Love is Blind - but you shouldn’t be: Understanding how our relationships affect our money.
We’ve all heard that money is the number one reason for divorce, but here’s a new one: Research out of Utah State University is now claiming that couples who reported disagreeing about finances at least once per week were more likely to get divorced than couples whose disagreements were only a few times a month. Of all the common things couples fought about, money disputes ended up being the best harbingers of divorce (Source: Jeffrey Dew).
Ok, so if we agree that money problems are, at least statistically, the worst problems when it comes to predicting a happy marriage, what can we do to protect ourselves? Furthermore, if finances can thwart love in the good times, how can we expect to get through COVID times? Are we doomed?
Not necessarily.
Ultimately, financial issues are damaging if we are not prepared and if we are not fortified. What does that mean? It means that financially resilient women foster relationships that can weather financial struggles and remain happily married, regardless of what life throws their way. If the relationship ends, it doesn’t spell the end of their financial health. So what does that financial resilience look like?
At altruWisdom, we work with couples and their finances every day—and we’ve picked up a key lesson or two. Here’s what Kaia (fake name, but real powerful story) learned about her financial behaviours after her marriage dissolved:
Q: What was your life like before you started your business?
A: I was a happily married mom of two kids, one of which we adopted when my husband’s sister passed away. I thought about money—along the lines of maybe reducing the grocery bill or saving up for a vacation or a treat, but not in more significant ways than that. However, I had worked in commercial real estate in my pre-mom days and, at the beginning of 2019, I decided to get back into the game as a consultant. My husband and I prepared for me to work 5 hours a week—just to get my feet wet.
Well, it turns out I had a knack for it and the timing was right. By the beginning of 2020, I was making more money than my husband, who had been the breadwinner until now. Initially, he was great about it; he helped me set up an office space, attended networking events with me and was amazing with the kids.
Q: That sounds like a dream. What went wrong?
A: As my work picked up, I depended on him more and more. He eventually went to part time hours to support my demanding work schedule. Within a year, we had reversed roles. I was working a lot. Attending events, climbing the ladder, and he was staying home.
Then, the pandemic hit. We were working from home, our kids were not in school or daycare, it was mayhem.
By June of 2020, mid-pandemic, the two of us could only agree on one thing. We wanted to separate.
Q: How did your finances affect your decision to separate?
A: Truthfully, I think we both realized that we really didn’t know or understand each other’s money values. We agreed on things like parenting the kids or what to eat for dinner, but we had drastically different money stories and values. He didn’t realize how much he valued a traditional family unit with the man as the breadwinner and the woman as the caretaker. I didn’t realize how much working and building a business fulfilled me. We both spent money differently, had different financial goals, different views on how to discuss money—we were on two different planets.
Q: How did the separation affect your business?
A: Well, at the time of separating, my husband was barely working and was no longer financially secure enough to be on his own. I, on the other hand, was earning a lot and spending most of it on “self-care” because I was stressed. This combo put us in a deep financial hole. My husband believed he was owed 50% of my business, because he helped me set it up and he supported me as I created it—that was his way out of the mess.
Maybe he was right in that regard, but I wasn’t expecting to give him half of my business. Over my dead body, I thought.
Once we both met with lawyers, we started to realize how sticky the situation had become. I owed a lot of child support, I was behind on my taxes, my husband and I both owned a home that wasn’t worth the price we had paid for it. We felt stuck. The worst part? We had, out of spite, closed our joint account and accidentally left ourselves in arrears on some important bills, including our insurance. Our life and disability coverage lapsed. A rough time to be going through a divorce! I had a terrible credit rating and a huge tax bill from my business.
Q: That is a swift change in circumstances and, as you mentioned, a tough one to climb out of! What are the lessons you learned and what would you do differently next time?
A: Most importantly, I had to open my eyes. Our differences in values were always there, we had just ignored them. But the financial issues we failed to discuss at the beginning of our relationship ultimately ended up hurting us most at the end of it.
So here’s what I would tell my daughter if she were getting married:
Lesson #1: You both need to understand your relationship with money. How do you each spend? Why do you each save? What does security mean to you both? What are your expectations of one another? Financial and otherwise?
Tip: A money story is a personal narrative about money. It makes up your beliefs, thoughts, and feelings about money – and affects your financial behaviors.
Lesson #2: Don’t ignore red flags, financial ones included. I knew about issues relating to financial abuse and financial infidelity, but I didn’t know what that could do to my own financial health. These include signs of financial abuse and financial infidelity.
Lesson #3: That which gets measured, gets managed. Align yourselves on goals, weekly and monthly spending and create a system to check in - this is the real self care!
Lesson #4: Don’t fear the legal paperwork. That’s right. Pre-nups, post-nups, cohabitation agreements, insurance, wills, powers of attorneys...it’s all important. It’s not about being greedy - it’s about using these documents as tools to open up a discussion around a whole bunch of what ifs. Then, you can take steps to make sure you both are protected and aware of the risks.
Lesson #5: The three D’s - divorce, disability, and unexpected death - are most likely to decimate a woman’s financial health if she isn’t prepared for them. So make sure you are prepared!
Lesson #6: Death (inheritances), debt and taxes - they can all become “ours” - even if you don’t intend for that to happen.
Kaia’s story is one that all women should hear, and the lessons she shares are worth unpacking. On March 19th The51 and altruWisdom are teaming up to dig deep into how our relationships affect the way we spend, save, and plan for the future. We’ll investigate popular behaviours and beliefs, offer tips on how to better “marry” these two important facets of life and then open the floor to discussion; we can’t wait to hear about your experiences.
We will cover:
The right way to express and explore the money stories that you and your partner are bringing into relationships.
How to have the conversation about cohabitation agreements and pre-nups - and if you need one!
The steps you can take to make yourself and your relationship more financially resilient.
The smartest ways we have seen couples share their finances and which method works best for you
Spot the financial red flags early on so you can enter your “forever after” with perfect vision.
This event is open to all. We'll see you there!
-altruWisdom & The51
Guest Blog Author: Alisha Mawji