In my capacity as a financial adviser, I often see the financial effects of divorce. I meet with couples both before and after divorce and have realized that money is often a major factor in marital disharmony, not necessarily due to the lack of it, but rather due to the way that it’s handled. Why does the way people handle their money have such an effect on their home life?
I asked Laurie Puhn, author of Fight Less, Love More: 5-Minute Conversations to Change Your Relationship without Blowing Up or Giving In this question. She gave three reasons why money and financial considerations affect family harmony:
Know the facts
Laurie told me, “The first thing I have found as a couples mediator is it tends to be that one person has the facts and the other person does not.” Although some couples prefer to have only one spouse handling financial issues, it‘s crucial that the other side knows what’s going on, as this prevents many misunderstandings. If one spouse pays the bills, the other needs frequent reports as to how much and where the money is being spent. Building a budget (and sticking to it) is a team activity.
Communication and trust
When I asked Laurie if it’s better for couples to divide or share financial responsibilities, she answered, “It’s different for each couple. But it comes down to doing whatever is going to lead to respectful communication.” Whatever couples do, they need to be open with each other and trust each other’s judgment. Each spouse carries different financial baggage and differing expectations of “normal.” Work together to find a spending/saving balance that resonates with each spouse.
Some sociologists argue that having a woman be the higher earner leads to higher divorce rates. In the interview, Laurie explained that this should not be a problem if both sides express appreciation for each other’s role, both in and out of the home. Money problems don’t only stem from the lack of it, but from people’s relationships towards it. If you look at money as the highest value, financial problems (the value of your portfolio drops, temporary unemployment, etc.) can be devastating. But if you have a concrete financial plan and vision of how you want your finances to work for you, market fluctuations and other fiscal bumps won’t derail your relationships. Open, honest communication, both with your family and financial advisor, are important.
Find out more about how finances affect home life by watching a video of my Goldstein on Gelt interview with Laurie Puhn on YouTube. (Opinions expressed on the show are not necessarily those of the host, Profile Investments, or Portfolio Resources Group, Inc.)
Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.
Published September 2, 2012.