If you're having difficulty solving relationship money problems, financial consultant Ruth Hayden might have the solution. A member of the Association for Financial Counseling and Planning Education, Hayden is the author of four books, including Your Money Life: The "Make-It-Work" Workbook, Start Where You Are: Retirement Planning in a Changing World, How To Turn Your Money Life Around: The Money Book for Women, and For Richer, Not Poorer: The Money Book for Couples. She is also a nationally recognized financial advisor for numerous media outlets.
Based in St. Paul, Minnesota, Hayden conducts financial workshops covering a number of topics and personally consults individuals hoping to learn better financial practices. For couples, she stresses the importance of communication and gaining an understanding of each other's money history and influences.
Because battling over relationship money problems is still the number one reason couples split, LoveToKnow Save asked Hayden to outline her philosophy for how couples can manage finances more efficiently and the tools that will help.
Solving Relationship Money Problems: Ruth Hayden Interview
I'm going to pull out the big guns here: what seems to be the problem when couples and money collide?
Many couples forget two basic steps:
- The management of money is 80 percent of the process. Because if we can't have a conversation about money, we can't count together. Many couples have three ways of communicating about money: fighting, silence, and acquiescing. None of these are effective. Your money plan may hold, and mine may hold, but if we don't know how to merge them together, everything falls apart. You can't blame the other person - you're both responsible for communication and finding ways to make it all work. And if you want to be in a committed relationship, you have to learn how to do this.
- The actual counting of money is 20 percent of the process. This is the nuts and bolts, surely, and has importance, but you can only do this after you've established the communication. It doesn't take a great deal of intellectual intelligence to handle money. Other financial experts are falling to the ground as I say this. But it's true. However, it does require a large amount of emotional intelligence to manage money.
In your book For Richer, Not Poorer: The Money Book for Couples, you outline the four cornerstones of a "healthy money partnership." Please explain these.
- Commitment. Say to each other, "We will find a way to do this, even though we are very different from each other." This is true for every couple. When we first fall in love, we are intrigued and interested in someone different. As we grow and change together, we wish we had fallen in love with our clone.
- Respect. I wish my husband and I had financial guidance when we were trying to learn together. We had different backgrounds, priorities, and perceptions. And even now, after decades of marriage, we have to learn to respect how these factors influence money management.
- Trust. Each person needs to say to the other, "I will do what I say I'm going to do." Then, the other person needs to trust that's what will happen.
- Skill of Compromise. Sometimes, you have to remind yourself, "If I'm going to be happy and have a healthy partnership, it's not going to always be an even mixture of your way and my way. If I always have to have my way, then I should stay single and have a roommate." Couples have to learn the true art of compromise if they're going to manage money in a way that benefits the entire household.
How does an individual's societal and familial background with money influence their current management of it?
That's a great question, because those factors weigh heavily on how we perceive money. Our desires, what we think we deserve, our general attitude about the topic, what our parents did - these all play a part. As a couple, we have to use the cornerstones to anchor the structure to work through these factors. Then, we find the middle, the compromise, with a solution to change the language and a solution both can live with.
Most of the successful couples have specific solution made up of the same components - money for me, money for you and money for us. How big those pots are depend on the couple. Coins in their individual pockets differ from the couple pot, but each has a little to pursue individual interests, no questions asked.
Unfortunately, what I see usually is one of two things:
- A totally separate system, in which a couple tallies up who contributes what and it's not a partnership system.
- The other system is what I call "enmeshment". The money is thrown into a big pot, with usually one person controlling it. There's not room for individual spending, and there's continual conflict.
Learning About Each Other
What do you do to help people get better at solving relationship money problems?
My approach to couples having a better relationship with money focuses on the relationship itself. Recent studies reveal that one-forth of couples don't ever talk about money. Here are some more statistics. 25 percent of couples have no idea what the other one does with money. Thousands of couples don't even know what each other owes on a credit card. Only 43 percent say they ever work on money in any form, and 38 percent say they never talk about retirement.
So, I start with their training of money. Background, for example. Look at the other person and examine his or her beliefs. His or her behavior is logical to them. It may not work, but it's logical.
But if you have a commitment to your relationship, that you really want to grow old together, you'll discuss things and find that compromise that reaches the solution. And, quite frankly, people really do want to that partnership more than wanting to be right.
If you walk away with what the two of you have agreed with, you might say, "that was a little different, but it was okay." It gets easier to have that attitude each time.
Every single couple I work with is different, and if they focus on those differences, they're going to get a divorce. But if they still love each other and find each other interesting, there's a chance everything will be okay.
Can you give us some examples of couples reducing the emotions surrounding money and learning to trust one another?
An attorney and his wife came in, and the main conflict was over the high price of a parking space at his firm's office. He actually said, "I would sooner divorce you than give up that parking space." Obviously, this was a belief that was purely emotional. With further discussion, the attorney revealed that his background included the shame of hopping from small town to small town as his father searched for work. For the attorney, having that parking space gave him a sense of belonging, and his wife began to understand why, in his mind, it was worth every penny.
Another couple came in looking for solutions to minimize expenses. They agreed that the wife would financially support the couple while the husband went back to school. He thought the biggest expense they could cut was the wife's clothing budget. She refused. He argued, "You promised to support my going back to school."
The wife admitted that the clothing was an important part of her image of herself. With further discussion, we uncovered that the wife's mother sewed her clothes or got them at a thrift store. But, the more wealthy kids the wife went to school with recognized their castoffs, and she was constantly humiliated. The husband felt sympathy and backed off, and we were able to work out some better shopping alternatives that help reduce spending.
Even my husband and I have had moments like this. When we were newly married, he invited his parents for dinner, and we didn't have water glasses. Now, this was back in the late 60s, and he wanted to buy 12 glasses at $15 per glass! When I suggested that we go to a discount store, he was very insulted that I would serve his parents this way.
Now, growing up in my family, if you found a glass and it was clean, it was good enough. We'd rather travel. His parents were both hardworking, blue-collar folks, but his mother saved for the best serving pieces. I had to understand that my husband learned the importance of showing how much you value guests from his mother, and that was that.
Tools That May Help
What tools do you recommend for helping couples come to better solutions?
- Hold a money meeting every week. Make it no less than a half-hour, but no more than an hour. Go someplace else, if necessary. The couple has to show up for the meeting without reminding each other about it. Then, they have an agenda. They could pay bills, they could balance the checkbook, going over savings, or talking about retirement. Another important aspect of the money meeting is that they take turns running it.
- Deal mostly in cash. The main budget buster is the weekly flexible expenses. It's the food, it's the drugstore-type stuff, the coffee. I suggest that if a couple really wants to connect with themselves and where the money is going, take the money out in cash, decide on what to spend, and when it runs out, they cannot go back.
These are the expenses that build up on credit cards, and then the couple has no idea what they spent the money on. So with the individual allocations of cash, each will watch their "entitlement" spending. Most couples can't look at the big picture of money until they bridge this particular area. It's not an either/or model, it's both. But, we still need a big picture. If they can plan the cash - what they can gets their hands around, it builds their confidence.
Remember, it's normal to be different from each other. Financial skills are definitely learnable, but it takes work.