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.

Want more helpful financial guidance, delivered directly to your inbox? Sign up to receive our posts, written by financial planners who work with people like you every day. No sales pitch EVER (being unbiased is the foundation of what we do), just the best our awesome planners have to offer. Click here to join.

How One Couple Got (& Stayed) On The Same Page About Money

January 12, 2018

The new year is a perfect time to take a look back at the progress you made in your financial life last year and kick it up a notch for this year. So many New Year’s resolutions fall by the wayside by St. Patrick’s Day (eating less ice cream and calling old friends always makes my list – and by April there’s ice cream in the freezer & old buddies still get the occasional “like” on Facebook but not the catch-up phone call). There are some resolutions though, that are not only good for you but sustainable. And maybe a bit more realistic than my ice cream resolution too. Here’s one of those examples.

When the splurges add up

I recall talking with an acquaintance this time last year and she was having some financial difficulty. She and her husband had just bought a new car because their old one had over 250,000 miles on it. They paid about $4,000 more than they had budgeted after they fell in love with one particular car.

They had also renovated a bathroom, and the costs ran higher than expected. Finally, they went “a little overboard” (her words) on Christmas shopping (using credit cards). In isolation, none of these issues would have been an issue. The combination of all 3 things made them feel very constrained — almost overwhelmed — once the dust settled and they looked at the monthly expenses after their winter spending spree.

A difference in principles

She made a New Year’s Resolution to get her spending under control and, for the first time in her life, to understand where her money went — she wanted to see her financial “big picture.” Until that point, her guiding principle had always been, “I have a good job and make enough money to spend what I want to spend and I’m not extravagant, so it’s not a problem.” Her husband was more fiscally conservative and this difference was starting to put stress on their marriage.

Figuring out the big picture

After some conversation with both of them, we sat down together with the goal of organizing their financial life. We used this financial organizer in order to help them see the big picture – what they own vs. what they owe.

They had never put everything on one page before, so this was enlightening for them and probably not in a good way. They thought they were much further ahead than they actually were. We also used a combination of this expense tracker and Mint.com to help them get a firm understanding of where their money was going each month.

Setting a team goal

Upon having this “aha moment,” they made a promise to each other, and a New Year’s resolution, to work as a team this year. Their goals were to:

reduce their debt
maintain spending discipline
update their financial worksheets on the 1^st weekend of each month

Teamwork makes the dream work

I saw them in the grocery store recently and asked how their resolution from last year is going. They smiled! Putting it on paper and choosing a sustainable “resolution” made it so they could stick to the plan and even create some healthy new money habits. Now they hold their monthly “financial meeting” at a local breakfast hot-spot, and it’s become a no-kids breakfast date that they look forward to. I have never seen them look happier.

Want more helpful financial guidance, delivered every day? Sign up to receive the Financial Finesse Tip of the Day, written by financial planners who work with people like you every day. No sales pitch EVER (being unbiased is the foundation of what we do), just the best our awesome planners have to offer. Click here to join.

Are You Committing Financial Infidelity?

October 20, 2017

Have you ever cheated or lied to your spouse or significant other regarding a financial matter? Amazingly, 42% of adults who combine their finances with a partner admit to committing financial infidelity, according to a survey last year. The survey also found that almost 4 in 10 people had hidden cash, a purchase, a bill, or even a bank account from their significant other, while 16% reported more significant lies such as how much they earned or how much they owed.

These numbers are higher than when the same survey was conducted 3 years earlier. Perhaps we need Sweetest Day as a reminder to be good to our partners after all!

Money fights can lead to divorce

I have to say that I’ve occasionally tried to pass off a new outfit as if it had been in my closet for a while, but never to the point where a financial deception would cause an argument between me and my husband. Luckily, we don’t fight about money since arguments about money and finances is the top source of marital tension based on Money Magazine‘s Americans and Their Money survey.

Fights about money that occur at least once a month were reported by 41%, followed by chores and quality time together, and this financial stress isn’t good on the state of their relationships. Utah State University professor Jeffrey Dew, an expert in money and family relationships, has found that couples who disagree about finances almost every day are 69% MORE likely to divorce than couples who rarely or never argue about money.

Spotting the signs of cheating

So how can you spot the signs that your partner in love and money is cheating on you financially? It usually gets detected with finding a stray receipt or credit card statement you aren’t familiar with, or even worse, calls from creditors.

Another red flag is if your loved one gets defensive or withdrawn when you try to bring up money issues or if they handle all the bills and you never get to see how the money is being spent (or earned). In some cases, financial deception could be a sign of a serious issue, such as gambling or a compulsive shopping addiction.

Avoiding financial infidelity

To avoid being cheated on or to fess up to your own financial infidelity, the first step is to sit down and have the “money talk” at least once a month. Clear the air and share all of your debts, account balances, and review your latest pay stubs. Talk about what is causing you to stray from your financial goals as a couple and set a spending limit like $100 for individual purchases that don’t require approval from your partner.

Paying the bills should be a joint venture so both of you know how much is owed and to which creditors. This way, the only thing left to argue about will be what’s for dinner tonight — which, believe it or not, 28% of couples argue about every month!

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.

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.

How to Manage Financial Stress in a Chaotic World

June 03, 2016

Periodically, there are times I look at my daughter’s life and think it’s a great time to be her. Right about now is one of those times. She is doing a study-abroad session in Italy, and since I travel for work a lot and know my way around airports, she asked me to take her to the airport.

We live in Baltimore and we use BWI as our “home airport” so I am there quite frequently. I knew that her flight was booked from Philly instead of Baltimore, but when I put the trip into my calendar I simply typed “Take Jordan to Airport” in Outlook about two months ago. As time moved forward, the Philly part slipped my mind, and when I put her bags into my car, I immediately headed toward BWI.

As we got to BWI, my daughter’s face went white, and she gasped “Why are we here?” (She had been texting her classmates and making sure that she had packed everything.) It was at that moment that I realized my error.

I needed to get to Philadelphia and FAST! I fired up my Waze app, drove well in excess of the speed limit and got her to Philadelphia well in time to get through TSA and customs well for her flight. It was not a stress-free endeavor, but all’s well that ends well. It ended well, so now I’m looking back wondering if there was anything that could have prevented my “stupid human tricks” or a lesson to be learned.

Once she was safely at her gate waiting to board her plane, we had a chance to recap our crazy mini-adventure and think about how it could have been a quicker and less stressful event. She could have reminded me that it was Philly because she knows I sometimes go on “auto pilot” because of a busy calendar. I could have been more descriptive in my Outlook calendar and done a quick check-in with her before leaving the house, saying “we’re off to BWI…correct?” Just a little bit better communication could have prevented a mini-crisis.

I see this with couples that I talk to on a regular basis. They are both working hard to earn their incomes, raise their kids and plan for the future – but sometimes things get missed in the chaos that is life in today’s world. Financial stress is one of the leading causes of marital disagreements and when it becomes too much to bear, it can frequently lead to divorce.

When one spouse handles the financial affairs and the other is completely disinterested and uninvolved is when I see the stress level being the highest with couples. The financial manager often feels unsupported and the financially uninvolved partner can feel powerless or at the mercy of the financial manager. There’s a simple way to avoid that. Weekly, bi-weekly or monthly financial meetings are a great financial management tool, can be done quickly and can keep two people on the same page.

Here’s all you need for a successful family financial meeting: a calendar (I love the ones from the mall kiosks that you see every year around the holidays), 10 minutes and a pen. Since I’m single, I schedule a financial meeting with myself every other Saturday. I pull out my calendar and using June 2016 as an example, will write my “Payday” on the 15^th and 30^th. I’ll write “mortgage” on the 1^st, “utilities” on the 22^nd and every other recurring bill that I have on the date that the bill is due. There are sometimes random bills that come up and aren’t in my monthly budget like car insurance, which I pay quarterly or doctor bills if one of my kids has had a visit recently.

When I see it all laid out on my financial calendar (I don’t put anything else on that calendar and I use my phone for all of my other calendars), it helps me stay on track. I’ve shown this system to some of my married friends and some couples that I’ve worked with to help them solve their financial stress. When they see how easy it is, they promise to try it.

I’ve heard from quite a few couples that both partners, the financial manager as well as the uninvolved one, feel much lower stress levels and the “fights about money” go away or are tremendously reduced after implementing this system. For anyone who is struggling with how to reduce the level of discord around your financial life, try this easy way to engage either yourself or your partner in a discussion about money. A calendar, 10 minutes and a pen are WAY less expensive than a divorce!

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.

Continue reading “The Number One Reason Couples Fight About Money and How to Stop”