Money may not be the root of all evil, but it certainly can sow seeds of marital discontent. According to the National Marriage Project at the University of Virginia, perceptions of how well one’s spouse handles money strongly correlates with marital happiness. What’s more, the National Marriage Project cites a study showing that conflict over money matters predicts divorce more than any other type of disagreement. For most men it was the only type of disagreement that would lead to a divorce. For women, money conflicts ranked #1 with sexual infidelity a distant second.
There’s no getting around it, marriage is not only a union of love, but a financial partnership. And while it’s not always clear which comes first: the trouble in the nest or the trouble with the nest egg, what is clear is that for a marriage to succeed, couples need to be in alignment when it comes to spending, saving, risk tolerance and priorities. With that in mind, here are 4 ways to keep the state of your union strong:
Rule #1: Share a Vision
A solid partnership needs a shared vision, so have a heart-to-heart with your partner about life goals, including how much savings and liquidity you need to sleep at night, what college is going to cost for the kids, how long you plan to work and how you envision spending your time in retirement. When you’re both working toward large common goals, you’ll be much more likely to agree on the smaller day-to-day issues such as balancing checkbooks, taking on debt, discretionary purchases and lending money to friends and relatives.
Rule #2: Forsake All Others
Speaking of lending money to friends and family, these types of loans can cause tremendous strain on your marriage – especially if the loan goes bad. One solution is to make it a policy “never a borrower or a lender be.” Another is to have an agreement with your spouse that you will not lend out more than you can afford to lose. Whatever you do, never, ever, lend or give substantial sums of money to others without your spouse’s knowledge.
Rule #3: Shared (or Separate) but Equal
To merge accounts or not to merge accounts? That is the question. While most married couples share joint accounts, about 14% of couples bank separately, according to a 2004 survey commissioned by SmartMoney and Redbook magazines. While there is no one-size-fits-all solution, the important point is that spouses work out an arrangement where they save, invest and pay household expenses as a couple, but still have some discretionary money which they can spend however they desire.
Rule #4: Choose the Best Person for the Job
Every relationship needs a good CFO. What works best for the relationship is when a couple realizes their strengths and weaknesses when it comes to managing finances. Some people are more disciplined and better at managing the money flows and paying the bills. Fortunately for most couples, one partner or the other tends to be more passionate about running the family finances and overseeing the investments. Be sure to choose the best man or woman for the position – whichever one is better skilled at investing and managing money, and who also has the passion to do so. If neither partner is a good candidate for the job, it may be time to outsource! Hiring a professional to take over the family accounting might be the best thing for your relationship, your credit score and your financial future.
Money can be a touchy subject. In fact, many couples would rather talk about almost anything else. However, open communication, transparency, shared goals and a team approach to the handling of money are essential if you want your love – and your money – to grow.