In a country plagued by low financial literacy, it’s good to know that personal finance courses are becoming a requirement for high school students. Thirty-nine states now require such courses for high school graduation, according to the Council for Economic Education. But money can get a lot harder when romantic relationships come along: Each partner brings their own money beliefs, emotions and habits to the party, which explains why finances reliably rank as one of the top causes of divorce. Maybe one day couples’ financial alignment will be a required academic course, but until then, partners often must muddle through, perhaps with the help of a therapist or financial advisor. For this week’s Barron’s Advisor Big Q, we asked financial advisors to share their best advice for couples who want to create harmony around money.
Tricia Mulcare, senior wealth advisor, HB Wealth: I do quarterly talks with couples who are on the brink of getting married. I start by asking, “What are the stories you heard growing up?” One person in a relationship may have seen that their parents were always stressed about money because they watched their parents grow up in the Depression. The other might have parents who did not respect money, who lived paycheck to paycheck, who vividly remembers losing the house. Then I encourage couples to talk openly about how they really spend money.
Is it important to get your nails done every week or every month? Are you still paying off your student loans? Are you trying to keep up with the Joneses with a new car every few years? Do you have a loan? Or do you have a plan for buying either the first house or the next house? What does your ideal travel look like? What priorities do you have for your children? Sometimes we assume our partner is thinking the same things we are. So anything you can do to have that communication earlier on will alleviate at least one little stress in the marriage.
As far as high-level recommendations, have an annual meeting to talk openly about what happened last year and what your big-picture goals are for the future. Review account statements so both people know where the money’s located. Talk about your timeline for retirement, buying a second home, or plans for a big trip for a milestone birthday or anniversary. I recommend a joint bank account for joint bills. I also recommend that if you get an inheritance, keep it separate, but talk about the plan for those funds. And I am a fan of prenups, especially if you’re coming to the marriage or remarriage with assets.
Caroline Wetzel, private wealth advisor, Procyon: The first key is to have a shared sense of ownership and involvement in the overall strategy. How do the members of the partnership view money today? What is yours, mine and ours, and what does the future look like for us? All too often, couples are so focused in the current moment that these more strategic, longer-term questions get put off to another day. So the first and most important component is to ensure that both members of the partnership are aligned around the importance of creating a joint strategy. The second is having agreement and accountability around the day-to-day implementation of the strategy. Each member of the couple doesn’t have to do everything to make the strategy happen, but the couple should understand who’s doing what and how. That way if something is going awry, we’re minimizing surprises and maximizing communication. Lastly, iteration and reiteration of the financial conversation and plans is extremely important. For so many people, money and finances conjure up a variety of emotions and expectations, and it’s not until you’re in an intimate relationship that you’re even aware of it and called out to become accountable for how you’re doing things. And so that third component is the reiteration, the grace, the ability to say as a team, “Look, this is what we’ve been doing, but maybe it makes sense to course correct here.”
Reva Shakkottai, senior portfolio manager, RBC Wealth Management: When you create harmony around money in a relationship, it’s not about agreeing on everything. It’s about creating a system where both people feel heard and respected and secure. Most financial conflict isn’t really about the money. It’s about what the money represents. It’s about differences in values and habits and expectations, and when you align on the meaning of money and create structures and open communication, the numbers tend to fall into place.
I advise clients first to understand each other’s money story. These are the beliefs and emotions about money that were formed early in childhood. They come from how you saw money handled, whether it was scarce or abundant, whether conversations at home were stressful or calm. I firmly believe this shapes your habits today. One partner may have grown up in a household where money was tight, so they value saving and security. The other may have grown up comfortably and associates money with freedom or experiences. I find that most couples naturally have a saver and a spender. And that’s not a flaw—it’s actually a strength, because the saver creates stability, and then the spender ensures that you enjoy your life. The goal is not conversion to one ideal; it’s balance. You don’t need to change your partner’s money mind-set; you just need to understand and respect it.
Charles Scarallo, senior private wealth advisor, Wealthspire Advisors: Open communication is key, and having a neutral third party that is objectively thinking about the couple’s collective goals and helping them work together to achieve them is a key component of what we do every day. So No. 1, we highly recommend working with an advisor. And then it starts with building alignment between the couple. It’s not just about investments, actually far from it. It’s more understanding each of their unique goals, and then as a couple, how they’re looking to achieve those goals. It’s creating a shared vision on what success might look like for them and their family.
We have some big conversations, including about legacy. You could have a situation where one member of a couple feels like they’ve done enough for their kids during their life; now they want to enjoy their money and are not so concerned with how much they leave behind. The other spouse might say, “I do want to leave a legacy; it’s important to me that once we’re gone there is something there for our children.” So each individual might have their specific biases, needs, wants, and objectives. It’s about communication, some compromise, trying to find common ground and working together on a plan that is going to address everybody’s goals.
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