December 17, 2013
Spouses and Their Money: Getting in Sync
Money matters can get complicated for couples who may not see eye to eye. In a recent interview with Squared Away, Kathleen Burns Kingsbury, author of the new book, “How to Give Financial Advice to Couples,” shared her tips and insights for couples trying to meet in the middle.
Q: In a relationship, is money about more than just money?
Kingsbury: Money is often a reflection of our feelings about security, respect, love, power – it really symbolizes these things, whether we’re aware of it or not. So how a couple talks about money and manages their money is a reflection of how they relate to each other in other areas as well.
Q: Explain “money beliefs”?
Kingsbury: A money belief is a thought or attitude toward money that influences your savings, spending, investing and gifting every day. These beliefs tend to reside in our unconscious thought. Because we live in a society where money talk is taboo, we often don’t identify these attitudes. But money beliefs are formed between the ages of 5 and 15 by observing the financial behavior and attitudes of parents or people around us. And these money beliefs tend to be oversimplified, because they were formed in a child’s mind.
Q: Why is it important for husbands and wives to compare their beliefs?
Kingsbury: When couples are arguing about money, they may be arguing about which bills to pay or how to pay for a daughter’s college. But what’s really going on is they’re hitting up against their different money beliefs.
A: What’s an example?
Kingsbury: Here’s a concrete example from my own life. I’m a former FDIC bank examiner who’s been a consummate saver. My husband’s money history is very different. He is a spender and was not taught to save as his family just had enough to make ends meet. When we were ripped off by a contractor for a substantial amount of money, we each addressed the crisis using our money beliefs. I was freaking, because we no longer had 25 percent of our gross income in savings as a cushion for emergencies since we had to use that money to pay our bills. But my husband seemed unaffected. One day, I asked him, “When do you think you’d start to worry about money?” He thought about it for a little bit and said, “When people start repossessing our stuff.” He would worry when the bank took our car or TV!
These different perspectives caused financial tension. However, once we got to the underlying reasons, instead of fighting, we started to get curious about how we approach things very differently. We realized that the other person’s money belief isn’t wrong – it’s just different. The conversations that followed reduced the tension, and together we were able to recover from the loss.
Q: What major life decision creates high tensions among young adult couples?
Kingsbury: Your first house. It’s the first time you’re faced with, “Wow this is a really big decision.” But you’re also faced with your money beliefs. What does it mean if I live in this neighborhood or have old furniture? Do I want to be house poor to get a bigger home, or would I rather start small so I have money to go out and have some fun? For the first time, you are faced with the fact your answers to these questions may be different. This may cause conflict, but it’s also a great opportunity for couples to start talking about their money beliefs,
Q: Is deciding on retirement ages a source of conflict for older couples?
Kingsbury: A study done by Fidelity in 2011 found that 53 percent of couples don’t agree on their retirement age and 47 percent don’t agree on whether they’re going to work in retirement. The same study also found that only 38 percent of couples interact jointly with their financial adviser. I think part of the issue is financial advisers aren’t working in a couple-friendly way to get both people in the room to talk about these issues.
Q: Given the high incidence of marital conflicts over money, is it wise to simply avoid mating with someone with opposing views on money?
Kingsbury: Absolutely not. When couples learn to talk about money – though it’s difficult – it increases intimacy in the marriage, because you’re learning more about your partner. What do they value and what do they bring to the table? And most importantly, how can we respect our differences and still operate as a unit?
Q: Should two working spouses keep joint or separate bank accounts?
Kingsbury: There is no right answer, just the answer that works best for the couple. But a lot of couples have a joint account for house expenses, and separate savings or checking accounts for their own discretionary expenditures. What I recommend is for couples to talk about the pros and cons of joint vs. separate accounts and then do what works well for them. If they do decide to have some separate money, it is helpful to determine an agreed upon dollar amount each person can spend without consulting the other individual. This aids in communication around larger expenditures and also gives each person some independence when it comes to money.
Q: Women are contributing more to the household income. But in reality, do men still wear the pants when modern couples make their financial plans?
Kingsbury: I think that is a myth. In my work I find there’s often a spouse or partner who’s financially dominant. They tend to be more interested or have more skills in the financial arena, and that person can be the man or the woman.
Q: What if one member of the couple knows more about finance – should the other person let them take charge?
Kingsbury: It’s okay to have someone who’s the point person for the couple’s financial activities – you take care of the cars, and I’ll manage the money. But it’s really important for couples to have regular financial meetings – they can be 15 minutes. It’s also important for the person who’s not managing the money to be informed about what’s going on with the family finances, and meetings give them an opportunity to discuss their perspective on what to buy, save and invest.