The worst financial mistake couples make before spending a dime

For-Love-and-Money

For almost five years I’ve served as a financial advisor at my church. Individuals, but primarily couples, who have reached the edge of their fiscal cliffs take the rather bold and often humbling step towards fixing their monetary lives by reaching out to someone for help.  I’ve found that it usually takes a catastrophic event, or the potential for one, to motivate someone to admit their finances are in shambles and they don’t know how to rebuild them. Without fail one of the two – usually the husband – is overly unenthusiastic about my involvement to the point of irritation. And it’s only when faced with a potential divorce does he consent to someone stepping in.

I work almost exclusively with married couples. I find it rare that a single person will reach for help. Much of that, I think, is for the unmarried guy or girl their money problems rest squarely on their own shoulders, there is no one else to blame for any mismanagement. But with married couples the dollars and cents play a minor role in the larger problem, the far bigger obstacle is determining who is the likely cause. It’s a necessary evil because when it comes to marriage there is far more at stake; it’s common knowledge that the number one cause of divorce is money problems.

So it is that coupled with the propensity to wait until the wolf comes knocking at the door, by the time they get to me I usually play the part of advisor and therapist.

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My immediate mission during that first meeting is getting the back story and determining what got them into the current mess. This often necessitates I tune out ample amounts of static and finger pointing in order to get there. He thinks she spends too much on clothes, she thinks he wastes too much on his bass boat, in the end it often becomes a game of ‘where’s the blame?’ While this process can become contentious, I usually find that skinning a cat of their own making brings everyone’s egos down a notch or three.

The only way to effectively get to the root cause is by asking lots of open-ended questions that will let the conversation meander through the fault finding, like a muddy river,  to the crystal clear lake of truth. Many of these questions are hardwired into the conversation while others creep up as one offs based upon the answers given. But invariably during that first meeting I will always get to the one question that will shed more light on their situation than anything either of them could express otherwise,

Who handles the finances in the family?

I have yet to meet one couple – not one – I’ve worked with who has answered this question with anything other than, ‘my husband does’, or ‘my wife handles all that’.  It seems that the going marital practice is for one person to assume the full burden of responsibility for keeping the  family’s entire financial house in order because the other can’t – since they don’t like that stuff, won’t – as it’s boring and they’ve got better things to do, or isn’t allowed – because she is the ‘numbers person’ of the family.

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Like any workout programs the effort determines the results and homework is a significant part of this financial makeover. The first week is always two-fold; to begin they must track their spending and the other is to begin doing the bills – as a couple – at the same time. Neither of these, it should be noted, are welcome projects but tangible progress will never be achieved until both are accomplished with a precision-like effect.

The reason for the tracking should be obvious by now unless you don’t get Dave Ramsey or Clark Howard where you live (read here for more on that) , but the other may be a bit less apparent.

Responsibility – As a married couple you are jointly on the hook for the household debts – no matter whose name may be on the note. (Try missing a few car payments and see if they let you keep the minivan because it was in your husband’s name?).

Transparency – I can’t tell you the number of times a wife or husband would get the shock of their lives learning about debts their spouse had and they were unaware of. A good friend of mine found out during her divorce that her soon to be ex husband had amassed $90,000 in credit card debt, of which half of the amount to settle came out of her half.

Accountability – when the bills are paid together each person is going to be more accountable. It’s hard to hide her Jimmy Choo habit when you’re both looking at the credit card statement.  But if one person handles all the bills they are only accountable to themselves (and we know how that can go).

Respectability – A couple’s resentment for each other often takes seed in the soil of their finances. He thinks she is spending his money, she is bitter that he even has the audacity to feel that way. When couples manage their household finances together it generates opportunities for the couple to talk about these things in a way that never could happen if only one handles them.

Pressure – All the responsibility for keeping a family’s ship afloat is usually too much to ask of one person. Besides, two brains are always better than one and perspective is leveraged that would otherwise be missed with only one person.

It works – Couples that manage their finances together seldom disagree on money issues, are never surprised financially, have better marriages with greater respect and deeper love and appreciation for one another. Because they choose to manage their money as a team, the feel and act more like a team in the other areas of their relationship.

It’s through these experiences over the years the Queen and I have already agreed that from the moment we get married we will  manage all of our finances together as a couple in full accountability and complete transparency. While money problems may be the cause of most divorces, the way we see it couples that pay the bills together will stay together.

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