Did you know that 43% of all married couples in Ghana argue over money issues, making it the major reason couples fight? If you and your spouse handle money differently, now is the time to talk, establish expectations, and draw up a financial plan.
Money is a very big part of a marriage. Having enough to spend, and to do the things each wants to do, is important to both parties. When couples are not able to do that, then other issues pop up in the relationship. When husband and wife are not on the same page as far as family finances go, other difficulties inevitably arise.
Effective communication often emerges as the most difficult obstacle to establishing goals and expectations, and developing a financial plan. Many of us have been taught during childhood that discussing money is somehow inappropriate. Couples must understand that it is not only appropriate but absolutely necessary to managing finances in a marriage. Just as finances must be planned in a business, they must also be planned in a marriage. You must communicate in spite of any difficulty.
For example, how do you get your spouse to understand that he or she will need to curb their spending habits so that you both can begin putting money away?
There’s got to be a viable agreement, because most couples discover that a lack of money, a lack of spending control, or a lack of fallback savings eventually causes other problems in a marriage. Little things grow into much bigger things. However future arguments over finances can be avoided by simply communicating, creating an understanding of expectations, setting objectives and agreeing on a financial roadmap.
The Marriage Doctors outlines the following financial plan of attack for couples of any age:
• Stop living beyond your means.
• Treat the household like a business.
• Create an income-and-expense statement.
• Create a balance sheet.
• Create a budget.
• Figure out how to pay down your debt. Agree on a plan of action in which you both share equally in cutbacks.
• Find ways to cut expenses.
• Go on a debt diet starting with the little stuff.
• Celebrate when you pay off a debt.
There are many resources for help in creating family budgets and living within them. For instance, Gabriel Ofori Yeboah, a Registered Investment Advisor, author of the book INVESTMENT GUIDE (FOREX TRADING), and the CEO & FOUNDER of GOY FINANCIAL SOLUTIONS provides adequate resourceful resources to boost your finances and help shape your investments ideas as well as setting budgetary guidelines plans for your family and educational funds advisory services for your children. In sum, married couples have an important opportunity to plant the seeds for a healthy marriage by simply talking with each other, being realistic about expectations, and making that financial plan. Money matters!
Now let’s look at how to prevent money from ruining your marriages.
It’s no secret that fighting about money puts a huge strain on a relationship.
Money issues are so troublesome that people who say they’re experiencing stress in their relationship cite finances as the number one reason — easily beating out the second place contender: annoying habits. Money issues are also responsible for 22% of all divorces in Ghana.
This may seem like a grim prognosis for married couples, but it doesn’t have to be. There are various steps that experts say couples can take to avoid letting money matters get the best of their marriage. So whether you’re about to say “I do” or money problems have you thinking maybe “I don’t anymore” the following tips can help prevent money from destroying your relationship.
Don’t set yourself up for disaster
Of all the couples that I see, the number one mistake they make is spending too much on the wedding. The average cost of a wedding is more than GHC 26,000, and if you live in a metropolitan area like Greater Accra, it’s almost three times that. Most couples starting out can’t afford to pay cash for that so they’re going into debt to pay for this one day celebration. For many young couples that’s on top of student loan and facilities from banks. So they’re literally drowning in debt out of the gate.
While this doesn’t mean couples need to forgoing wedding festivities, those with limited budgets should do something smaller or find other ways to make the wedding more affordable and save the big party for the fifth or tenth anniversary when they’re in a better financial position.
Discuss your demons
Experts agree that fully disclosing your financial situation with your significant other before tying the knot is a must, regardless of how uncomfortable it may be. This is the time to mention outstanding debts, loans, income sources, investments or other financial assets or obligations. (If you’re already married and still withholding this info, now is the time to bring it up).
If you’re in a second or third marriage and you have alimony or child support payments or even if you expect to provide financial support to aging parents or adult children in the future, that is something you need to address as early as possible.
Understand your partner’s money mindset
A lot of the fights between spouses that seem as though they’re about money aren’t about money at all. It’s actually a clash of temperaments. Temperament is a huge potential source of conflict, one person may be upset that their spouse is spending too much, but the issue may not be just that they can’t afford it but may be something deeper, such as a real fear of not being able to pay their bills someday.
It’s also important to have an understating of how your spouse views money and how they were raised around money. “Were their parent’s frugal or big spenders? Did you live on a budget? Did your parents talk about money or was it a taboo subject? What is your spouse’s greatest fear with their finances? All of these answers will play into a marriage and how that partner treats money today.”
Set your eyes on the (same) prize
Life happens and things change, so it’s not unusual for people’s financial expectations and priorities to shift as time goes by. The problem is when couples forget to check in with each other to make sure they’re still in synch.
It’s a good reality check for a couple to sit down once a year, no matter where they are on the financial spectrum, and discuss what they are working toward. Whether it’s a vacation home, paying off debt, or saving more for retirement.
Having goals aligned is especially important for couples with only one income-generating spouse: Often the non-working spouse feels guilty about not contributing financially or the working spouse may feel resentful that the money they earn isn’t being spent prudently. Making sure both partners have the same goal in mind is essential. It can also be helpful if the spouse that’s not working does something on the side to generate some money, even if it’s just a small amount here and there. It can be anything from selling items. It doesn’t matter the amount of money, once that spouse starts to earn some on their own they will feel more powerful.
Don’t ignore the “B word”
There’s no sexy way to say it: you need to have a household budget. It’s the most effective way to keep track of your money. Budgeting may seem tedious, but having one can yield significant benefits, not least of which is preventing the marital turmoil that arises when one or both spouses are in the dark about where their money is going.
The good news is that technology has made budgeting a lot easier with the proliferation of online tools and apps that track your accounts and spending for you. A program that lets you create a budget and automatically track your accounts and transactions so you can see how you’re progressing. It also categorizes your purchases to give you a better idea of how you’re spending your money. There are a lot of other great programs as well so it’s worth looking into which program works best for you.
Stop Keeping Secrets
Keeping secrets from your spouse can put you on the fast-track to marital mayhem. Unfortunately it’s not uncommon, especially when it comes to keeping secrets about money. Roughly six million consumers in Ghana. (about 23% of the country’s population) have concealed financial accounts such as current accounts, savings accounts or fixed deposits from their spouses, partners or significant others they live with, according to an analysis. Almost 30% have secretly spent GHC 500 or more without telling their partner. Hahaha Funny huh.
So many couples are hiding money or debt or charges and then the spouse finds out and its war in their marriage. In a survey conducted, 1 in 10 people said their secret loan debt with banks led to a break-up or divorce.
While no one should be micromanaged or expected to disclose every debt, hiding accounts or lying about big loan debt can be toxic to the relationship and can lead to bigger emotional issues down the line such as guilt by the person keeping the secrets and questions of trust when the partner who was deceived inevitably finds out.
Give each other some breathing room
Conferring with your spouse about all of your purchases can feel very restricting – especially when you find yourself having to defend a purchase that your partner doesn’t endorse. That’s why various experts suggests having separate budgets for each spouse to spend on discretionary items of their choosing.
I recommend a line item on the families’ budget title “fun money”. These are the funds that can be used any way they choose and partners don’t need to report back to one another each month as to what they used those funds for.
Mr. Amponsah, a close friend, uses a variation of this strategy in his family – he and his wife have separate clothing budgets that they can spend however they want. “There is a freedom there,” he says as long as each spouse remembers that they’re accountable for staying within their budget.
Come up with a system – like CPUs
When it comes to spending, it’s important for couples to have some ground rules in place to determine, for instance, what purchases need to be discussed ahead of time or what the reasonable spending limit is on clothing, kids’ toys, food or other household items.
In my family we use CPUs, which stands for “cost per use.” It’s based on whether the amount of use an item will get justifies its cost (it’s gotten the thumbs up from every financial advisor I’ve asked about it). CPUs work best with bigger ticket items. For example, it would be tough to justify the CPU on a GHC 50 pair of shoes that will be worn five times — since it basically means it would cost GHC 25 each time they were worn. A GHC 500 briefcase would be easier to justify since it would be used every day, coming out to pesewas on the cedi for each use. We don’t use CPUs as an exact science, but it has allowed us to create a baseline for spending that we can both reasonably follow. While this may not work of everyone, it is important for spouses to have some sort of mutually agreed upon system to ensure they’re both on the same page when it comes to spending.
Remember the golden rule
Treat your spouse as you would want him or her to treat you. This may seem simple and obvious, but it’s something that a lot of couples forget to do, especially the longer they’re married.
Experts say one of the biggest problems couples face when it comes to money is how they argue about it. Everyone argues, Mr. Amponsah, says but, “It’s much more important with a financial disagreement how you have it.” He adds, it’s okay to complain about something that your partner is doing but it’s not okay to use words that are contemptuous or to use negative labels such as “irresponsible” to describe their behavior.
Call for reinforcements
If fights about money have hijacked your marriage and you’re coming close to pulling the plug, consider enlisting the help of a third party who can help you get back on track.
For some couples this might be a financial planner (consider one that charges by the hour so you don’t have to make a long-term financial commitment) or if you’re religious, enlist the help of a church ministry. You could also make an appointment with a couple’s therapist. There is a burgeoning field called “financial therapy” that is dedicated specifically to helping couples navigate financial turmoil.
Would You Have Joint or Separate Bank Accounts?
Traditionally, when a couple gets married, they merge their money, including paychecks or other recurring income, tax refunds and, of course, cash gifts from the wedding, into one bank account. This often serves as a symbolic gesture, showing the union of two people into one unit. Having a joint bank account can also be a smart financial move that simplifies a couple’s new life together. However, joint bank accounts can also have their pitfalls, so newlyweds must weigh the pros and cons of all options before making a decision.
Benefits of a Joint Account
One of the main advantages of a joint bank account is that there is a smaller chance of encountering financial “surprises” when all money goes into and comes out of one account.
Married couples with joint accounts often have an easier time keeping track of their finances because all expenses come out of one account. This makes it harder to miss account activity, such as withdrawals and payments, and easier to balance the checkbook at the end of the month.
Having one bank account also allows each spouse to have access to money when they need it. Joint accounts usually provide each account holder with a debit card, a checkbook and the ability to make deposits and withdraw funds. With banks that provide such services, each account holder also receives online access to account information and tools, further simplifying the process of keeping track of money.
Some legal affairs are also streamlined with joint bank accounts. In the event that one spouse passes away, the other spouse will retain access to the funds in a joint account without having to refer to a will or go through the legal system to claim the money. Depending on the state and local laws, the surviving spouse may have to go through a lengthy legal process to claim money in a separate account.
Couples may not feel comfortable with the loss of financial independence that comes with a joint bank account, especially early in the marriage. With separate accounts, each spouse maintains their own finances and is only responsible for paying their share of the joint bills. If one or both spouses feel more at ease knowing they have their own money to do with as they please, pooling the money in a joint bank account can cause friction in the marriage.
Joint bank accounts can also cause issues in a marriage when spouses fail to inform each other about their account activity. The convenience of joint access to funds in the account can also cause overdrafts and bounced checks if one partner makes an unexpected withdrawal or payment. If one spouse is less financially responsible than the other, separate accounts keep much of the damage contained to one spouse’s finances.
If the couple decides to separate, the funds in a joint account can be messy to separate. Each spouse has every right to withdraw money and close the account without the consent of the other, and one party can easily leave the other penniless. Separate bank accounts prevent that scenario and can allow for an easier break that often doesn’t involve a long fight to fully separate the finances.
Other Options
Married couples can choose to maintain separate accounts and also open a joint account in which they deposit a portion of their income. This provides the benefits of a joint account and the independence of divided finances. Couples can also chose to keep separate checking accounts and start a joint savings account for vacations, down payment for a home, kids’ college tuition, or retirement.
Couples should discuss whether to have a joint bank account or not as early in the marriage as possible, if not before the wedding. Examining the benefits and drawbacks of all the options will help lay a strong financial foundation and ensure that each spouse is on the same page. Couples should also revisit their decision every so often to make sure their strategy still works for them.
Happy Finance Management, Happy Marriage.
Author: Gabriel Ofori Yeboah
Fund Manager, Investor, Broker, FX Trader, Consultant–(Investment, Financial Analyst, Banking) and CEO & FOUNDER–GOY FINANCIAL SOLUTIONS
Email: gabbynanaoforiyeboah@gmail.com Tel: 0246751535
