Paths Through Divorce (2/7): Money Talks for Married Couples

When's the last time you and your spouse sat down at the kitchen table and asked each other about your money story? It probably doesn't happen very often, but it's so important with married couples to be on the same page about your money. I'm Kathy Costas. I'm a financial advisor and certified Divorce Financial Analyst, or CDFA and as an expert in divorce financial planning, I have a very unique insight and perspective on what makes marriages fail, and because of that I've created a focus in my practice on financial planning for married couples.

Now that may not sound very exciting or unique or really a specialty, but I think it's all about how you approach it, and I think it's a very important process that all married couples should work through with a trusted advisor. each of us come to our relationship with a preformed relationship with money.

I always tell my clients, you had a relationship with money before you had a relationship with each other, and now you're bringing that together. And yet we don't often talk [00:01:00] about it. And I think it's very important to have those conversations as I do with my couples. How were you raised was there abundance?

Of money. Was there a lack of money? Was there scarcity? Did you have reckless spending in your family, one of your parents? Did you go through a rough financial time where you lost your family, lost a business, or were things always just fine? Maybe you used a lot of credit cards and debt, or maybe you didn't buy anything unless you could.

Cash for it. These are the things that we bring to a marriage and these shape our decisions and our feelings and thoughts around money. And normally these things come up at an inflection point. As I said, you don't usually sit down at dinner and have the conversation. It's usually around something happening.

One of the big ones is one of your kids or some of your kids are ready to go to college. How are you gonna pay for college? Some spouses will say, I don't care if we have to sell the house and spend the whole retirement account, we're gonna pay for them to go to Harvard. Now the other [00:02:00] spouse may not feel the same way.

I had a very interesting experience years ago. A young couple came to me to talk about planning, financial planning for their young family. In fact, she was very pregnant at the time and I said, you might consider a 5 2 9 for college savings. And he looked at me and he said, oh no. If my kid can't figure out how to pay for college on his own, then he shouldn't go.

And I looked at her face, and you might imagine she clearly had a very different feeling about that and a strong feeling about that. And they had obviously not discussed it. And it was probably not the time to discuss at that moment, but it was just such a stark reminder that we need to talk about these things before we're faced with them.

Probably not before the baby's born necessarily, but certainly with your advisor. How is that going to work for both of you? Come up with a plan, because financial stress is one of the biggest causes of divorce. I see it all the time, so that's one of the inflection points. Another is retirement. [00:03:00] A lot of people think, oh yay, you're retiring.

It's the best time. Not always. There's often a lot of fear and anxiety. I have a couple of business owners, husband and wife and one of them is ready to retire yesterday and the other one's kind of hanging on because they're afraid of, what does that mean? What is my Monday gonna look like? They're afraid of lo losing their purpose and their reason for getting up in the morning, even if they have the money.

Then there's also the feeling of starting to spend. We spend our whole lives. Saving money and now you're going to have to turn on that spigot and start to drain some of those accounts. it's very scary and some spouses say, no, I'm gonna work till I'm gone and die at my desk. And the other one says, but we wanna travel and we wanna spend time with our grandkids.

What's the point of retiring if we don't do those things? So it causes a stress about how are you managing your spending and how are you managing your financial planning? The other one can be an inheritance when one spouse [00:04:00] inherits money. As we're seeing a great transference of wealth from one generation to the other, all of a sudden a spouse inherits money.

How do they feel about that? Is that money that is gonna go to the community? Or maybe they wanna keep it so that when they pass it just goes to their children and maybe not their spouse and their potential new spouse. So that's something we can handle with an estate plan. But it's really about having these conversations early on when I work with couples so that they get on the same page, because I find that one will say, oh, she's too conservative, or he's too aggressive.

but when we dig a little bit as to where is that. Coming from, I find we also often end up on some common ground that we can move forward, and then we work on the nu nuts and bolts of the financial plan. So we work through the emotional side, but then we talk about things like social security planning, again, up updating an estate plan, long-term care, all of those different aspects.

And what can [00:05:00] retirement look like for them, where they're both happy. And when I have a couple where one party wants nothing to do with the money, and the other one is in charge of it, we also need to talk about that and educating that partner because if the other spouse passes away, that's gonna be left on often the widow who is now faced with making very difficult decisions during a really difficult time.

So it's helpful for both of them to have some handle on what's going on, some agreement on what they see the future. So financial planning for married couples doesn't sound too exciting, but believe me, there's such value in it in keeping you out of the other side of my practice and the divorce financial planning, you owe it to your family and the next generations as well.