Talking to Your Spouse About Money
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aremafoto I have a guest post up on Get Rich Slowly about how to talk with your spouse about money. I had the privilege of interviewing financial counselor Lou Scatigna, aka The Financial Physician, for the article.
Lou's not at all shy with his opinion. He told me straight up that a marriage where the couple can't agree about money is doomed. He also painted a pretty scary picture of what can happen when one partner abidcates full control of the household finances to the other: elderly people lose their spouse and suddenly have no idea how to pay the bills, or one partner is able to hide tens of thousands of credit card debt from the other until it is too late to avoid bankruptcy.
How to avoid these problems? Communicate. Specifically, Lou suggests holding a family finance meeting every month where you sit down with your partner and go over each bill together. In my household, we take it a step further and go over our spending spreadsheet to look at each category together. Not just the bills but also groceries and gifts and anything else we spent money on during the month. We also use the time to check how we're doing on our long term financial goals.
This is harder than it seems. Here's an excerpt from my post:
Managing finances together sounds simple, but there are a lot of stumbling blocks. People are busy. You’ve got a career, a family, maybe kids of your own, plus friends and hobbies. Spending an evening a month on a boring chore can seem like a lot to ask.
Plus, money pushes a lot of buttons for people. It brings up fear, anxiety, guilt, anger. A lot of negative emotions most of us like to avoid. So we avoid talking about money with our spouses until it explodes in a financial disaster or a relationship meltdown.
Even when we do sit down to talk, it can be hard to make good use of the time. Should you discuss long-term goals or just go over this month’s bills? How can you avoid spiraling into a fight?
It helps us to set aside a specific time to go over these things each month. That way, we resist the risk of ambushing each other with small money dramas when one of us is busy, distracted, or cranky. Having a time and place to talk means these conversations happen, and they happen with a lot less friction than they used to when we crammed them in over breakfast or after bedtime.
A few commenters on GRS suggested that once a month wasn't often enough. Indeed, when my husband and I first started getting our financial act together, we had weekly meetings for awhile. I still sit down alone once a week to work out the budget for the coming week, because it's me who handles the day to day finances. Others felt a formal meeting was unnecessary, and they just catch up with their spouse about money on a need-to-know basis.
What's your financial communication style? Formal meetings or swift chats on the fly? Are you happy with the way you and your spouse talk about money? Do you know enough about your finances to handle things alone if you had to? What would you like to do differently?
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When my girlfriend and I go over our budget, we try to keep things very light-hearted, and we try to get it done quickly. It's all to easy fr one person to start nit picking at how much money was spent in a particular category, or certain expenses that were unnecessary and this will quickly lead to fights.
Another really important point for those couples who are serious about each other is to start talking about finances before you're married.
My husband checks balance on all of his accounts on a daily basis, while I'm more fly-by-night about my finances. Several times a week, though, he sits down and inputs all of our latest receipts into Quicken, and as he's doing it, we have a not-terribly-formal conversation about what we've been spending and whether we're going overboard. It keeps us from facing big surprises because we're always aware of what's going on with our money.
Our system is almost on automatic pilot. In November we make up a written budget for the following year. We generally know how much needs to go into each category from year to year. I make up the rough. We discuss changes, and reevaluate long term goals at that time.
Each of us is responsible to write down what they spend in each category. So if one of us picks up a prescription or buys gas they write it down. If there's a deficit we discuss, "where we're going to take it out of", and make the adjustments. Most of the time we keep under budget. If there is a horrible difference in a particular category, like the year our son broke his arm, I might rewrite the budget to accomodate, trimming from each of the other accounts to cover, and we talk about it.
Both of us can do all the budgeting functions but they're broken down this way: I write and keep the budget up, DH balances the check book and does the taxes. We don't charge something unless there's cash in the account. We pay for groceries in cash. We don't carry debt. Each of us a bit of personal spending money to do with what we want. That pretty much keeps things running smoothly.
As a financial therapist and money coach, I think it is vital for couples to know about each others money history and 'money type.' This emotional and psychological awareness actually leads to less friction when discussing family finances. Understanding the context of each others' beliefs, attitudes, and behaviors regarding money--often informed from messages we received from our families as children--helps each partner develop empathy for each other. It's this mutual understanding that helps the couple feel like a team rather than adversaries. I would offer that some of these early couple 'money dates' include an exploration and discussion about this. It's an incredibly valuable exercise.
What a coincidence, today was about the money talk at kickdebtoff. As we were talking with my wife last evening about the subject, one thing that we obviously agreed was that money conversations will only work if you are in a relationship that fosters communication. If you cannot communicate freely with your spouse on other aspects of relationship, money talk will certainly be a challenge
I think the most important thing is to talk about money and financial goals before getting married. Although it may be a touchy subject or be "boring", it's well worth a couple's time. I am really fortunate to be married to a man whose financial goals are in line with my own. Not everyone is so lucky. If you find yourself in a touch situation, it is important to talk things out with your spouse and you need to realize that it is okay to talk about money. It shouldn't be taboo in your relationship.
Married people do better financially than singles, not because financially successful people get married, but because married people who behave as true financial partners do better financially.