How Money Can Ruin a Marriage

Posted on: June 17th, 2010 by

Financial Planning - Accounting - Rockville, MDSo much has been written about how tough economic times have forced couples to postpone divorces.  They just can’t afford it.  Legal costs and accountant fees grow as a union dissolves and a two-income household lives cheaper than a two-household pair of singles.  As the economy improves, we will probably see divorce rates creep up.  But even if money woes are keeping couples together, financial disputes remain the root cause of irreconcilable differences.  Here are some common financial issues that can lead to divorce:

Paycheck Envy:  More women are entering marriage with assets of their own and many are earning more than their spouses.  According to the Bureau of Labor Statistics, one in three married women out-earns her husband.  That amount expands to more than half if they earn $55,000 or more.  Men can feel threatened by not having their traditional bragging rights as breadwinners.  For women, it means they have their own money to protect from the irresponsible actions of a mate.  With more at-stake, women can’t afford to be deferential to their mate the way past generations were.

Debt:  Utah State University professor Jeffrey Dew authored a widely cited study that concluded that couples who argue about finances at least once a week are 30% more likely to divorce than those who only vent occasionally about money issues.  Couples with no assets were 70% more likely to divorce compared to couples with assets of $10,000.  Cutting into the ability to build assets is America’s longstanding addiction to credit cards.  The answer: fewer credit cards.

Bills:  As part of a survey last year, Fidelity Investments found that less than half of couples make day-to-day financial decisions together on issues such as budgeting and paying bills.  In many couples, one person always pays monthly bills early while the other might procrastinate until the due date and beyond.  Cutting checks can be even more stressful when an unnecessary shopping spree blows the monthly budget or a mate doesn’t take kindly to the premium cable channels or costly text messages their better half piles into the mix.

Investing:  One can assume that investment decisions are increasingly dividing couples if both partners are financially savvy.  Risk tolerance may be incompatible, with goals out-of-synch.  Looking over an investment portfolio or 401(k) plan, one spouse may want to explore emerging market funds, while the other dismisses anything but safe domestic large caps and bonds.

Secret Stash:  Financial infidelity is a newly coined term that describes situations in which a spouse hides cash or credit from his mate.  It may seem a good idea to have a secret credit card or bank account that you can dip into, but your partner will probably take great offense at the covert action.  Beyond the financial dishonesty on display, such hidden reserves may be a warning sign of even bigger transgressions.



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