Read an Excerpt
Financially Ever After
Chapter One
Ten Questions Every Couple Must Ask
Question 1: Do You Have a Basic Understanding of Money?
This seems like a no-brainer. Just about everyone has been handling cash in some fashion since grade school...of course you have a basic understanding of money.Only, many people don't.
If they did, then why does research out of Indiana State University find that young adults...those between 20 and 24...represent the fastest-growing source of bankruptcy filings in the country? Meanwhile, the Gen-X crowd...those born generally between 1965 and 1978...is more likely to file for bankruptcy than were their Baby Boomer parents at the same age. Those bankruptcies are sparked in large part by soaring credit card debt and the fact that too many homeowners opt for magical mortgages that open the door to a house well beyond their ability to pay. This led to a rash of foreclosures that has pushed people out of their homes, often robbing them of whatever equity they had in their house.
None of that indicates a basic understanding of money. It does, however, indicate a basic understanding of spending...and that's the problem. Fact is, Americans in general...not just Gen-Xers...are a financially illiterate lot for the most part. Studies of everyone from high school seniors up through older adults routinely bear this out. As a society, we spend more than we save so that our savings rate as a nation is among the lowest in the world.
You can see why it is important for spouses to know if their partners possess basic money knowledge. The wiser you each are financially, the smarter the decisions you'll make together,ultimately leading to a more fulfilling relationship, since you'll both feel more secure financially and will more likely achieve whatever it is you want your money to achieve.
But here's the rub: Financial prowess does not reside in everyone, nor does it appeal to everyone. Lots of folks aren't naturally inclined to care about the minutiae of money: managing investments, comparing insurance policies, or shopping for the best interest rates on savings accounts and mortgages. That's enough to cause a conflict right there. The one who does care will ultimately be frustrated that their partner could care less; and the one who could care less will ultimately be frustrated by the seemingly constant...incessant...focus on money. It can be a never-ending spiral that intensifies as you slip deeper into the vortex. The money-conscious partner tries ever harder to instill financial values into a partner; the partner tries ever harder to rebuff those efforts...all of which leads to an even harder push on both sides. At some point, your conflict erupts into discord that flows through other parts of the relationship, and even into the bedroom.
I'm not saying that to succeed in marriage you must absolutely master the intricacies of personal finance and be able to wax philosophically on the debate between growth and value stocks or the merits of fixed-rate versus adjustable-rate mortgages. If you know all that stuff, great. If you care to know all that stuff and you don't, pick up any one of the numerous comprehensive personal-finance guidebooks (I'm partial to The Wall Street Journal Complete Personal Finance Guidebook and companion workbook . . . but, then again, I wrote those).
The real problem you must address...the problem Question 1 is getting at...is what to do when neither of you, or only one of you, really understands money. That must be rectified, otherwise you're likely to spend your relationship continually insecure financially, or frustrated with each other, or maybe even routinely fighting.
You probably already know if you have a good understanding of money. If you regularly balance your checkbook when the statement arrives, if you live below your means so that you can afford to contribute to your 401(k) plan every paycheck or an IRA every year, if you refuse to carry a balance on your credit card, and if you're leery of...not excited by...an interest-only mortgage that allows you to buy the $300,000 house you otherwise can't afford with a traditional mortgage, then you probably have as solid a financial foundation as you need to grow your wealth. If none of that rings true to you...or if you sense that none of this defines your partner...there's a gap in the financial knowledge base you need to confront.
You don't necessarily have to ask if your partner understands money...your partner may not even know how to answer that question. But you will hear the answer in comments about late fees imposed on a credit card again, grousing about never having the money to afford the car-insurance premium when it routinely rolls around, gripes about an inability to make ends meet. Ask simple questions like "Do you have money saved in your 401(k) plan?" and listen for the "why" behind the yes or no answer. Ask whether your partner follows a budget, then ask why. What kind of car does the love of your life drive? Or what about the house, the furnishings, the style clothes hanging in the closet? Does the house itself, or the neighborhood it's located in, seem consistent with what you generally gauge to be this person's level of income? Do the furnishings and the clothes square up as well? All of these offer snippets of information you can use to answer Question 1.
Recognize, though, that some of the financial gap you see might have emotional roots. I talk to lots of couples in my job as a personal-finance writer and columnist, and after all these years I'm still astounded at the degree to which people will open up to me...a stranger they've never met...about their financial lives. Though the details are different, many of the stories are the same: "My (husband/wife/partner, fill in the blank) and I have very different styles and we fight about money because (he/she) doesn't understand me."
Financially Ever After. Copyright © by Jeff Opdyke. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold.
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