How to Avoid Financial Conflict in Marriage

SUMMARY:

A lot of what we talk about on our podcast is a reflection of issues and concerns clients raise on a regular basis. Additionally, we work with clients from various backgrounds, allowing us to see a variety of situations.

Should a married couple have joint checking and savings accounts?

Separate bank accounts among married couples have been increasing in popularity. A study from Northwestern University- Kellogg School of Management analyzed the financial behavior of a group of newlyweds. Some of them had joint accounts, some had separate and others were left unassigned so they could self-select what they thought would be the best option for them. After analyzing these couples for two years, they looked at their overall marital happiness and found that those with joint accounts were significantly happier in their marriages than those who had separate accounts. This study was able to clearly demonstrate that the joint account structure led to better marital communication and satisfaction. It is important to note that the decision to have joint accounts has a higher chance of success if made early on in the marriage. Newlyweds have the ability to set up communication patterns from day one.

Talk About Money Openly

It is critical for a couple to create an environment where it’s okay to talk about money, or the lack thereof, from the beginning. Discussions about the family’s budget shouldn’t turn into a fight. It’s common for newly married couples to struggle with money since they are often just starting out their careers. Creating a budget and sticking to it in those early years can determine how financially successful a couple will be in the future. A budget does not mean you can’t spend any money, it means that every dollar has a purpose. A budget can actually give you the freedom to spend.

Often, it’s hard to plan for things that seem so far away. For example, thinking about retirement when you are still in your late 20s. However, it’s the choices you make today that will ensure you a comfortable retirement tomorrow. If you enter retirement with a load of consumer debts, you will have a hard time because retirement is all about cash flow. In order to prevent forgetting your long-term goals through the years when life gets busy, you should create a mission statement. In addition, you have to make sure that everyone in your household is familiar with it. An example could be: “To build a financially secure future while traveling the world and helping others”. Having a clear goal can make working toward it easier for everyone.

If you are married or have a partner with whom you plan to spend the rest of your life, you should have joint accounts and a joint financial plan to to avoid financial conflicts. One thing is certain, you can’t have separate accounts, pay bills separately, while still reaching long-term financial goals together.

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