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Dollars and Discord: Top Financial Mistakes for Couples to Avoid

Dollars and Discord: Top Financial Mistakes for Couples to Avoid

February 01, 2024

Hundreds of couples have walked through our doors seeking financial advice, giving us a front-row seat to how people navigate their finances as a team. It’s exciting to watch couples pursue financial milestones together, but the journey can be rough at times.

 

Whether dating, engaged or married, many couples argue about money, sometimes to the detriment of the relationship. Financial issues are a leading cause of divorce. But it doesn't have to be this way!

 

Common Financial Mistakes

Successfully managing your finances as a couple requires commitment, understanding and respect. There’s no one-size-fits-all solution to working through financial problems as a team, but knowing what not to do can be just as helpful.

 

1: Letting One Person Make the Decisions

It’s common for one partner to know the budget inside and out, while the other is shocked to learn how much money is being spent every month. When this problem goes untouched, widows or widowers are left in charge of their finances without a clue as to what accounts they have, let alone how to invest and withdraw wisely. Ignorance is not bliss when it comes to money management.

 

2: Not Setting Spending Limits and Savings Goals

What’s worse than only one spouse knowing the financial plan? Not having one at all. Keeping track of how much money is coming in and going out every month can help couples avoid overspending and allow them to prioritize their long-term goals, like saving for retirement. Some married couples find it easier to track their spending and saving if their financial accounts are combined, while others prefer to keep separate accounts. As long as both partners are on the same page and have equal access to the resources they need, keeping separate accounts is fine.

 

3: Keeping Financial Secrets

A recent study found almost half of adults have hidden a purchase from their partner. It can be tempting to keep debt or poor spending habits a secret, but that can lead to distrust and insecurity. Being upfront about your financial struggles will help you address the problem head-on and create a solution together.

 

4: Not Sharing Your Retirement Plans

Transitioning into retirement is a major life change, and oftentimes couples are not on the same page about how they want to spend their golden years. One may want to travel, while the other is content to stay home and spend time with family. Talk about how you each want to spend your time in retirement and what you will do to create a new sense of purpose. Our customized financial roadmaps incorporate both partners’ goals to ensure they can live out their retirement dreams.

 

5: Not Asking for Help 

Even if you and your partner are on the same financial page, chances are neither one of you is an expert in risk management or investment strategies. As financial advisors, we love coming alongside clients to create plans designed specifically for their needs. We pride ourselves on going the extra mile for our clients, whether that means conducting in-house research or monitoring investment accounts daily.

 

6: Ignoring What You Can’t Control

Many couples don’t like to think about what would happen if one of them passed away prematurely or needed long-term care in retirement. Planning for future inflation issues, longevity risk and healthcare costs can save couples from emotional and financial stress down the road. If your current financial plan is not protecting you from these kinds of risks, reach out to schedule a meeting with us.

 

7: Ignoring What You Can Control

In a similar vein, it’s important to acknowledge what is in your control. Many couples underestimate the power of proactive financial planning. Diversifying your investments, saving both pre- and post-tax retirement money and creating a comprehensive plan are all important ways to shape your financial future.

 

Bonus: Failing to update beneficiary designations is a common misstep couples make. The beneficiary designations on your financial accounts will supersede your estate plans, so make sure your spouse is listed as the primary beneficiary to ensure they have access to those funds if anything unexpected were to happen.

 

Tips for a Healthy Conversation

How and when you approach financial conversations can have a big impact on whether or not things go well. Both partners should feel comfortable contributing to the conversation and voicing any concerns they may have. Setting is everything — starting the conversation in front of your kids or in public may not be appropriate.

 

Be patient with one another. If tempers flare up, take a break to regroup. Using “I” statements will help you voice your concerns without making your partner feel attacked. Rather than thinking about what you’ll say next, practice active listening to help your partner feel heard and understood.

 

Some of our clients talk about their finances weekly, while others prefer to do it once a month. One way isn’t better than the other; what’s most important is to find a rhythm that you can both commit to. Keep in mind, life changes or large expenses such as a new baby or an unexpected home repair may require a one-off conversation.

 

Working with a financial advisor can help you and your partner better navigate financial conversations. Relationships are very important to our team at Zephyrus, and we are passionate about helping clients get on the same financial page. We keep the lines of communication open so that both partners feel confident and supported as they work toward their financial goals.