Hiding Purchases From Your Husband is So 1950

March 29, 2017

When I was a little girl, I remember my great aunt sending my mom money with a note that simply said, “Please don’t send a thank you note. I don’t want my husband to know.” My great uncle was a bit of a curmudgeon and my aunt would have suffered for her generosity. I also remember my grandmother taking me shopping for back-to-school clothes but telling me to leave everything in the car when we went back to her house so my grandpa wouldn’t know she was spending money. Sound familiar?

A lot of us grew up with this example and continue to exhibit similar behavior in our lives today. Have you ever rushed to put purchases away in the closet before your husband could see or stuffed your Lululemon purchases into your purse before walking into the house to avoid a potential fight about overspending on perceived wants versus needs? How about hiding a Target splurge on stuff for your kids?

While these actions may have been slightly justified back in our grandma’s day, these are all examples of financial infidelity. Just like if you were deleting texts between you and a male coworker to avoid a fight with your husband, hiding purchases from him is the same behavior. It’s a violation of trust. What do you really have to hide?

Back then, women didn’t have as many choices when it came to careers and having their own money or even sometimes in choosing a life partner. I will never forget the day I nervously broke the news that my first marriage was ending to my grandmother. Her response surprised me.

She said, “Good for you. You will do just fine. If I’d had a career and options like you, neither one of my marriages would have lasted.” And while I didn’t relish the thought of anyone I love feeling “stuck” with someone else I love, I understood what she meant and she was right. The big difference between back when my grandmother had to sneak spending behind my grandpa’s back and today is that if you find yourself in a marriage where you truly don’t have economic power, you have the choice to work it out or leave.

I’m not saying you shouldn’t have the autonomy to make your own purchasing decisions – quite the opposite. You may never get on the same page with your spouse about the value of spending on certain things like clothes or wine or electronics or name the thing that causes money fights in your marriage. But there are ways to solve that without hiding purchases such as having separate spending accounts where you agree that you each can do whatever you want with that money with no judgment and no arguing. The kicker is that you both have to stick to the agreement where you only spend that money and not other money that’s allocated towards your family’s goals.

It may be a challenge to arrive at an amount you both agree on for your spending money. When a spender marries a saver, the saver will always want to spend less, but there are logical ways to arrive at that number. Start with your shared goals like retirement, paying off debt, saving for college, etc. Assign a number to those goals and calculate what it will take to get there and agree together whether that amount is reasonable or if you need to modify the goal. Getting on the same page about this helps you both feel responsible for your part in achieving that goal and should help the saver partner relax a little bit about spending on things they don’t perceive as necessary.

Kelley Long is a resident financial planner with Financial Finesse, the leading provider of unbiased workplace financial wellness programs in the US. For more posts by Kelley or to sign up to have her weekly post delivered to your inbox each Wednesday, please visit the main blog page and sign up today.

Why and How to Have Weekly Money Talks

March 28, 2017

When I first got married, money talks in my home looked something like this: I brought out my spreadsheet and the four other programs I was working on to have a financial summit with my husband. He mentally tuned out the second he saw the first version of the budget and was in another place (I suspect it was at a college football game) by the time the meeting was over. Over the years, I learned to simplify my budgets and my husband brought both his mind and body to the meeting. My colleague Steve offers great insight into how to make couple money meetings work that I wish I knew from the beginning:

I have a confession to make. For over a decade in my professional career, I was the pot calling the kettle black. Almost 20 years ago, I followed the advice of a fellow CFP® professional and started advising clients to schedule a weekly 30 minute money meeting to focus on their finances, but I wasn’t doing these myself. Then about 7 years ago, I started having those meetings with my spouse and guess what? They work.

The basic idea is this. Many of us can go a month or longer and not spend any time thinking about our investments or whether we are spending our money on what is important to us instead of where we have always spent it. We pay our bills but don’t think about our spending plan.

On a side note, I hate the word “budget.” It sounds like “diet” to me. They both are limiting and negative.

A friend of mine told me “Steve, you’re a financial planner. Don’t think of it as a diet. Think of it as an eating plan.”

That works for me. I don’t think of my spending as a budget. I think of it as a spending plan.

The ideal time to have a conversation about money is not when you’re late for work, trying to get the kids off to school and have a deadline that is consuming all of your mental energy – been there done that. The Weekly 30 Minute Money Meeting can either be with yourself or with your partner. The rules are the same:

1.You cannot change the past. It is a waste of time to argue about or beat yourself up about things that have already happened. Learn from your mistakes (we have all made them) so you don’t repeat them in the future.

2. Be thoughtful and focus on the future. With my eating plan, if I choose to have a 1,500 calorie breakfast (which is delicious), I’d better plan on eating a lot of salad with little dressing for the rest of the day. If I choose to spend my future paychecks now (think credit cards), I’d better plan on not spending any other money.

3. Hold yourself accountable. Notice I didn’t say hold your partner accountable. We are adults and need to hold ourselves accountable. If you make a mistake, own it and try hard not to repeat it.

4. Schedule the meetings when your energy is high. I am an early morning person. I wake up at 5:30 am every day no matter the time zone or if it’s a weekend.

The ideal time for me would be 6:00 to 6:30 on Saturday morning. My wife’s response to this suggestion is not fit for publication. We meet from 11:00 to 11:30.

These are some tricks to make the most out of your meetings:

Put them on your calendar and if you think about something, pull your phone out and add a note to this week’s meeting. That way you don’t forget it.
Use the meetings to develop a spending plan. Your spending plan needs to get you, not the other way around. Look at your bank’s online tools, other online tools like Mint, our Easy Spending Plan, a custom made Excel spreadsheet or paper and pencil. Try different ones until you find the one that gets you.
Find an item in your spending plan that you buy because you have to but don’t enjoy spending money on and see if you can cut that cost. Think of auto insurance and electricity. Any money you can free up from those is money you can save or use for something you want.
Run a retirement estimator calculator and make sure you are on pace to retire. Update this at least once a year.
Run a DebtBlaster calculator and make sure you are paying off your debt as efficiently as possible. Update this every 6 months or when you pay something off.
Review your investments at least once a quarter and make sure you are taking an appropriate amount of risk.

As someone who has done this for a while, the benefits of these meetings include reduced financial stress, you and your partner having a plan and fostering honest, direct and sincere conversations about money. Start now. Don’t wait a decade…like some people.

Don’t Lose Your Voice When It Comes to Your Finances

March 14, 2017

My husband loves cars. No, I mean he really, really, really loves cars. Whenever he is driving, our conversations will quickly go from what we are going to eat for lunch to the engine power on the vehicle next to him – often in the same sentence.

I thought I was all alone, until my colleague, Vekevia, shared with me that her husband loves cars too. As we started talking, I wanted to share her wisdom on how to keep the peace in a household with very different interests, especially when one person manages the household finances. Below are her thoughts:

Some couples manage money together and other couples have one person who primarily manages the money. Usually, in cases where one spouse manages the finances for the family, that individual is more financially savvy or may just be better at handling that responsibility. That makes sense.

It becomes an issue when either spouse, most likely the one not handling the finances, feels like their financial goals or desires are overlooked or not taken as seriously as the other spouse’s financial goals or desires. This is especially true when you just do not see eye to eye on the value of what either spouse holds dear. I handle the finances in our family and have had to learn to work with my husband so that we both feel heard.

My husband is an avid car lover and I don’t just mean that he enjoys seeing nice cars. No, his passion extends far beyond that. He is fascinated over how a car is designed and built. He cares about the horsepower and enjoys seeing how it performs.

Every year, we go to a well-known racetrack in our area to see other car enthusiasts show off what they’ve built and race each other. As you might suspect, this is not cheap. On average, the cost to build a car like what you would see at this type of event can sit close to six figures and annual maintenance after racing can fall in the five-figure range. Guess what? He wants to build one.

Initially, this was a problem for me because I do not value cars the way he does. I just like when a car is visually appealing, dependable.…and INEXPENSIVE! The good news is that we are compromising and he plans to build a much less expensive car, but the financial planner in me wants to scream. Cars are depreciating assets that lose value rapidly over time.

However, my husband’s passion for cars, as expensive as it may be, holds a value that I can’t technically plug into my calculator and put down on paper. It would mean a lot to him for his dream to become a reality at some point this lifetime. I value him and his happiness. Life is short and you only live once.

Being financially healthy doesn’t mean denying yourself the things you’re passionate about just because of cost. It’s about fitting your passions into your budget. Sometimes, you may have to find ways to make more money or decrease your expenses. We’ve chosen to fit building a car into our budget, not at the sacrifice of keeping a roof over our head, saving for our son’s college, or being able to retire, but it’s important, so it’s there.

Are you in a similar situation with your spouse? Here are some tips to show your spouse he/she has a voice in your finances:

Have an open conversation about your financial passions or dreams.
Decide what you value most. (You may have to choose 1 or 2 passions each this go around and take on the others in your next lifetime.)
Calculate how much you need to save for other financial priorities like retirement and funding your kid’s education.
Estimate the cost of making it all a reality.
Determine if your current income can carry the cost.
Seek opportunities to increase your income. That might mean pursuing a degree to make a career change, going for a higher paying position, or taking on a second job for extra income.

Realize that the cost of something is important, but so is the way your partner feels when you are willing to acknowledge and support his/her interests. You both should have a voice in your finances and work together to set up a feasible plan to make your dreams become a reality.

How an Argument on Valentine’s Day Made Our Marriage Stronger

February 14, 2017

When I think of Valentine’s Day, I always think of my first Valentine’s Day after I got married. We were new homeowners undecided as to how to decorate our home. I am a saver and I wanted to bargain shop and slowly decorate. My husband is a spender who was tired of walking around empty rooms and wanted to start buying furniture without looking for a deal (gasp). Our discussion, or rather argument, about how we would buy furniture was the first dose of reality that we had very different thoughts about money.

Now, I am sure some of you are asking yourselves why she is talking about an argument on Valentine’s Day. Trust me. I am going somewhere with this. It was not easy, but after we both stopped pouting, our argument made us realize that in order to have peace, we needed to agree on how we will spend money as a couple so over the next few months we came up with a plan to manage our finances together. The following is how we were able to do it without strangling each other:

1. We had money meetings a few times a month. We had a meeting a few days before the new month began to discuss what expenses were coming up during the month and a shorter meeting before each pay period to make sure nothing changed or was forgotten. The longer we did this, the shorter the meetings became. This went a long way to prevent arguments about last minute unexpected spending. Consider using a budget worksheet as a tool to map out your spending plan as a couple.

2. We set up communication ground rules for the meeting. First, we agreed to obey the principle my kids learned in kindergarten that if you have nothing nice to say, then say nothing at all. We established the budget meeting as a no nagging, judging, and cursing zone with no sarcastic remarks allowed. We also had to give one compliment about how our spouse managed their money. Work with your partner to come up budget meeting ground rules.

3. I agreed to keep the meeting short and my husband agreed to bring his body and mind to the meeting. I also agreed to be flexible on the meeting times if important events arise, such as my husband’s favorite team playing. Agree on a meeting date and time where both of you can be mentally as well as physically present.

4. We set up 4 accounts: a joint checking account where both of our paychecks initially went into for the household bills, separate checking accounts where money was transferred from the joint checking account for personal spending that we did not have to consult each other on, and a joint savings account. We agreed on how much each of us would get to spend every pay period. Every couple is different, so discuss the best opton for the both of you.

5. We also came up with spending ground rules. For us, it was that we would not spend anything over $100 from our joint account without discussing the purchase with each other. We also agreed that we would not discuss money spent in our personal accounts. I deliberately mentioned this twice because for some couples, it’s important to have personal money you can spend freely.

So as odd as it sounds, our argument on Valentine’s Day was one of the best things that could have happened to us. It led us to getting on the same page about money, which brought us closer together as a couple. As you celebrate Valentine’s Day, consider using the day to go over ideas on how to help you and your partner manage money better together.

How to Have The Money Talk

January 30, 2017

Are you in a serious relationship, thinking about moving in together, engaged or even newly married? If you are contemplating sharing a household together now or at some point in the future, there’s no better time than the present to discuss your finances. “Your life partner can be your best financial friend or your worst financial enemy,” according to Financial Finesse CEO and author Liz Davidson. Marriage is an emotional and spiritual partnership, but it’s also a legal financial relationship. Money is the leading cause of stress in relationships, but it doesn’t have to be. The foundation of any successful economic partnership, including living together or marriage, is strong communication with full financial disclosure.

Ground rules

The Money Talk can sometimes bring strong emotions to the surface, so choose a place to have your discussion that will be relaxing and free of distractions to both of you. Choose a pleasant, neutral location where you have sufficient privacy. Keep these ground rules in mind:

Make sure your discussion is scheduled for a time of day that works for both partners. My husband prefers to talk money and night and I prefer the morning. Over time, we’ve learned over time to bring up financial decisions during breaks in the work day, or on weekend days is best if we’ re going to have the most productive conversations.
No alcohol! While a glass of wine could give you courage to disclose your student loan balance, each partner should have their wits about them. It will much easier to listen compassionately without judgment if you are free of cocktails. Feel free to stash a bottle of champagne in the fridge for later to celebrate this milestone in your relationship.
Set a beginning and end time for your discussion. If you don’t finish everything, set up a follow up date.
Don’t judge. Your partner has a different money story and may have different values and financial priorities than you. Refrain from expressing opinions – think of this conversation as an exercise in information-gathering.

What to discuss? Make sure that you’ve covered all your bases:

Tell each other your money stories

How did your parents handle money? What do you think of how they handled their finances? How did that impact you? If you’ve never thought through your money story, the book The Feel Rich Project, by Michael Kay, CFP® has some helpful chapters on how to assess your history.
How would you describe your financial personality? Are you a saver or a spender, or something in between? Do you like to plan carefully, or be more spontaneous? Do you collaborate, or prefer to decide independently? Are you more likely to be meet your own expectations or those of others? Consider using this framework for thinking about how you best create financial habits. If you want to dive deeper into the financial personality question, you can both take an online quiz here or here and compare notes.
What’s the biggest financial success you’ve had? What are the factors which contributed to it?
What’s the biggest financial failure you’ve had? What are the factors which contributed to it?
If you’ve been married or living together before, how did you handle money together? What worked, and what didn’t?

Take inventory – how much to you spend, what do you own and what do you owe?

Now that you’ve reviewed the emotional side of money, it’s time to get practical. Compare notes on your income and expenses:

Income

How much do you each make? Do you expect that to increase, decrease or stay the same in the short term?
Do you have other sources of income, such as rental property, business investments or trust income?

Expenses

How much and what are your “must pay” expenses every month – housing, transportation, insurance, child support, tuition, etc.
Do you track your expenses? What system do you use?

Assets

How much are you saving for retirement as a percentage of your income? How much have you saved so far in retirement accounts, such as 401(k) or 403(b), Roth and traditional IRAs?
If you own your home, what’s it worth approximately?
Do you have an emergency fund? How much do you have in cash reserves?
What other investments do you have?
Do you co-own any of your assets with someone else?

Debt

What is your mortgage balance, rate and remaining years to pay, if you have one?
How many credit cards do you have? Do any of them carry balances that don’t get paid off in full each month? How much?
Do you have outstanding student loans? Are they private or federal loans? Are you current on paying them? Are you in a loan deferral or forbearance period?
If you have non-mortgage debt, do you have a plan for paying it off? By when?

Insurance

Financial wellness means that you are prepared for unexpected and expensive events, such as a major illness or car accident.

Do you have health insurance? What kind of health care benefits are available to you at work?
Do you have short and/or long term disability income insurance?
Discuss your auto insurance. Do you have the bare minimum coverage, or are more fully protected?

Show each other your credit reports

Now comes the hard part. Show each other your credit reports. For many couples, this is the most difficult part of the conversation. Remember, regardless of your credit history, transparency here is an act of love. If you are thinking about spending your lives together you’ll have an economic and financial partnership, not just a romantic one. Full disclosure is essential, especially for engaged and married couples, who will generally be held legally responsible for debts their spouse occurs during the marriage.

Access your free credit reports from the three major credit bureaus at annualcreditreport.com or share your report from any online credit monitoring service you use, such as Credit Karma or Credit Sesame.
Review and discuss any major items, such as bankruptcy, short sales, and a history of significant late payments or charged off accounts. Do you see evidence that your partner has good financial habits, or is working to develop them after a financial mishap?
If one partner has significantly better credit than the other, how will this impact how you manage money together?

What are your financial priorities and long term goals?

Once you’ve tackled the rough part of the conversation, you can head to the fun part! A successful marriage begins with a shared vision. Ask each other:

If everything worked out exactly the way you wanted it to financially for us, what would that look like?
Where do you see us living now? In five years? In retirement?
If we plan to have children, do you think one of us should take a career break to raise them? For how long?
When would you like to be financially independent enough to have the option to retire?
Can you define “financial independence” for me?
What would happen if one of us got sick or laid off? How do you think we should handle it?
If one of you has children from a previous relationship, how do you plan to handle the costs of raising them, including sending them to college? See Financial Planning Tips for New Stepparents for ideas.
If one of you has significant debt, such as credit card balances or student loans, what is your target time to have them paid off completely?

Not a one-time event

Congratulations on getting through your first “Money Talk!” We hope this will be the first of many ongoing conversations about your joint finances. Marriage can teach you a lot about money. Now that you’ve established a foundation of transparency, full disclosure and sharing your visions, set up regular “money meetings” to talk through ongoing financial business. You’ll have a better personal – and financial – relationship for doing that.

Do You Need a Cohabitation Agreement?

January 25, 2017

As more and more couples choose to live together without going through the formality of getting married, a new term has cropped up in the legal world: the cohabitation agreement. Similar to a prenuptial agreement, the cohabitation agreement is a legal document that both partners sign clarifying things like how bills will be paid and other logistics of the relationship, along with the division of any assets and custody of any children should the relationship end. Many couples who move in together do so as a sort of test to their compatibility – before taking the legal plunge into marriage, they want to make sure they can actually live together peacefully.

I can relate. After my first marriage went down in flames for reasons that would have been sniffed out had we lived together prior to the wedding, I knew that I would move in with any future prospective husband before he put a ring on it. These situations don’t always call for a cohabitation agreement, but some couples may still choose to have one just in case the experiment fails.

Couples who, for whatever reason, decide to forgo marriage altogether and simply make a life together may choose to sign a cohabitation agreement in order to provide a level of protection should things turn sour down the road or one partner passes away. Each state’s divorce laws provide this protection when a legal marriage exists. The cohabitation agreement serves as sort of a replacement for this protection.

For example, let’s say a couple purchases a home together then breaks up. If they were married, the judge presiding over their divorce case would see that the home was fairly split between them according to their state’s laws. When there is no marital law to apply, it can lead to costly legal battles even if the home was jointly owned. A cohabitation agreement helps to clarify and hopefully avoid such battles by stating ahead of time what would happen to the home should the couple split up or one person die.

Cohabitation agreements also served as a sort of prenuptial agreement for same sex couples before they were legally allowed to marry, but there are still instances where a same sex couple who is married may still need the protection of a cohabitation agreement or similar document: for example, when they have a child in a state that doesn’t allow adoption by same sex parents. I have friends who had to consider this when each of them gave birth to a daughter from the same sperm donor, making their daughters half-sisters with different mothers who are married to each other. One of the reasons they chose to live where they do is that their state of residence allowed the other mom to adopt her non-biological daughter so that if something happens to the biological mom, there would be no concerns about the surviving mom retaining custody of both girls.

Here are the aspects of your life that a cohabitation agreement could cover:

Distribution of property (both individually and jointly owned ) should you break up or one person die. For couples with large income and/or wealth disparities, this can help avoid conflicts during and after the relationship about who pays what and who gets what.
Financial support during or after the relationship. For example, many romantic partnerships are forged out of business partnerships or vice versa. This can get very messy should the relationship end, so a cohabitation agreement provides a level of clarity and protection for both parties in that case.
Support, custody, etc of minor children. Family courts can override these agreements if it’s in the best interest of the child, but having an agreement ahead of time can provide peace of mind, especially if the child is not a biological child of both partners.
Health insurance responsibility. Many employers allow coverage of domestic partners, so a breakup could lead to loss of coverage for one of the partners.

Wills and powers of attorney can be used to cover most of these topics in the case of death, so cohabitating partners should still take those steps as well. In fact, it could be even more important to establish an estate plan when you’re NOT married as your partner may not be entitled to anything should you pass.

There are mixed opinions in the legal community about the enforceability of cohabitation agreements. This article is not meant to serve as a substitute for paid legal advice from an attorney. Should you decide that you and your partner need a cohabitation agreement, I strongly recommend you hire an attorney to draft it to maximize its effectiveness should you need it down the road.

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How Do You Make Financial Decisions?

March 04, 2016

For the last week, I’ve read a lot about Apple vs. the U.S. government regarding the request of the government that Apple build a back door into the phone of one of the San Bernadino killers. The case is very controversial and I understand why both sides feel so strongly. The government wants to break into the phone to see if there is evidence that can help understand and track down anyone who might have helped the killers. Apple is concerned that an important part of their products, a strong encryption that makes them very secure, could be no longer a strength if the encryption code they would write gets into the hands of the wrong people. Both sides have strong arguments, and I will keep my opinions out of this. Continue reading “How Do You Make Financial Decisions?”

How Your “Time Perspective” Can Impact Your Marriage

December 23, 2013

Last week, my wife wrote a blog post to kick off the “couples and money” series. One of the hot button “budget busters” she talked about was the urge to splurge on non-essential luxury items like clothes, purses, household items, etc. (I thought her timing was perfect for the busiest shopping period of the year.) Admittedly, she isn’t the only one in our household with a taste for big ticket items as I have a long list of wants (definitely not needs) on my list for Santa. I would love to have a paddleboard, upgraded golf clubs, football season tickets for next season, or a trip to Brazil for the World Cup. Continue reading “How Your “Time Perspective” Can Impact Your Marriage”

Money and Marriage: The Missing Manual

September 03, 2012

It 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. Continue reading “Money and Marriage: The Missing Manual”