From the day you go on your first date with someone, money affects your relationship. Whether you’re trying to save your marriage or contemplating a new one, understanding your financial personalities will help to smooth the road ahead.
Have you ever tried carrying a big heavy suitcase to your car and then forgotten where you were parked? We’re willing to bet that the heavy tugging on your arm is nothing compared with the emotional baggage you’ve been carrying around on the subject of money. Unfortunately, too many people don’t realize this before they tie the knot. We’re sure many of you have some unbridled energy when it comes to spending money (or saving it, for that matter).
Much of this is not your fault. Virtually all of us have heavy emotional ways of dealing with dollar bills that may have started years ago with our parents. This article is designed to help you understand your attitudes about money and how they are affecting your relationship. It is only when the two of you figure out what is influencing your behaviors on the subject of money that you can avoid some of those spats for which neither of you really is to blame.
Understanding your financial personalities
Money problems, although they seem to create the most stress and friction in a marriage, don’t always stem from not having enough — although the lack of money triggers many arguments.
Friction also can arise if money leads to unbalanced behavior, or if certain personality traits around money lead to arguments.
The late Lucille Ball, in her book Love Lucy (G.P. Putnam & Sons), said she spotted at least one money conflict with Desi Arnaz right away — even before she married him. “I’m a careful spender,” Lucy wrote. “Desi is highly extravagant. It would save a lot of arguments if we kept our incomes and obligations completely separate.
“So right from the beginning of our marriage, our business manager, Andrew Hickox, handled our affairs on this basis.”
Each paid personal expenses and contributed a fixed amount every week toward home expenses. Lucy’s manager gave each of them $25 a week for incidentals, and everything else was charged. Checks and bills were paid by their agent from separate accounts.
Even if yours is among the one out of ten marriages that consider money management a strong suit, you’re not out of the woods when it comes to money problems. Reason: If you’re overly aware about money, you might not communicate well on other matters, or you could lack intimacy.
You might think you have a balanced marriage. But if that’s the case, you may fall apart if you don’t have enough money, or if you need to discuss it.
So how can you win at this money game and keep alive the love you’ve finally won?
The first step is to recognize and understand your money personalities. For example, some people go out and spend money when they get upset. Others feel sick when they spend the money. Might you expect Sir or Madam Lancelot to ride in on a white horse and pay off your credit cards? Some people always pick up the tab because they want to be liked.
Don’t despair. Even if you’ve detected a money-triggered bad habit of your own, there’s plenty of hope for your marriage. In fact, none of these may be a major problem unless it affects your relationship.
Spender or saver?
Are you a spender or a saver? Based on our experience and the letters we’ve gotten from our syndicated column, there are tons of things that can cause fights in a marriage. But when it comes to money, these two personality traits seem to be the most basic of all.
The bottom line, as we see it, is that each of us has his or her own money personality, which, if unchecked, can create conflicts. Bring two people with money problems together, and you have double money troubles. Even if just one person in a relationship has a money problem, conflicts can result. That’s why it’s important to understand your attitudes about money, and settle any conflicts. Then work together towards your joint financial goals.
Let’s face it, in our marriage, it’s pretty clear-cut. There definitely is one spender and one saver.
Gail (spender): I like luxury, shopping, having friends over, and inviting people out to dinner.
Alan (saver): I like eating at home, investing, a quiet day alone on the sofa, and golf. No stores, please.
We’ve been lucky enough to work through these personality differences through many a compromise. Unfortunately, or fortunately, a good part of these behaviors are not our fault. They stem from our past experiences. Take the parents of the spender in our marriage. Both worked for someone else for a living. They, too, enjoyed spending their money on family and friends.
The “thrifty” half of this couple also got much of his behavior from his parents, who owned a produce business and always worried that an economic downturn could affect their income. They were careful to save every penny.
While these behaviors, passed on from one generation to another, may be a source of many a dispute between us, they are not necessarily our fault. Nor is a marriage of a spender with a saver the only potential source of conflict. Two spenders could wind up building up the household debt, and putting stress on a marriage. On the other hand, two penny-pinchers could reinforce each other’s spartan ways and each could wind up blaming the other for not being able to relax and enjoy life. We’re certain that many a psychologist could elaborate on these combinations and others.
Believe it or not, your attitude toward money also may tell a lot about the way you love. Often, a family that is generous with money also is generous with love.
Meanwhile, the penny-pincher who is reluctant to part with his or her money may have a hard time showing love, adding other obstacles to a relationship.
Complicating the money patterns each of us has already obtained (at least partially) from parents are cultural traditions. Many of these traditions are outdated, and place too heavy a burden on either or both sexes. If both of you treat money with equal respect and understanding, you’ll actually have a stronger and more prosperous relationship.
Women: Are you turned off by a man who doesn’t have much money? This stems from the cultural belief that a man who loves a woman must take care of her, which too often means making a lot of money. This can put a lot of pressure on a man. Some men, we suspect, live in fear that they won’t be able to support their families. In fact, many who got laid off in the last recession were devastated because they weren’t able to do what was expected of them.
Men: Do you consider your wife/girlfriend incapable of managing money? If so, this is an insecurity that can be brought on by another cultural belief that has been carried on for way too long. Unfortunately, women who buy into this stereotype don’t bother to learn how to invest. Meanwhile, this puts another major stress — the family’s investment burden — squarely on the man’s shoulders.
Women who believe this myth wind up being less successful financially. Not only are they still paid less than men, but some live in fear of losing the little they have. Men who are unwilling to share financial decision-making find themselves carrying an awful lot of financial responsibility they might not always be up to handling.
“The problem is, a woman wakes up one day to find out the retirement money she assumed was there is much less than she projected it to be,” says Roger Smothers, a financial planner who also runs a psychotherapy practice in Binghamton, New York. “On the other hand,” he says, “a man who loses a job, for example, is likely to be under particularly heavy strain given the power he feels he needs to have.
“If he loses his job in a corporate setting, and his spouse is beating him up, it’s hard enough to get back out there when he feels defeated,” Smothers says.
There are some pretty big differences in how men and women view financial decisions too, notes psychotherapist-consultant Olivia Mellan:
- Men tend to take credit when they make money, but blame others if they lose it.
- Women credit others when they make money, but blame themselves when they lose it.
- In fights about money, the man blames the woman while the woman blames herself, but then may resent the man.
- Men tend to be uncomfortable discussing investment decisions with spouses.
- Women almost always go to spouses with financial issues.
- Women feel they need to discuss and plan financial moves more than men do.
Look at your own relationship and those around you. Men typically take more risks. Although they probably won’t admit it, they hurt pretty bad when they lose.
Women stick to safer investments. As a result, they lose less. But too frequently, they’re afraid to take the risks necessary to make more money long-term.
Meanwhile, put some of these issues into a relationship, and there sure are a lot of reasons for couples to fight!
While spenders can get the family into trouble with debt, savers don’t necessarily have to cause problems — unless they happen to hook up with a partner who likes to spend, notes Diann Dee Michael, Ph.D., a Fort Lauderdale, Florida-based psychologist.
“Misers have to realize they’re in a world with other people,” she says. Once they do, she says, a miser can learn to relax about spending money if it makes a partner happy. By the same token, she says, a spender who knows he or she has hooked up with a miser should defer to the miser now and then. Even if the spender would prefer a filet mignon dinner, pancakes can be tolerable when love is involved.
Besides, when you offer to do what your partner wants, whether it comes to spending or saving money, you’d be surprised how much more smoothly your relationship works.
Exercise to Curb Spending
Are you a spender who has gone a bit overboard? Here are some steps you can take to get things under control:
- Identify activities — apart from spending money — that make you happy. Some ideas: exercise, art, hobbies, relaxation techniques, support groups, discussions, and sports.
- Make a list of what provokes your overspending. Avoid those triggers. Example: Feel you must stop every time you walk by a certain store on the way home? Take a different route.
- Spend one week writing down all your purchases. At the end of the week, determine which purchases you really didn’t need.
- Brainstorm ways to cut own on those purchases you didn’t need. If you like going out to dinner, for example, avoid the restaurants that cost $100 a person and resolve to go to restaurants that cost $20 each instead.
- Write down what you really do need, i.e., money for a house or retirement.
- Determine a specific amount you will deposit into a savings account each week towards those important goals. Make it your priority — before you do anything else with your paycheck.
What type of investor are you?
Well, until now, you might not have realized the impact that your thoughts about money could have on your personal relationship or marriage. However, apart from the personal issue, there are investing issues to consider.
Al: Your growth stock fund is up 25 percent this year!
Gail: Hmmmn. Mysterious silence about the rest of our investments.
We mentioned earlier that women tend to be less comfortable taking investment risks — a factor that hurts their ability to earn more money long-term. Men, on the other hand, are more inclined to take risks — sometimes without completely understanding the risks they are taking. Then when they lose, they suffer terrible depressions.
Nevertheless, history has proven that people willing to take some risks and invest in stocks or stock mutual funds for a term of at least 10 or 20 years tend to make more money than more timid investors. The trick — for both men and women alike — is knowing when and how to take such risks.
Take Sam and Henrietta, who are 65 and living on Sam’s retirement savings — about $25,000. Sam put the bulk of that money in a stock mutual fund. Two months later, there was a stock market correction and Sam lost $5,000 — just after he managed to break a tooth while eating some southern fried chicken. Of course, Sam had no dental insurance and had to cash money out of his fund to pay for a bridge at exactly the wrong time.
Not only did Sam take a big risk with his lifetime savings, but he lost money at exactly the wrong time. Needless to say, his wife Henrietta was very upset, and wouldn’t talk to him for a week.
On the other hand, James, a 35-year-old doctor, makes $100,000 a year. He and his wife, Susan, were very comfortable putting $10,000 in the very same stock mutual fund that Sam and Henrietta invested in because they have at least 30 years to retirement. James and Susan both know they don’t need the money immediately. So it doesn’t matter if the investment is worth only $8,000 after the first year. They know that by the time they retire, based on the stock market average of 10% annually, it’s likely to grow to $174,494. That’s more than it would likely earn in a CD, which historically has averaged just about 3% over the years.
The trick to investing is understanding your investment and balancing its risk with the amount of risk you can tolerate. You also need to remember that keeping all your money in CDs or savings accounts, while not as risky as the stock market, also presents a risk of its own. That risk is your money may not grow fast enough to keep pace with inflation, or the price increases in your everyday living expenses.
How to compromise
All right. None of us is perfect. Even if you fully understand money and investing, as well as how you think about money, you’re bound to have some money disputes. So once you’ve corrected your own bad money habits, you’ll probably still need to compromise with each other on money issues.
There are a couple of preliminary rules to follow to reach this goal. First things first. Turn off the television and unplug the telephone, please. Round up all your financial paperwork. Trying to decide on a mortgage? Get the terms of your mortgage agreement or the good faith estimates of the lenders you are considering before either of you opens your mouth.
If you’re having a money conflict, keep in mind basic differences between men and women. Men don’t like to be told how to act. So women need to make a particular effort to provide positive reinforcement when they communicate. “Honey, I love you, but don’t you think it would be in our best joint interests to see a financial planner?” might be one positive way to state your case rather than, “You don’t know what you’re doing. You already lost us $10,000 last year.”
On the other hand, women need more time to analyze and plan things. Men need to respect this. Don’t throw the checking statement at her when she’s just come home from a day of mind-boggling deadlines at work.
Once you have these basics down, you’re apt to eliminate some areas of major conflict.
Checklist: How to compromise
Looking for compromise on a money matter without a full-fledged fight? Here are some great tips for you:
- Only one person may talk at a time.
- State exactly what you want — clearly.
- Listen carefully to the response.
- Repeat back what you think you heard your spouse or lover say.
- No name-calling.
- Make your points by using the words “I feel” and “I need” rather than putting down your partner.
- Say what you agree with.
- Say what you disagree with.
- Take turns figuring out ways to compromise.
Risk Tolerance Quiz
To determine your risk tolerance, circle the letter that best expresses your answer to the following questions:
1. How old are you?
a. Over age 65 (1)
b. Between age 55 and 65 (2)
c. Between age 35 and 55 (3)
d. Under age 35 (4)
2. How much are you willing to lose in mutual fund investments in any given year?
a. 1 percent (1)
b. 3 percent (2)
c. 10 percent (3)
d. 15 percent (4)
3. How important is regular income from your investments to cover expenses now?
a. Very important (1)
b. Important (2)
c. Somewhat important (3)
d. Not important (4)
4. How important is it to have a regular income from your investments to reinvest?
a. Not important (1)
b. Somewhat important (2)
c. Important (3)
d. Very important (4)
5. How important is it to avoid losses and know your money is safe?
a. Very important (1)
b. Important (2)
c. Somewhat important (3)
d. Not important (4)
6. How important is it that your money grow faster than the prices you pay for the things you need?
a. Not as important as getting regular income (1)
b. I want it to grow as fast as the cost of things (2)
c. I want it to grow more than the cost of things (3)
d. I want it to grow much faster than the cost of things (4)
Now add up the numbers in parentheses to the right of each of your answers to determine your total risk-tolerance score.
- If your score is 10 or less, you are a conservative investor. This means safety is as important as seeing your money grow in value over the years. Consider a mix on the order of 40% stocks or stock mutual funds, 40% in bonds or bond mutual funds, and 20% money funds, savings accounts, CDs, or U.S. Treasury securities.
- If you score between 10 and 20, you are a moderate investor. You are willing to see a short-term decline in the value of your investment in exchange for long-term growth. Benchmark investment mix: 60% in stocks or stock mutual funds and 40% in bonds or bond mutual funds.
- If you score 20 or more, you are an aggressive investor. You are willing to accept larger short-term losses in return for substantial gains long-term. Benchmark mix: 80% in stocks or stock mutual funds and 20% in bonds or bond mutual funds.
This article has been edited and excerpted from Love, Marriage & Money: Understanding and Achieving Financial Compatibility Before you Say “I Do” by Gail Liberman and Alan Lavine (Dearborn Publishing, 1998). This husband-and-wife team offer a one-stop guide to everything you need to know about your finances before, during, and even after a commitment. It blends legal, financial, and psychological information into an essential resource for anyone managing money and a relationship. If fights about money wrecked your last relationship — or are destroying your new one — pick up a copy of this book. Available at better bookstores across North America, or on the Web at www.amazon.com, or www.Indigo.ca.