Money troubles in a marriage are one of the key reasons couples end up in divorce court. While money can’t buy happiness, good money management within the home can bring peace of mind to both partners. It may not make them happy, but at least they know where their money is going and that it’s being spent and invested wisely.
Without good financial management, the home situation can quickly become chaotic and even intolerable. It’s already challenging enough to cover essential expenses—mortgage, kids’ education, nannies, insurance, maintenance, country clubs, summer camps—but it becomes even worse when these expenses can’t be met. That’s when money troubles in a marriage begin to fester. A good piece of advice is to address money matters before marriage. During the dating stage, both partners should get a sense of how the other person handles money. Dating couples will quickly learn whether their partner is living extravagantly, being financially prudent, or being outright stingy.
Money has always been a taboo subject—and it likely always will be—but when two people decide to marry, it should be one of the first things they discuss. In fact, it should be addressed immediately to avoid any misunderstandings when starting life together. Financial conflicts at the outset can spell trouble for a marriage. As Gail Liberman and Alan Lavine note in their book Love, Marriage and Money: Understanding and Achieving Financial Compatibility Before—and After You Say I Do (Dearborn Financial Publishing, 1998), “Knowing the basics about how to handle and talk about your newly combined finances (or even debts for that matter) can provide a strong foundation for your long-term relationship.”
Money Troubles: A Favorite Subject of Oprah
In some of her past shows, Oprah Winfrey brought together financial planners and couples experiencing money troubles in their marriages. They would have frank, open discussions about one spouse’s excessive spending and how the other partner nearly filed for divorce. The stories often follow a familiar pattern:
- Boy meets girl, and they fall in love.
- Girl notices that boy is a lavish spender—he takes her to the fanciest restaurants and drives her around in flashy cars.
- Girl believes that once they marry, he will change and become more reasonable with his spending.
- During the first two years of marriage, boy maxes out their credit limits, their credit cards, and damages their credit score.
- Bills pile up, and they begin fighting over money.
- They sell some of their possessions to pay for the electric bill and school lunches for their kids.
- The situation escalates, and they decide to split up.
This scenario is unfortunately all too common—some might even call it an epidemic. The painful truth is that many people can’t control their spending and have little understanding of personal financial planning. It’s often said that money is the root of all evil, and we would add that money is frequently the root of many divorce cases. This happens because marrying couples are unaware that, as they walk down the aisle, they are bringing two very different financial lives into the marriage.
Money Tips for Couples
Gerri Willis of CNN offers five essential tips on how to successfully manage both marriage and money:
- Reveal all financial matters to your future spouse: According to a Redbook survey, 36% of men and 40% of women admit to lying about the cost of their purchases. Be transparent with your partner about your bank accounts, debts, loans, and any credit score issues. Failing to do so could cause problems later, especially when applying for loans, as a poor credit score may result in a denied mortgage. Honesty upfront can prevent future doubts.
- Decide if you want a joint account: Deciding which expenses will be shared from a joint account may be a better option for younger couples just starting out with few assets. For older couples, particularly those in second or third marriages, keeping separate accounts may be a better choice, especially if one partner is burdened with debt the other does not want to absorb.
- Review your financial situation regularly: Discuss key issues like retirement plans, investment choices, and plan for major expenses in the next 12 months.
- Don’t feel guilty if your wife makes more than you: It’s important to recognize that women’s roles in the corporate world are more prominent now than ever. Harriet Pappenheim and Ginny Graves in *Bringing Home the Bacon: Making the Marriage Work When She Makes More Money* (Harper Collins, 2005) note, “During this tricky transition in modern marriages when men are increasingly being unseated from their financial thrones, it’s essential for women to try to understand who men are as human beings and why they react to things the way they do. Only with this understanding will it be possible for contemporary women to sustain a relationship with their male partners.”
- Deal with the unromantic but important issues: Address practical matters like a will and a prenuptial agreement. A will ensures that your assets, children, and property are managed according to your wishes, while a prenuptial agreement is useful if one spouse has significantly more assets than the other.
There are two extremes on the money spectrum, but the best approach is to find the middle ground. Don’t overspend or live beyond your means, but don’t deprive yourselves of the enjoyment that comes from spending your hard-earned cash either. Acting like a Scrooge is just as detrimental to a marriage as being a spendthrift.
Know what you can afford, and always prioritize saving. During your productive earning years, establish a solid financial plan. Agree with your partner on the difference between essential and non-essential spending.
As our father always used to say, “If you can’t afford it, you can’t have it. And if you have to keep up with the Joneses, do so on a budget.”
