When you’re single, it’s fairly easy to track what comes in and goes out each month.
However, once you’re married, managing day-to-day spending and long-term financial planning takes on a new dimension — and can often lead to serious disagreements.
“Not only do you have to keep track of two people’s income and expenses, you also have to consider the other person’s needs and wants,” says Sandy Shore, Credit Counseling Supervisor with Novadebt, a nonprofit debt management organization. “And more often than not, they are not the same as yours.”
Not surprisingly, disagreements about money are a common source of conflict in relationships, and, according to Shore, frequent, unresolved money arguments often escalate into divorce.
Experts say there are certain patterns that many couples fall into, which predispose them to financial problems. Here are seven signs that your relationship could also be heading for financial trouble.
1. You chase after “must-haves.”
Many young couples unconsciously shape their life to fit their expectations of a storybook romance — without regard to the financial consequences — and this often begins even before the couple has tied the knot.
For example, a lavish wedding and exotic honeymoon are a must-have for many couples, and they often use credit cards to finance that dream, according to Shore. However, the wedding is just the beginning. The list of must-haves rarely ends for couples who are addicted to maintaining a certain lifestyle.
Tip: There’s time for everything in life. Wait until you have the money before you buy that fancy barbecue set or flat screen TV. And if you must go into debt, experts recommend keeping your overall debt payments below 40 percent of your gross income. This includes monthly payments for credit cards, student loans, car loans and mortgage payments. (If you rent, substitute rent payments for mortgage payments.) Some experts advise an even more conservative strategy: Keep total loan payments at no more than 30 percent of your combined gross income.
2. One person is in charge of all the money.
In most relationships, one person pays the bills and manages other financial tasks. However, in some cases, that person takes control of all the financial decisions as well, which sets the couple up for numerous issues.
“We see all too often that one person is in charge of all the financial matters, and the other person has no idea how much they owe and what the payments are,” says Mike Sullivan, Director of Education at Take Charge America. “That’s a recipe for disaster.”
Sandy Shore of Novadebt tells the story of one couple who came in for credit counseling because the wife racked up a huge credit card debt. The husband was very upset with his wife’s overspending, but the wife insisted that she was just buying necessities, such as food, clothing for the kids and supplies for the house.
Once Shore created a budget of the couple’s fixed expenses, it became clear that the man wasn’t giving his wife sufficient money each month to cover the expense of feeding and clothing a family. Not wanting to rock the boat, she instead turned to credit cards to fill the gap.
Tip: Stay involved. While it’s tempting to let one spouse manage all things financial, it’s essential that both partners have a full overview of their financial situation. Set up a time to meet at least once a month to go over your financial situation and make adjustments as needed.
3. You don’t know where your money goes.
More than one in five adults don’t keep close track of their spending, according to a survey by the National Foundation for Credit Counseling. Tracking what comes in and out is far more complex when you’re a couple, particularly if you both have an income. However, it’s essential that you do so.
“Not tallying up expenses is one of the most common characteristics of people who are having issues with money,” says Shore. “Couples who don’t know what it really costs them to live very often end up with problems.”
4. You have conflicting spending priorities.
When two people come together, they are bound to disagree about how to spend their money. You may want to save for the down payment on a house, while your spouse is fine with living in an apartment. Or your spouse may relish driving an expensive car and keeping up with the latest gadgets, while you prefer stashing money into a savings account each year.
If you don’t create a common ground for spending priorities and long-term plans, you are likely to grow apart, first financially and then emotionally.
Tip: To reconcile conflicting spending priorities, first sit down and create a budget, Shore recommends. Figure out which expenditures you agree on and what they total each month—and be sure to include long-term goals as well. Once you know what your fixed joint expenses are, agree on an amount each of you can use to spend on what you want.
5. You don’t have a long-term savings plan.
Having an emergency fund and a retirement savings plan is essential to ensure long-term financial well-being. Yet, a surprising number of people don’t have either. As many as one in two Americans say they would be hard pressed to come up with $2,000 for unexpected expenses, according to the National Bureau of Economic Research.
Tip: Saving money for the future is not just smart financial planning, it’s essential for the long-term health of your relationship. Not having enough money can be toxic for relationships. Plan ahead for surprising detours. One day, you’ll be glad you did.
6. You avoid talking about money.
Most couples have to make frequent decisions about how to spend their money — and the decisions are rarely easy. Avoiding talking about them, however, indicates that you have swept the issues under the rug and are evading sensitive topics in order to avoid confrontation.
Tip: Stop the finger pointing. Instead of arguing about what your money was spent on, talk about what your long-term goals are. Then develop a framework you both agree on for how you spend your money.
7. You keep secrets.
Money secrets typically start very innocently. For example, a person may apply for a credit card and fail to tell their spouse, thinking it’s unimportant. Then they begin to use the card in secret, and the balance slowly escalates.
“We find that a lot of clients have credit cards that their spouse doesn’t know about,” says Shore. “They are spending money on things they think their spouse would not be happy about, so they’re keeping it secret. Unfortunately, sometimes it gets so big that the other person is going to find out, because there is collection or even bankruptcy involved.”
Tip: Keeping money secrets is also known as financial infidelity, and it can be very damaging to relationships. The longer you wait to come clean, the greater the risk of a long-term fall-out. Take a careful look at why you began keeping money secrets in the first place and then talk your concerns over with your spouse.
Shore recommends that you also consider working with a marriage counselor or credit counselor when tackling hot-button issues like any of the above. Working with a third, neutral party can often help break down old patterns and establish new habits of communication.