Do Financial Challenges Cause Divorce?
Arguments about money are one of the biggest contributors to divorce. No surprise there. But is there a happy medium for marital finances?
Yes and no, financial and relationship experts say. Check out the stats on financial woes in marriage, and learn whether your coupling may be as doomed as a bounced check.
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What Are Your Options?
Don't Talk About It.
In a survey, 31% of responders reported lying about their finances to their spouse. Of those:
- a) We can’t find a financial or a relationship expert who says this is a good idea.
- b) Carl Richards, certified financial planner and author, suggests that the more couples knew about their finances and goals, the happier the couple would be.
- c) Bad things could happen: Missing a bill, car, credit, or house payment. Unexpected, unneeded expenses. Mismanagement of funds by one or both parties.
- d) A spouse may not have a squeaky clean financial past and slip into some bad habits. Sometimes, they bring their significant other down with them.
- 58% hid cash.
- 54% hid a minor purchase.
- 30% hid a bill.
- 16% hid a major purchase.
- 15% hid a bank account.
- 11% lied about debt.
- 11% lied about earnings.
The Joint Account
There is something inherently trusting in trying your financial well-being together. It's more than vowing to love and to hold, it's being together for richer or poorer.
Sarah Pennells, a finance journalist and broadcaster, has discussed the pros and cons of joint accounts:
- Both partners know exactly what's going on.
- Easier to pay bills.
- Easier to share financial responsibility.
- Both spouses are responsible for debts.
- One partner may expect justifications for expenditures.
Some couples delegate one person as the spender, to keep purchases from rocketing out of control and reduce the confusion.
In a recent American Express survey, 31% of married or long-term partners had separate checking accounts. 23% had their own savings.
Some say that separate accounts undermine a marriage. Dr. Phil suggested separate accounts over joint accounts:
- "It's important to have independence and your own discretionary money."
- But he advises keeping the other spouse informed of expenditures and living within a mutually-agreed-upon budget.
"Yours, Mine, and Ours" Accounts
- a) An alternative solution to the separate account, and a favorite of Jean Chatzky, a financial journalist, author, and speaker.
- b) It can get messy, especially in a dual-income household.
- c) If a couple makes (roughly) the same amount of money, they may be content to call it even and deposit the same amount into the joint account.
- d) More likely, couples will have vastly different incomes, and a set amount might seem unfair. This can easily be fixed by setting a percentage. Say a couple jointly makes $90,000 a year. One brings in $60,000 while the other makes $30,000. The higher income individual would be responsible for two thirds of the contribution to the joint account.
- e) A way around the math: Have both paychecks go into the joint account and give each separate account holder a stipend.
So What's the Secret to Success?
It all comes down to communication.
Scott and Bethany Palmer, authors of Cents and Sensibility: How Couples Can Agree About Money, emphasize that partners need a full disclosure discussion on finances before combining assets.
The National CPA Financial Literacy Commission suggests having an undistracted weekly or monthly "finance night" to:
- Review statements.
- Talk upcoming expenses.
- Splitting the duties, but keep the lines of communication open.
However you choose to handle your finances as a married couple, it is vital to discuss, discuss, discuss. If you can’t discuss these matters in a civil way, you might want to talk to a financial or marriage counselor (or a lawyer).
To talk to a local divorce lawyer, go to Total Divorce.