Get Your Spouse Involved in Personal Finance

Published January 19th, 2008

Every day we hear heartbreaking stories about couples who have been destroyed by bad management of their personal finances. I’m talking about separation, divorce, or sudden death, leaving the other person feeling ill and ill-equipped to deal with the aftermath. We also hear about the ongoing conflicts of spenders versus savers, or those that are just spenders. Some people have no idea where the money comes from–but they know when it’s gone–and have no idea where it went. To compound the problem, some of these people end up passing their bad habits on to the next generation–who will be doomed to financial disaster if something is not done soon. How do I know this? I married a wonderful man who was the product of a family with bad financial habits. For the sake our relationship and our finances, I had to teach him about the management of our personal finances–and I didn’t take no for an answer. It was one of the most rewarding and challenging tasks we have endured in our 8 year relationship–but it was so worth it. It might not be easy, but you or someone you care about can do it too.

The following suggestions are what worked for us, and some basics, hopefully enough to at least open up the lines of communication and get started:

Talk About Money

Don’t make money a taboo topic in your house. If you want a healthier relationship with each other, you’re going to have to find away to still talk about everything–even money. Take some time when you are both well rested, well fed, and doing something you like to find out what their thoughts are on money, and what it is that makes them uncomfortable. The reason I mention talking under these circumstances is that jumping on someone when they walk in the door hungry and tired from work, might be setting yourself up for failure. If you broach the subject in a gentler, kinder way, your partner might not feel like it’s a personal attack.

Get to the bottom of it

Find out why they are not more involved in your finances? Maybe there’s a good reason like they just never got any skills from their parents, and now they think it’s too late. Some people had a bad financial experience during college or university and don’t trust themselves. Others don’t think personal finance falls under their “half” of the relationship responsibilities. Then there are others who just want to be taken care of. Whatever the other person’s reason, get to the bottom of it and find a way to get through to them. It maybe that you need to tell them your finances are in trouble, and the only way out is if you get their help and work together. If you have a family, you may just want to tell your other half that you need to make sure they know how to take care of themselves or your family should the inevitable happen one day. Either way, acknowledging their fears or concerns and asking for their help might be the most successful way of getting them on board.

Different learning styles

People learn in three different ways: By doing, by seeing, and by hearing. In order to be most effective, you may need to present the information in 2 or more of these ways for optimal learning. You might have to get creative!

Ins and outs

Start with the basics–this is the most important area for them to become familiar with. Don’t yet launch into a lesson about investing, retirement, insurance…all very important, but you don’t want to scare them off by speaking a foreign language. Start with your day to day banking transactions. If you haven’t yet signed up for online banking, do it. Do it right now. I did that with my husband.

It is very convenient to use online banking because the accounts are identified and could be brought up with the click of a mouse. If you need to, print off the account transactions so you can make notes. Show the other person how much and how often the money goes in, and then identify together all of the transactions that are going out of the accounts. Don’t get upset or make accusations, just patiently track the money together so you know how it comes and goes. Set a goal that we need to make sure that what goes out should be less than what goes in, ie. Let’s spend less than we earn.

Record your spending for the month. It will in the very least make each person think about every transaction they make, and take accountability. By doing this, you are actively engaging everyone in personal financial management.

Credit cards

We only use one credit card, and it is attached to our online banking so we can check it easily. You can tell a lot about a person by their credit card bill. If you have credit card debt, see the interest rate on the card, and figure out how much interest is being charged every month. Once you explain what’s going on and how you’re being hosed by the credit card company, the other person may be surprised and appalled at what is going on under the surface of the bill and the “minimum payment” amount.

Debt

Good debt or bad debt, explain to them the difference. If you’re in trouble, seek credit counselling immediately. In the very least, your personal banker may be able to help. It may be embarrassing, but being on the same team, and then involving a professional sooner rather than later may be the best thing you do. Compound interest on your loans will only grow out of control, so the sooner you get help to make a plan, the better. Try to figure out the reason behind the need to spend or buy, deal with it as a couple or a family, and with the help of a professional if necessary.

Insurance

Let your spouse know what types of insurance you have, and most importantly where the policy documents are in case of emergency. The most common types of insurance are life, home, auto, medical, dental, and disability. You may or may not want to go into a lot of detail here, but the most important thing is that they know what types of insurance you have, and how to access it if they need to.

Investments and retirement

Unless your other half is eager to learn all about this right away, I would skip the details for now in favour of getting your spending and debt under control first. The important things to share with your spouse here are the numbers of where you are at, pension statements etc., and whether or not you’re on track. If you’re really behind in your savings, talk to your personal banker and set up an automatic monthly withdrawal into a low risk investment like a money market fund, or an index fund until you get things figured out. Explain to your spouse how you need to spend some of the money you were wasting on things you don’t need, or interest, so that you can retire or your kids can go to college. You can go through the finer points of investing at a later date, right now it’s more important that you just start doing it, anything you can afford, just pay yourself first.

Well, I hope that this article has been helpful to you and your other half, or anyone that you care about. Maybe the true moral of this story is to teach any young person in your life about money management when they are young and not set in their ways, while they are still growing, changing, and can be moulded easily. It’ll be the biggest favour you can do for them and their future partner.

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