The 7 Worst Money Mistakes Married People Make
Everyone knows that disagreements over money can cause a huge amount of stress in a marriage. However, money may be more important than we think. A recent study out of Utah State University shows that couples who report fighting about money at least once a week are 30% more likely to divorce than those who only argue about it a few times a month. (See also: Difficult Talks You Must Have With Your Spouse)
In addition, the same study says that arguing about money is one of the best predictors of divorce. It correlates better with the divorce rate than arguing about sex, in-laws, and more.
So, if you want to stay married, it's clear that it's important to get the money thing right. Below are some of the mistakes likely to make the financial side of your married life much more difficult.
1. Forgetting the "Money Talk"
Couples need to talk about money, starting before they're even married. They need to be upfront about how much they make, what their expenses will be, what their investments look like, and how much debt they have. It's also helpful to discuss how they see finances working between the two of them. Will they have a joint account? Do they prefer to keep private accounts and each take on a portion of the expenses? (See also: How to Make a Relationship Work When One Partner Earns More)
While many couples these days do talk about money before marriage, it's important to continue doing so afterwards. Many of the things that happen in life will change your financial situation, and it's important to keep in communication about those. Everything from having kids to changing jobs to buying a house can cause major flux in your overall financial position, and communication is the best way to avoid conflict in these areas.
2. Not Figuring Out Your Spending Philosophy
Different people spend differently. Some need to be able to spend so that they feel like they have some freedom. Others don't want to spend because that makes them feel safe. Whatever your point of view on spending, it's almost certain your spouse's will be at least a little different. So talk about these things and come up with a plan you can both agree to. (See also: What's Your Credit Card Spending Style?)
Some couples keep separate "spending" accounts. Others put a cap on spending, saying that no one person will spend more than a certain amount without talking to the other. Do whatever works for you, but do something!
3. Not Filing Joint Tax Returns
Unless you are under some very specific conditions (like one of you has high medical bills and a very low income), most couples will save money by filing taxes jointly. Even the IRS advises couples to file a joint return, noting that they will likely save money that way. Check with an accountant if you're not sure this is right for you. (See also: The Worst Tax Moves You Can Make)
Some people want to preserve their financial independence by filing separately. Especially in a household where one person makes significantly more money than the other, this can feel like a way to make sure that what is "mine" stays "mine." However, the overall savings can't be denied. If you need to, come up with a way to divide the tax return before it comes, so you can maximize savings and still get an amount you feel is fair.
4. Putting Kids Before Anything Else
While it's natural to want to take care of our kids, it can be a mistake to put them before everything else, especially when it comes to money. There are many ways to do this. For instance, some people are continually bailing out older children, helping them out of financial difficulty. However, this can end up bankrupting mom and dad. Instead, offer to help in other ways, maybe offering meals or a bed to sleep in while they are repaying their debt.
You should also save for retirement before you save for college. While both are important, there will likely be other ways to pay for college (like student loans, scholarships, grants, or your student working his or her way through), but retirement is pretty much a "save now" sort of deal. If you get your retirement well on its way to being funded, then you can start saving for college.
5. Not Educating Kids About Money
Teaching kids about money is important not only to avoid situations like those mentioned above, where an older child needs financial help because of silly mistakes, but also to help keep the peace in your household when kids are smaller. When your kids understand the value of money, they won't constantly be pushing you to spend here and there, which will cause less conflict between you and your spouse.
Some parents get overwhelmed at the very thought of teaching kids about money. There are some good resources online, though. While the best one for you depends on the age of your kids and the particular financial lesson you're trying to teach, it's usually enough to know that you will be able to find what you need through a simple Google search when you need it.
6. Lying to Your Partner About Money
About a third of the population admits lying to their spouse about money. This can mean going on shopping sprees that you don't tell them about, and sometimes even involves hiding receipts and credit card bills to continue the deception. However, when it finally comes out (and it nearly always does), this feels like betrayal to the lied-to spouse — even equaling the betrayal of learning a partner has cheated. (See also: How to Tell if Someone Is Lying)
If you have hidden things from your partner in the past, it's important to bring them to light voluntarily, rather than letting your spouse find out on their own or from someone else. If you haven't hidden things, resist the temptation to start now. Even if you break the rules you've imposed on yourself or spend too much, tell your spouse. Honesty won't fix your mistake, but it will keep you from compounding it with more lies.
7. Taking on Too Much Debt
When you combine your income with your spouse's, especially early on, it can be easy to start thinking in terms of how much more the two of you could borrow, together, than either of you could get alone. While this is true, it's never a good idea to borrow money unless you really need it. After all, the research shows that debt causes stress. And the last thing you need in your marriage is more stress.
While you may decide to take out a significant loan soon after marriage, for a house or a car, make sure you do so reasonably. Don't simply spend as much as you can on a house just because you can. Instead, determine what you need in a house and work from there.
Do you and your spouse fight about money? What helps keep the conflict to a minimum?