Making a marriage last is hard work. This is no secret to anyone who is or has been married, because life gets complicated. Melding your life with someone else’s can be enormously rewarding, but sometimes circumstances test even the strongest marriage. Some key stressors in marriage often include raising children, potentially differing family values, busy daily schedules, etc. Add in money problems, and things can get difficult fast since money and emotion are often closely intertwined.
In fact, money is said to be one of the top causes of marital distress, even if you’re millionaires₁. The conflicts it causes can go beyond just day-to-day spending. Differing attitudes toward budgeting, savings, investing or even how to spend retirement money can scuttle the best-laid financial plans – and marriages.
Women and men often bring their own personal experience with money to the table which can shape their views on finances. Consider John and Suzanne, as I’ll call them. In their early 50’s with 2 teenagers at home, they came in recently to begin the retirement planning conversation. They’ve been married for almost 3 decades and explained that while they’ve always known their financial styles were different, it wasn’t until they started to get serious about retirement that it’s begun to cause greater and more frequent disagreements. The daily differences in their spending attitudes had been manageable up until now, especially because they both had their own company 401(k) to manage as they saw fit. But now the larger picture of how to position their money for long-term income purposes brought their differences to the surface. One of the biggest issues was that John was willing to take investment risks that Suzanne found hard to stomach.
John was raised in a fairly affluent family, whereas Suzanne was raised by a single mom who often worked numerous jobs at once to pay rent and keep food on the table for her and her younger sister. As you might imagine, Suzanne has a much harder time parting with money for anything that’s non-essential. She’s also a more conservative investor than John, unwilling to take many big investment risks. Their contrasting views were becoming a common topic of disagreement and they wanted to find common ground to move their retirement plan forward.
Unfortunately this isn’t an uncommon situation. In fact, in my experience there is also usually one individual within the marriage who is the financial “alpha”, so to speak. It isn’t always men, although it used to be years ago. With John and Suzanne, she was the one managing the day to day finances for the family. Her money insecurities drove her to watch their pennies carefully.
At the end of the day, it doesn’t necessarily matter who handls the money, but communication is key to making sure both parties agree – at least to the extent necessary – on the family finances. This means that everyone should be included in the conversation. Even if one spouse isn’t speaking up, they still need to be heard and their views expressed. Both parties should be comfortable with the process and the decisions being made.
It’s crucial to get all financial concerns and points of dispute out in the open so that you can address them one by one. For example, if one spouse has a strong need for security and the other is more of a risk taker, it may make sense to structure your assets so that you can select spots within your portfolio that offer acceptable safety measures, while allowing other assets to be invested more aggressively. This way both spouses’ needs get addressed and the overall plan is often even strengthened by this balance.
Or perhaps the solution comes down to the division of assets in dollar amounts. For example, perhaps each spouse is in charge of managing the money as they see fit up to a certain dollar amount. Having your own spending and investment account offers each spouse exclusive control over those funds and ideally makes negotiating the rest of the portfolio less stressful or emotionally charged.
The good news is that, regardless of your financial differences, these often fade over time. According to marriage researchers, no matter how much some couples may disagree, longtime partners often end up reshaping each other’s behavior, financial and otherwise, and become more alike₂.
After years of making decisions together, financial and otherwise, many couples learn the importance of compromise and working together to achieve their goals. In my experience, some of the more successful retirement plans involve a mindset that their money is “ours” instead of “mine and yours”, and this can be a significant contributor to resolving money differences.
You know, it has been almost thirty years to the day where I went to my father in law, Joe, to ask for Jill’s hand in marriage. I asked him for the secret to a successful marriage like he had. Joe is a direct kind of guy with few words. He said, “Jeffrey, a successful marriage is a full time job! Treat it that way.” The guy was right.
And as always – be vigilant and stay alert, because you deserve more!
Have a great week and Happy St. Patrick’s Day!
Jeff Cutter, CPA/PFS is President of Cutter Financial Group, LLC, an SEC Registered Investment Advisor with offices in Falmouth, Duxbury, and Mansfield, MA. Insurance offered through its affiliate, CutterInsure, Inc.