Married Money: Tips and Red Flags

How do you and your spouse handle money? Are you generally on the same page about saving and spending? Or do your differences in money habits cause problems in your marriage?

One of the fascinating things I’ve come to learn about through my years as a divorce mediator is how couples approach household money management. Of course, I’m seeing people at the end of their formal relationship so we’re looking back on how they did it and working to untangle their financial knots for divorce. But, there are many lessons to be learned from the divorcing folks that can benefit the newly or even not-so-newly married folks.

Do you and your spouse keep separate bank accounts or do you pool all your money into joint accounts?

There are essentially five different ways to managing household finances. Each system has its pros and cons and choosing one or the other does not mean your marriage will be stronger or weaker. How we handle money is simply a reflection of how we as individuals feel about money – earning, spending, saving – with maybe a sprinkling of childhood history thrown in there. While one system might seem perfectly fair and reasonable to one person, the same system might feel uncomfortable to another person. The key is to get on the same page as your partner with your financial plan so you’re both clear on your expectations.

Matching expectations are easiest when both partners make the same amount of money. In that case, the focus is on how to much spend vs. save and save for what? But, if the income difference is great like when one partner stays home with the kids or is in school full-time, for example, the list of things to consider gets bigger. And the way you manage your household money will likely need to be different.

If you don’t think your current system is working for you, it might be time for a sit down with your spouse to talk about it. Here’s a video with some practical tips on how to have that conversation. I recommend that you both research the different systems to see which one you are currently using and what the other options might feel like to you each.

The real key to all of this is good communication and trust. It’s hard for a lot of us to talk about money but just by acknowledging that with your partner and agreeing to talk is a start. "Regardless of preference, having a transparent budget that both parties agree on and contribute to is important," says Peter Wall, chief market strategist for Chase, originally quoted here. "Creating a financial partnership that recognizes and respects what each partner is contributing to the overall welfare of the family is extremely important," adds Wall.

Recommendations:

  • Schedule regular (monthly or quarterly) money talks.
  • Be honest with yourself and your partner about how you feel about spending and saving and your financial goals. Talk about what’s hard for you and what your concerns are.
  • Develop short and long-term goals together as a couple and celebrate the closer you get to and when you do reach those goals.
  • When earning patterns change significantly, consider trying a different system to fit the new situation. For example, if you go from a two-wage earning household to one, you may want to switch from separate accounts to a joint account or the ‘allowance’ system. Again, the systems are described here.

Unfortunately, some couples never get on the same page with money. If it isn’t what undoes the marriage it will certainly be a factor. To try and stay ahead of disaster, look for these

Red Flags:

  • Your partner won’t discuss money with you at all or never completes the conversation.
  • Your partner won’t fully disclose their income, spending or debt.
  • Your partner makes big purchases, like a car, without consulting you.
  • Your partner adds your name to a credit card or loan without consulting you or giving you all the information.

Finally, here are the profiles of ten couples to help you see where you and your partner might fit to give you some perspective. Good Luck!