Battle Over Money Control Can Bankrupt a Marriage

Jim and Paula have been fighting about money again.

In fact, the only arguments the Santa Ana couple have are about money--how much to spend, how much to save, what to spend it on.

But money wasn’t always a source of conflict.

When they married 16 years ago, Jim, a city planner in Santa Ana, was the breadwinner and financial decision maker. And although Paula never really felt good about it, she didn’t object. After all, her father handled the money in her family.

But three years ago, with her two children approaching adolescence, Paula, 37, obtained a nursing degree and went to work full time. Now she’s no longer willing to let her husband make all the major financial decisions.

Jim, 41, sees it differently. While he concedes that Paula’s job as head nurse in a Los Angeles hospital requires her to work harder than he does, he believes his higher earnings--nearly double hers--give him the right to control the purse strings.

“Jim came from a traditional home,” explains Paula, who requested anonymity. “His mother didn’t work, and his father ruled the roost. She had to ask permission to buy a dress. It has been difficult for him to accept the fact that I have changed, that I am more my own person today than I was when we were first married.”

Jim and Paula’s battle over family finances is not unusual.

In fact, Orange County financial planners and family counselors say they are seeing an increasing number of couples like Jim and Paula who are seeking advice on how to handle money and the accompanying domestic problems.

A decade ago, about 10 of the 50 adult clients Huntington Beach clinical psychologist Kenneth Fineman saw each week cited money issues as a main factor in marital discord. Today, he said, he’s seeing 35 to 40 with money problems.

Inflation, Fineman said, is a major culprit.

“My guess is that, for most people, inflation has far outstripped their ability to keep up, or to cope, with the increased money demands for them in their family,” he said. He also cited another factor: the increase in the types of leisure activities and high-priced electronic gadgets available today--all of which may be more than a couple can afford.

“People put these items on charge cards or take out loans, and they get in trouble doing it,” he said. “One of the primary difficulties (couples have) is the control issue: how the money is spent and who determines what it’s spent for.”

Before feminism began taking hold in the early ‘70s, Fineman says, husbands typically handled the finances. It was not uncommon for many wives to be completely unaware of assets, liabilities, investments or even the amount of life insurance their husbands carried. Today, with many women earning as much or more than their husbands, that has changed. The U.S. Census Bureau reports that in 1988, 66.5% of all married women paid the monthly bills compared to 23.1% during the 1950s.

But the change has not come easily, particularly among couples in traditional marriages.

“At the beginning of a marriage, a husband will often arbitrarily take over the finances, and the wife will automatically acquiesce to him,” Fineman says. “But as she grows in the marriage, she begins to feel stifled by this arrangement and wants to assume more responsibility. The husband, accustomed to his role, is frequently reluctant to give up that power.”

As a certified financial planner for Felton-Collins, Woodhouse & Associates in Costa Mesa, Victoria Felton-Collins regularly consults with couples about their finances. She believes too much blame is placed on husbands for wives not having a role in financial decision making.

“It isn’t as simple as the husband taking over,” says Felton-Collins, who has a doctorate in psychology. “In our practice, we frequently see married women--housewives and career women alike--who do not want to take responsibility for finances or investments. Perhaps they were brought up to believe that men should have all the control or feel insecure about their financial savvy. So they give all the responsibility to the man, who, because of the way he was taught to think, takes over. A pattern is set, which, years later, is difficult to change.”

But Felton-Collins believes the problem is not insurmountable.

Most of these couples “have a great marriage,” she says. “All that stands in their way is money.”

According to the financial planner, every couple brings two portfolios to a marriage: financial and psychological. The psychological portfolio is filled with values, traditions, beliefs, standards, feelings, goals, wants and needs, she says.

The financial portfolio, she explains, is filled with cash in and cash out . She maintains that the only way a couple can work together is to integrate these portfolios.

A method she uses is “mirroring,” where each person takes 10 minutes to express feelings about money. This includes opinions about how and where money is being spent, with each person sharing a money goal for the future. Listening to the other person, without rebuttal or debate, is an effective tool in reaching that goal, she says.

“Without a willingness to reach an understanding, many marriages crumble under the weight of these unresolved conflicts,” she warns.

Nancy, an Irvine marketing director for a real estate company, found out that allowing a partner control finances can result in disaster. She and her husband, Norm, are in their mid-30s. When they married after a six-month courtship, she did not object when he took over bill-paying duties. Nearly four years later, she is faced with financial ruin and an impending divorce.

With a combined income of more than $90,000, their future was bright. But they never discussed financial goals, except in vague terms. He bought a boat; she maintained an up-to-the-minute wardrobe.

“I never felt good at handling money, though I always managed to pay my bills on time,” says Nancy, 36. “I thought that was good enough. Credit card companies continually increased my limits, so I saw myself as a responsible career woman. Beyond that, I guess I didn’t want to know what was going on.”

Nancy was forced to take a closer look when she was home one day with the flu. She received a call from a credit card company demanding an overdue payment. She didn’t know anything about the credit card and insisted there had been some mistake. But there was no mistake. Without her knowledge, her husband had applied for more than 40 credit cards and signed her name on the applications; all the statements were sent to a post office box. The minimum payments on all the credit cards alone amount to more than $4,000 a month.

She still hasn’t been able to get a suitable explanation from Norm about where the money went. However, close scrutiny of their bills indicates that he took out large cash advances on the credit cards, and she suspects that gambling played a large part in the fiasco.

How can a spouse be unaware of such blatant mismanagement?

Often, says Fineman, it’s because one partner is relieved to relinquish control.

“This person doesn’t really want to know and is happy to be free of the responsibility,” he says. “So he or she doesn’t check statements, doesn’t pay attention. It is often a game of denial for both perpetrator and the spouse.”

Elizabeth Murphy, director of education for Consumer Credit Counselors, a nonprofit organization based in Santa Ana, says that most couples come to see her when it is already too late.

“All I can do for them is to work with what they have, which is usually a mountain of debt and few resources,” Murphy says. She says she often sees couples drive up in one of their two expensive cars when their combined income is under $40,000 a year.

She holds that one partner should not shoulder the full responsibility for finances. Couples, she says, should establish a system that each partner can understand, rotating the responsibility monthly or quarterly.

“That way neither party ends up the heavy each month, and in the event of illness, divorce or even death, no one person is dumped into a precarious position,” she says.

Felton-Collins says that many couples’ problems could be avoided if they would establish priorities.

“Let’s say a couple wants a new BMW,” she says. “The total costs break down to $750 per month. The question becomes: Would you rather put that $750 every month into something that will be worth considerably less in three years or put it in a growth mutual fund for the same amount of time? It’s all a matter of priority.”

Tom and Allison of Rancho Santa Margarita are newlyweds in their mid-40s who were willing to make such a commitment. With five divorces between them, each was determined to achieve a successful and lasting marriage.

First, they had to agree on separate property ownership and how they would handle financial assets and responsibilities. A combined gross income of $98,000 enabled them to buy their new home. Then they opened several bank accounts. Each has an individual checking account into which they deposit their respective paychecks. Car payments and other personal expenses are paid out of these accounts. They each write monthly checks from these accounts that are deposited into a long-term, mutually shared savings account, and a disposable savings account, from which insurance premiums, vacations and unexpected expenses are paid. A joint checking account is shared for household expenses. Each has established a savings account for their own children.

Tom and Allison contribute to all these accounts proportionate to their individual incomes. She pays the household bills each month and furnishes her husband with an accounting. Tom admits that at first he had a slight problem letting go of the finances.

“In my previous marriages, I was the sole breadwinner, so the job naturally fell to me,” he said. “But Allison is much more organized than I am, and once I admitted that I really hated managing the money and that she is really better at it, it was easy to let go.”

10 STEPS TO FINANCIAL HARMONY

1. Before marriage, sit down and have a hard discussion about money. Make sure your goals are harmonious--that you are headed in the same direction.

2. Disclose all financial obligations and liabilities.

3. Establish a budget with a system you can understand and follow.

4. Select a regular time each week to discuss financial matters. Have an agenda. For example, you may wish to discuss a prospective investment program or decide on a large purchase. Bring all the information to the table.

5. At each meeting, one partner should be responsible for providing an accounting of the current month’s expenditures.

6. Discuss individual and mutual goals. Then decide what you are willing to give up to achieve them.

7. Set aside no less than 8% to 10% of your combined net income for long-term savings.

8. Take no longer than three months to pay off all credit card charges. Always pay off entertainment charges--dining, concerts--in full when billed.

9. If you do not know where your money is going each month, keep a record of all expenses over a typical pay period, even incidental purchases. Scrutinize credit card statements to examine spending patterns.

10. Don’t waste time blaming each other for sloppily handled finances. If necessary, seek advice from a professional.