Are you the out spouse in your financial relationship?Submitted by Castlebar Asset Management on July 9th, 2015
Our financial lives as couples are complicated. Merging together two people’s financial life can take time particularly if you got married a little later in life. In most cases, we have structured are home life around one person taking ownership of certain tasks. The same usually applies to your family’s financial tasks. When it comes to your finances it can be a huge mistake to not share your financial responsibilities.
In my experience there are two types of people in most relationships; the “financial spouse” and the “out spouse”. The “financial spouse” is the person who takes control of the household finances while the “out spouse” is the one who is not involved in financial decisions. There are not gender specifics to either role. I see nearly an even split between women and men fitting into each categories.
Some couples are successful at sharing their financial responsibilities. This is the ultimate goal but is not found in the majority of relationships. It is normal to have a spouse or partner take the lead but both spouses should share and communicate on financial issues. Divorce rates are down but still 1/3 of marriages end with couples splitting (not the 50% most us of think). Disagreements over money are cited as one of the top reasons for divorce.
Being the “out spouse” may suit your personality because you are not interested in your finances or you focus on other things that are more important and leave this to your partner. Here are three reasons to reconsider being the out spouse in your financial life:
Death and Taxes: Benjamin Franklin said “In this world nothing can be said to be certain, except death and taxes.” There is a 50 / 50 chance that you will outlive your spouse and it is a fact that women generally outlive men. While you don’t have to be the financial expert, it is important to have some knowledge of your financial situation. If you are the surviving spouse it will help reduce your level of stress if you are more informed on your finances. As for taxes… leave that to your CPA.
Financial Literacy: Financial decisions are everywhere in our lives and having a basic level of financial literacy is an important life skill. You don’t have to be expert on all areas of your financial life but having an understanding of your household budget, how much you are saving for retirement and why you are insured at a certain level are things both spouses should be familiar with.
Different Perspectives: Being married or with someone usually means you are better together than apart. Taking your significant others advice of financial decisions will provide a different perspective than making the decision on your own. Bouncing financial decisions off one another will lead to better outcomes.
If you or your spouse are on the outside looking in on your finances you can take some of these steps to correct the “out spouse” problem in your relationship:
Discuss: Set one day a month when you both sit down to review your financial goals, budgets, questions and concerns. Open a bottle of wine and make this a positive experience. You don’t have to micromanage each others financial decisions. In fact you should build into your budget some spending money that you are able to spend on yourself or gifts. Now if you start buying a new truck or $10,000 unexpected Amex billings start showing up you’ll need a little more accountability.
Share: There are many great online tools where you can share your financial information with your spouse in an easy no hassle way. We offer our clients a service that sends a weekly email which updates their different investment, retirement and bank accounts. It is a simple solution to keep both of you on the same page.
No Blame Game: Financial conversations between couples can lead to fights. If you set a ground rule that you’ll only look forward and won’t judge of poor past decisions it will lead to a healthier and more productive conversation. You can’t change the past so there is no use in fighting over it!
Pollyannas Are Not Welcome: If you are going to commit to eliminate having an out spouse you have to participate. Sometimes one or both people in a relationship take “it will all just work out” approach to their financial life. If you are going to commit to both working on your financial situation you have to stick to your plan.
Your goals should be to have more balance in your financial decisions. The “financial spouse” will have more of the household’s financial tasks on their plate but the “out spouse” will be more involved in the process.
Andrew Comstock, CFA
Disclaimer: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.