changes in in your spouse’s behavior. Consider working with an unbiased CERTIFIED FINANCIAL PLANNER™ who can coach you through the process of figuring out how you are going to tackle the situation together. Find one by asking your workplace financial wellness program or look for a Fee-Only CFP®.

Practice full financial disclosure

When my husband and I first got together, we had the Money Talk. I was honest with him about where I was in my financial life (paying off some debt from a former business, downsizing my lifestyle so I could save more). Although he’d had it together since graduating college, he wasn’t the slightest bit judgmental. In fact, he was able to look at the situation quite logically and before we got married, we figured out a plan to tackle the last of my student loan and business debt.

We developed a strong, unified vision of where we wanted to go in our lives and how we would manage money together. (You can read our story here.) Keep talking about money throughout the evolution of your relationship: have money meetings and make sure you understand each other’s financial values – the number one reason couples fight about money.

Set everyone up to succeed

Set up a system where the less savvy partner can succeed. This means:

Avoiding blame or judgement
Making money management a team effort
Setting up “yours, mine and ours” accounts for cash management so everyone has some control over some of their spending
Monitoring your credit monthly
Celebrating small wins

Consider workarounds to protect your credit

In the meantime, consider workarounds to protect your own credit and repair your spouse’s, such as putting some bills in an individual name and avoiding joint credit cards, car loans or mortgages, etc.

Worst financial enemy or best friend?

Let’s be realistic – if you weeded out everyone in the country who had debt or less than perfect credit, the pool of potential mates would be pretty small. That doesn’t mean it’s not important to address in your relationship, though. How you deal with credit card debt, student loans and/or poor credit scores in your relationship will determine the financial foundation of your marriage.

As our CEO Liz Davidson wrote in What Your Financial Advisor Isn’t Telling You, your life partner can be your worst financial enemy or someone who lifts you higher. Even if you don’t have the same levels of financial wellness levels when you start your life together, with good communication and ingenuity you can be best financial friends.

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The 4 Money Questions Every Couple Needs To Answer

June 06, 2017

My husband loves to mentor young men, especially married men — he says he hopes to help prevent some of these guys from making the same mistakes we made in our first few years of marriage. Lately he’s been noticing a trend — a lot of them are bringing up arguments about money. As he’s helping them work through these issues, it seems to stem from the fact that couples are thinking through every part of their relationship, but forgetting to discuss and agree on their financial lifestyle.

A financial lifestyle is basically how you, as a couple, choose to handle money. There is no right or wrong answer, just what will work best for both of you. As my husband talks about financial lifestyles, he encourages couples to ask the following questions:

How will you view the money that comes into the household? Discuss how all money coming into your home will be labeled. Will it be “Yours and Mine,” “Yours, Mine and Ours” or simply all “Ours?” Will you have separate accounts only or two separate and one joint or only joint accounts? How will you make spending decisions about big ticket items? Many new couples find that they both just assumed it would be one way and are surprised to find their partner thought differently.

The thing is, it can be an evolution. My husband and I transitioned through each option. When we first married, everything was divided. After a few months, we decided that we wanted to share our joint bills, so we created a joint account for those expenses. A few years later, we were ready to put it all together and agreed to have only joint accounts. But first we established ground rules about how much was ours to spend individually, and we set limits on how much we can spend before we have to discuss the purchase. This saved us from a lot of future “discussions” (my southern way of saying, “fights worthy of WWE“) about spending money.

How will you manage your money? Will you both follow a strict budget or will you have a general idea of the spending and handle things as they come? Sit down with your partner and discuss how you will organize your spending.

As you may have guessed, I was the strict budgeter and my husband operated with no budget. At first, I stuck with my strict budget, which my husband never followed. I had to learn to get my husband involved in the process and give in to how he wanted to spend some of the money. We now have weekly money meetings to discuss the budget and any upcoming expenses.

Whose debt is it? This is a big one. It’s vital to discuss how you will handle any debt you’re bringing into the marriage as well as agree on how you’ll handle debt you incur together. Will it all be considered joint debt or will it be separated by the person who acquired the debt, with that person responsible for paying it out of “their” money?

At first my husband and I kept our debt separated based on whose name was on the bill. But after a few years of getting nowhere with paying off debt, we finally decided to combine it all and used our combined income to tackle it until it was gone. There is no right or wrong answer, just the right answer for you and your partner. The most important thing is to agree on the answer.

How much debt will you have? Ask each other how you each feel about carrying debt and what your relationship with debt will look like throughout your marriage. Some people are fine having low interest debt such as student loans and a mortgage, some others dislike all debt, and yet others are fine with debt as long as the payments are manageable.

My husband and I are both debt averse, but we had very different perspectives as to how to pay off debt. I probably would have lived in a van to get debt free, but my husband actually wanted a life. We learned to meet in the middle. We agreed to budget our lifestyle expenses and to focus the rest of the funds on getting out of debt with ground rules like establishing no new debt. Listen to your partner and compromise to come up with a plan.

These discussion are tough, but the earlier you have them the less potential conflict — learn from us. My husband and I did not have these conversations early enough in our marriage. As a result, we fought about money and struggled until we learned that we can get so much further by working together.

The Number One Reason Couples Fight About Money and How to Stop

February 10, 2016

70% of fights within couples are about money according to a Money magazine poll, which really doesn’t surprise me. That’s one of the reasons our new book, What Your Financial Advisor Isn’t Telling You: The 10 Essential Truths You Need to Know About Your Money, dedicates a whole chapter to love and money. What surprises me is that so many people I talk to about this are unaware of the underlying issues that lead to these fights. Very rarely is it actually about the money. In my experience, it’s usually more about a difference in values relating to money.

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