Financial Habits that Can Sink a Marriage
Money conflicts can sink a relationship, even in households that aren't struggling financially. A study published in the Journal of Socio-Economics, for example, found that women argue with their significant others about money more than any other topic, including love, children, in-laws, leisure, drinking, chores, other women, and religion.
The first step to avoiding money-fueled strife in your relationship is to recognize your money styles. Psychologist and author Brad Klontz, a therapist specializing in financial issues, says everyone develops unconscious beliefs about money through childhood experience.
"Money scripts," as he calls them, are "only partially true but contextually accurate -- that is, they make total sense in the context from which they arose, but may be inaccurate in other contexts." For example, a woman he knows has been hoarding money for years without her husband's knowledge. She fears being left alone and penniless -- which happened to her in a previous relationship.
"She brought her unresolved hurt from that relationship and the resulting belief that 'you can't trust others around money' into her current relationship where she lives in dishonesty, fearing getting caught," Klontz says. "With therapy, she could have been open about taking care of herself financially in her relationship while being trustworthy herself."
Belinda Fuchs, a Boston CPA and financial coach, agrees. Couples "don't take the time to understand and talk with each other about their money beliefs, upbringing, habits, and behaviors with money," she says. "Then they judge, blame, and complain about how their partner is with money. The couple then stops communicating and starts resenting, avoiding, and hiding issues with money. The result: significant stress, arguing, and financial infidelity -- and the relationship sinks."
If you find yourself arguing that your way of approaching money is the only way, you're probably operating out of a money script, Klontz says. Overspenders, for instance, shop until they drop out of a belief that more money and material goods will make them happier; underspenders may neglect basic needs or reasonable comforts out of a money script that says there will never be enough.
"After a series of unresolved arguments, the overspender may begin hiding or lying about spending to avoid a fight," Klontz says. "Eventually it is discovered and can lead to further mistrust and significant conflicts."
Moreover, researchers from the University of Pennsylvania and Northwestern University found opposites attract when it comes to extreme spending styles. The more conflicted someone felt about their own style, the more likely they were to be attracted to a partner with the opposite approach – and the more they argued. So how can you find common ground?
Here are three steps to money harmony:
- Learn to talk about money. Delve into what you have been taught about money from your family; discuss your deepest fears, three or four of your highest goals, and how you would like money to work in your relationship. Find a low-stress time to have the conversation. "Accept your partner for who they are, including and especially with their money values, beliefs, and behaviors," says Fuchs. "Create a safe, open environment and start having conversations about money and your financial futures." Then come up with an agreed-upon plan for your money.
- Get a tool to monitor your progress. There are an array of web-based tools to help manage your cash flow, including free sites such as Mint.com and comprehensive subscription-based sites that charge a small monthly fee, such as Mvelopes.com.
- Agree on how much you can spend without consulting the other person. Beyond a spending plan, decide how much each of you can shell out for a splurge without telling the other person.
"This allows a degree of freedom within the context of a larger agreed-upon financial plan," says Klontz, adding, "if a couple is having trouble agreeing to a spending plan or spending limits, it is time to get some help from a therapist.">
Olga Ward, 30, a married human resources professional with a three-year-old son, chose Mvelopes after bouncing a check to the babysitter. "Our account balance would look fine but I would forget that the insurance or other bills automatically come out," she says. "There wasn't a clear picture of how much we had for all the bills and what was left over if we wanted to buy something."
Ward's debit and credit cards, checking and savings accounts are linked to the program electronically. She creates virtual "envelopes" for each of her spending categories with budgeted monthly amounts, based on her take home pay. For instance, Ward might set aside $100 for clothing; if she charges $50 to her credit card to buy a blouse, the spending shows up in a "new transactions" folder. She clicks and drags it into the clothing envelope, which decreases by $50, so she knows she has exactly $50 left that month to spend on clothes.
Ward says the certainty eliminates the stress and guilt she sometimes felt about spending. "Now I'm not taking the money for clothing out of car insurance – that money is there and this is clothing money, and it's okay to spend," she says. Using the tool, the couple's arguments have ended, and they were able to save up three month's living expenses for emergencies.