Money Mistakes Couples Make – Part 1
Posted by Gail | Filed under Getting Married?, Money Management, Relationships
I’ve worked with a lot of couples, and a big part of what I do is help them see how their money is impacting their relationship, or vice versa. Yup, sometimes a crappy way of relating can really muck up the money. Whether you’re planning a walk down the aisle or you’ve already been hitched for eons, there are some common mistakes couples make that can throw a wrench into their Moneyworks.
1. Keeping secrets. I’m truly amazed at the number of people who hide stuff from their partners. They go shopping, bring home a bag of stuff, and rip off the tags – because, of course, their partners are morons and won’t recognize a new outfit when they see it. One woman shoved her new purchases in the laundry hamper first thing. Another kept her new purchases in the trunk of her car until she could slide ‘em into the house. Many people lie about what they’ve paid for an item because if it’s a good enough deal they can slip it past their buddy. And then there are all the folks who hook up only to find their partner is a financial disaster.
If you can’t be open about what you’re buying, that should tell you something. If you think your partner is going to object to your spending, hey, listen up! And if you’re planning to mate and you haven’t sat down to talk about your money, you’re a fool, plain and simple.
Communication is Job One in the survival of any relationship, and if you can’t bare your financial soul to your partner, if you can’t trust that person to tell you the truth, you should not be getting married.
2. Not having a budget. It isn’t going to come as a surprise to you that I think every couple should have a budget. Whenever you combine two lives, two ways of looking at things, two spending profiles into one, you need to have a plan to ensure both bodies are on the same page about where the money should be going.
Having come up with a budget you both agree to, it’s easy to decide what to buy and when. You simply ask each other, “Where does this fit in the budget?” If it doesn’t then you work together to make room, cutting a little of her golfing and his beerwiththeboys to come up with the cash to make the purchase. Working together WITH A PLAN beats the bejezus out of flying solo blind and bumping into each other.
A budget can be a relationship-saver when one of you is a spender and the other is a saver, since by having a plan you can address both your needs. It’s particularly important when you are both spenders heading to the brink of bankruptcy. Knowing where you stand financially means you can make informed decision about your spending without a huge debt hangover.
3. Putting One Guy in Charge. It’s not unusual for one person to assume the nitty-gritty of daily finances. It often falls to one partner to pay the bills, check the insurance coverage, decide on how to invest the retirement savings, figure out how much to put away for education savings, negotiate with lenders, pay the taxes… the list is virtually endless. Often it’s because one partner is more inclined toward these tasks. The problem is that when one person is excluded, or totally abdicates responsibility, it means the other can mess things up with no monitoring or grow resentful at always having to do the detail. It’s important for each partner to not only to feel involved in the big financial decisions but also understand the day-to-day details.
Taking turns managing the chequebook, and having regular conversations so that both of you are clear about what’s going on, means you’re both in the know and working to the same ends. It also means that one person doesn’t have to deal with all the crap, while the other merrily laughs off the stress and frustration with, “You’re managing the money, so this is your problem to deal with.” (Yes, there are dopes who say this.)
Tomorrow: More Money Mistakes Couples Make
June 17, 2009 at 7:23 am
This is soooo common…I have folks coming to see me all the time about consol loans saying “don’t tell my spouse”…this is my private business…what up with that??????…of course I have to honor their request but more times than not they can’t get the consol loan without the spouse on board because they just don’t earn enough…the funniest part though is that usually the spouse they are worried about judging them is just as far in the hole with their own “private business” and they are also telling me…don’t tell my spouse…it’s a funny money world out there for sure..lol…
June 17, 2009 at 9:04 am
Wow – it seems to me that Sparky’s comment isn’t actually funny at all. It’s tragic. I think you would have the moral, if not ethical, responsibility to tell each person that they really should talk to their spouse first. Whether it’s ‘private business’ or not, if they sign something – because they are married – they other person could be on the hook for it should something go bad.
To Gail’s post –
I think I would have trouble giving up ‘control’ of the finances – though I see your point in that no one is there to keep me accountable for things. Tricky….
June 17, 2009 at 9:09 am
Point Three is where we could definitely work. I’m certainly the lead hand on the nitty gritty details side, and I do feel resentful sometimes, I’ll admit. That being said, we talk about it all the time, and make the big decisions together, so I don’t think it’s in the realm of pending doom, but if we didn’t have things to work on improving, well heck, we’d be bored!
June 17, 2009 at 9:13 am
I totally “get” your point about one person being in charge. But logistically speaking, how do you get around that? I took on our finances when we joined money about a year and a half ago. Most of our bills are auto-deducted. All I have to manage are the debt repayments monthly and making sure we stay on our budget. I am pretty much the only one who spends money. But my partner and I have gone over the details of the budget and he asks if he is planning to buy anything over $50 whether or not we have room in the budget category that he wants to spend on. This seems to work well for us since I do almost all the grocery shopping and meal planning and we don’t spend much money at all on entertainment, other than our weekend liquor now that it’s hot out!
Still, I worry that our system is too parent-child like sometimes. DH has all the details of everything, in the event that I suddenly passed away or there was an emergency. It is just a document though that lists all our bills, due dates, incoming $ and insurance details.
My question would be, without one person assuming the responsibility, how do you ensure that it stays organized, and that everything stays on track?
June 17, 2009 at 10:07 am
With my ex-boyfriend, I used to hide my purchases, to avoid arguments. Even though our money was separate, he still questioned every purchase that I made, no matter how small. So, I hid them. He, on the other hand, had no problem buying any electronic toy or even a car without consulting me and then would say “its my money, I earned it, I can spend it however I want!” If I tried that on him, it would be “well, you never have any money because you spend it all on clothes!” So, any new clothes purchases got hidden.
Now, my current bf and I have an understanding that purchases under $100 there’s no questions (even though I know he thinks I have too much clothes too!) and I don’t feel that I have to hide my purchases anymore.
Funny, when I come to think about it, I think I bought so much clothes back with the ex for the “thrill” of it. Hiding it and hoping he wouldn’t notice. It was my way of rebelling, I guess. Now, I don’t feel the need to do that anymore, I don’t spend anywhere near the amount I used to. Also, Gail has a lot to do with it as well!
June 17, 2009 at 10:16 am
We’ve been using the jars since December with great results (was lifesaving when DH was laid off in Feb) and now we want to plan together for the future. We decided to reread Smart Couples Finish Rich. I like the activity of exploring your personal life values and what money means to each of us.
We can tell you our net worth at any given moment, and know the date our student loans will be finally paid off. It’s nice to have him by my side when we watch TDDUP episodes. We’re in it together, and that makes all the world of difference. I’m hoping that by this time next year (fingers crossed for a fulfilling job for DH), there will be a trip to Italy on the horizon, all thanks to the jars and discovering our shared priorities. Yay!
June 17, 2009 at 10:52 am
Jessie your comment which I have pasted below is not accurate.
“if they sign something – because they are married – they other person could be on the hook for it should something go bad.”
A spouse is not responsible for their husband/wife’s debt unless they are co-signing the loan, card etc. Just being married to someone doesn’t make the loans or credit cards joint.
June 17, 2009 at 11:14 am
Shelley, the spouse may not be officially on the hook, but since the money is finite from month to month it simply HAS to be a joint effort, otherwise they are robbing Peter to pay Paul…. unless they split of course, but it shouldn’t have to come to that with communication and teamwork.
Point #3 is the big one in my life. Since we joined money over a decade ago, the hubby has abdicated all financial matters to me. I am not particularly comfortable with it. Sure I am doing a “great job” as far as he is concerned (he says he has never been so financially secure as when I started managing it) but what if something happens to me?! He flat out refuses to learn how to pay bills online!
I have made a binder that lists all our important accounts, insurance, will, etc., and he actually knows where the binder is, but other than that I can’t get him to participate no matter how much I plead.
Example: There was a gift he bought me on credit, he said “don’t even open the bill, I will take care of it”. So when it would come in the mail (he doesn’t ever check the mail) I would put it on his nightstand. Then a couple months later the creditor was phoning asking when payment would be made and he was in arrears!!!! I asked hubby, and he said he hadn’t gotten around to mailing the checks yet. Then I told him how easy it was to set up online, and he declined to do it himself asking me to please sort it out.
What should have been so simple got very complicated from sheer stubborness. Otherwise he is very intellegent, and responsible, I am not sure what the hang up is with it.
June 17, 2009 at 12:58 pm
Gail, please include in your next “Money Mistakes that Couples Make” the mistake that SOME women make “letting the man take care of them”. I have two wonderful, generous, kind women in my life who have made this mistake and are now living a horrible life full of financial hardship. One is a senior citizen who didn’t want to be included in the financial decisions because she didn’t want her partner to “feel less like a man”. She now lives in absolute poverty with little chance to improve her life situation because he spent every penny they earned, didn’t want any retirement savings and took his pension for his lifetime only. The other woman is the mother of 4 small children who’s husband didn’t want her to “worry her pretty little head” over the finances. He died of a heart attack and she is now trying to dig her way out of debt and provide for her kids with no life insurance, no mortgage insurance and no emergency fund or savings. If you are a woman who doesn’t participate in your family’s finances, GET INVOLVED, demand that you are an active member of everything. If you know a woman who might be in this situation, educate her, help her to prevent a future like these women are living. It is unbearably sad to watch these two women struggle with the financial difficulties and the life that they have to live.
June 17, 2009 at 1:18 pm
To *pol – I wasn’t referring to the effort required to pay off debts or the joint team effort required to stay together. I was simply stating that legally one spouses debt is not the others unless they signed the contract as well.
June 17, 2009 at 1:20 pm
SO true. You know, now that my husband and I are talking more freely about our purchases and budget I feel so FREE! I’m not hiding any purchases (except for his gifts when I get them for him, of course
), I feel no guilt when I spend within our budget (whereas before I felt guilty no matter what spending was going on because I just had no idea whether or not we could afford it), and it’s opened the door to dreaming about what we’ll do with the money we’re currenlty putting towards credit card debt once we’re debt free (not long now!! free of credit card debt by October and free of student debt by late 2011)
June 17, 2009 at 1:38 pm
I would agree with others that having one person in charge is a lot easier, but I get the point that Gail is trying to make. I am generally in charge-when we were both paying bills it got really confusing and things got missed/double paid-but I try to bring DH in to the loop regularly with where things are at, and we discuss ad nauseum how to spend/save/invest…
June 17, 2009 at 1:40 pm
Great points! The only one we’re struggling with is #3 – I take care of everything financial. However, my hubby is fully on board with our budget (which I forced him to help create even though he insisted “whatever you want to do is fine”) and never spends a red cent without asking me “is it in the budget”? He prefers it this way, and being a bit of a control freak, I don’t mind too much!
June 17, 2009 at 6:26 pm
We take joint responsibility for our money, and I’m so glad we do. It’s such a help to be on the same page, to have an understanding about our money. I think it really helps to keep everyone open and accountable, and in crafting a budget. It’s hard to pull the wool over someone’s eyes when they know how much is in the chequing account, you know?
June 17, 2009 at 8:14 pm
I’m in that awkward inbetween phase, where we see the benefit of merging our money, but are both used to being very independent. I wouldn’t say either one of us is irresponsible, but we could be doing better. And now that we have a new roommate we are still working out the kinks for how the exchange of money happens for rent and bills.
June 18, 2009 at 7:23 am
I always recommend my clients give full disclosure to their spouse on all financial matters…ALWAYS, but, at the end of the day if they don’t discuss it I cant disclose it either (this doesn’t just apply to credit either folks keep just as many secrets about their investments as well)…also, if the credit they are seeking is not feasible on their own or just not a wise choice I will also discuss that in detail…when I said funny I meant strange…have no fears about my morals or ethics in this job…they are both in tact 100%…lol..cheers!
June 18, 2009 at 7:43 am
My husband and I never really shared any responsibilities for paying the bills. He would drop off a bill if I asked him to but usually, I always did it. I think that came from being single for so long prior to marriage and keeping an account book or ledger of my own. My husband had a cheque book where he kept all his banking records. He could tell me exactly how much he had but I liked my system better. So, he didn’t object to my paying the bills. He would ask generally are you making us money? I would say I can’t seem to make it stretch but he really wasn’t interested in discussing money issues. He rather liked it to be my business. We would discuss things when they needed to be discussed but purchases for the kids or myself rarely got discussed. We were doing okay for a long time this way and then our marriage which wasn’t perfect anyway took a major hit and then for a few years I didn’t care as much and that is when the budget really fell apart. He is manic and he went on a spending spree with his credit card (he has a monthly amount of his own to work with – and this pays for the things he puts on his card – but it got worse – really worse) and somehow I decided that I was entitled to spend as well in a perhaps delusional thinking pattern that it will help to keep the marriage a little better balanced. Wrong, wrong. I should have been the responsible one but no – I fell apart.
Now, I’m in the hole trying to get back to the point where I was so many years ago, and I am to some degree getting there, but the future is not going to be good for quite some time. My husband, in a manic phase surrendered his life insurance in order to live his life – rather than provide insurance to me to carry on without his income. So, I concur with Northern BC mom that if you know of situations where a wife is in the dark – then help her to find a way out of that very cold dark and lonely place if this is possible. I found out after the fact about the insurance. Unfortunately, I should never have allowed his name to be on the insurance when I insisted that we get him some insurance before we had children. Too bad that I didn’t realize what a manic could be like – but then I didn’t know he was a manic. Another sad tale.
I take Gail’s advice to have a shared responsibility with setting a budget and living within the budget seriously. If you are meant to be together then think together about all aspects of your life and do this prior to marriage. You will be better off if all things are shared. Otherwise, you are living a financial life alone within the confines of a stilted marriage.
Been there and done that with many regrets.
June 18, 2009 at 1:35 pm
Regarding point 1: I do that with food. If I bring home cookies (or ice cream, or some other sort of junk food), I won’t state that I picked it up. It’s on the receipt if he chooses to look at it, but usually he doesn’t.
I’ll also make a point of sticking them at the back of the cupboard/freezer, out of his sight. However, this isn’t a malicious action – he is trying to lose weight and for him, that means no junk food, ever. I still take my cookies for lunch (but don’t bake, so he doesn’t have that delicious fresh baked smell), but he doesn’t have to be enticed to consume.
So, I am still “hiding” things on him, but I think it’s a little different to spend $2 for a bag of cookies every few weeks (and part of the planned expense) than it is to be spending the money maliciously and then being afraid to say you bought something.
June 23, 2009 at 5:16 pm
@Shelley – Unless you live some place with community property laws. The specifics of the laws vary, but in some places, a spouse can indeed be on the hook for a debt incurred by the other.