Do you talk about the “M” word with your spouse?

Like it or not “M-ONEY” is one of the major causes of marriage splits.

In fact my Father, a retired minister, spent much of his career counselling couples on marriage and pre-marital preparation. “It’s one of the big 3 issues that couples grapple with that can cause problems in marriage – money, sex, and in-laws.”

As a side note he also says, “I was taught in college and have observed that immorality, temporal values, and bitterness are the 3 most common problems people face in life generally.”

Personally, in my years of consulting in the finance world, I’ve noticed that divorce was one of the big wealth busters for couples.

The family courts in Australia are very powerful.  And I dealt with many a client, trying to recover and rebuild, after all the assets have been split from a nasty divorce.  For fathers with children, there were child support payments to meet until that child reached maturity at 18, not to mention the emotional toll on all involved.

Prevention is the key!

If a couple can work in alignment on how to make money, they increase the likelihood of success.

Here are 5 things they can do:

1. Discuss money!

Many families and cultures feel it’s a taboo when it comes to discussing the “M” word – money.  Get over it!  If the weekly budget isn’t discussed at some point, it’s only a matter of time until someone is going to spend funds when they shouldn’t and a big bill is due.  Communication allows a couple to plan and anticipate what’s coming up.

2. Agree on goals and be aware of your values.

On goal setting the biggest problem here is that most people never even set goals.  If you aren’t setting financial goals you aren’t going to achieve them.

Secondly, you have to recognise that your values will determine where your money is spent.  In a relationship, both you and your spouse may differ on what’s important to them.  If that is so, this can lead to potential conflict.  One spouse may not be too worried about owning a handful of investment properties or trading the markets.  They’d rather just focus on relationships and live day to day.  For the other, the investments and increasing their education on how to make money may be very important.

When working through this, there may be a need to have some give or take.  Again, your values determine where your money is spent!  So openness and honesty is critical.

3. Update each other.

Recently I had a client come to me who was sorting out her father’s estate.  The father had never told his wife what he was doing financially, and he never threw any records out.  The daughter was now involved sorting the numerous boxes, and it took them about a year to just to get things to a point where they were now ready to see me.  If one individual plays the role of the “chief financial officer” their partner may not need to know every detail in terms of where the money is being spent if overall it is being well managed.  However, some form of organisation is needed so that if it has to be picked up by the other individual they don’t have to start from the beginning.  Having a reference document or index may help, so that if something does occur to the main financial controller the other partner can easily pick things up.  This is especially important for business owners and investors who spouses rely on that cash flow to pay the bills.

4. Develop the discipline to save.

This basic discipline if never mastered will ensure wealth is never created.  I was taught if you don’t save you don’t value yourself.  You don’t value your hard labour but value your creditors before yourself.  I heard of one couple where he wanted to save and she’d rather spend.  So he set up a private bank account and put funds in there for their financial future and never told her about this.  While this allowed him to save, it threw into question for me what is the contingency plan should anything happen to him?

The compromise that some couples reach on this, is that the one who is not into saving is aware this going on, but doesn’t have regular access to this account for safety purposes.  It’s an out of sight – out of mind approach.

I know of an extreme case where the man suffered from bi-polar. His wife, in order to protect both of them from his mood swings, did not allow him any access to the bank accounts whatsoever to prevent him spending it dangerously.  He was fully aware of this and trusted her.  As a contingency plan in this extreme case, a trusted family member may be required to control an emergency fund for the other individual if she became incapacitated.

5. Agree to merge or separate funds

I’ve observed some couples keep their finances separate, rather than merge them in a single bank account.  Some do this to avoid conflict and allow each other the freedom to do what they like with their money.  The challenge with this approach is that sometimes one spouse may because of life’s circumstances become reliant on the other for financial aid.  For example, does the couple plan to have children? Will the wife’s income stop if they do? If one falls sick and can’t continue working, will the other financially support them?

It’s also an interesting scenario if both decide to purchase an asset together such as the family home.  Who pays for what share and for how long? Do they also have equal ownership and say if they want to sell the asset?

The common thread here is communication is essential.  However, sometimes restraint is required.  I’ve found in my own marriage I’ve needed to give my wife a break from talking about money which is hard when you’re working in the industry of finance, and you get excited about new things you’ve discovered!

All in all, the “M” word needs to come into discussion. Money should be discussed if not for building wealth, a more substantial reason – to improve the relationship and marriage.

DISCLAIMER

Trading Institute is not a licensed financial planning firm. We are simply an education company, who will give you factual information. We do not give any general or specific advice around options, trading, or anything else. That is not what any of our presentations or courses do. Please see a licensed financial planner when it comes to any investment advice you need.