Couple’s therapy – Part 3 Finding financial fairness
by Arnold Machel, CFP®
“What causes fights and quarrels among you? Don’t they come from your desires that battle within you? You want something but don’t get it. You kill and covet, but you cannot have what you want. You quarrel and fight. You do not have, because you do not ask God.” James 4:1-2 (NIV)
Over the past few months we’ve been looking at ways to coordinate finances between husband and wife. Conflict is a natural result of independent beings choosing to do things together, choosing to be interdependent – so conflict isn’t something to fear. Consider it something that will make your marriage stronger, not weaker – at least if done well. Today we’ll consider a few solutions that might work for you in areas that commonly create conflict.
You’ve decided to manage all of your finances jointly and now you’re facing some issues. The three most common issues you are likely to face a conflict about are:
• Spending vs saving/investing
• Paying down debt vs saving/investing
• How much to donate
Start off by recognizing that it’s quite possible that you may never come to agreement. It’s been said that a successful negotiation results in all parties being equally unhappy. It is well within the realm of possibilities that the best you will be able to do is to come up with a compromise in which your dissatisfaction levels are more or less equal. By starting off with the understanding that you may need to learn to accept a compromise, you greatly increase your chances of success.
Also understand that it may be temporary. You may come to an agreement only to find over time that it’s just not working for you or your spouse and that you need to renegotiate, or you may find that you can’t agree now, but do end up coming to agreement many years from now. Either way, it’s okay. Your relationship is more important than getting your way.
Spending vs Saving/Investing
You feel like you never know about tomorrow, so you want to live life to the fullest today. That means not scrimping on vacations or eating out. Your spouse is concerned that you’re spending at the cost of your future. That in retirement all you’ll be able to afford to eat is cat food plus what you can get at the local food bank. So the two of you fight – a lot.
This is by far the toughest issue to deal with, as it is often something that is very deep-rooted in the psyche of the individual. It is where budgeting works best. Deciding ahead of time how much will be spent on each activity or area (lattes, saving for the future, eating out, vacations, etc.) will force you to compromise purposefully and for a set time rather than stressing and arguing about it all the time. Take the time to thoroughly review where your money goes and where you want it to go. (See my August 2016 article on this).
Once the budget is set, segregate the funds for each activity so that you know exactly how much is there. You’ve each agreed how much will go to that activity. At the end of the month, if you both agree to move some ‘eating out’ money into the vacation fund then you can always adjust. You just need to both agree before any changes are made.
Of course this presumes that the spouse who likes to spend agrees that money is finite and it’s not okay to borrow willy-nilly for everything he or she wants to do. Dealing with a true spendthrift who doesn’t appreciate reality will in all likelihood require the help of a professional counsellor.
Paying down debt vs saving/investing
Another difficult conversation centres around what to do with that all that extra money being saved by not spending it on lattes. Perhaps one spouse wants to pay down the mortgage but the other wants to save for retirement.
First off, recognize (and acknowledge) your common ground. In a very real way, both approaches help provide for the future, just in different ways. Next, seek professional financial help. Maybe one way makes much more sense in your circumstances. This is where your banker or financial planner should be able to help. Hopefully they will be able to clearly show the benefit of going one way or the other, or demonstrate that in your case either approach works out equally. If that’s the case, hopefully one of you will be willing to give in. If none of that works, then consider a compromise. Maybe you could do both. For example, for every dollar paid towards principal a dollar gets invested.
This can be another contentious issue as it may be rooted in deep convictions. I’ve known a few couples that had trouble coming to agreement on this. In some of the cases, the wife wanted to tithe, but the husband didn’t. One of the couples came to the agreement that they would tithe on only half their combined income. Ultimately, as he grew in his faith, he came around and they tithed on their whole income.
In another case, the couple couldn’t come to agreement at all. Since he didn’t want to tithe and she did, it was proposed that she tithe on her income and he not tithe on his. Surprisingly (at least to me) that also wasn’t acceptable to the husband-to-be. He pointed out (rightfully so) that by her tithing, she was reducing the total pot of money that they had available and that they had agreed to make all money decisions together. This couple ended up getting married with the issue left unresolved.
What I said last month bears repeating. These decisions are best faced (and dealt with as much as possible) before getting married. That doesn’t mean they are set in stone. Some of them may require adjusting during marriage.
By addressing as many issues ahead of time during your premarital counselling and/or with joint visits to your financial planner, you each get a much better sense of what to expect in the marriage, and of your spouse.
Arnold Machel, CFP(r) lives, works and worships in the White Rock/South Surrey area. He attends Gracepoint Community Church where he serves on the Leadership Team. He is a Certified Financial Planner with IPC Investment Corporation and Visionvest Financial Planning & Services. Questions and comments can be directed to him at: email@example.com or through his website at www.visionvest.ca Please note that all comments are of a general nature and should not be relied on as individual advice. While every attempt is made to ensure accuracy, facts and figures are not guaranteed.