June 2011

C2 GETS HITCHED - Marriage: The Great Money Merger

Author: Emily Johnson

I am not a marriage counselor, nor do I play one on TV. I am, in fact, a financial “counselor,” frequently called to advise divorcing couples on the financial ramifications of their separation: settlement options, tax implications of division, financial picture post divorce, etc. From this perspective, I have learned a significant amount about love and money—and money and marriage—two very different relationships.

Statistics consistently list money and/or financial discourse as a leading cause of divorce. I would argue that money actually holds the position of unfortunate (and convenient) scapegoat in marital conflict. My job, when working with divorcing couples, is to remove the emotion from the finances and to focus instead on the future needs and wants that their assets will support. Not an easy task, but the process most couples go through is very telling. For example, one spouse may fight tooth-and-nail to keep a marital home that holds many memories, because they are unable to envision a life outside their marriage; but this home may ultimately be too expensive and a detriment in their new financial reality.

In short, marriage involves the merger of two unique financial value systems that have developed over a long period of time. While volumes have been written by individuals more scholarly than I am regarding the underpinnings of a healthy marriage, I will humbly offer three key observations—lessons, perhaps—taken from my experience as a financial “coach,” in hopes that they may be useful to couples entering into the great money merger of marriage:

1) Over-communicate—and early. Ninety-nine percent of the divorces for which I consult share a common theme: miscommunication (or no communication at all) of financial needs, wants, and concerns. If your spouse doesn’t understand your financial hot buttons, how will he or she know how to A) address them if they are in conflict with their own, or B) deal with inevitable future conflicts amicably and find a successful solution?

Determining your joint financial objectives early and reviewing often is key. Your spouse may have been raised by spendthrift parents, while you learned to sign your parents’ country club member number to a check at age four. These differences are ingrained and powerful, but not deal breakers. So, to avoid working for 20 years to support a family lifestyle which you not only resent but also creates financial handcuffs and marital strife, be open and clear in your communication about your financial needs and objectives with your partner, and listen to his or her perspective intently.

2) Seek legal advice. Though unromantic, seeking advice from an experienced family law or estate planning attorney prior to saying “I do” is very appropriate in certain cases, especially second marriages and marriages involving children from previous relationships. Prenuptial agreements (aka prenups) may actually create peace of mind for both spouses and their families by protecting assets earned or received prior to marriage and/or by defining how one party will be provided for in the event of a divorce. Additional discussions around estate planning for blended families are also recommended and often serve to prevent future conflict among immediate and extended family.

3) It’s not always about the money. While money is frequently cited as a leading cause of divorce, I have also seen financial issues serve as a scapegoat in divorce—a symptom perhaps, but not the underlying cause. When spouses are in conflict over deep-seated issues, be it differences in value systems, child rearing methods, etc. that intensify over time, how one or both spouses spends money becomes an irritant, almost like nails on a chalkboard. Spending habits that were historically overlooked and accepted as normal can take center stage and exacerbate a conflict.

Though I defer to the expertise of a mental health professional on this issue, I would refer back to number 1: Happiness may be found in shared values and open communication.

Though not soft and coated with sugar, my perspective is not intended to be negative. In fact, I take these lessons with me into my relationships. Though friends suggest that my experiences may jade my views on marriage and seal my single fate, I disagree. The lessons learned from heartbreak, both personal and observed, are acute and not easily forgotten. Money alone will not buy you a happy marriage, but a willingness to merge your thoughts on the true value of money just may.

Emily Johnson is a financial advisor and managing director of Polaris Capital Advisors, LLC. In addition to providing traditional wealth management advice, she frequently consults with divorcing spouses and their legal teams throughout the Southeast. Please contact her at (843) 686-2425 for additional information.

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