Artie and his wife had long ago settled on a sound division of how they managed their marital finances. When they first married, neither one of them had any significant experience with managing finances. They barely knew what they were doing. But they had the great advantage of intuitively agreeing on their management principles. Without having even explored the subjects before their marriage, they quickly learned that they had similar attitudes about money, spending, and saving. And they gradually developed the management skill and experience they needed. They also soon settled on a division of their financial management labor. Artie tracked their balance sheet, studied trends, analyzed alternatives, investigated risk, recommended investments, and monitored investment accounts. His wife budgeted, made the daily, weekly, and monthly expenditures, and monitored and balanced the checkbook. Much to their security and satisfaction, their relative roles and aptitudes worked over the long term to stabilize and grow their finances until they were able to financially bless their family, church, school, and community.
Finances
Managing the marital household requires more than doing the laundry and grocery shopping, mowing the lawn, and taking out the garbage. Managing the marital household also requires managing the marriage’s finances. Someone must deposit the paychecks, keep the checkbook, and pay the bills. Better yet, someone should also keep track of the credit-card balances, school loan pay down, mortgage balance and interest rate, saving for an emergency fund and children’s education, and investment for retirement. One or the other spouse, or both of them, may at times spend substantial time and go to substantial trouble to manage and improve marital finances, while investigating and resolving financial issues. But even the routine of paying the monthly bills takes time and commitment. And having a steady and wise hand on the financial tiller, always on the lookout and ready to adjust, can make a huge difference to the course and quality of a marriage. Make the commitment to manage your marital finances, including learning finances and developing financial skills. Refer to the guide Help with Your Money for much greater detail on managing personal and household finances. That guide includes not only strategies, principles, and explanations, but also illustrations, forms, checklists, and commitments.
Integration
As already mentioned in a prior chapter, marriage generally requires, or strongly advises in favor of, integrating each spouse’s personal finances into the marital finances. In some cases, one spouse may have such substantial debt or assets, or special business or professional risks and interests, that maintaining some separation of individual finances from marital finances might make sense. But gains or losses of one spouse or the other inevitably affects the marital finances, whether you treat your marital finances as joint or separate. Integrating the two spouses’ finances both recognizes that reality and can vastly simplify management. It can also draw the two spouses further together around their finances, as around other aspects of their marriage. Separate finances, by contrast, is an invitation to secretive transactions and other mischief. Don’t keep separate finances, unless you must. Generally, putting all paychecks into marital accounts and paying all bills out of marital accounts is the wiser course from financial and relational perspectives. Your marital household is a single unit. Treat it that way financially.
Conflict
Professionals who either study or help to resolve marital issues and conflicts, like academics, pollsters, marriage counselors, pastors, and lawyers, will say that money is the biggest or among the biggest of reasons for divorce or other marital conflict. It stands to reason if so. Money represents different things to different people. But money can stand for or relate to several things that many people value including security, status, power, pleasure, control, freedom, love, care, health, generosity, and legacy. No matter how you feel about any of those things, you or your spouse likely have at least some interest in some of those things. Thus, how the two of you manage your marital finances may affect how each of you feel about one another and your marriage. To take one example, if money means freedom and pleasure to one of you, who then promptly buys a sailboat when first able to qualify for it on credit, but money means security, stewardship, and generosity to the other of you, who rues the sailboat purchase, then your marriage has just discovered a significant money conflict. Be aware of the risk of conflict over your marital finances, if you don’t clarify and agree on your money-related values and goals.
Debt
Debt that one or the other of you bring into the marriage can affect your marital finances and, if not handled well, your marital relationship. If both spouses bring roughly equivalent debt into the marriage, then they are likely to have no dispute over the consolidated debt’s repayment, unless one debt is more reasonable or has a greater financial return than the other debt. A gambling debt is one thing, while educational debt for a law or medical degree that qualifies the degree holder for a substantial income is quite another thing. You and your candidate spouse should best work out your feelings, values, understanding, and plans regarding debt you each bring into the marriage, if possible even before deciding on engagement. Few things can spoil an engagement as much as learning that your fiancé is not just the pauper you anticipated but the deep debtor you did not. Yet when spouses put their heads together and lean their backs into the traces, they can also retire substantial debt in a much shorter period than either might be able to do alone. Debt is not at all the death knell to a good marriage. A married couple may even be able to handle substantial debt, whether brought by one into the marriage or accumulated by both during it, through forgiveness or discount programs, waivers of penalties and interest, and in the extreme case individual or dual bankruptcy filings. Don’t let marital or individual debt intimidate you. Instead, attack and get rid of it.
Assets
Perhaps surprisingly, assets that one or the other of you bring into the marriage can also be a source of conflict. One would think that bringing assets into a marriage, such as an inheritance received from the estate of a parent or grandparent, or a marital home that one spouse bought and paid for through earnings or savings or received in a divorce settlement, would benefit the marriage. And indeed, assets brought into the marriage generally do. Both spouses can then enjoy the wealth that one or the other spouse accumulated before they met and married. But those same assets may become a source of strain or contention. The spouse bringing the assets into the marriage may, for instance, have different ideas than the other spouse of how to use, preserve, protect, maintain, or improve the assets. The other spouse may not appreciate, understand, and respect that under the laws of marriage and divorce, individual assets brought into the marriage, unless commingled with other marital assets, may well remain the property of the spouse bringing them into the marriage. That individual property is ours, but not really. If your spouse brings substantial assets into the marriage, understand and respect your spouse’s special interest in that property, while helping your spouse do likewise for you.
Values
If you and your spouse do not already intuitively agree on financial issues, a gentle discussion of values may help the two of you reduce the risk of money conflicts while better aligning your money practices and financial goals. You may not understand your spouse’s money practices and preferences until you understand your spouse’s marital and money values and goals. Indeed, you may not understand your own money practices until articulating your own marital and money values and goals. If you and your spouse haven’t discerned your values, then the two of you may be spending money the way that lenders, advertisers, neighbors, scammers, or others want you to spend money, against your own marital interests. Clarify your marital and money values. Do you desire security? If so, then you should be discerning security goals. Do you value generosity? If so, then you should be discerning charitable goals. Do you desire financial freedom? If so, then you might have other financial practices to adopt and goals to set. If one or the other of you is unhappy about marital finances, your marital money management likely isn’t addressing an underlying value. Figure out the values first. Doing so can be easier and more rational than agreeing on the practices without guiding values.
Goals
Once the two of you agree, intuitively or expressly, on money-related values, you might do well to set some financial goals. Goals can help you make decisions, not only about day-to-day expenditures but also about principles, strategies, division of labor, necessary skills, and helpful tools. Effective financial management isn’t simply about knowledge, or about financial products, or about financial practices. Effective marital money management involves many things working together over time and several things coming together all at once at various times. Marital money management has more to it than first meets the eye, more certainly than just being able to balance a checkbook so as not to write bad checks. Goals are one of those things. Goals commonly and wisely include to retire debt, build an emergency fund, save for a home down payment, save for children’s education, and save for retirement. You and your spouse may have other financial goals to tithe to your church, provide for elderly parents, care for a disabled sibling, leave an inheritance for children, or even to establish a foundation to leave a broader legacy. Even if you and your spouse don’t wish to articulate specific goals together, have a sense of the direction in which you hope to head. If you don’t, you may end up somewhere financially that you’d rather not have faced.
Strategies
Having a few consistent strategies can also help with marital money management. Avoiding debt when possible, for instance, is a strategy. So is building savings. So is acting as stewards over your marital finances, as if managing those finances for a fair, generous, but demanding owner. Other strategies include financial transparency toward one another, meaning no secret stashes or transactions. If you want to buy something frivolous, tell your spouse before doing so. Your spouse may be happy that you do so and may want your support for buying something equally frivolous. Budget for frivolity, if that isn’t a total contradiction in terms. But be transparent. Monitoring is another critical strategy. Don’t ignore finances. Watch account balances on both sides of the equation, savings and checking accounts in the positive, and credit-card and loan accounts in the negative. Prompt action, rather than procrastination, is another important strategy. When you see something wrong financially, fix it quickly, or it may fester, making it hard to fix later. If you see an opportunity to do better financially, jump on it rather than letting it pass by into obscurity. Whatever sound financial strategies that you and your spouse discern, recognize that the strategies you pursue can make huge differences in your marital finances.
Principles
Effective marital financial management also depends on money principles. The time value of money, referring to both the earnings over time that money can accrue and the cost over time for borrowing another’s money, can have an enormous effect on marital finances. Generally, the more you borrow, the more you pay over time. The corollary is that the more you save and invest, the more you earn over time. Thus, to apply that principle of the time value of money, get as quickly as you reasonably can from being married borrowers to being married savers and investors. Doing so may make the biggest outcome in your marital finances over a long time. Another money principle, after the time value of money, has to do with the relationship between risk and return. Generally, the greater the financial risk, the greater the potential return. You and your spouse might, for instance, be completely risk averse, stuffing your savings in your mattress (although even there, thieves and fire present risks). But then, you’ll have no return for that stashed money. If, on the other hand, you risk your savings in penny stocks, cryptocurrencies, or venture capital, you might quickly double your money–or you might quickly lose all of it. The principle of risk and return advocates for selectively managing investments to assume reasonable risks with appropriate diversification. That’s why prudent investors tend to prefer index funds or similar diversified investments that assume reasonable risk. If neither of you know money principles, then at least one of you might take on some studying. See the guide Help with Your Money.
Practices
Another key to effective marital money management is to turn your money strategies and knowledge of money principles into money practices. Practices involve the actions you regularly take with respect to your marital finances. If you don’t put your principles and knowledge into practice, they make no difference. Examine what you do surrounding your money. Do you open monthly bank and credit-card statements immediately? Do you pay bills as soon as due, without incurring late fees? Are you sticking to a budget when deciding whether to make anything other than routine purchases? Are you checking at least every quarter (three months) to see if your debts are going down and your savings going up, consistent with your goals? Are you monitoring investments in the same way? Don’t waste your financial knowledge and skill. Put knowledge and skill into consistent practice.
Skills
In time, and with appropriate attention and occasional study, you or your spouse, or both, should have grown in financial skill in each of the areas that your marital finances need for effective management. One of you should be skilled at developing and monitoring the marital budget. One of you should be skilled at investigating and recommending investment options. One of you should be skilled at monitoring trends and analyzing opportunities and risks in your balance sheet. One of you should be discerning in setting goals consistent with your marriage’s values, and turning those goals and values into effective strategies implemented with appropriate practices. Respect the range of skills necessary for effective marital money management. Pursue and refine those skills, while encouraging your spouse to do so also.
Division
You and your spouse may divide financial management responsibilities. Neither you nor your spouse need necessarily acquire and exercise all the financial knowledge and skills, and exercise all the financial management. One of you may find that your management of other household responsibilities, such as purchasing groceries, arranging for services, or retaining contractors, may lend itself to managing some of the financial responsibilities, such as paying bills and monitoring budgets. Or one of you may already have the financial knowledge and expertise in one area, whether budgeting or investing for instance, or have a desire and aptitude to acquire knowledge and skill. You may find that dividing bill paying and account monitoring, or balancing the checkbook and adjusting investments, or some other arrangement, keeps you both involved in marital finances while drawing on your greater skills and interests. If you leave all financial management to just one of you, that arrangement, while necessary or appropriate for a time, may leave the other of you inadequately informed to contribute and inadequately prepared to take over if circumstances change and demand.
Tools
Managing marital finances effectively generally involves at least two financial forms or tools, both a budget and a balance sheet. A budget plans in advance the monthly household expenses, while monitoring the actual expenditures against that budget. Sticking to a budget is key to making progress toward your financial goals. A budget gives you the day-to-day, week-to-week, and month-to-month picture so that you always have a picture of where you stand. A balance sheet, by contrast, lists assets and debts. Assets can include intangible interests like a checking account, savings account, brokerage accounts, certificates of deposit, IRAs, and similar investments, and tangible but illiquid property like the marital home and motor vehicles. Debts the balance sheet reflects can include a home mortgage, student loans, and credit-card balances. A balance sheet gives you the big picture of where you stand, whether as debtors overall or as having a positive net worth, meaning that your assets outweigh your debts. A balance sheet also lets you compare, month to month, quarter to quarter, or year to year, where your marital net worth stands and in which direction it is heading. See the examples in the appendix at the end of this guide. Consider maintaining a budget and balance sheet to best manage your marital finances.
Risk
As the above discussion has already hinted, managing financial risk is a key aspect of effective marital money management. Financial risk can include loss of a job, destruction of real property such as in a home fire or flood, destruction of personal property such as in an auto accident, theft of personal property such as in a home burglary or identity theft, the incurring of substantial medical expenses related to illness or injury, and investment losses related to market changes. Manage marital financial risks through emergency savings, diversification of income sources, diversification of investments, and insurance including coverage for healthcare expenses, long-term disability, life, home, motor vehicles, business loss, and, if a professional, malpractice. You can see the complexity and subtlety of risk management. Think in terms of building for your marriage a fortress balance sheet that secures your marriage against both predictable and unpredictable loss. That’s what you’re doing when you are attending consistently and effectively to your marital finances.
Investment
Once you and your spouse have established a reliable marital household budget, stabilized debt, and built an emergency fund, you should be thinking about how to invest your growing savings so that your marital finances can take advantage of investment growth. Marital investment growth can over the long term exceed and even dwarf the amounts that you and your spouse set aside for investing. Yes, your regular and prudent investing may be more important than your earnings. Millionaire couples tend to be those not with exorbitantly high incomes but instead those with especially sound and diligent savings and investment practices over the long term. Make prudent investing a marital commitment. Learn the principles, stay abreast of products, do the research, and acquire sound investment advice. Monitor your marital investment accounts for performance, and make regular adjustments to rebalance accounts and improve performance.
Taxes
Prudent tax planning can also go a long way toward improving your marital finances, both in the short term and long term. Federal, state, and local income taxes, state and local sales taxes, local property taxes, state real estate sales taxes, and various other specialty taxes on business property, gifts, and inheritances, among other things, can all add up. You and your spouse may find yourself losing a bigger bite out of your income to various taxes, than you ever expected. Many couples can, though, lawfully plan to reduce their tax obligations. Filing joint tax returns, claiming dependents, itemizing deductions, deducting business or employment expenses such as mileage or a home office, using available health savings accounts (HSAs) and education savings accounts (ESAs) or 529 plans, contributing pre-tax dollars to tax-advantaged retirement accounts such as 401(k) and 403(b) plans, and making and claiming charitable contributions are a few of the common tax-reduction strategies. Do your research and consult your tax preparer or accountant. A little tax savings can go a long way, when consistently pursued and regularly applied.
Assistance
You and your spouse may figure things out well on your own. Then again, financial management, especially in areas like risk management, insurance, tax planning, and investments, can be complex and can change relatively quickly with the times and circumstances. Of course, do your research. But also, don’t hesitate to get professional assistance. Accountants, tax preparers, estate-planning lawyers, independent insurance agents, and investment advisors can be especially helpful. Be wise about incurring costs for professional assistance, especially percentage costs on investment portfolios or growth that over the long term can be quite costly. But a little good advice here and there can go a long way to securing and growing your marital assets. To locate a skilled and trustworthy professional, ask around about reliable financial professionals in your locale. Do your online research. Check professional associations for discipline history, and check professional references. And don’t hesitate to change advisors or rely on advice or assistance from several sources. Diversification is a wise strategy not only in financial management but also in financial and other advice.
Poverty
The most disciplined, wise, and prudent of marital financial plans and management may not lead to marital financial wealth. Your marital finances are not entirely within your control. And no matter how well you and your spouse eventually do, you may start out relatively or flatly impoverished, or have poverty find you later in the course of unfortunate twists, turns, and events, even if you soon recover. When you and your spouse experience poverty, don’t unduly blame one another, blame others, or rail at the world. You’re not leaving the world with anything other than your eternal soul, you hope and should plan. You can’t take money with you. Money also has both positive and negative effects. You may find, as many couples do and my wife and I certainly did, that your times of marital financial poverty were simultaneously times of marital relational wealth. Times when you and your spouse barely have a nickel to rub between you are times when you appreciate the simple things of life, like a leisurely walk hand-in-hand together in the late evening summer sun down a dusty dirt road, with your hungry but devoted and silly dogs trailing pleasantly behind. Your marriage means far more than money.
Generosity
You can certainly measure marital financial success in more ways than one. Increasing your marital net worth may help you achieve other marital financial success measures. But be sure to articulate and act on those other measures. For instance, you and your spouse may decide that you wish to leave an inheritance for your children or grandchildren, or need to leave a trust fund for a disabled child. Then by all means, plan to do so, even if doing so reduces your lifestyle or financial expenditures in other ways. Alternatively or in addition, you and your spouse may decide that tithing and giving regularly to your church, giving generous donations to charity, or both, should take precedence over building your net worth or achieving other financial goals. Then by all means, plan to do so. Some couples devote the greater part of their income to supporting missionaries, funding charitable organizations, or funding family foundations. Other couples forgo substantial earnings to serve as missionaries or in charitable roles. If that’s your agreed-upon marital goal, then go for it. Simply becoming a rich or wealthy couple isn’t, frankly, much of a financial goal, all things considering. Instead, connect your financial goals and planning to larger and better things, including giving generously, spontaneously, deeply, and even sacrificially. You and your spouse may then enjoy greater peace and reward than ever, as the natural end of a long and successful marriage nears.
Reflection
Identify which of the two of you has principal responsibility for each of the following marital financial interests, opportunities, issues, and concerns: (a) sticking to the household budget; (b) maintaining an emergency fund; (c) reducing debt; (d) increasing savings; (e) investigating and recommending investments; (f) monitoring net worth and investment growth; (g) choosing and managing healthcare and household insurances; and (h) monitoring other financial risks. Having studied this list for relative responsibilities, do you and your spouse need to make some adjustments in those responsibilities, either to keep both of you involved, equipped, and informed, to more equitably balance the required time and effort, or to draw on the better knowledge, skill, or discipline of one or the other of you? On a scale of one to ten, how would you rate the marital financial management by both you and your spouse? How can the two of you improve? For what end or ends are the two of you managing your marital finances so diligently?
Key Points
Managing marital finances effectively is a key to marital peace.
Integrate your finances with your spouse’s as one household unit.
Discern the values you each hold behind any money conflicts.
Set marital financial goals based on shared marital values.
Pursue sound money strategies consistently over the long term.
Understand money principles like time value and risk versus return.
Consistently follow effective money practices like diligence and action.
Develop and deploy money skills in partnership, using your strengths.
Both divide and share money management responsibility.
Maintain a household budget and balance sheet as essential tools.
Manage marital financial risks with diversification and insurance.
Learn and follow sound investment practices, with sound advice.
Increase marital net worth by following tax-reduction strategies.
Get sound financial assistance where you lack knowledge or skill.
Treat periods of marital financial poverty as times for simple pleasures.