A couple’s financial plans are like an airplane
with two jet engines. If both engines are not
pointed in the same direction, they are going to
have some problems. By not working as a team,
financial planning for most couples will always
be a battle and never a victory.
For 10 years I worked as a financial advisor for Morgan
Stanley, where I had the privilege of
working with a lot of couples, some even
going through divorce. In most cases,
money was the No. 1 reason for their
marital problems. Conversely, with the
couples I met who had been married 20 to
30 years, it was obvious they worked on
their finances as a team.
Money disorders are the last great
taboo topic. Couples are more comfortable
talking about sex than money. This
fear of talking about money stems from
how we were raised. If you are in your
30s or 40s, your parents, in most cases,
didn’t talk to you about money at all. You
were raised at a time when it wasn’t polite
to talk about money. And often the only
time you saw your parents talk about money was when
they were fighting about it. So much of our knowledge of
how to handle money comes from what we saw our parents
do. And, often, our parents were not the greatest fi nancial
Whether you are newlyweds or are looking to retire,
planning your finances together is something you can start
today. And remember, when two people work together to
accomplish a goal, they can usually achieve it twice as fast
as either of them working alone.
I wrote Smart Women Finish Rich around
the same time I was getting married. And
even though my wife and I were financial
advisors, we were arguing about money.
We had never taken a class or received any
coaching about how to manage money as
a couple. As a result, neither of us thought
about how different things would become
when we went from being two single
people managing money as individuals to
a couple managing money together.
We thought if it’s tough for us, no
wonder it’s tough for other couples.
And that’s what led me to write Smart
Couples Finish Rich. I’m humbled that the
book has been so well received. In the
10 years it has been in print, it has sold close to a million
So what can you and your partner do to avoid arguing
about money? (I use partner deliberately because in a good
relationship that’s exactly what a spouse or significant other
First, you have to look at why most couples fight about
money. What happens in most marriages is we tend to
marry our financial opposite. If you are raised to save
money, you tend to marry someone who is a spender. If
you have married your financial opposite and you’re not
talking about money proactively, you need to come up with
a better plan.
“Couples tend to fight about what was spent rather than their underlying fears about money.”
In my experience, couples talk about money primarily
when there is a problem, such as when the bank account
is empty or it’s time to pay the bills. Usually, one person in
the marriage pays the bills. And when I was growing up, it
was my father, who would barricade himself in his office
once a month. It was common knowledge in my home
that no one ventured to that side of the house when dad
was paying bills. A lot of couples I have talked to share
Many couples tend to fight about what was spent rather
than their real underlying fears about money. I might get
upset with my wife that she bought her sixth pair of black
shoes, but the shoes are not why I am angry with her. My anger stems
from the underlying fear about whether my job is secure or how we
are going to pay for college for our son. Often, the real issue isn’t what
the squabbling is about.
With more than 33 percent of marriages ending in divorce, and
research showing that the biggest cause of marital stress is financially
related, the American family is under even greater pressure as we
head into one of the most difficult recessions in three decades. How
can we weather the economic storm?
It’s more important than ever to continue talking with your partner
about your financial concerns. It’s also important that you continue
working together on solutions and goals, and that you remain
open to each other’s ideas. Creative thinking will get you through
the challenges and help you see opportunities—even during this
As partners, you’re best suited to calm each other’s fears, especially
the irrational ones. For instance, many may feel tempted to stop
investing altogether. Don’t do it. Bottom line is, don’t stop paying
yourself first. This means don’t shut off your 401(k) plan and don’t
start shutting down your IRAs. Stay vigilant, and don’t stop saving
because, at the end of the day, whether you are putting money in
stocks, bonds or cash, it’s the habit of saving money that is key.
And don’t be tempted to use home equity to pay off credit cards
or consumer debt. Home equity loans are a big reason people are
upside-down on their mortgages and can’t sell their homes—or have
lost them to foreclosure.
Make sure you keep an eye on your financial goals. For years I
have told my readers the most important investment decision they
can make as a couple is to buy a home or to save for one. Remember
that how you finance the home is more important, in many cases,
than the price or location. Getting the financing wrong can result in
losing your home, as we’ve seen with so many people who took out
adjustable-rate mortgages without understanding the risks, which is
something I’ve always preached against.
As I mentioned, there are hidden opportunities that come from
economic downturns. In my other book, Start Late, Finish Rich, I talk
about ways to grow your income by starting your own business. I
do believe during the next 24 to 36 months, millions of Americans
will see the greatest opportunities in their lifetimes to build wealth.
In addition to starting a business, there are opportunities to buy real
estate at a discount. Throughout recessions, there have been many
people who take lemons and make lemonade. And there will be many
people who become millionaires during this recession.
The truth is we’ll get through this, and the economy will ultimately
turn around and markets will go up because they always do. But my
guess is that it’s going to take a couple of years. My grandpa used to
say “This, too, will pass.”
But make sure you and your partner are communicating about
your financial goals in the meantime. If you are badly in debt or
living paycheck to paycheck, I’m here to tell you, as someone who has
personally coached thousands of people on their finances, it can and
will get better if you and your partner will take action together. The
sooner you start working together, the more quickly you can dramatically
improve your financial picture.
David Bach is the author of several national best-sellers, including Start Late,
Finish Rich and The Automatic Millionaire. His latest book is Go Green,
Live Rich: 50 Simple Steps to Save the Earth (and Get Rich Trying).
Founder and chairman of FinishRich Media, Bach is frequently featured on
television and radio shows and in newspapers and magazines. He serves on
the Habitat for Humanity board and is co-founder of Makers of Memories, an
organization helping victims of domestic violence.