Money and Divorce: Which Problem comes First? Do money problems cause divorce or does divorce cause money problems?

Why is money so often cited as a primary reason for divorce? Is it the actual cause of divorce, or does it become an issue when couples decide to split?

I wish I could state unequivocally which it is, but what I can do is speak to the causes behind why couples argue and often split over money issues.

Many couples come from different backgrounds in terms of how they view and value money. Where one person in a relationship might feel like money should be used to buy things today that they believe enhances their life experiences, the other person might feel like money should be primarily used for basic life needs, with the rest, saved for the future.

To this day I find it shocking that so many couples get married without discussing not only their current financial situation, but how they think and feel about the purpose money plays in their lives. Where do they stand on debt? How about the importance of saving and investing. What about having children; public or private school? Pay for college? Buy them a car at 16? Should your children work and if so at what age?

So often when couples come to me for financial planning, it is clear that one person cares more about spending money on furniture, cars, kids or vacations. The other wants to live more modestly and save and invest. Typically, I find one person deferring to the one with the stronger, more dominant personality, instead of that couple finding a happy medium between their divergent views over the use of the family income. When compromise isn’t reached, couples create a hotbed for future grudges and blame.

Many couples don’t share in money decisions, but assign the one person who is more suitable or interested in money to make financial plans. Again, this seems like it works, during good financial times, but when the economy suffers, and jobs are cut back or lost, money suddenly becomes a point of contention for the couple. It’s just too easy to blame the person who manages the family finances for the current state of affairs.

What often goes unspoken is the burden of responsibility felt by the one person assigned to handle the money. Sometimes this is the one who earns the most, whereas other times it is the stay at home spouse who runs the household. I am regularly astounded at the lack of knowledge the not-financially involved spouse has around finances. They can’t answer the following questions:  How much does your spouse earn? How much life insurance do you have on each other? How much of your income is your family saving for retirement?

Alternatively, some couples simply keep their money separate and don’t act like a team around the family finances. Although many claim this works just fine for them, how can a couple really be on board with their future current plans and future dreams when they are in the dark about each other’s money behavior. I tend to think that couples choose this as a default to doing the hard work necessary to compromise and come together around money issues.

People decide to divorce for so many reasons from infidelity to abuse and addiction issues, from growing apart to not growing at all. Occasionally financial issues are at the center of the marital difficulties, but often money has not been a problem to couples in the past.  But mark my words, regardless of the cause of the decision to divorce, once a couple moves forward with divorce, money becomes one the biggest areas of contention.

After all, what is divorce really, but a legal separation of all that was shared in marriage, be it real estate, savings and investments, and sadly, children. Suddenly couples who in their past relationship openly shared money regardless of who earned what, now it’s mine is mine and some of yours is mine, too.

All sorts of financial wreckage is possible, as the reality of taking one family and their income and assets and splitting it between two households.  Generally there is simply never enough money to go around, and often both people in the marriage are basically starting over financially.

I can’t state that money is one of the top causes of divorce, but I can say without a doubt that divorce causes all sorts of money problems and that any financial problems that were quietly hidden during a marriage, come flying into focus when divorce happens.

For me, the end of a marriage is so sad on its own. Two people who at some point in the past loved each other enough to want to spend the rest of their lives together, have come to a point where they can’t work out their differences; that alone is simply tragic. But I find it ironic that much of that is lost in the process of divorce, and the ever powerful money, becomes the argument.


Marriage and Money- Yours, Mine and Ours?

Call me crazy, but when I got married almost 24 years ago in 1989, I just assumed that couples closed their individual checking accounts and opened up one joint checking account. This account would be used to deposit all salary and wages into, and to pay all household bills from. It never crossed my mind that there should be an account that’s just mine or just my husband’s, other than our retirement funds which can’t be comingled.  And that’s exactly what we did within about three months of marriage. Surprisingly, or maybe not, we’ve never had a problem with that arrangement.

As the years progressed and we had more money to save, jointly held savings accounts and investment accounts were created as well. Because this was the way my husband and I handled our money, I always assumed that all couples did similarly. Over the years of being a Financial Planner and asking people about how the money was handled in their marriage, I found out that there isn’t just one way, let alone one right way that couples manage the family money.

In fact, I had to start asking couples to share details with me about how wages and salaries were shared or kept separate, and how bills were divided up so that I would know where their future savings would come from.  What I found was that every couple does it differently and for different reasons, so what’s important is finding a way that works for your relationship.

When I ask couples who don’t simply combine their finances, why they don’t, the reasons are varied. Sometimes it’s secrecy and not wanting the other person to know what you’re doing with your money. Sometimes it’s a trust issue, especially if a saver is married to a spender, and doesn’t want them dipping into their separate funds. Many times, especially when individuals marry later in life, it’s simply that each person has gotten used to having their own accounts, and wants to maintain control over them.

Whatever you do in your relationship, I see some pitfalls in both setups. First let me speak to the concerns I have for couples who comingle everything, like I have done. Typically in this scenario, one person takes the lead on doing bills, managing debt, and adding to savings (This would be me!). The downfall of this setup is that many times that person feels the burden of having to make all the financial decisions. In the event something goes wrong, it’s just too easy for the uninvolved person to blame the one making the financial decisions. But even more important, is how easy it is for the one who doesn’t handle the money, to be totally clueless about:

  • Where is all the money located and how do I get to it?
  • How much are the monthly bills and how much money comes in monthly?
  • How much do we save for the future?
  • How much insurance coverage do we have and is it adequate?

This can be so detrimental in the face of a family crisis like a premature death or a disability of the person handling the family finances. I’ve been witness to a few too many widows (and I’m not being sexist here, but the statistics are still that women tend to outlive men, and men typically handle the finances) coming to my office absolutely distraught over the loss of their spouse. But equally scary and adding insult to injury is the fact that they also are now worried about if they have enough money. Knowing so little about their money, they have a hard time trusting a financial advisor that they might not have even met before.

There are ways to handle some of these challenges, and I try to do this in my marriage. Having regular meetings, minimum annually, to review the current financials and where everything can be found is helpful. If you use a financial advisor, having both people meet regularly with that advisor so they can form a relationship of trust, in the event they will one day be handling the money for the family. For the person in charge of the family’s finances, try to keep all money centrally located, versus spread across a dozen different places. Try to consolidate retirement funds and other savings vehicles.

Now let’s look at the pitfalls of couples who keep everything separate. The challenges include when one person greatly out earns the other in a two income household; do you still split the bills evenly? And how about when one person stays home and manages the home? Do you give them a spending allowance for groceries and personal items? How about planning for your retirement together? Doesn’t this need to be a group effort and a group decision? How does a couple who keeps their accounts separate pay for vacations and dinners out?

I’ve had so many experiences with couples who have separate accounts. When I ask how they split up the bills, I usually hear, “Well he pays the mortgage and utilities, but I pay for food and everything related to kids”. Then the arguments start over who carries more weight on the bills. The bottom line is our goal is to get away from arguing over money and get on the same page about planning for now and the future.

I’m curious how your family handles money and the good and the bad that come from your strategy. Be looking for questions on my Facebook page asking you to share what works for you in your relationship!

For Love or Money- Do Money issues affect your relationship?

With Valentine’s Day upon us, I reflect on the many complications that money can cause in relationships. In my experience counseling thousands of people over the past 25 years, typically opposites attract. Not always, but in most instances, I find one of a couple who is fiscally on top of things with the other partner having a more laissez faire attitude about the family finances.

Does this pose a problem? Not necessarily. It really depends on 2 things:

1) Does the person who takes charge of the financial matters feel resentful?

2) Does the less involved partner defer to the other one?

Having been the one who handles the finances in my relationship for over 20 years, I can in all honesty admit that there were times when I felt resentful. I felt like there was a burden on my shoulders, not just to pay the bills, but to work and earn and grow the savings that we had set aside. Over time, I was able to accept that as luck would have it, I’m simply better suited to be in charge of financial matters. Of course, I am a financial planner, but that’s not necessarily why I’m more suitable. I’m innately organized whereas my husband has a bit of adult ADD, and there would be a lot of late fees in our life if he were in charge of bill paying! Knowing that has helped me be OK with adding that chore to my “to-do” list versus his. Whatever resentment I might feel over “having to be in charge of the finances”, pales in comparison to the anger I would have towards incurring incessant late fees and interest charges.

The second point however, is crucial. In my marriage, I get no push back on my decisions of what to spend or how much to save. Nor am I married to an over-spender. So my husband lets me run the ship of the family finances and doesn’t make it difficult through his money behavior. He is on board with the overall plan and rarely spends excessively.

I wish all couples had this kind of situation. Because if I’ve heard it once, I’ve heard it a thousand times…”I want to save more, but he/she spends so much, I just can’t do it” or, “We wouldn’t have debt if it weren’t for his/her non-stop spending”. Unfortunately, this is more the norm I find with many couples.

Do you and your partner argue over money? Or do you disagree on your partners spending or savings habits, but choose to keep it to yourself and silently curse their behavior and its affect on your financial situation? Either way, it’s not a good place to be. So what can a couple do to come together on money issues?

  • Consider letting an outsider look over the monthly expenditures and give their input on the spending.
  • If you’re already saving, but arguing over needing to save more, consult with a CERTIFIED FINANCIAL PLANNER™ to get an idea if you truly need to save more to reach your goals.

A financial plan can help you determine if you’re on track to meeting your future retirement needs and perhaps your partner, who wants to save more, is just living in “the fear of never having enough”.

  • Schedule weekly meetings with your partner to discuss spending and monthly meetings to discuss savings goals. Have an agreement that no arguments are allowed, just an overview to get both in a couple engaged in the family’s goals.

So let’s say you try these tips and don’t get anywhere with coming to a compromise, or you’ve tried in the past and know it doesn’t work. Then it’s probably time for some financial therapy! There are therapists who specialize in money issues between couples, as well as Certified Money Coaches. These professionals can help you discover the blocks you have regarding money, and clear the path to new behavior…if you’re open and ready, of course!

It’s sad that too often money comes between couples and can threaten to destroy relationships. Money should simply be a tool we use to live a certain lifestyle, and save for a reasonable future. But since money IS NOT logical and rational, but deeply emotionally charged for most of us, it often becomes divisive for couples. Don’t let money ruin your relationship. Be open to getting help and to change if you need to.

A very Happy Valentine’s Day to one and all!


Financial Gut Check

In my last blog, I wrote about why some people aren’t able to keep their New Year’s resolutions or stick to a financial plan. It’s generally not that they lack discipline, or that the goal was too lofty. It is usually that they haven’t taken a hard look at the emotions behind their financial behavior. Without this knowledge it is impossible to move forward on financial goals and keep them going for the long term.

Just like when you start a diet or exercise plan at the beginning of a new year, and you find that by Jan 31st, you have already broken your plan; it’s rarely due to the excuses you tell yourself.  Although, “I’m just too busy to get to the gym” or “I don’t have time to cook healthy, nutritious meals for myself” are often true, there’s usually more underlying issues that contribute to our inability to honor our promises we make to ourselves.  I contend that there are emotional reasons we overeat or resist taking care of ourselves, both health wise or financially.

So, how honest are you with yourself about your finances? Do you hide behind the busyness of your life as an excuse to not look at your finances? Or perhaps you are simply scared to face reality! How would one go about doing a deeply honest Financial Gut Check?

Let’s start with adding a few things up. Now before you say, “I’m not good with numbers” or “Math was always my worst subject”, fear not! I’m talking addition and subtraction of long numbers only! This is 5th grade math, so those excuses don’t fly. If you are resistant to any of the following suggestions, go back to last week’s blog:

  • Total up all debt
    • Separate mortgage debt and car loans from credit card debt
    • Review the credit card amount due monthly and ask yourself, “Am I decreasing the overall amount of credit card debt on a monthly basis?”
  • Total up all assets
    • Separate Financial accounts (savings and investments) from Real Property (house, cars and collectibles)
    • Review the financial accounts monthly and ask yourself, “Am I increasing the overall amount of savings on a monthly basis?”

If the answers to both questions above are yes, then you are on the right track and should probably go to the next step on the road to financial honesty; meeting with a Financial Planning professional. The purpose of this meeting is to make sure that your savings rate is adequate to get you to the goals you have and to make sure your investments are in line with your investment time horizon and risk tolerance. A good financial planner will also help you review your insurance portfolio, making sure that crises won’t derail you from reaching your financial dreams.

There are many financial websites that can offer you similar help, but I always feel like people are more accountable when they work in tandem with another person, versus simply interacting with a software program.

If the answers to either of the two questions above were no, and you are not making any headway on reducing debt or increasing savings, it’s time for some more self honesty. I would tell you from my 25+ years of counseling people around their money goals, that there is probably some emotional resistance you might have towards paying down debt or increasing savings.

Most programs that lead to behavior change start in the same place. Identify what the problem is and how and why you ended up there. Reviewing your personal money story, how you were raised around money, what situations have happened in your adult life that impact how you view and value money, can often uncover the keys to awareness that can help you break free from debilitating money behavior.

Being honest with ourselves can be the toughest thing we ever do, but can also be the most revealing and freeing activity leading to changing our ways. Whether you eat or drink too much, gossip, gamble, overspend or hoard money, change begins with honesty.

Make this New Year of 2013 the year of true change by honestly looking at your finances and your money behavior. Here’s to a healthy and prosperous new year for all!

Why Can’t We Keep Our New Year’s Financial Resolutions?

Did you start out the year like many of us, saying “I’m going to lose weight, get to the
gym more, reduce my debt, spend less and save more”… and have you already fallen
off the wagon? Why do we make the same resolutions every year but are continually
not able to stick with our goals?

And please don’t say we don’t want it enough. There isn’t a person out there who
wants to be in debt or scared that they haven’t saved enough money. I’ve never met
a person who wants to end up as a bag lady or working until they die as a greeter at
Walmart (not that there’s anything wrong with that)! No more than anyone wants to
be overweight or unhealthy.

So why can’t we stick to our plans and goals? My belief after 25+ years of counseling
people around money issues, is that we all have deep seated emotions surrounding
and defining our money lives. And until we address those issues, we are destined to
repeat the same patterns over and over again.

So if your goal was to reduce, pay off debt or save more, and you haven’t been able
to achieve this, ask yourself, “What’s behind your over spending?” Perhaps you
were raised without much and now that you are working and making a good living,
you feel like you deserve to have what you want. Perhaps shopping is a way you
reward yourself for all your hard work. On the other hand, maybe you are married
to someone who overspends, and you feel like no matter what you do, you can’t get
ahead. So if you can’t beat them, join them!

Maybe you believe that overspending enhances your happiness, and what if you
died tomorrow, think of all the spending you’d miss out on! It’s different for every
person, but trust me on this; behind overspending and not being able to stick to a
budget, there exists some emotional feeling fueling the behavior.

Gratefully, I am not an over spender. Never have been, never could be. But I have
bordered on what I call being a compulsive saver. Most people think, “Well that’s a
good problem to have”, and in some ways I’d agree. I’d rather be an over-saver than
an over-spender. But my belief system holds true. Behind all compulsive savers,
there are emotional forces fueling the saving.

In addition, don’t think for a minute that being an obsessive saver can’t cause you
problems; especially if you are in a relationship with someone who doesn’t share
your same belief system around money. Many relationships have ended over
couples not being able to agree about money.

I’ve seen savers who are close to money hoarders, who lose friends over the fact
that they count pennies between each other. I’ve seen compulsive savers deny
themselves the enjoyment around the wealth that they have created. So what
emotions lie behind extreme savings? Usually, there is a deep fear of never having
enough money.

In my case, my father was an immigrant to this country and while we were growing
up, we never had some of the nicer things my friends had. In fact, I thought we were
poor, but it turns out we were middle class. But instead of going off in the direction
of over spending (which could have happened), I took on my parents’ fear of not
having enough money. In many ways I mirrored their behavior.

But here’s the difference; I’m not an immigrant. My husband and I earn a very nice
combined income, and I work hard. I’ve been focused on saving for the majority
of my life. Yet I’m married to a man who has pined for a lake house or mountain
house for as long as I’ve been married to him (and that is over 23 years)! Now in
all honesty, for the first 10 years of our marriage, we could barely afford our first
house, but after the first 10 years it was doable. Yet I resisted over fear of spending
the money.

I had to do some hard work on myself; to let go of the fears that my parents planted
deep in my psyche, that I should not spend, but save, save, save. It didn’t happen
overnight but I’m happy to report, that I really don’t worry about money (much!)
and we are embarking on the purchase of a lake house property.

I’ve chosen to BELIEVE the financial plan I update for myself annually, which says
we are OK. We are on track if not ahead of a decent retirement, not too far down the
road (if that be our choice).

You too can overcome your financial behavior if it needs to be fixed. Is it going to
be easy? Not likely! But start with looking deeper at your patterns and take a good
honest look at what drives your behavior. This self honesty is the starting point to
change! You can do it…I did!

Happy New year!

Holiday Spending Feels Empty

Being a long term saver and bargain shopper, there is something inherently stressful for me about the holidays.

I feel the need to “make it special” and somehow that gets interpreted into LOTS OF BOXES under the tree or for the 8 nights of Hanukkah. I feel forced to buy things that often aren’t needed. And I’ve spent a lifetime trying to only buy what is needed, with an occasional want as a bonus!

Early on, I felt a bit of competition in terms of living up to my Mother-In-Law’s spectacular Christmas mornings, where the opening of presents lasted hours and the pile of boxes were sky high! Once I started down that path, my kids got used to it. So, how do you change your ways?

When my kids were little, I’d make them clean out their room prior to Christmas morning and I’d find items that I gave them last holiday, still in the original package. I’d rationalize that it was only a $10 item, but I knew it went against my belief about spending just for spending sake.

And then I realize I’m conflicted. One year, we decided to not give gifts during some difficult financial times, and I know I felt like we were missing out or at least my children were.

Over the years, I’ve found myself pushing items my children or my husband and I needed, off until December so I can buy them, and give them out during the holidays. It sort of makes sense, but I’m always left feeling like I was coerced to spend for the holidays. And I didn’t take the time to find something really special that would surprise them; I simply put things they needed under the tree.

Then, there’s the awkward moment when a friend gets you a gift but you didn’t reciprocate. And how about tipping the newspaper deliverer, the waste management people, and the mailman? How do you know how far to go?

Does everyone go through the gambit of emotions around holiday spending; about how much to spend and for how many people? Or is it just me? Because of being in the financial industry, am I just hyper aware of spending?

And what about people who simply don’t have the money; do we expect them to give gifts anyways and go into debt? So… this is why I get stressed during the holidays!

Eventually It Gets Personal!

In keeping with the fact that November is National Hospice Awareness month, as well as our focus on caring for our aging parents, I decided to go personal with this blog and share my own experiences in each area.

Two years ago, my brother, sister and mother and I had to confront the reality that our 81 year old father/husband was terminally ill. He had liver damage from fatty liver disease and both his liver and kidneys were starting to shut down. The only treatment option would have been a liver transplant and at 81 that’s truly not an option.

Initially, we had to deal with the issue of whether or not Dad was a DNR (Do Not Resuscitate). Now, Dad was a really smart and incredibly practical man, so I was pretty certain that if his heart gave out at any point, he wouldn’t want to be brought back. But he was going in and out of consciousness due to drug interactions that a failing liver couldn’t process.  Therefore, my Mom was in charge. After 56 years of marriage, when the hospital asked us about a DNR, Mom’s only answer was that they needed to do whatever and go to any lengths to keep Dad alive. It took a lot of family meetings and then using moments of Dad’s lucidity to convince Mom that he was in fact by choice a DNR. This is a really tough conversation to have when someone is already ill. I urge you to have this conversation as a family far in advance of the potential need.

For the next two months, Dad would go into the hospital for a week, and then be too weak to go home, so he’d go to a rehab center for a week or two. Another drug interaction and then we’d repeat the process. After 8 weeks, I said to my family, “is this really how Dad wants to spend whatever time he has left or how we want to spend our time with him, going from hospital to rehab and back?” So we decided it was time to bring him home and call in hospice.

Hospice was incredible! They showed up in advance with a bed and everything we would need to take care of Dad at home. They took over medication dispensing, provided counseling and nursing assistance. They had 24 hour help available if we need to call someone. I was amazed at their service and even more so at their hearts. These people were incredible at helping the dying transition to the afterlife and help the living cope with the reality of their loved ones’ death.

The most amazing gift a hospice nurse gave to me was when I had been with my parents out of state for a week, missing the holidays with my husband and kids and really felt like I needed to go home. But Dad had been hanging in there and I didn’t know what to do. The hospice nurse told me to go home and be with my family, but make sure and say goodbye as if it was my final chance to speak with my Dad. I thought long and hard about what I would say to him. When I was about to leave, I asked for a moment alone and I told my Dad what he meant to me and what wonderful parts of me I felt like I inherited from him. What a blessing to have that chance! I went home and when he died a week later, I was totally at peace having said that final goodbye.

Fast forward one year… to early 2012, just one year after Dad died. I get the call from my sister, who lives near my parents, that my mom was having a stroke. It was a big one, but mainly affected her cognitive skills. She woke up not remembering that Dad had died, what year it was or much more than the names of her children and grandchildren. She also lost her ability to read. Immediately my mother lost her independence and we were looking at having to get her live in help so she could stay in her home. Over this year, many of Mom’s long term memories have come back, but the short term recall is shot. Her heart and blood work look great and she could continue to live a long time, but will always require care.

My sister and I started doing our research and called a variety of different care giving services that were recommended by the rehabilitation center. Interestingly, Medicare was done paying for Mom’s rehab after 2 weeks, and she was basically being kicked out. We were shocked to find out that the cost of care was $220 a day, which equals $80,300 a year (Holy crap!).  Now Mom and Dad had scrimped and saved their whole life so they could afford to pay for that for a while, but that’s a lot of cash! Gratefully, I had begged my parents around 12 years prior to buy Long Term Care insurance. The benefit I had sold them was only $100 a day, but with the cost of living adjustment, the daily benefit was now $165 a day, covering $60,226 of that $80,000 a year bill. Needless to say we breathed a big sigh of relief!

The total cost of the premiums they paid for that coverage over the 11 years was around $55,000. We have already recouped that cost. But the reality of insurance is you hope you waste those premium dollars! Who wants to have a car wreck, a house burn down, die prematurely or lose their independence in old age? Obviously no one, but the question is can you afford the cost if any of those things happen to you? If the answer is “No”, then insurance is the answer. If your parents can’t afford LTC insurance, consider paying for coverage on your own or with your siblings.

Next week kicks off the holiday season of Thanksgiving through New Year’s. This is a great opportunity to discuss all of these issues with your aging parents. Most people haven’t asked their parents these sensitive subjects. Don’t blow the chance to talk to them about their final wishes while they are healthy and can give you their input. You won’t regret it!