Recently, on an episode of my radio show, “Your Money,” I spoke with Brad Klontz, Psy.D, the co-founder of Your Mental Wealth. Brad, who is an associate professor of personal financial planning at Kansas State University, appeared on the show around Valentine’s Day, so it was only fitting to discuss money and relationships. You often hear about couples who struggle with how to handle their finances. In fact, money is the number one topic for conflict in relationships. It’s also the number one reason for divorce within the first three years of marriage.
“Many of us were raised without good modeling by our parents about how to talk through money disagreements,” Brad said. “Nobody has the exact same beliefs about money. It ends up being dangerous territory. People end up avoiding the topic to avoid conflict.”
Each of us has our own “money script,” or belief about money, that was passed down to us from our parents, Brad said. That script will invariably differ in some way from our spouse’s script. Very often - perhaps out of a subconscious need to seek some balance - we are attracted to people with very different money scripts than our own, which can lead to conflict. And if we’re not careful, we spend our time trying to convince the other person to see things our way.
Many of us end up engaging in quick, angry, “drive-by” money conversations, rather than sitting down with our partner and having a longer, more in-depth conversation.
As a psychologist, Brad has noticed common patterns among couples. “When I meet with couples, I switch them away from the issue they are fighting over and focus on the issues that they should have (addressed) early on.” These include: What are your financial goals? Financial fears? What was it like for you growing up in your family? How did it impact your relationship with money?
“It’s important to understand where your partner is coming from, because when you’re in the middle of a conflict, they just seem crazy to you and you’re trying to convince them not to be crazy.”
So, should two people with conflicting money scripts even be together? Yes, as long as they make the effort to have the important financial conversations before getting married and having kids.
“When I find a couple in conflict about money, it’s about conflicting money scripts and they are battling them out in relationships,” Brad said. “Ultimately, a relationship is really a series of successful negotiations. To negotiate, you need to know what beliefs you got from your parents – some of them you probably want to adjust or modify – and then try to understand your partner’s beliefs.”
Many couples argue about what the other partner is spending money on, whether it’s clothes or games or something else. I know someone here at Penn who has an agreement with her husband. They are both allowed to spend $250 a month on whatever they want without criticism from the other.
“I love that strategy,” Brad said. “The closer you are to joint accountability around money, the better your financial health. Your partner can be your accountability person.”
Accountability is key today, as financial “infidelity” is alarmingly prevalent, he said. One out of three people admit to lying to their spouse about money because they don’t have an agreed upon plan.
If you are concerned about your partner’s spending, it’s important to schedule time to speak with each other about your overarching financial goals and come up with a jointly agreed upon plan.
Once you have a plan in place, write it down and revisit it every three to six months to see if adjustments need to be made. “It’s common for people to never sit down and do this in order to achieve their goals, but it’s really important,” Brad said.
It’s also important to build in time for “positive” conversations about money, for example, your ideal vision for retirement. “Build in some fun conversations around money that you leave feeling happy about. Build up that emotional bank account so you’re less fearful going into that (future) conversation.”
Kent Smetters is the Boettner Professor of Business Economics and Public Policy and faculty director of the Penn Wharton Public Policy Initiative at the Wharton School of the University of Pennsylvania.