Money troubles in a marriage are one reason couples end up in divorce court. Alright, so money can’t buy happiness. But if there is good money management in the home, it brings about peace of mind for husband and wife. 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.

If good financial management did not exist, then the home situation can get chaotic to the point of being intolerable. It’s bad enough when there’s a series of expenses to cover – mortgage, kids’ education, nannies, insurance, maintenance, country clubs, summer camps – but it’s worse when these expenses can’t be met. That’s when money troubles in a marriage begin to fester. A good advice is to sort out money matters way before marriage. During the dating stage, men and women should get an idea of how the other person spends money. Dating couples soon discover whether they’re living it up, being financially prudent, or being outright stingy.

Money is a taboo subject – will always be – but when two people decide to get married, it should be one of the first things they talk about. In fact, they need to address it immediately so as to avoid any misunderstanding when they begin their life together. When there are financial conflicts, the marriage is off to a bad start. As Gail Liberman and Alan Lavine point out 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 used to bring together financial planners and people experiencing money troubles in their marriages. They would have frank and open discussions about excessive spending by one spouse and how the other spouse almost filed for divorce. The stories run through a common thread:

  • Boy meets girl and they fall in love,
  • Girl notices that boy is lavish spender. He takes her to the fanciest restaurants and drives her around in flashy cars,
  • Girl believes that he overspends but decides that when they get married he will change and be more reasonable with his spending,
  • During the first two years of their marriage, boy maxes out their credit limit, their credit cards and brings down their credit score,
  • Bills pile up and they fight over money,
  • They have to sell some of their possessions to pay the electric bill and for school lunches for their kids,
  • Situation gets out of hand and they decide to split up.

The situation as we describe it above is rampant. Yes, call it an epidemic. The painful truth is that people can’t control their spending and have zero sense when it comes to personal financial planning. Money is at the root of all evil, they say, and we’ll add that money is most often at the root of all divorce cases. That’s because marrying couples aren’t aware that when they march down the altar, they’re actually leading two different financial lives.

Money Tips for Couples

Gerri Willis of CNN offers five tips on how to mix marriage and money:

  • Reveal all financial matters to your future spouse – Willis said that according to a Redbook survey, 36% of men and 40% of women admit to lying about how much it cost them to buy something. Share financial information with your future spouse by revealing how much you have in the bank, your debts and loans, and if you’re having problems with your credit score. If you fail to share any of this information, remember that when the time comes to sign mortgage documents, the bank may deny you a loan because of your poor credit score. Don’t give your spouse any reason to doubt you. Be upfront.
  • Decide if you want a joint account – deciding which expenses will be shared and paid out of a joint account is probably a better arrangement for younger couples who are just starting out and don’t have substantial assets, according to CNN’s Willis. For older couples however who are into their second and third marriages, a joint account isn’t necessary. They can choose to keep their expenses separate. It’s convenient especially when one spouse is still burdened by debts that the other does not want to absorb.
  • Review your financial situation regularly – discuss issues like retirement plans, investment choices, and plan major expenses for the next 12 month period.
  • This is for the men: don’t feel guilty if your wife makes more than you do. It’s nothing to be ashamed about. Women have come a long way and their presence and influence are more pronounced now in the corporate world. Harriet Pappenheim and Ginny Graves (Bringing Home the Bacon: Making the Marriage Work When She Makes More Money (Harper Collins, 2005) say that “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 most important issues – we’re referring here to things like a Will and a prenuptial agreement. A Will contains your specific instructions with regards to your assets, kids and other property, while a prenuptial agreement is ideal if one spouse has far more substantial assets than the other.

There are two opposite ends of the money spectrum. Let’s not go to extremes. Middle ground is best. What we mean by this is that we shouldn’t overspend or live beyond our means, nor should we consistently deprive ourselves of the enjoyment that comes from spending one’s hard-earned cash. Acting like Scrooge is just as bad for the marriage as being a spendthrift.

Know what you can afford and don’t forget to pay yourself first. In your productive earnings years, have a sound plan about your personal finances. Agree on the difference between essential spending 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.”

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