Financial Strategies for Couples

These gems can save you time and money when making important financial decisions.

• Managing Money Together
• Financial Communication for Couples
• When Sparks Fly

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Managing Money Together

The saying "Married for better or worse, or until debt do us part" seems to reflect today's marital realities more accurately than does the traditional vow. Financials play a crucial role in almost all relationships. In fact, disagreements about money are the leading cause of divorce.

Each of us has our own money personality, which can cause friction in our marriage. Four primary money motivators influence the role money plays in our lives.

• Freedom: "That bonus? I'm spending it on a trip I've wanted to take."
• Security: "Money makes me feel secure. If I don't have a nest egg, placed in a safe investment fund, I panic."
• Power: "I work hard. I deserve a new car and I'm going to have it."
• Enhancing relationships: "If I won the lottery I'd buy gifts for everyone and pay everyone's way to a big family reunion."

You may as well accept right now that your money personality is different from that of your spouse (it almost always is), and try to understand each other's feelings about money. In Dan and Sandy's relationship, money caused arguments and hard feelings nearly every day. Discussing each other's money motivators helped them to understand why money was such a touchy subject in their marriage.

Sandy came from a very poor family and remembers her mother worrying about buying groceries. Early on, Sandy vowed that she would never again have to worry about putting food on the table. Dan, on the other hand, had a father who spent money freely. Dan's attitude was, "We're young and now is the time to have fun. We'll have plenty of time to save later on."

After discussing their differing money personalities, they realized that Dan's disregard for Sandy's fear of poverty terrified her and led her to believe that Dan was irresponsible and uncaring. On the other hand, Sandy's tight-fisted attitude made Dan feel smothered so that he resorted to impulse-buying and trying to hide his spending from Sandy.

In his book For Love or Money, Bernard Poduska says, "If your money is going toward something you value, then you will usually feel a sense of satisfaction and accomplishment. But if your money is going toward something you do not value, then you will usually experience a sense of frustration and futility."

Dan and Sandy were able to discuss their values and goals and make financial plans. Together they created s spending plan that included paying bills, savings, and "fun money." Sandy's fears were put to rest when she saw money in their savings account every month and she was able to quit treating Dan as irresponsible when it came to money. Because the budget included "fun money," Dan didn't have to hide his spending from Sandy and was able to curb his impulse buying.

To manage your money together and to keep money from sabotaging your relationship, try some or all of the following tips:

• Sharpen your communication skills. Schedule a regular meeting to discuss finances. Make a commitment to each other that you will not use money as a weapon against each other or as a way of making up after an argument.
   
• Divide financial tasks. Share responsibility for check reconciliation, tax preparation, gathering information about investments, etc. Use your monthly meetings to report back to each other.
   
• Make decisions together. If one of you wants something, sit down and discuss a strategy for saving toward the desired item.
   
• Curb impulse spending. When you see something you want, put it on hold until the "I've got to have it or I'll die" feeling cools off. Discuss it, weigh the pros and cons of the purchase, and consider the long-term sacrifices. What are you willing to give up? Is it worth it?
   
• Understand that you and your spouse's money styles were shaped by past experiences. Just because your partner's money personality is different than yours doesn't mean one of you is right and one is wrong. The more you "blame," the more defensive your spouse will become. When blaming and defending occur, you'll find your priorities getting even farther apart.

Financial Communication for Couples

When couples discuss money, it's not uncommon for sparks to fly and for feelings to smolder. In fact, conflict over money is one of the leading causes of divorce. The following suggestions, from Kiplinger's Personal Finance and Stretcher.com, can help couples achieve peace over money matters.

• Swap financial chores with your partner for a month or two. The cross-training will help ensure that both of you are fully acquainted with your financial picture. It will also give you more appreciation for the chores the other does routinely.
   
• Linger over a quiet dinner and muse about your next 10 to 30 years together. Talk about seeing your kids off to college, the cars you'd like to drive, the places you'd like to visit. 
   
• Automate bill paying as much as possible. Some banks offer an online bill-paying service. SMFCU offers a free three-month trial and charges $3.99 per month afterward to handle up to 20 bills a month.
   
• Review overlap in your mutual fund investments. If three or four of your mutual funds are actually invested in the same few stocks or sectors, your portfolio isn't nearly as diversified as you might think.
   
• Inventory everything you own. Store the list in a safe place away from your home, but where you could get to it easily if there were a fire or other misfortune.
   
• Grab a copy of your credit report. The Village offers a credit report reading service. They will get a copy of your credit report, help you decipher it, recommend ways to improve it, and explain how to challenge it if something is incorrect.
   
• Audit pocket money for a month to take stock of where that walking-around cash goes.
   
• Look for ways to cut $25 or so from your monthly budget, just because. Switching to a different cell-phone plan or auto-insurance policy could do the trick painlessly.
   
• Establish a dollar amount you can't exceed without discussing the purchase together.
   
• Establish an emergency savings pool of three to six months' worth of income.

Signs of Financial Madness

1. You keep separate personal bank accounts so you can each spend your money the way you please.

2. One of you has credit cards, debt obligations, or investments without the other's knowledge.

3. One of you has a collection or hobby that requires significant financial resources, and the other is not fully supportive.

4. You make significant purchases without consulting each other.

5. You make significant purchases even when your spouse strongly objects.

6. One of you has no idea where your monthly incomes goes.

7. One of you has no idea of your total debts or assets.

8. One of you does not earn a paycheck but must ask for permission to spend money from the spouse who does earn a paycheck.

9. You and your spouse assign certain debts and certain savings to each other.

10. One of you refuses to be accountable to a budget or savings plan.

-Jeremy L. White in "Christian Financial Concepts"

When Sparks Fly

  Set respectful ground rules for "money arguments." Here are some ideas:

• Clearly identify the issue at hand. Do not drag other points into the discussion that do not address the problem, concern or dissatisfaction. What is the issue -spending too much money, spending it at the wrong time, or spending it on things one of you thinks is unnecessary or unimportant.
   
• Let each family member state his or her wants, needs, and personal feelings about the situation. Avoid judging or criticizing.
   
• Listen to each other carefully.
   
• Recognize that the person who earns the money doesn't have the right to dictate how it is spent.
   
• Be willing to negotiate.
   
• Keep in mind that neither of you is perfect.