Let's talk about cheques, baby
A major cause of marital splits – ahead of infidelity or even leaving the toilet seat up – is having different attitudes to money. So could a trip to the financial planner spare you a visit to the marriage counsellor?
Are you getting enough? Money, that is. Couples will share all kinds of intimate secrets before they candidly discuss their finances – if they ever have that conversation at all. Yet how each spouse handles money is regularly found among the top ten reasons for divorce. Marriage vows promise ‘For richer, for poorer’, but the trouble can start when one spouse suspects that they are getting the thin end of that wedge.
Bob and his wife Marion have been married nearly 40 years, and these days generally agree on financial matters. But it wasn’t always plain sailing. Bob recalls buying their first house together. ‘Marion had her eye on a little terraced place that we could comfortably afford, but I’d fallen in love with a big detached house out of town, with wonderful views. The price of that one pushed us to the limit, and I remember she was cross with me for insisting – especially because she was actually earning more than I was at the time. But we bought it, and of course it was the eighties and it shot up in value. Though we did have to tighten the purse strings for a while.’
What Bob and Marion had run up against was what financial planners call ‘risk tolerance’. Bob had come to the relationship with a higher risk tolerance, being ready to take the chance of things going wrong in return for greater benefits. Marion, on the other hand, was willing to sacrifice a level of benefit in return for greater security. Neither position is right or wrong, but different levels of risk tolerance can be a cause of friction, not only because they are deep-rooted and hard to change, but because so much can depend on them (like one’s house).
But as Bob ruefully recalls, Marion got her own back a few years later. Bob happened to see a painting that he liked, and wanted to buy the original for a thousand pounds. This time Marion put her foot down, so Bob bought a reproduction of the same picture for £50. ‘And ten years after that I found out that the original had been re-sold for £15,000!’ Bob reveals. But he does admit that Marion was right to warn him off on that occasion. ‘I may have turned out to be right, but it could also have gone so wrong.’
Love over gold?
There can be many sources of financial friction in relationships, but most boil down to risk tolerance. Any financial plan hinges on a person’s attitude to risk – so if you have two people and two contrasting attitudes, there may be constant conflict. Prime examples include:
‘Splurge versus sacrifice’ – He denies himself treats so they can save a bit more, while she splashes out on what he perceives to be luxuries. He may feel that his self-denial is funding her self-indulgence, so feels like an unequal partner.
‘Breadwinner syndrome’ – One spouse is the main or sole earner, while the other stays at home and keeps house. The working husband starts to believe he has more right to spend the money, while his wife holds the view that raising kids is harder work than his desk job. Arguments follow.
‘The credit crush’ – He sees nothing wrong with living with debt, providing he feels in control of it. She, by contrast, hates to borrow anything. He feels rich, she feels broke.
‘Short-term, long term’ – Her idea of wealth is having money to spend now. His idea of wealth is having plenty of savings. One of them will always feel restless.
‘Charity begins at home’ – One spouse enjoys giving lots to charities, while the other feels the pinch on their household finances – but if they complain, they risk appearing mean.
‘The high roller and the hedger’ – see Bob and Marion, above. While the hedger likes to play safe, the high roller will risk a big loss for a greater gain.
Couples need to be compatible on a wide range of levels, and divorce statistics show that finance is one of the most important. It’s easy to see why. Money can mean many different things to different people: independence, security, self-respect, power – even a way of expressing love. But one person’s extravagant show of affection might be another’s idea of waste.
Unless already very similar in financial attitudes, every couple needs to sit down and have ‘the talk’. This is the perfect time to consult a financial adviser, who can mediate between the points of view and balance the risk tolerance of each partner to find a happy medium. The upshot may be that both spouses end up better off than they would have been by sticking with their own inflexible attitude. At the same time, they can gain maximum benefit from the many financial advantages of being a couple. It can certainly save on divorce and alimony costs.
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