It’s a well-known fact that a financial divide is the source of friction in a lot of marriages. Is your marriage one of them? Combining finances and learning to communicate with your spouse is something of a fine art. However, it’s one worth learning in order to prevent a financial divide down the line.
You’ve probably heard the term “divide and conquer”. Here, I’m using the term to describe how to tackle your finances in stages.
The first issue is organizing your finances (for easier use, access, and understanding). This will take some time, but it’s well worth the effort. By dividing and conquering that piece you will actually start opening up the lines of communication.
I’ve written other blogs about how to organize your finances, you can read them here and here. There’s also a downloadable one-page guide that I created as a catalyst to help you get organized and pull things together.
The second part of stopping the financial divide in its tracks is learning to communicate around your money together.
If you’ve read my blog before, you’ll know that I’m fascinated by behavioral finance. Understanding how communication is complicated by the childhood messages you (and your spouse) received, may help you understand yourself and your spouse.
Let’s get started.
It took me ten years to marry a doctor!
However, before we married, we decided to join our bank accounts. It was during residency when money was notoriously tight. You can add to that student debt and the cost of living in Southern California.
Our first step was to look at how we wanted our banking structure. This allowed us to start experiencing money jointly together before getting married.
Whether you’re doing this prior to marriage or if you’re already married, that’s not the point. It’s about taking baby steps together and learning about navigating joint finances.
I know there are couples who keep their finances separate, but I’m a firm believer in combining finances.
It’s an important part of being on the same page with your significant other. It allows you to look at the goals you have both individually and as a couple. Once you have all of those goals mapped out, you can align them with your resources.
Also, being on the same page both financially and with your goals allows you to dream together!
What did merging our finances look like?
Before we got married, Taylor and I linked our accounts. It was for a cause that most people can relate to, we had bills to pay!
Individually we put money into a joint account and then the joint expenses, for example, our rent would come out of that account.
After we got married, we merged our finances. Our income was very similar (not that it matters).
Taylor was never someone who shopped a lot, but she also never worried about spending money on shoes or something she wanted. After we married, she’ll tell you that she felt guilty for spending the from the joint account.
That’s when I created a banking structure where we each had a separate personal account for spending money, so we could feel free to buy things we wanted.
Those accounts were in addition to the joint account for bills and a savings account. We also had a credit card.
This structure was a stepping stone that lasted for approximately a year, it was our way of easing into fully joint accounts.
It was a good way to “test the water” because I didn’t know how combining finances would work. This structure gave us time to learn about each other’s spending habits.
Are you having trouble picturing what I’m talking about?
We had three joint checking accounts:
- One titled family checking.
- The second titled Ryan’s spending.
- And the third titled Taylor spending.
They were all joint accounts (we each had access to all of them). However, we could spend the money inside our labeled accounts on whatever we wanted. We could use all the money on a monthly basis–or save it for several months.
Another important piece to this puzzle is having automated transfers. They allow a pre-set amount of money so that you can have the money at hand without having to move money into the account.
Why did we change the structure after a year?
That year of baby steps built our trust.
We realized that neither of us would blow up our finances. There were no arguments or serious disagreements about money. That’s when we decided to fully merge.
Something that has changed over the years is, now we have multiple savings accounts for our various goals.
Who’s the Boss?
In other words, who is in charge of the finances?
I naturally like doing the finances, I mean that’s why I got into financial planning! I’m just a money nerd, who likes to mess around with the numbers. Taylor likes the medical side of things, she doesn’t care about dealing with finances.
In our household, there is no great financial divide!
Your household may be different, you may both want to handle the finances. My advice is to divide and conquer between cash flow and investments.
You can each take turns taking responsibility, one person will manage the outflow of money, the other person is managing the inflow of money to investments (which can be automated).
What if you’re both Type A personalities, who need to be in control and see everything?
I would suggest budgeting software, something like YNAB (You Need A Budget). It’s budgeting software, so there’s an app on your phone where you can keep track of your spending.
Oh no, that dreaded “B” word!
Even if you’re someone who doesn’t like to budget it’s important to know where your money is going. I can’t say enough about the importance of a good budget and cash flow.
I’d also suggest weekly meetings. These meetings don’t need to be drawn-out affairs–literally 15 minutes will suffice. They’re just to touch base regarding your money.
Another way to keep the financial divide at bay is to talk about life planning.
That means talking to each other about what’s important in life and figure out together how to spend money.
This is not just for talk’s sake, it’s for planning.
If traveling is important to you set aside money for traveling, it’s about whatever is the most important thing to you. We don’t need the nicest new TV because we barely watch TV. It’s not important to us.
When Taylor and I travel, I’ll plan the trip and save money ahead of time. The importance of that is that the money is set aside. We can relax and enjoy the experience.
Now, whenever you travel something unexpected can happen. I always inflate the amount that we’re saving in the travel category to cover the surprises.
The life-planning is about getting to the core of what makes you happy.
It will become evident throughout all of your financial decisions. As a couple who is attempting to conquer your finances, it’s imperative to figure out what makes you happy and allocate more funds to that. You and your significant other will quickly get on the same page (and avoid the financial divide) if you’re open and honest about the things that make you happy.
Just remember you can have whatever you want, but you can’t have everything!
Getting It Together
How far off are you from being on the same page?
The answer will vary from couple to couple. Let’s say that for the most part, you’re on the same page. Money dates will help you out.
Taylor and I go on money dates. In fact, I learned on our first money date that spreadsheets aren’t Taylor’s love language.
Everyone’s money dates are different. Some people like to go out to eat and others might have pizza and wine at home.
Taylor says that I’ll initiate a conversation that seems normal but they’re really a sly way to have a money date. Sometimes our money “date” will be a family dinner that includes some discussion about finances.
- How are we doing this month?
- We spent a lot of money here ___.
- This is where we’re going ____.
It’s usually just a quick check-in.
However, we have started including the children, who are five and three. We talk about money in front of them. We want them to understand what money is and how it’s used. We want them to understand the language of money and how it makes them feel (what’s their ‘why’).
What if one of you is a saver, and the other is a spender–and there are disagreements?
This is where life planning is going to come into play.
This is how you figure out where you like spending money. The person that is the spender is probably going to have the biggest mindset change. The life planning exercises will help the spender understand what actually makes them happy.
There are a lot of people spending money on Amazon. They don’t realize how much they spend or recognize that it’s a fleeting pleasure that is cluttering up their home!
I’ll admit that we’ve used Amazon. It was usually for things we had to buy anyway. I’m talking about dog food, diapers or wipes. Occasionally, there would be something else on our Amazon bill, but it was something that was planned.
One question to ask yourself is: Is this making me happy or am I getting a dopamine rush from opening the box?
Sometimes a money date isn’t enough, there are some instances where you’ll need professional support.
- Hiding bank accounts
- Hide purchases from your spouse
- Opening up a new credit card (so purchases won’t be questioned)
- Setting up separate bank accounts so you can pull money in/take it out
It’s when you’re actively trying to deceive your partner or stop a fight.
These types of behaviors are similar to closet eating (when you’re overweight and you’re trying to hide how much food you’re eating).
These behaviors are indicative of a massive financial divide in your marriage.
If it’s just financially related where you’re hiding boxes, but everything else in your marriage is healthy, then you may need to find a fee-only financial planner, who is going to be an independent third party to help you work through those things.
However, if you have other problems in addition to the financial divide, please seek professional advice through marriage counseling. Make sure you get help because a devastating breakdown of your relationship will also crush your finances.
And as things change you’ll need to adjust by checking in with your life plan.
You’ll want to make sure you’re set for the retirement that you envision and put that in numbers. You may see that if you keep spending it will extend your retirement age. That something a fee-only a financial planner can help you decide. They’ll be able to tell you how much you should be saving for the lifestyle that you want to have.
Are you interested in FIRE?
Taylor and I agree that for us it’s not about retiring early.
What is it about?
It’s about having the independence to say that I don’t have to work or I can choose to make less money and hire out something in the business that I don’t love doing.
But I’m fortunate, I’ve created a job that I absolutely love.
I love the podcast, I love working with clients. Since I work from home, I get to see my kids in the morning, take them to school, and pick them up after school.
I couldn’t be happier.
Are you on the same financial page as your spouse? Or are you risking the financial divide? In either case, this “Get Organized Checklist” will help. Get your FREE download here.