In many households, one partner handles the finances while the other is disengaged. In fact, only one in five couples makes financial decisions together. Having a “money person” in a relationship can make sense, especially if that person has a knack for bill-paying, investing, estate planning and other financial tasks. But wealth psychology expert Kathleen Burns Kingsbury warns that even if this set-up works well for years, it may eventually come at a cost.
Problem: Couples who tacitly accept these dominant/uninvolved roles often put off talking about money on a regular basis, either because it leads to arguments or they assume there’s plenty of time for discussions in the future. That kind of avoidance can create subtle resentments. The money person starts to feel like an overbearing parent. The less involved partner may feel disempowered and hide money or purchases to avoid scrutiny. And of course, no matter how well-intentioned the couple is, if the money person has health problems or dies, his/her partner may be left without the confidence or skill necessary to make smart financial decisions.
Kingsbury says that reevaluating your money roles now allows you to set more effective boundaries with each other, decrease tensions and uncertainty, and perhaps even deepen your sense of intimacy and teamwork in the relationship.
Her favorite strategies for couples….
Improving your financial relationship doesn’t mean that you need to change who you are as a person or split all financial tasks 50-50. Often, major improvements come from minor adjustments such as making sure both partners participate in big money decisions and talking regularly to get a clearer picture of one another’s money goals.
What you should do together…
Assemble a file with a master checklist or spreadsheet of all financial accounts and documents. Include information about how they can be accessed—passwords, locations, account numbers. This is a low-conflict, easy task that brings peace of mind to both partners. The file should include…
- Names, addresses, phone numbers and e-mail addresses of financial advisers—attorney, broker, insurance agent and accountant
- Auto titles and maintenance records
- Bank and brokerage investment accounts (taxable and retirement)
- Contracts (legal, etc.)
- Estate-planning documents (wills, trusts, etc.)
- Home mortgage and other loan documents
- Insurance policies
- Recurring bills, outstanding debts
- Social Security records
- Tax records
As you build the spreadsheet and put together the file, create a list of issues that you want to discuss and financial chores you can do together or take on separately. Examples: Change passwords that are too simple…update your wills…make sure beneficiary forms in investment accounts have been filled out.
Use a personal-finance app for couples. The software typically allows couples to sync various accounts online to better collaborate on financial transactions…set up monthly bill-payment reminders…and automatically categorize and track spending so you can see how you’re progressing. Recommended apps…
Mint is one of the most comprehensive personal-finance apps with nearly 30 million users. Cost: Free. Mint.com
Honeydue offers unique features for couples such as the ability to directly message each other through the app if, for instance, a recent charge doesn’t look familiar. Cost: Free. Honeydue.com
Important: While couples should strive to be transparent about their finances and activities, no one likes to be micromanaged. I suggest that partners agree to have individual accounts for discretionary spending up to an agreed-upon amount each month without needing to consult one another.
Conduct a monthly financial meeting. These should be no longer than 30 minutes. Start each one by focusing on a small, positive financial accomplishment such as staying within budget for the month or lowering credit card debt. Check in to make sure you’re making progress toward financial goals, and review upcoming tasks or events. End the meeting by discussing one area of your financial relationship you want to work on. Afterward, reward yourselves with an activity you both like to do.
Use Kingsbury’s Rules of Engagement. You need to treat each other thoughtfully when you discuss finances because disagreements over money and money roles have the potential to escalate into full-blown power struggles…
Be respectful. Listen without interrupting. Reflect back what you’ve heard to ensure accuracy before you make your own point. Recognize that both viewpoints are valid.
Use “I” statements to communicate how you feel and what specific action triggered those feelings. Otherwise, you come across as scolding or nagging. Instead of saying, “How could you bounce another check?” try, “It’s upsetting to me when a check bounces because we get hit with late fees.”
Don’t mind read. Couples tend to jump to conclusions about each other’s motives. Instead of being judgmental, be curious. Trying to increase mutual understanding about the other person’s experiences and values will yield more effective resolutions than trying to convince your partner that you are right.
If you are the money person…
Find ways to reinforce your partner’s involvement in financial matters. Include him/her in all conversations and e-mails with advisers, even if they seem trivial or perfunctory. Never just hand your partner financial documents to sign without explaining what they are.
Keep your ego in check. Realize that your partner’s input can help you make better decisions. Example: I purchased a new coffee maker on sale. My husband was confused since we already had the exact same coffee maker and it worked fine. I got angry and refused to return the new one. Finally, he asked me, “Why is the new coffee maker so important to you?” We talked, and I realized that in my family we lived for big sales. I wanted my husband to acknowledge how thrifty I was. At the same time, it made no sense to keep a new coffee maker in a box just in case the current one broke. My husband helped me realize that spending money to save money isn’t always the best financial strategy.
If you are the less involved partner…
Take responsibility for educating yourself. If your partner doesn’t have the ability to be a good teacher and coach, seek out advisers who can fill in your knowledge gaps or take an adult-learning course in personal finance.
Ask for a “great gift.” If your partner likes to be in control and is stubborn about sharing information with you or seeking your participation in financial decisions, say, “The greatest gift you could give me is letting me be more involved. It would alleviate a lot of my fears and stress knowing that we are doing this as a team and as equals.”