CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS |
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SUCCESSFULLY MANAGING MONEY IN A RELATIONSHIP DURING TOUGH TIMES Conflicts over money are one of the leading causes of
friction and divorce in a marriage. Couples already vulnerable to money battles
are finding themselves fighting even more in the stressful aftermath of the
terrorist attacks and the weakened stock market and economy. Here are some
suggestions for successfully managing money in a relationship during these tough
times. Create a shared vision for your money. Start with
how the two of you envision your lives together. Do you want to buy a home, have
children, retire at a certain time and place, take expensive vacations, start a
business? Your goals determine how you need to manage your money, and the more
you can clarify and agree on those goals, the more it will go toward ironing out
money management differences. Prioritize your goals and focus on the most
important ones first. Examine your own money personality. It’s common
for couples to differ in their individual attitudes toward money—one spouse
might be a spender, the other a saver. How do you view and value money: a means
for power, freedom, security, an end in itself? Do you spend money when you’re
depressed, or to celebrate? It’s difficult for couples with dramatically
different attitudes to meld into a shared attitude. But by exploring and
discussing each other’s attitudes toward money, you stand a better chance of
accommodating those differences and reducing conflicts. Joint and separate checking/savings accounts. A
common suggestion from financial planners is for couples to have joint checking
and savings accounts, but also their own checking or savings accounts. The
couple uses the joint accounts, perhaps funded in proportion to each person’s
income, to pay mutual expenses such as food, clothing and shelter. The separate
accounts—funded realistically so as not to drain from mutual needs—allow
each spouse to spend according to his or her individual attitudes. A spender
could spend away (agreeing not to touch the joint account), while the saver
could sit on his or her money. However, you should still be financially
accountable to each other on a periodic basis. Manage money together.
Write bills and budget together. Sit down weekly to discuss mutual financial
decisions, and periodically review overall finances. One person may be more
adept at Managing money together not only reduces conflict, it
provides a valuable bonus should the lead money manager become incapacitated or
die. The partner then is more readily able to step in. Put your financial house in order. Money conflicts
often arise out of anxiety or severe financial difficulties—unemployment, a
declining market, catastrophic medical expenses, a death in the family. By
putting your financial house in order, such as building a cash emergency fund,
diversifying your investments, and being properly insured, you can reduce or
even eliminate the impact of these potential or real financial problems. Resolve investment conflicts. There’s nothing like
a declining stock market to exacerbate conflicting investment styles—the
spouse who doesn’t want anything riskier than certificates of deposit saying
“I told you so” to the spouse who invested heavily in tech stocks. Again,
understanding your money personalities and clarifying your financial goals will
help minimize your clashes. Some financial planners discourage couples from splitting
their portfolio into individual accounts, but sometimes it is the only practical
way when investment styles clash. It may be the best choice in cases where each
person brings sizable investment accounts to a marriage. An alternative is to
have the risk taker establish a small “play money” account—perhaps no more
than five percent of the couple’s portfolio—for those higher-risk
investments. Seek professional help. Start with a financial
planner who can help clarify your goals, establish an investment plan, organize
your finances and help you examine your money attitudes. However, your money
conflicts may reflect deeper problems with money (such as gambling) or even
issues that may have nothing to do with money. For these issues, you may need to
see a professional therapist. Whatever the conflicts and their causes, it’s critical to
attempt seriously to resolve them. Otherwise, you may find your finances in
disarray and your marriage in trouble. November 2001— This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by McGuire & Co., LLC, a local member in good standing of the FPA. |
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