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Whether in a traditional marital relationship or not, money can be a source of friction amongst partners.
I typically recommend clients review their credit report at least once a year. On one occasion, I was reviewing credit reports of a married couple in my office and surprisingly noticed two five-figure unpaid credit card balances on one of their reports. The person initially acted surprised and shocked, stating, “There must be a mistake.” After initially stating to her husband that she had “no idea” how or why those charges were on there, she ultimately came clean and admitted to the extravagant spending. The husband felt betrayed as his wife had not been candid or open with him.
While infidelity can wreck a relationship, so too can financial infidelity. Studies indicate that financial infidelity happens in over 40% of marriages. What is more significant, however, according to the National Endowment for Financial Education, in cases of financial deception, 85% indicate it impacted the relationship in a significant, negative manner. While divorce happens for a myriad of reasons, when one pulls back the curtains, money is often a source of friction and can contribute to the destruction of a relationship.
The issue: Couples rarely talk about money. Almost all relationship experts discuss how “communication” is important, yet we often fail to do it, especially when it comes to finances.
During initial visits, I often ask respective spouses, “What money lessons, good or bad, did you learn from your parents?” The answers are often revealing, and it quickly becomes obvious (in almost all cases) this has never been discussed in the relationship. If parents grew up poor, sometimes that can create a spender, as growing up, they never had “nice things” and don’t want that to be them or their children. If parents were spenders, sometimes that person says, “I don’t want that to be me because ultimately my parents were living on the edge and fought about money all the time.”
On one occasion, a spouse relayed how her dad was a big-time saver and amassed a decent amount of wealth given his age. He passed away in his late 40s, and that experience shaped her money behavior (a spender), as she felt, “You can’t take it with you.”
Another client, given her parents didn’t have much money, recalled being nervous as a child asking her parents for “$5 to go to on a school field trip.” She didn’t want that to be her and now is a bit extravagant on spending money on her kids. She never wants to tell them no.
What’s interesting in all these examples is that the other spouse most often had no idea the reason for the behavior.
The thing to realize is that every behavior has a rationale behind it. I have helped coach my daughter’s “rec” and club volleyball teams over the years, and one year had a particularly disruptive teenage player that I couldn’t seem to manage. I reached out to a respected school counselor for advice, and while part of me was wanting her advice to be “stay firm, take charge, and demand the player listen or else,” she mentioned that “behavior always serves a purpose.” She urged me to have an open mind, try and truly understand the purpose behind the behavior, and fill whatever that void is with a positive behavior.
In other words, if your spouse has a different money behavior than you, try and truly understand the “why” behind what is driving that. Have an open mind, be nonjudgmental, and be curious instead of furious.
What if you and your partner just have very different philosophies of money? When meeting with potential clients for the first time, I can often tell early on who in the relationship is the saver and who is the spender. Sometimes this will come out during the visit, or I’ll even ask (often already knowing the answer), “So, who is the saver in the family?” This will often lead to finger pointing as the saver proudly tries to “scoreboard” and tells the spender, “You spend way too much money!”
Meanwhile, the spender points out to the saver, “On our recent vacation, you wouldn’t let me get a margarita at our hotel because it was ‘too expensive.’ We were on vacation!” The saver counters with, “The reason we can even go on a vacation is because of my frugality!”
I try and point out and sincerely make them aware that having both a saver and a spender in a relationship is actually a good thing. Two spenders, that’s a disaster from a financial perspective, as spending too much just isn’t sustainable over time. Two savers, well, your bank balances look awesome, but you drive a beater, wear clothes from a thrift shop, and always sit in the “cheap seats.”
Opposites attract, and again, that can be a beautiful thing.
Many problems in life often have easy solutions if we just choose to pursue them. How does one reduce the impact the chance that finances will become a source of strife in a relationship? Well, years ago, I had an assistant that was almost 40 years my senior. I had somewhat of an ethical dilemma and asked her, “Dorothy, what do you think?” I’ll never forget her response as she said, “John, honesty is always the best policy.”
My suggestion is for couples to on occasion go on a “money date.” Pick a time when both parties are relaxed and alert, as when emotions are high, learning and change is often very low. Carve out a Saturday morning and go for a walk and just talk — about money. No need to bust out the spreadsheets or statements, just talk. Consider what is important about money, money lessons learned growing up, and if any full disclosures need to be made. Communicate and be candid.
If this seems impossible, have a seasoned financial adviser facilitate the conversation. It could just save your relationship.
John Loyd, CFP®, MBA, EA is founder of The Wealth Planner™. For over two decades, he has been providing wealth management advice to small business owners and high-income professionals. Contact him at [email protected]. Securities & Advisory Services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.