Money and marriage: Talk to ease the tension

by Center for Personal Finance editors

NEW YORK (4/12/06)--A nationwide survey of 1,000 spouses--500 husbands and 500 wives--confirmed what many already know: Money is a source of tension in marriages, causing more fights than sex or even in-laws. What was surprising, though, was the finding that men and women have dramatically different ideas about who does what with the family finances, and what their partners care about (CNNMoney.com March 14).

The survey, conducted for MONEY magazine by Mathew Greenwald & Associates, found that (wives, bite your tongue) husbands were especially clueless about what their spouse cares about when it comes to money, underestimating how much women care about almost every financial issue from investing to paying off debt.

Most couples seem to share the same priorities when it comes to saving for retirement and emergencies, and they also share the same worries--job loss and debt repayment--and values. While couples may not know it, they're remarkably in sync about what matters most to them. For example, the survey found that only 45% of men say that having an emergency fund is very important to their spouse, yet 67% of women actually believe it's crucial. Only 27% of men believe their wives think having the right investments is very important, but nearly half of women say they do care.

The problem is communication. Talking about money is a challenge for several reasons. Men and women have different levels of enthusiasm for the topic, and some women feel anxiety about taking the lead in the family's investment. Women face serious financial challenges such as lower earnings on average, possibly having to care for children without the help of a spouse, living longer, and faring worse financially in a divorce.

The most difficult question to ask a soon-to-be spouse is, "What are your financial assets and liabilities?" Net worth should be the starting point for the rest of the money discussions you'll need to have (The Wall Street Journal March 27). Then get into the habit of making money discussions a part of your life together.

What other questions should you ask?

How much debt do you have, and how do you use it? Are there student loans, car loans, credit cards with high balances, and personal loans waiting in the wings? Start this discussion by sharing your credit report. Get one free report per year from each of the three major credit-reporting agencies.

What's your money history? Do you have happy memories of money from your early years? Early money observations and behavior can define how you and your partner manage your finances.

Is a prenup necessary? Granted, the question could raise more than one eyebrow, but there may be a situation where one partner needs to shelter assets for a dependent--say, from a previous marriage.

What are your financial aspirations? For example, one spouse may think the other will continue to work all the way to retirement age; if that expectation isn't shared by the other spouse, problems may arise. Talking about the "what if's" will help each person understand the other person's views.

How will the financial duties be divided? First, look at each person's strengths. Is one partner better at managing the bills and bank accounts? Who's in the best position to research investment options? Who will pay the bills? Regardless of who does the work, each spouse should be kept apprised of what's going on to prevent getting blindsided by a crisis.

How many checkbooks are needed? Joint accounts help you handle combined expenses, but they're not for everyone. Whatever approach you take to writing checks and making purchase decisions, make sure you keep track of all the expenses.

For more information, read "Couples and Money: Achieve Financial Harmony and Prosperity" and "Prenups Clarify 'Yours, Mine, and Ours'" in the Home & Family Finance Resource Center money savvy section.