By Arnold Machel, CFP®
“A gentle answer turns away wrath, but a harsh word stirs up anger”
- Proverbs 15:1 (NIV)
Last month we considered the importance of communication when it comes to handling money and discussed how to appropriately set the stage when doing so. This month I want to provide you with some specific ways and examples that might help you create solutions that work for you.
Some of the more common areas of disagreement when it comes to money are…
- Spending vs saving/investing
- Paying down debt vs saving/investing
- How much to donate
Things are most difficult to deal with when both husband and wife have vastly different ideas of what reasonable spending is and/or where funds should be allocated. It’s best when both husband and wife are on the same page, but when one is a miser and the other a spendthrift, things can get rocky. And the whole husband/wife relationship thing just doesn’t tend to work out well when the miser continuously tries to keep the spendthrift in check.
So, if you’re the miser, don’t just ask how your spouse can spend less. Look at where you might be able to cut, too. Do the work together and do your best at seeing things through your spouse’s eyes and being open to change yourself.
I’ve come across 4 main systems that couples have used.
Everything Separate
Keeping everything separate just doesn’t feel that healthy to me, but in certain circumstances it may make sense. Certainly it eliminates the need to be of the same mind when it concerns spending, saving and giving.
Everything Joint
My personal bias is to have everything joint. “What’s mine is yours and what’s yours is mine.” This definitely “feels” like it’s the most appropriate. It necessitates trust and relies on an interdependent relationship. It is most useful when both spouses are generally on the same page when it comes to big picture stuff. There may still be long term disagreements about certain issues, but if the couple can get past them (even if they never agree on them) then this works great.
I have seen enough situations, though, where spouses have vastly differing views on what is appropriate for a daily spending allowance or how to make money decisions. So I find myself suggesting a combination more and more often. There are essentially two ways this can work.
Combination No 1. (joint bank account with separate spending account)
Arrange to have both of your paycheques go into the same joint account. From that, arrange for a weekly or monthly allowance to go into a debit card “spending account” for each of you. This could be as large or as small as the two of you decide. It doesn’t even need to be an equal amount. The key is that you both agree on what the amount will be and on what it is meant to cover, and that this will be your only source of personal spending. It may be beneficial to even come up with a list of expenses that must come out of this account (eg. lunches, magazines, morning coffee, books, snacks, etc.). The eloquence of this approach is it eliminates the need for one spouse to be a nag. The debit card solves that problem.
This approach is most useful when couples are pretty much in agreement, but one or both of them needs a mechanism to prevent them from over-spending. It allows for joint planning and necessitates being on board with big picture issues. It is a great alternative when the “Everything Joint” method is causing issues.
Combination No 2. (joint bank account for shared expenses; everything else separate)
A different approach to the same idea is to agree to share only household expenses and have each spouse manage the remainder of their money completely separately. The spouses may agree to share the expenses equally or proportionate to their income or to some other formula.
While at first glance, this approach may not feel very “Christian” to some, it may still be appropriate for estate planning purposes where one or both spouses have children from a previous relationship and they wish to ensure that those children are the ultimate beneficiaries as opposed to their spouse’s children.
Next month we’ll provide a few examples of how others have dealt with some of their spending, saving and donating issues.
On a final note, in my opinion it is vastly superior to face these decisions before getting married and then to be open and willing to make adjustments as needed during marriage. Address the issues during your premarital counselling and then have your fiancé meet your financial planner. It can be tough to start the discussion, but I suspect it will be well worth it.
Arnold Machel, CFP® lives, works and worships in the White Rock/South Surrey area. He attends Gracepoint Community Church where he serves on the Leadership Team. He is a Certified Financial Planner with IPC Investment Corporation and Visionvest Financial Planning & Services. Questions and comments can be directed to him at dr.rrsp@visionvest.ca or through his website at www.visionvest.ca. Please note that all comments are of a general nature and should not be relied upon as individual advice. While every attempt is made to ensure accuracy, facts and figures are not guaranteed.