One area of marriage that tends to have a lot of conflict is finances, however there are some simple things that can be done to at least prevent some of the conflict.
Years into our marriage we went to a seminar by The Money Couple (https://themoneycouple.com/). Their premise was that we all have a money personality. Some of us are savers, some are risk takers, and so on. If we at least understand our own and our partner’s money personality then we have a foundation to start having conversations and making decisions about money. You can take a free simple test at their website to determine your money personalities.
A huge issue to discuss which is related to money personalities is each partner’s comfort level with debt. Looking at each of your own strengths and weaknesses when it comes to tracking money and then making an agreement as to which partner will do what task with finances can save a lot of conflicts.
For us, Sharon is more the detailed person, so she pays 99% of our bills both personal and business. She is very prompt, so our bills are paid a little ahead of time. I am the type of person who procrastinates and would probably come in from farming at midnight and realize that the electric bill was due tomorrow. We both agree that bills should be paid on time, we just go about it in different ways and her way is a lot less stressful than my way. In some marriages it is the husband who is the more detailed person who pays the bills and tracks the finances.
In college I took courses in accounting, tax and law so I do the majority of the communication with the accountant, banks and attorney and then review with Sharon any documents she needs to sign. If I can not explain all of the details of the documents to her satisfaction, she will talk to the professionals herself, because sometimes I just don’t explain well. It is more important to me that she understand documents than whether I am the one to explain them to her.
One thing we did early in our marriage upon the advice of a banker was to get a credit card and checking account in Sharon’s name only. That way if some unfortunate tragedy happened to me, she already had a credit history.
Some couples have an agreement as to how much money each can have from the budget per month for fun money that they spend without discussing it with their spouse. Some couples each have separate bank accounts that their paycheck goes into and they have agreed what expenses come out of each person’s account. Some couples put everything into one joint account and then agree who takes primary responsibility for that account and agree on a budget as to how the money is spent.
Some couples have agreed upon spending limits for each spouse. Each of them can make their own decisions in their area of responsibility such as household, vehicles, etc. up to a certain dollar limit without consulting the other partner, but over a certain dollar limit they need to consult the partner. For instance, maybe they have agreed on a $500 limit. Maybe the wife is in charge of the household and the vacuum is almost worn out, so she does her research and buys a new $300 sweeper and does not tell her husband ahead of time. On the other hand, maybe she dreams of a whole house vacuum and it is $3000 so she talks to him first. Another example – maybe he takes care of the cars and realizes that winter is coming, the car needs tires, so he just buys new tires for $400. On the other hand, he is at the mechanic’s and is told that the car needs a $3000 overhaul, so he goes and talks to his wife about their options.
I had an attorney, who was also a large real estate investor, once tell me that his agreement with his wife was that if he was going to spend $10,000 he did not tell her, if $100,000 he told her, and if $1,000,000 he asked her. I never talked to her to find out if she agreed to his system, but if she did and it worked for them, that was great.
One system that doesn’t seem to work so well is throwing all the money into one account and both partners using ATM cards and no one tracking upcoming bills or balancing the checkbook.
Another system that does not seem to work so well, is just carrying a deck of checks and writing checks on the account and not keeping a register. That is a surefire way to get into financial trouble very quickly.
I knew of a situation where the husband was a wealthy businessman and passed away and I think his wife was in her 60’s and had never written a check. That was a highly stressful situation where others had to come in and manage most things for her.
I knew of a situation that unfortunately looked like it was headed for divorce. The husband was a well-off businessman who gave his wife a substantial household budget each month, but she did not know how much money they made. She told me that just last year he had brought their joint tax returns to their son’s ballgame and she just signed them on the sidelines without reading them. I suggested that before she signed them this year, she either had her husband explain them or that she insisted their accountant explain them to her and show her how much money they were making.
If you have been working as a team to figure out the best way to manage and organize your finances and making joint major financial decisions in normal times, then you have a better foundation to build upon and make tough financial decisions when unexpected events such as Covid-19 come along.
What have you found to be some helpful ways for you and your spouse to manage money? Do you use any budget software to help?