Once you’re married or in a committed relationship, money should be the least of your concerns, right? Shared expenses, perhaps more than one income – how could something like an old loan or a credit score get in the way? Is your money history really that important?
“Very important. Some studies suggest that financial stress is the top cause of marriages collapsing,” says Bruce Provda, a New York-based divorce and family law attorney for some 40 years. “When credit scores are more or less similar and neither party enters the marriage with a burdensome debt load, the couple is more free to focus on building the relationship.”
The #1 cause of stress in a relationship
Provda is right, at least according to a survey released earlier this month by SunTrust bank. Of those surveyed who admitted stress in their relationship, finances were the #1 reason, noted by 35% of respondents overall. And it’s not an issue that necessarily gets easier with time. Of those aged 45 to 54, money issues were ranked the top cause of marital stress by 44% of those surveyed. And Provda claims the catalyst can be a matter as mundane as a FICO score.
“Credit scores really come into play when the couple share a ‘must-have-it-now’ mentality and aren’t willing to work and save towards major purchases,” he says. “If one, or both, parties have lousy credit scores, it tips the playing field in the relationship and adds to the stress. However, if the couple hasn’t developed trust in each other, learned to communicate honestly and openly, then the credit scores and debt are secondary to the real problems facing them.”
Angela and Kirby Jacobson are young marrieds living in Dallas. She is a marketing professional; he’s an investment analyst. Having been married for nearly five years and sharing finances for eight, you would think that — like many couples — there would have been some serious financial discussions along the way. Serious, maybe. But Angela says they never fight about money.
“I think that people think we’re lying when we say that we haven’t fought about money but it’s genuinely true,” she told the Money Pivot. “There doesn’t always have to be strife in order to have a remarkably positive outcome, and I like to think that we’re a living, breathing example of a couple who agreed on goals before we had any money to speak of and have stayed committed to those goals even as our priorities have changed.”
The couple’s primary goal: earn fast, retire early.
“We’ve actually never fought about money because we have both agreed from the beginning on the same goals – make as much money as we can as quickly as we can, so we can get to actually living our lives and enjoying our lives together,” she adds.
Separate or joint accounts?
For the newly married or cohabitated, money issues can be triggered by something as simple as deciding about whether to maintain separate or joint banking accounts. Once and for all: what’s the right move?
“Both. And neither,” Provda says. “A young couple, just starting out, may find it beneficial to share a joint account for household bills, vacations and so on while maintaining separate accounts for personal bills, hobbies, etc.”
But in Provda’s experience, the answer seems to evolve to joint accounts over time. But take that will a grain of salt – after all, he is a divorce attorney.
“As they mature, I have found that many of my clients have slowly merged individual accounts into one joint account as the level of trust has grown. The question of joint or separate accounts is a great question, but not one that can be answered definitively for every couple. Each couple needs to do what works best for them,” he says.
From the beginning, Angela says she was reluctant to fully merge finances, so the couple created a system where they each paid a share of the household bills based on the percentage of total income they individually contributed. But still, they share joint accounts.
“Having separate accounts implies that one or more individuals in the relationship aren’t willing to be fully honest about their spending habits. Rarely are separate accounts desired so that one person can constantly shower the other with surprises,” Angela says. She and Kirby share their thoughts about finances at TheSimpleMoneyBlog.com. “Separate accounts also imply that there is a certain amount of yours versus mine, and we’re very opposed to that. Marriage is a partnership and that means finding a way to agree on how money is acquired and spent. Respecting each other enough to manage against shared expectations is fundamental to a successful marriage.”
Millennials and marriage
Millennials like the Jacobsons are waiting longer to marry, choosing to deal with things like student loan debt and career issues first before committing to a long-term relationship. Does that give them a better chance for marital success?
“I’m not sure the Millennials are being proactive in their decision to wait longer before marrying,” Provda says. “Maybe they’re being reactive because of the student loans. It’s an interesting question to think about. But regardless of their position as being pro- or re- active, yes, many studies have shown that the longer a couple waits, the more they mature and the more each of them mature, the better the odds for marital success.”
However, he adds: “But maybe the longer wait before marrying isn’t about money after all. Maybe the longer wait allows them time to mature and develop sufficient inter-personal skills which allow them to better manage — and discuss — the household finances.”
“I love that people are waiting to get married for tons of reasons, but I don’t believe that sorting one’s affairs prior to marriage necessarily leads to a more successful or fulfilling marriage,” Angela says.
Keeping financial secrets
A recent survey revealed that many people in committed relationships keep financial secrets from each other, including hidden accounts and debt. It would seem a recipe for relationship failure, but Provda says it may not be that simple.
“The issue goes a little deeper. Yes, keeping financial secrets from each other is a sure way to destroy the marriage, but a relationship built on secrets about anything — not just money — is doomed to fail. If each party doesn’t have a sufficient comfort level to trust the other in financial matters, how can they possibly have trust in other areas of married life? Open communication is the signpost towards a successful marriage and that means open communication about everything the couple faces.”
Angela and Kirby agree – and have put in place a system of checks and balances.
“We don’t run all decisions by one another — like going out for lunch or groceries — but every purchase throughout a month is reviewed by both of us in our own ways of tracking,” Kirby says. For Angela that means pen and paper, and for Kirby, a Certified Financial Planner, it’s Mint.com. “Trying to hide something or buying something the other wouldn’t agree with would very quickly lend itself to disaster. At each point in our careers, we’ve thought of things as ‘ours’ regardless of who made more for the year, so it’s not a ‘his’ versus ‘hers’ type of mentality since all buckets collectively help benefit us together.”
Money is not the root of all evil
And while it is often blamed for the failure of marriages, the seasoned attorney — who has sat across the table from his share of those in wedded deadlock – thinks that in most cases, money is not the root of all evil.
“Money issues in marriages, which aren’t adequately dealt with, are just a symptom of more serious problems in the relationship,” Provda says. “It’s easier to point to the inanimate object of cash as being the reason for a couple’s divorce than to take responsibility and look at one’s own issues which contributed to the demise of the union. Lack of trust, poor communication, different life goals, etc., are the primary causes of divorce. Money issues are merely the symptom.”