February is the month of love. We celebrate Valentine’s Day with chocolate, flowers, and conversation hearts! But finances continue to be one of the leading causes of divorce in the U.S. So, at the risk of ruining a nice moment, let’s consider some do’s and don’ts of relationships and money.
Let’s talk first about red flags. We have seen each of these situations, usually in multiple variations, in our financial planning work. If any of these describe a relationship that you or a loved one are in, some focused work is in order.
• Either partner is unwilling to discuss their money story or spending habits. I’ve talked with couples that grew up in households where discussing money was taboo. Sometimes we see generational differences in how directly money issues are brought into the open. We understand the temptation to avoid what can be a difficult issue, but now is the time to break that habit. It’s too important for the future success of your relationship.
• One or both of you keep financial secrets. You decide to go into a committed relationship and don’t tell your partner about $20,000 in credit card debt. Your partner hides purchases in his/her car that suddenly appear as new items in your household. Financial secrets don’t work. They lead to feelings of resentment and betrayal that are hard to overcome. Both partners must lay all their cards on the table.
• One partner prevents the other from getting or keeping a job. This may seem like an extreme example, but trust us: It happens! One partner may be insecure about the success of their partner or prefer they not have a career. They encourage them not to work or interrupt their workday with visits and calls so much that the partner quits, or they get fired. Don’t get us wrong — we know plenty of couples that have happily divided roles so that one partner works while the other partner runs the home front. But that must be a choice that both partners make.
• One partner requires the other to ask for money or gives the other an allowance. Controlling your partner through access to money is always unhealthy. In our experience, when one partner controls the purse strings, resentment and bitterness almost always follow.
We’ve got those negative examples out of the way. So, what does a healthy financial relationship
• You must discuss your money story and history well before making a commitment in your relationship (like shared living space or marriage) and make an unemotional decision about whether your stories are reconcilable. For us, this really is Rule #1. If you determine you are not financially compatible in the beginning, it will make everyone’s life a bit easier.
• Sharing your money story with your partner includes discussing at least the following points at length: What are your values/beliefs about money? How did you perceive money growing up? Does money equal power, security, or freedom for you? Are you a spender or a saver?
• Financial goals are created and discussed together. Partners set realistic budget and short- and long-term financial goals together. They update and review these goals on a regular basis. At my house, we call this meeting a “financial summit,” and it happens about once per year. As little interest as my husband has in this meeting, he commits to it and often has important feedback about our goals.
• Partners have open communication about spending limits. Often, I’ve seen people determine a set dollar amount that can be spent before discussion; that seems to be a successful strategy. Large purchases are discussed before they occur.
• Partners handle debt as a couple. Remember that regardless of whose name the debt is in, both partners are responsible for it if incurred while married. Healthy couples create a game plan together to pay off debt without finger-pointing. Perhaps more importantly, they work together to live debt-free.
• People in healthy financial relationships understand that money doesn’t equal love. Think about how often we still see advertising suggesting that “the more I spend on you, the more I must love you.” No, no, no! A beautiful piece of jewelry (or, say, an incredible new mountain bike) is worthless if it means that the mortgage didn’t get paid on time. It would do us all a ton of good to separate love and money.
As I sneak up on twenty years of experience in financial planning, I am more and more aware that the relationships we have with money and each other are central to a successful and happy life.
Jennifer L. Adams is a CERTIFIED FINANCIAL PLANNER™ practitioner and financial advisor at Starks Financial Group. Starks Financial Group is not a registered broker/dealer, nor is it affiliated with Raymond James Financial Services. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment Advisory services offered through Raymond James Financial Services Advisors, Inc. This article expresses the opinions of Jennifer Adams and not necessarily those of RJFS or Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James does not provide legal services. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER ™, and CFP® in the U.S.