My husband and I have differing opinions on insurance. Yes, we're both multi-cultural and multi-racial. My dad showed me where the life insurance policies were located in a safe when I was 10 years old. Joe’s dad died while he was getting his undergraduate degree.

Joe has a large extended family in Indonesia, so there’s no shortage of relatives to care for loved ones in the event of an illness or premature death. In his mind, why buy insurance when you have family?

My reaction to Joe’s perspective on financial planning was making him feel guilty. I then applied for life insurance on my own, scheduled the paramedical exam when I was six months pregnant, and agreed to pay the life insurance premiums for us both.

Key Takeaways

  • When one partner lacks basic financial knowledge, the ensuing missteps in a marriage can lead to arguments, tension, and mistrust.
  • A couple's financial literacy should include personal financial planning, creating a budget, setting goals, and managing debt.
  • A financial advisor can work as a neutral party to help a couple focus on their goals, increase communication, create "next steps," and improve their financial outlook.

When a Skills Gap Can Lead to Discord...or Divorce

Sure, one could say I’m risk averse. I prefer to say risk aware. I didn’t think that buying life insurance would jinx me. I didn’t think avoiding the topic would prevent me from dying, either. I wanted my family to have the money they’d need in the event of my illness, disability, or death.

As a certified financial planner®, I get to see first-hand how financial planning can affect a marriage. In fact, I don’t think there’s a single segment of our lives that’s not affected by financial planning.

Imagine the hurdles a couple will face if one or both partners lack even the most basic financial literacy. Missteps and the arguments that result from them frequently lead to ongoing tension and mistrust in a relationship, sometimes reaching a point of no return.

Americans' declining financial literacy (and solvency) is a growing concern—even the Federal Reserve took note. In a 2018 study, it found that 40% of adults wouldn’t be able to come up with $400 for an unexpected expense or would have to sell something or borrow money to cover it.

Add the tension of unpaid bills, looming student debt, or over-spent credit cards to the stress of a romantic relationship, and it’s no wonder money is one of the most-often-cited instigators of marital discord.

It’s Not Just Spending Less

Financial literacy is a relatively bland-sounding way to describe the ability to understand money and the role it plays in a person's life. For couples, it means knowing how your beliefs about money impact your decisions about money, which in turn affect the other person in your relationship. When you’re part of a couple, financial literacy should include personal financial planning, creating a budget, setting goals, and managing debt—not just because it’s the “right” thing to do, but because your decisions will affect your partner whether you make them intentionally or not.

The Path to (Financial) Infidelity

As a CFP® who helps clients plan for their financial futures, I encourage both parties to clearly state their views on money, which pretty quickly highlights where they differ. The two individuals who make up a couple bring with them two different perspectives on saving, spending, and investing—not to mention what’s an acceptable level of debt or risk.

When the two members of a couple come from different backgrounds, having contrary opinions on how things “should be” is common. Agreeing on how to handle finances and having frequent conversations about the progress you are making is essential. Otherwise, financial infidelity can creep into your relationship.

Financial infidelity can be difficult to detect, but here are a few red flags to look for:

  • Your name has been taken off a joint credit card
  • Cash is missing
  • You notice your partner has a lot of new possessions
  • You find a statement for a credit card you know nothing about
  • Your partner is obsessive about checking the mail
  • You find evidence of a financially addictive hobby like gambling
  • You see beneficiary changes on any investment accounts or insurance policies

How to Prevent Financial Conflict in Couples

Straight up, money is an awkward topic, and you’re probably avoiding a conversation about it. Even if you think you’re on the same page, checking in with your spouse can help you avoid or at least mitigate major miscommunication about how your money is being spent, saved, or invested. Here are some steps that can help.

Commit to transparency

Being open and honest is the foundation of creating financial harmony in a relationship. Full disclosure includes sharing details about debt, credit scores, bank balances, and spending habits. When taking this essential first step, it’s crucial to listen without judgment so you can gain a clear understanding of your financial situation.

Understand their motivations

Like it or not, your approach to money is often strongly influenced by your parents and a lifetime of experiences that molded you. If you grew up wealthy, your outlook is probably quite different than that of someone who grew up economically disadvantaged.

Make a point to understand your motivations too. What may seem thoughtless, selfish, or strange to you may simply be the way things were always done in your spouse's life.

Set goals, then share them

Sharing financial goals can help to build a happy relationship. Keep in mind that goal-setting extends beyond money. Ask your partner about what they want to achieve in the future and how they envision their everyday life and your life together. Then put your goals in writing and include the steps you’ll take to reach them.

Have regular checkups

Financial literacy isn’t something that happens once. It’s an ongoing conversation between the two of you. A monthly or weekly “marriage meeting” is an excellent way to make sure you stay on the same page when it comes to your finances.

Seek help

You get a medical checkup every year, why not get a financial checkup, too? A financial advisor can bring the expertise of a neutral party to a tense corner of your relationship.

To find the best ways to help you, a financial advisor will get to know you both as a couple. Here are a few questions you might be asked:

  • Can you tell me about yourself, your career, children, and work history?
  • How would you like me to help?
  • Are you doing anything now to improve your financial picture?
  • What are your goals and have you talked about them together?
  • What concerns you the most about your financial literacy as a couple?
  • What’s a good next step and how can I help you?

In some relationships, one person takes care of the primary financial responsibilities. But a financial advisor will want to meet with both of you because financial decisions will have an equal impact on each of you, regardless of who makes the initial choices. Plus, if the worst should happen and one of you passes away, the other won’t be left wondering what accounts they had or where their money is.

Money is tense. Money is awkward. Money is personal. It's simultaneously one of the most uncomfortable topics in a relationship and the one most likely to play a prominent role in a couple's success. Just like a mental health professional guides individuals and couples over their emotional hurdles, financial professionals can help ensure couples have the right vocabulary, financial literacy, and confidence to make the best choices with their money.