This is a guest post from Sierra Black, a long-time GRS reader and the author of ChildWild, a blog where she writes about frugality, sustainable living, and getting her kids to eat kale.
Talking about money is one of the great taboos of our culture. I know more about my friends’ sex lives than I do about their bank statements. Many of us find it hard to discuss finances under the best circumstances. When we’re stressed about money, we tend to clam up even more.
If you’re married (or living with a partner), you don’t have that luxury. Financial success is not a private affair. You need to talk to your spouse or partner about your money. This is vital for both the health of your relationship and the health of your bank balance.
You don’t have to take my word for this. This week, I had the pleasure of interviewing Lou Scatigna, a.k.a. The Financial Physician. An entire chapter of his new book is devoted to “lack of spousal communication”.
How big a problem is failing to talk to your spouse about money? “If you have money conflict, your marriage is doomed,” Scatigna says.
OUCH! My husband and I have our share of differences when it comes to handling our dollars, and I’d like to stay married. In addition to genuinely liking the guy I married, divorce is expensive.
The monthly family finance meeting
Scatigna’s prescription for this ailment? Have a monthly family finance meeting. Scatigna says its vital for both partners to sit down together once a month and pay all their bills together. Even if you’ve automated many of your monthly bills with an electronic bill pay system, you need to be looking at them each month. Doing this together has a lot of advantages:
- You both know the real cost of living in your household. When only one partner handles the finances, the other can be genuinely unaware of how much credit card debt your family is carrying, or how high the winter heating bills are. This is information you both need to have.
- You can hold each other accountable to shared financial goals. It’s harder to justify an extra latte when you know you have to own up to your spending at the end of the month.
- Working together can make it fun. Instead of a tiresome chore, handling the finances can become something you do together. Finding ways to save can become something of a game, and as you get better at it you’ll both reap the rewards.
- Having both partners fully up to speed on the household management protects you both from being left in the lurch should the other suddenly not be available. People die or suffer sudden illnesses, and the business of life goes on. You don’t want to have to learn how to pay your home’s monthly bills while you’re handling a family crisis.
I’m a long-standing believer in the theory of a monthly household finance meeting, but I also know it’s a lot harder to practice than it is to theorize about. Scatigna says it’s the rare couple that actually sits down and talks about finances every month.
Making the time to talk
Managing finances together sounds simple, but there are a lot of stumbling blocks. People are busy. You’ve got a career, a family, maybe kids of your own, plus friends and hobbies. Spending an evening a month on a boring chore can seem like a lot to ask.
Plus, money pushes a lot of buttons for people. It brings up fear, anxiety, guilt, anger. A lot of negative emotions most of us like to avoid. So we avoid talking about money with our spouses until it explodes in a financial disaster or a relationship meltdown.
Even when we do sit down to talk, it can be hard to make good use of the time. Should you discuss long-term goals or just go over this month’s bills? How can you avoid spiraling into a fight?
My husband and I have been in a groove with this lately. To get started, we sat down and worked out a master list of financial goals. We also made a huge spreadsheet of our fixed and flexible expenses. We use these as guides when we’re looking at how cash flowed in and out during the month.
Here’s a list of do’s and don’ts that are working for us:
- Don’t spring a big money talk on your spouse by surprise.
- Don’t talk about it when you’re already angry. Just got a surprise overdue notice for that parking ticket your honey forgot to tell you about? Don’t call her up at work to complain about it.
- Don’t talk about it after midnight. My husband and I tend to leave money talks for the end of the day, and wind up trying to deal with it when we’re both exhausted and edgy.
- Do set a specific time to sit down and discuss your finances. If you expect the conversation to be difficult, try scheduling two dates at once: one to talk about money, and another one a few days later to do something fun you both enjoy.
- Do have an agenda. We’ve wasted many household money talks staring at each other over a pile of bills and not knowing what to do. Now we have a pretty clear routine: go over each spending category on our spreadsheet, look at how much we spent, figure out if we can cut back on it at all in the coming month, and check in about how that fits into our big-picture money goals.
- Do be gentle with each other. Scatigna warns that in households where one spouse pays the bills, that partner can become resentful for having to carry all the weight. That was certainly the case in our house, but once I learned to control my temper about it, my husband became much more willing to come to the table and get involved.
While cooking dinner or getting ready for work is not the time to have this conversation.
Talking about money really has eased tensions between us. It’s also helped with our cash flow. We’re on the same page a lot more often. We’re both paying more attention to the kinds of details that used to cost us a lot in mistakes or careless spending. We feel like a real team, and we’re actually saving money.
Previously at Get Rich Slowly, Sierra told us about sweating the big stuff, described the pitfalls of buying in bulk, and made an argument for a secular tithe. As you might guess, I like her writing.
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@Shara, That’s why we use an allowance system and Mr. Sam doesn’t have a credit card. Its not that Mr. Sam is a spendthrift or that he is bad with #s (in fact he has the MBA) its just that managing personal finances is not his interest. He hates to pay bills, doesn’t balance a check book, didn’t have a savings account until he met me, didn’t have an IRA until he met me, he had a 401k but didn’t max it out, and he had a big fat student loan and lots of other debts.
Thankfully, we agreed that it would be best if I managed the money and he would help with investing (still working on that one) and he agreed that since he wasn’t going to pay attention to his spending the allowance system would work best. And for fairness I’m on the same allownace. I could care less what people think about us, and our financial quirks, as Dave Ramsey would say, I don’t want to be normal, normal is broke and stupid.
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@Sam, LOL “normal is broke and stupid” oh, I hope not! And yet I fear so!
DH and I don’t do meetings either. We have mostly separate finances although each of us has access rights on the others’ bank accounts (this is “just in case”).
Basically we always divvied up the household expenses based on who is making more, with each of us responsible for our own debts. That wasn’t working so well after a while so we changed things around so that my smaller income all goes to “financial future” – insurance, paying off my debt, and retirement savings – and his (larger but variable) goes to “financial present” – rent & utilities, and his debt.
Once our debt is gone for good, I would like to handle ALL the regular payments, mostly because it’s easy for me (online billpay!) and I kind of get a kick out of it. He still writes checks (caveman!) and carries his bills around in his work bag, which makes me crazy but I don’t mention it.
We have never fought about anything, but the one time we came close it was about money, so we always know the possibility is there. Trust, the golden rule, and good will are essential.
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My brother and his wife NEVER did this. They are now divorcing after 21 years. She is amazed that they have NO money. They have spent all of the equity in their home, financed cars and lived high. His salary was good- until last year. She thought that she was going to get a big check walking out the door (her choice)- but is finding that her new nurse’s salary may be supporting the family. Talk about shock!
I prefer ALWAYS talking about money:>) The more open the better. I just HATE secrets. I have helped several friends and family members learn how to discuss money with spouses.
Ah- the day of the “mom at home and knowing nothing about the money” still exists in the fifty and up group!
Great article. Well written and important. I like the last thing on the list the best!
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E @33, I wanted to comment about the allowance. My husband and I both have allowances. We get $300 each a fortnight and out of that we pay for lunches, coffees, books, clothes – anything that is our personal spending. He buys a lot of computer games. I like to get facials. Anything that’s joint, like going to the movies or to dinner, or things for the house, comes out of the appropriate budget bucket.
It’s a great way for us to have some independence in what we’re spending and so that he in particular doesn’t have to answer for his personal spending when I’m reconciling the budget.
And it’s not at all degrading to either of us. He does joke to his friends that he only gets paid $300 a fortnight but really he feels very comfortable with our finances and the freedom he gets.
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What a great post. This is equally important for couples that aren’t married yet, but are serious about each other. It is much better to deal with this sort of thing upfront, rather than letting it become an issue further down the road.
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I’m surprised that this article didn’t suggest that at some point it’s good to have a 3-way discussion with a professional. That has helped us when we’ve had specific money questions (especially retirement planning).
But, generally, I’m another person in a very happy, very long term (more than 30 years now…) relationship where we don’t need monthly meetings or lots of talk about how each of us is managing our money. This has been true even during those times when only one of us was earning, and the other had to take on many more financial responsibilities. If there’s trust — and enough money! — then there won’t be fights. We don’t have children, and we haven’t had to take on parent or other dependent care, either, so I do recognize that we’ve been lucky.
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Even more important is to have have the “talk” BEFORE your spouse becomes your spouse.
If your differences are that great, it can have a serious effect on your marriage
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hi,
I’m from Malaysia. Have been following GRS since last year, but only as a silent reader. But this time, I would like to share my own experience
Eventhough we r geographically and culturally different, the bottom line of financial management still remain the same
I’ve been married for almost 2 years.
I agreed that any issue involving money is not very easy to handle, and for some reason, each couple may have a different point of view and also applicable to each individu
Personally, for my partner & me, we have a very contra appetite in money management, since both of us got our own pay. But we agreed and implementing the “Delay Gratification” concept moderately in our life, but still willing to burn some money for fun (this help minimizing our stress actually).
Considering this, we both agreed to manage our daily finance management separately but still share money for any joint-daily-expenses (expenses that will involve both of us).
Plus, we share our ideas when it is involving investment & Goals.
We use Boardgame “Cashflow 101″ as a tool to understand each other investing style.
2 heads is better than one. Normally, we will discuss our investment strategy together, to eliminate the greed factor and to minimize grey area. And also, we will discuss our strategy when we have something to buy, involving big money (this is what I meant by Goals).
Briefly, our financial management system involving:
a) tracking down our monthly expenses (not very detail to every pennies, just following budget set-up by ourself, separately).
b) Saving is our priority, before doing anything.
c) We apply envelope system for our savings & joint-daily-expenses.
d) We set-up our Goals together, not separately.
e) We discuss our investment strategy together. This is very important for us!
f) For investing, I will read and get some info, before sharing with my wife, since she’s too busy
g) My wife is an expert in finding bargain for our daily needs. This is a very big help.
h) We normally have a ad-hoc meeting in a leisure, but sometimes we still quarrelling, hehehe.
i) Delay Gratification is the best thing to describe our spending style and lifestyle
Hope you guys can understand my writing
Thanks.
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My wife prefers to have me handle the finances, but we don’t find it necessary to meet every month, since most of our bills are paid automatically, and our cash spending tends to be fairly consistent from month to month.
We do meet in January to agree on our goals for savings and charitable giving for the year. Also, for the few “discretionary” budget categories we have (such as travel, home furnishings, car repairs, clothing), we set a budget for the year for each category. (About the closest we come to having “allowances” is for clothing – we each have a budget for the year). Neither of us likes to shop, so overspending is usually not a problem for us.
We will also meet twice a year to go over our net worth statement. We review the performance of our investments and decide how much to pay down on our line of credit for the next six months. Normally we prefer to be debt-free except for our mortgage, but because we can borrow money at low rates, we have decided borrow to buy stocks in companies with high dividend yields. So far this has worked out quite well, but we still try to pay off some of the line of credit each month, and our total borrowings are a fairly small fraction of our net worth.
We like to follow the KIS principle (keep it simple) in most areas of our life, including our finances. By focusing on a few key variables (savings, charitable giving, a small number of discretionary expenses) and trying to be content with what we have, we find that we are able to stay on track without a lot of effort.
JS
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@Not My Mother #54:
We do the same thing too. Allocating equal amount of allowance has eliminated resentment between us. After all, I don’t need to know what my husband is spending on his discretionary money and vice versa. As long as I know that he’s not blowing his money recklessly while I’m scrimping dollars, I’ll be ok.
As for the other 90% of our money, we budget and save it together.
Btw, it’s nice to see another Aussie in here
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I pay all the bills in our house but my husband and I don’t have formal meetings- we talk about money as and when it comes up, and I usually update him about our general situation in passing conversation every week or so. Even though he barely looks at our bank accounts he knows our general situation and we have shared goals, which I think is the important part.
Regarding allowances- theoretically I like the idea of us both getting a set amount of money per week or per month and we have tried to do that in the past, but I found that we needed to be a bit more flexible with our cashflow while we build savings/pay off debt so instead of a set number, we kind of play it by ear- I monitor how much money we have left, we check with each other on purchases over about £15-20 or so, and make adjustments to spending as necessary. I like this because it gives us flexibility, although it’s only possible because we both have similar attitudes towards money (we’re not super frugal people by nature, but neither of us are big spenders either.)
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We discuss finances every month when my paycheck comes in and we pay the bills. We prefer to pay them that same day, even though some are not due for another two weeks. We each get $70 ‘allowance’, and we discuss what the money in our savings account will be used for. Usually the savings are ’1 month’s rent, I would like to have 3 month’s rent in there, honey. Shall I add $100 to what we save this month?’. And I will send dh the occasional email from work with my new bright idea on money management.
Dh has no experience with money management, because he grew up without any money (really, as in: 1 meal per day, 2 if he was lucky), so I have to take it slowly and make sure there are eye-openers, rewards, ‘unexpected’ (for him) windfalls, etc to show him money management is useful and can be fun!
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This will sound crazy.
We have a method that takes a lot of angst out of the process: we hold our financial discussions in the oversize bathtub. If my husband starts getting hardheaded about an issue, I splash him or put bubbles on my head, and the absurdity breaks the tension. There’s no “business attire” to give a subconscious sense of power-tripping, we’re privately sequestered and don’t need to worry about the kids overhearing, warm water helps the body to relax… It takes a bunch of stress out of the situation.
We have a pack of kiddie “tub crayons” to jot notes or run numbers on the tiles by the tub. It’s harder to feel threatened by numbers when they’re written in “bubble pink” or “bathtub blue” and the nearest financial consultant is a rubber duckie.
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We love talking money, so my husband and I don’t have set monthly meetings or anything like that…it usually gets talked about a bunch anyway. We have joint accounts and joint goals.
I keep track of our spending and savings in an Excel sheet that we both have access to and we both know all our account numbers and passwords. We set our goals together so we both know what we’re saving towards (early retirement, graduate school for him, vacations, etc). When one goal is reached, we discuss what to do with the money that is opened up.
For general “fun/luxury” purchases, we both get $75 a month…if we want something more expensive, we simply run it by the other person to make sure it doesn’t mess with any of our larger financial goals. If we know we want to buy something really expensive, like our 47″ LCD TV, we save up for it in advance.
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@63 Carey, that is genius. Genius.
Humor does help when things get tense. The hard part is remembering that in a tense moment. Next time my husband gets all worked up about his taxes, I will see if I can remember to put some metaphorical bubbles on my head. Finances are important, but most of the time they’re not life and death.
Thank you for sharing that!
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Having a monthly meeting is exactly what my wife and I do. At first it was a hard setting a meeting to discuss money. Now, it goes by in a breeze. We talk about our goals. We review our net worth.
It was worked wonders for us. We both have a great understanding of where we are and where we want to go.
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I cannot get my husband to pay attention long enough to get into our accounts or pay bills. I hate that he stopped taking his ADD meds!
He is constantly having to ask me for passwords and things, and he complains that he can’t do it himself, but when I sit down to show him, he picks his nails or stares off into space.
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As a financial therapist and money coach, I think it is vital for couples to know about each others money history and ‘money type.’ This emotional and psychological awareness actually leads to less friction when discussing family finances. Understanding the context of each others’ beliefs, attitudes, and behaviors regarding money–often informed from messages we received from our families as children–helps each partner develop empathy for each other. It’s this mutual understanding that helps the couple feel like a team rather than adversaries. I would offer that some of these early couple ‘money dates’ include an exploration and discussion about this. It’s an incredibly valuable exercise.
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My wife & I are totally different when it comes to spending. I don’t, she does! Over the past 15 years, money issues have definitely been the number one issue with us. It adds a little more spice to life.
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I have tried all this – setting up a specific time to discuss finance, trying to go over financial goals, prioritizing financial needs, planning for retirement … the whole works. Unfortunately I am yet to see a sense of fiscal responsibility from my spouse. What do I do in that case? Currently I am taking care of all financial aspects myself due to this lack of fiscal responsibility and a lack of willingness to understand and participate from my spouse. Does anyone have this situation where one spouse is disinterested in participation?
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I totally agree,I just want to add a fact,which says :not all people can afford coaching sessions or even think about this , but I think treating financial stuffs should be done as we are going to treat psychological or social issues,because all those sides are mixed and formalize our personalties.
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I pay all the bills. Not just physically, literally. My (2nd) husband pays no household bills. His money is his money and all of my income goes toward what is takes to run a household. Becoming very resentful and wondering how to approach the subject.
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