Arguments about money hamper many marriages. If you consider that about a third of adults with partners report that money is a big source of conflict in their relationships, it's no wonder that financial problems are a leading cause of divorce. What you may not know is that the challenges can actually start even before you say "I do."
To help pave the road to better marital finances and relationships, here's an accounting of the most common financial issues married couples contend with.
- If you’re committed to a relationship, you and your partner owe each other a calm, honest conversation about each other’s finances, habits, goals, and anxieties.
- This where the ego, anxieties about control, and notions of marital roles will have to be checked. When working together, couples can achieve more than singles.
- If debt is an issue, couples can employ various tools and strategies to start paying off debt and get on a better financial footing.
- Having kids changes everything; ideally, couples should communicate their expectations and ideas about how to raise and pay for them well before they’re born.
- Couples who have trouble talking about money can seek out the help of a financial adviser or planner for unbiased advice.
1. What's Mine, Yours, Ours
Sometimes, when each spouse works and they can't agree on financial issues or find the time to talk about them, they decide to split the bills down the middle or allocate them out in some other fair and equitable manner. Once the bills are covered, each spouse can spend what they have left as they see fit. It sounds like a reasonable plan, but the process often builds resentment over the individual purchases made. It also divides spending power, eliminating much of the financial value of marriage, as well as the ability to plan for long-term goals, such as buying a home or securing your retirement. And it can lead to such relationship-ruining behavior as financial infidelity, when one spouse hides money from the other.
Bill splitting also pushes down the road any planning and consensus-building about how financial burdens will be handled if one spouse loses a job; decides to cut back on hours or take a pay cut to try out a new career; leaves the workforce to raise children, go back to school, or care for a parent; or if there's any other situation in which one partner may have to carry the other. Couples owe it to themselves to have a conversation about such contingencies well before any of them happens.
From school loans to car loans, credit cards to gambling habits, most people come to the altar with financial baggage. If one partner has more debt than the other—or if one partner is debt free—the sparks can start to fly when discussions about income, spending, and debt servicing come up.
People in such situations may take some solace in knowing that debts brought into a marriage stay with the person who incurred them and are not extended to a spouse. It won't hurt a credit rating, which is linked to Social Security numbers and tracked individually. That said, in most states (ones that operate under what is called common law) debts incurred after marriage (jointly) are owed by both spouses. Debts incurred individually are still owed by the individual, with the exception of child care, housing, and food, which are all joint debt no matter what.
Note that there are nine states in which all property (and debts) are shared after marriage regardless of individual or joint account status. They are: Arizona, California, Nevada, Idaho, Washington, New Mexico, Texas, Louisiana, and Wisconsin. In these states you are not liable for most of your spouse's debt that was incurred before marriage, but any debt incurred after the wedding is automatically shared—even when applied for individually.
Personality can play a big role in discussions and habits about money. Even if both partners are debt free, the age-old conflict between spenders and savers can play out in multiple ways. It is important to know what your money personality is, as well as that of your partner, and to discuss these differences openly.
Briefly, some people are natural savers who may be viewed as cheapskates and risk-averse, some are big spenders and like to make a statement, and others take pleasure in shopping and buying. Others rack up debt—often mindlessly—while some are natural investors who delay satisfaction for future self-sufficiency. Many of us may display more than one of these characteristics at given times, but will usually revert to one main type. Whichever profile you and your spouse most resemble, it's best to recognize bad habits and address and moderate them.
Marriage-Killing Money Issues
4. Power Play
Power plays often occur in one of these four scenarios: when one partner has a paid job and the other doesn't; when both partners would like to be working but one is unemployed; when one spouse earns considerably more than the other; or when one partner comes from a family that has money and the other doesn't. When these situations are present, the money earner (or the one who makes or has the most money) often wants to dictate the couple's spending priorities. Although there may be some rationale behind this idea, it is still important that both partners cooperate as a team. Keep in mind that while a joint account offers greater transparency and access, it is not in itself a solution to an unbalanced power/money dynamic in a marriage.
To have or not to have? That's usually the first question. Nowadays, it costs $233,610, on average, to raise a child to age 18, according to the U.S. Department of Agriculture. (If projected inflation costs are factored in, the cost rises to $284,570.) Food, clothing, shelter, little league, ballet, designer jeans, prom gowns, pickup trucks, and college are all part of a long list of child-related expenses. These don't include expenses for offspring who have already left the nest. That's assuming your kids will leave the nest. Some kids never do.
Of course, having kids isn't just about the cost. If one partner cuts their hours, works from home, or leaves a career to raise children, couples should address how that changes marriage dynamics, assumptions about retirement, lifestyle, and more.
The cost of raising a child to age 18 in the United States.
6. Extended Family
Co-managing finances and respecting the goals, needs, and expectations a spouse has regarding the extended family can be especially tricky.
Take, for example, her mom—she wants a vacation in Vegas. His parents need a new car. Her deadbeat brother can't make the rent. His sister's husband lost his job. Now one spouse is writing a check and the other wants to know why that money wasn't used to address needs at home or fund a vacation for "us."
This works the other way too. His mom will pay to fly him home for the holidays. Her mom will fund a new car since the one she's driving is a Honda, not a Lexus. Her mom buys the grandkids extravagant gifts and his mom can't afford to match that kind of spending. The joys of a family often extend right into your wallet (pardon the sarcasm).
How to Handle Money Issues in a Marriage
If you've read this far you'll probably not be surprised that the best way to handle such marriage stressors is with communication and honesty in conveying expectations, hopes, goals, and anxieties. Couples should also practice empathy, have the maturity to check their egos, and abandon any predilection for control. Yes, that's a lot easier said than done. And, no, there is no silver bullet. Some people may never get it right; that doesn't mean they are bad or they can't achieve some success by employing certain tools and techniques to address the symptoms.
Deal with debt
For many couples, dealing with debt is often the first issue on the agenda. Knowing what you're about to get yourself into can help you decide how to deal with it. Given this fact, both partners should have an honest, nonjudgmental discussion about possible bad spending or financial habits that should be addressed and avoided. Couples should also perform an accounting of debts and apply one of the several common payoff strategies, such as paying off the higher-interest debt first or paying off the smallest loans first (a.k.a. the debt snowball method).
Sign a prenup (or postnup)
If you just can't come to an agreement but your heart won't let you walk away, a prenuptial agreement may be an option. Just be aware that one partner may find that prenup insulting. The best practice would be to first have a conversation about the financial anxiety that makes one partner think a prenup is the best solution. If this is a second marriage for both partners, for example, they may have financial assets that they want to pass on to their respective children.
If you've already said "I do," and you want more than vows to protect yourself, you may want to create a pain-free postnuptial agreement (or marital contract). This marital contract can underline your love for each other, though it can be a hard sell and can wind up undermining marital trust if not used as intended or framed the right way.
Know your financial personality
Personality, as noted above, is another aspect of your relationship that will play a major role in your financial plans and your marital bliss or lack thereof. Pay attention while you are dating, and be honest about who you are. Talking about your views and feelings can help put both partners at ease, or at least let them know what to expect.
Check your ego
The power play issue can get ugly quickly. Few things build resentment faster than being made to feel inferior. If you've got the cash, you need to be sensitive about how you present spending decisions. If you don't have the money, you need to be prepared for the stress and tension that are almost inevitable, even in good marriages. This subject comes up with increasing frequency when couples wait until later in life to marry.
Debt that your spouse incurred before your wedding stays with them as far as credit reporting goes (though you might feel the bite of that debt yourself).
Studies have shown that people with more power are more likely to act selfishly, impulsively, and aggressively, and approach others with less empathy. Each partner in a marriage should ask themselves whether their behavior works toward the goal of a more kind, appreciative, and equitable relationship or not.
One solution that has demonstrated success is for the higher-earning spouse to delegate all spending decisions to the lower-earning spouse. It takes a certain personality to be able to make the decision to give up power, but if you can do it, it may be a sound path to peace.
Address family matters
As Tolstoy wrote in "Anna Karenina," "All happy families are alike; each unhappy family is unhappy in its own way." Extended family can be a huge challenge and no single piece of advice will properly address every situation and the emotions inevitably attached to them. Even if you are on the winning side of the argument, the loser can extract a penalty that outweighs the win. Living with a resentful, angry, frustrated spouse can be a miserable experience. Having a policy agreed upon in advance (such as asking for consent) can help stave off trouble. And defaulting to being understanding will smooth over any small transgressions. Of course, the best policy is "never a borrower or a lender be."
Passing Along Good Habits
If children are in your future, start teaching them about money when they are young. Preparing them for a financially responsible future reduces the odds of them dipping into your wallet as adults and knocking your savings plan off track. Use allowance and goals to teach your children about earning, saving, and spending money.
The Upside of Getting It Right
Challenges aside, getting married can have serious financial advantages. It is a great way to double your income without doubling your expenses. If you can synchronize your goals, you reach them much more quickly than you could by working alone. And keep in mind that, even if you get it right 99% of the time, it still means you'll argue about money issues now and then.
The Bottom Line
Good (and sometimes painfully honest) communication before and after tying the knot can dull the blow of bad financial news and lead to honest exchanges about each partner's money anxieties, habits, skeletons in the closet, and expectations. If you're thinking about entering into what you hope is a lifelong relationship, you and your partner owe each other such a discussion.
Lack of communication is the source of many marital issues. This space is where the hard work of marriage often lives. Like common health problems, financial anxieties—if not addressed—can become far bigger problems with much more difficult solutions. The best way to be sure you and your spouse are on the same page with your joint finances is to talk about them regularly, honestly, and without judgment. Don't do it when you're mad, tired, or intoxicated. Some couples may even find it helpful to schedule a time once a month, once a quarter, or once a year to check in on short- and long-term goals. They may even want to enlist the help of a financial advisor or planner for impartial advice.