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How to Talk to Your Spouse About Money details the cause of family money problems and outlines a framework for change. This report delves into key problem areas such as communication, personal financial needs and incongruent goals. It concludes with a process for the home that is open, honest and healthy – leading to better feelings among family members and ultimately to joint financial action that is coordinated and impactful.
Money. Depending on your station in life and upbringing, the word “money” conjures up emotions that range from utterly soothing to intense anger. People have very strong opinions about money; many of them are based on incomplete information or worse yet, heuristics that they learned growing up that no longer apply.
As one of the top reasons for divorce, it’s a surprising that the topic of money is rarely discussed prior to marriage, and even in marriage often not until its too late: homes, wedding venues, kids, even careers, all fine; money – not in great detail.
There is no single reason for this; perhaps it’s society’s romantic view about love and money:
• Who needs money when you have love
• Money does not buy happiness
• Love and money don’t mix
To delve deeper into the subject, I called in an expert. “Psychologically, discussing money kills the romance of the engagement,” says Christine, who is on the verge of getting married. “I’m afraid if I bring up the subject, the topic will take something that is so pure and make it about the business of marriage,” she continued.
Intuitively Christine’s view is understandable, although risky. Most people do not enter a marriage if they are not in love, and virtually no one wants to feel like money is the primary motivator for marriage. Because of this, couples often go out of their way to prove that they don’t care about money prior to marriage: men often spend more than they can afford on flowers, dinners, gifts and of course the engagement ring, and women state during the dating ritual that “you shouldn’t have.”
Despite this, after the vows are exchanged and life as a married couple begins, the union of man and wife quickly enters the money stage. Bills need to be paid, homes need to be purchased, and when the kids arrive, fugetaboutit! Nights out become almost non-existent; then come the diapers, the grocery bill, the school clothes, the larger home and eventually . . . college. Romantic vacations, dinners, movies, and other “couples activities,” that were once magical (and the cost of which was unspoken) now become the center of one argument after another.
How did everything go so horribly wrong?
The problem, and the solution, is simpler that you think. It comes down to three factors:
1. Honest communication
2. Setting and actioning common money goals; and
3. Not being so financially militant that romance goes out the door.
Marriage v. Dating
There is a difference in behavior when one thinks about how long they will be with their partner. “When a woman and man date each other, even right before marriage, neither thinks too much about the joint checking account, combining both partners assets, debts and expenses; nor do they think about funding a child’s (or multiple children) college education, the cars, the house, the insurance, etc. Certainly neither partner is thinking about retirement,” says Christine. “It takes a very mature and forward thinking couple to agree mid-marriage financial goals before walking down the aisle. In fact it happens so rarely that if the discussion were to be initiated by one partner, the other might head to the nearest exit, instead of heading to the alter!”
Post “I do,” however, in order for a couple to have a happy life together, a little structure needs to be put in place around money. Unless you’re marrying into the Forbes family, you will very likely have to agree how, and where, you spend your money. In the words of just about every Mom in the world, “you can have anything that you want, just not everything.” The same holds true for couples.
If a couple were to follow only one rule about money and marriage, it would be the following: Nothing gets better until both partners can have an honest discussion about money. Yes, it may lead to an argument, and yes nothing may get resolved the first go around, but discussing money openly is essential to a couple’s long-term financial health: if either (or both) partners think the other spends too much, spends in the wrong places, or does not understand the material needs of the other, then when it comes time to make money decisions one of two things happen:
1. Nothing, meaning each partner continues to do what they feel is appropriate and the frustration continues to build;
2. One partner “lays down the law,” to the other. Nine times out of ten this makes the situation (and the marriage) much worse.
How to talk to your spouse about money
Question: Who’s the enemy when it comes to your family finances? If you’re like most people reading this article, you’re thinking “my spouse of course!” Perhaps not . . . Let me explain.
In a perfect world, as critical thinking adults we should be able to easily slice through the hype, spin, and outright lies that the media, salespeople and other influencers of our wallet to come to a buying decision that is right for us. In that perfect world, you’d go to the mall and there would be a dozen or so brand-less stores with simple signs that say, Consumer Reports Highest Rated Shoes, Jeans, Jewelry, Food, etc. There would be no commercials on television baiting you with the siren’s songs of better, more, slimmer, healthier easier, cooler. You would not walk into a car dealership where Salesman A tells you that their car is the best, only to walk into different dealership where Salesman B tells you that theirs is the best.
You would never receive a call from the telemarketer who says, “Mr. Winter we’re from your credit card company and need to verify a few items on your account (how can you refuse the bait, it might be the truth!), and after a few ridiculous questions about your address or some other non-sense they slip in, “now we noticed that you are unprotected in the event you lose your job, and for only the cost of only 1 percent per month on your outstanding balance we’ll protect you . . .”
The fact, unless you are really diligent, marketing works. Consumers are “financially mugged” all of the time. They just don’t recognize it because the mugger is dressed in a $1000 suit, speaks the language of influence fluently and is very keen, even desperate to separate you from you money at almost any personal cost to their soul.
Setting and actioning common money goals
Understand that when dealing with your spouse, the conversation is different than when dealing with a car salesman, the timeshare marketer or even the real estate broker who “gets you.” Those are one-time transactions and it’s unlikely you’ll ever see that salesperson again. This means the setup is different: they don’t care about you (trust me, they really don’t) and you should not care about them. For them its about getting to “yes” at the highest possible price.
With this in mind, understand you and your spouse have (hopefully) many common goals, with some individual “marketing driven” differences and desires mixed in. For some people the following is a process, for others an intervention, but in either case this framework is a strong starting point:
Set a time to discuss what the two of you desire financially – big picture. Have the discussion at a time that is not distracting or stressful. In the morning, on the weekend is often a good time. Identify what you both want, and very importantly identify the differences.
1. Identify what drives the differences. I had one reader tell me that “he was absolutely sure the end of the world was coming to an end on December 21, 2012” (the end of the world according to the Mayan calendar), so “he did not need to save at all.” He went into the day with less than a hundred dollars to his name. I did not talk to him post that day, but I’ll bet he was in financial shock when he woke up alive and well on December 22!
But I digress. If your spouse’s concerns are valid, see if you can adjust your view. If it’s “end of the world” thinking see if you can adjust his/her view. For those differences that you two still can’t agree on, agree to disagree and then move on to step three.
2. Once you have common goals, put in place the appropriate plan to achieve those goals (set up an investment account, research off season discount purchasing, set up a debt pay down schedule, open a home savings account, etc.). Complete steps two and three every three to six months – forever.
3. Take action. Follow the plan. Don’t get too hung up if it’s not perfect. If you’re moving in the right direction that is a good start. You can continue to refine it each time you sit down to go through the process.
Don’t be financially militant
One of the reports I recently finished writing (but will never publish) was entitled, How to Pay off all of your Credit Card Debt in less than 6 Months. Becky, my spouse, read it and told me that she would not want to be married to the man who executed that plan! “Whooooaaaah. What? Are you talkin’ to me???”
The fact is, she was right. As a single man many years ago, I got out of debt “Spartan style,” fast, efficient and painful. I moved into a tiny studio in Chicago ($550 a month) had a vinyl couch that doubled as a bed, and an old television that my parents gave me that barely worked. It received channel signals from a rabbit ear antenna – what a concept! Most people cannot live like this and you should not drag your spouse there unless you are in dire straits financially or fanatically committed.
Celebrate your victories.
If you manage to save a few hundred dollars a month over the next 3 or 4 months, celebrate together over a nice (but not too nice!) dinner. If you manage to save a few thousand dollars a month celebrate with a weekend away. If you’re somewhere in between, well you get the point.
Giving your yourselves a break and celebrating your success once in a while will help keep the right behaviors going and make the plan much easier to follow (dare I say even exciting!).
Remember, revisit this process every 3 to 6 months and in a very short period of time, you can turn your family financial life from ruins to rockin’!
Until next time