Are Financial Issues in Your Marriage Leading to Divorce?
We are often asked what the leading causes of divorce are, as seen from our experience. Although there is no simple answer, issues surrounding control are almost always involved. And control manifests itself most often when money is discussed.
We find that many couples do not have a clear understanding of the emotional meaning of money, how it almost always means different things to different people, even if those two people are married. Understanding how money matters to your spouse can save your marriage. The issues that we counsel on are usually the following:
1. Whose money is it if I earned it?
Couples treat this in a variety of ways. Some just dump all funds into a joint account and both parties spend from there. We believe this is not a good idea and eventually leads to trouble and one party “taking over” the checking account. We are firm believers in separate checking accounts, with full disclosure. In other words, nobody gets to hide their statements or expenses. The answer to the above question is it belongs to both of you.
2. Is it OK for him to make all of the investment decisions?
It can be if he truly knows what he is doing. But what if he has a very high risk tolerance and yours is very low? Diversification is the key to investment success and that might mean diversifying the decision maker. Why not have each of you have your own investments and to be free to invest as you see fit? Competition breeds success and if you are both making separate decisions it could raise your rate of return over time. This would also provide an opportunity for you as a couple to discuss your different strategies and results.
3. I inherited money upon my father’s death and now my spouse wants be to put his/her name on the account. What should I do?
Pure and simply, do not do it. Some spouses consider it a sign of love to share an inheritance. We think it is a financial mistake. If one party places the other’s name on an inherited account, it is a presumed gift to a spouse. If 6 months from now (or 6 days) your spouse files for divorce, it could be difficult if not impossible to get those funds back. It is better to use the inheritance to better the lives of both parties, while still respecting the intent of the grantor, that a blood relative gets the money in the end. This issue can be a divisive one and one that often brings out the worst in people. The presence of a mediator will make it easier for the parties to resolve it amicably with no resentment.
4. I am in a second marriage and we are having trouble deciding what money to leave to his kids and my kids. How can we resolve this?
This is always a touchy situation, and often one that is best resolved with an unbiased third party. Family issues can get very emotional. The good news is that if you are in a discussion about leaving money to kids, then there is probably enough to go around and to come up with a fair solution. The presence of a neutral party that specializes in couples and their finances would be a good place to start. They can look at things logically and can keep it from becoming a fight between the two of you.
5. My spouse continues to overspend. What can I do?
Sometimes, there is nothing that can be done. However, bringing in a CDFA (Certified Divorce Financial Analyst) to look at the issues can help. Who is to determine what overspending really is? If you want your spouse’s spending habits examined, then be prepared to have your own examined as well. Being willing to do this will allay any fears your spouse may have about the process.
In the end it is having an agreed upon financial structure that will prove successful, that will include, a flexible budget for both parties, a savings plan, an examination of the debt levels and well thought out account structure. This can lead to a reduction in stress over money and allow you as a couple to get back to the romance issues of your marriage, which is why you got married in the first place.