Money Matters: The 2-M’s – Money and Marriage

 As a Financial Advisor, one of the hurdles I and other Advisors have in assisting clients (couples) in their setting up their retirement portfolios is the juxtaposing ideas as to how money works, what are their financial goals, and how to go about obtaining them. Making a marriage last can take effort even for millionaires unless both parties of a relationship are of the same mind set. Add in money problems, and things can get difficult fast. Finances can throw a “Monkey Wrench” into any relationship. A recent nationwide survey detailed finances as the #1 negative issue amongst couples.
That’s why it’s important to be aware of the kind of problems that can arise, and the methods you can use, as a couple, to overcome them. Experts in this field had had to find out why couples fight over finances, the kind of struggles that come up, and how they can beat them and make sure that the relationship prevails in the end with a sound financial position as well.
Core Values:
Most financial issues in marriage come down to one main factor: both partners have different core values about money. Many of these financial values developed very early and are difficult to change. For example, one partner might have been raised to value saving and investing. The other partner might have been taught to indulge his or her whims even if it means living paycheck to paycheck. This makes it very difficult for partners who view money, saving, and spending in fundamentally conflicting ways to manage household finances successfully as a team.
Couples may even have differing ideas about who the money they have belongs to. Some partners freely pool their money and treat it as a joint asset which seems to work the best. Other partners, rightly or wrongly, consider their earnings their money and split expenses down the middle. This seems to cause more problems when approaching retirement as one partner may have saved for retirement and the other not at all. I have clients now that this is indeed the case and they are in the process of getting a divorce over money issues in the relationship. I continue to manage the retirement account of the partner that methodically saved and has a sizable retirement portfolio and is another 15 to 20 years from retiring.
Credit Profiles:
A very practical and important sub-issue to this is credit. Ideally, this issue should be discussed before marriage. It can be an awkward subject to raise, but it is valuable information. First, knowing your partner’s credit score provides some insight into your partner’s past financial decisions. If one partner’s credit score is low because of past credit indiscretions it may affect the ability to access credit. In purchasing major items such as a house or car, the lender will consider both credit scores and, chances are, the poor credit score will result in higher interest rates and fees than if both credit scores were high. This could restrict the couple’s ability to save for emergencies or retirement.
Options:
Given the statistics about money issues in a marriage, determining financial compatibility should play a much more important role, perhaps even in premarital counseling and preparation so that partners never allow this issue to not to creep into their marriage.
But what if you’re already married?
Communication:
Communication is one of the most important parts of any relationship and communication about money is one of the most important kinds of communication, even if it might be one of the most awkward. Money issues add stress to any marriage. To minimize and prevent those issues from becoming bigger problems in one’s relationship it is important to start with the simple act of having conversations about money, i.e. understanding each other’s priorities and how major financial decisions will be handled most importantly have a financial plan/budget.
Having regular conversations/meeting about a budget, expenditures, and savings helps relationships avoid having big arguments about money by allowing you to bring up ideas and plans before they become critical mass. Understanding that you and your partner are likely to have different ideas on how to approach anything, including money, and then making that okay before an argument arises, takes the emotional punch out of the disagreement.”
The short answer is that money problems rank among the top reasons why married couples call it quits. To overcome or prevent financial fights couples need to focus in on effective communication when it comes to money, shared vision for goals, a well-delineated division of labor within in the home and keeping their finances well organized.
For more information, please call Douglas J. Sedam at 1-866-549-3900, 661-295-2400 #1 or email: Doug.Sedam@ThePaseoGroup.com. You may also learn more at www.ThePaseoGroup.com.
Securities and Investment Advisory Services offered through Western International Securities which is a member FINRA/SIPC. OSJ Office: 19510 Ventura Boulevard #211 Tarzana CA 91356 818-996-3375 The Paseo Financial Group, Inc. and Western International Securities are unaffiliated companies.