Why You and Your Partner Need to Talk about Finances

Like many other partnerships, spouses frequently divide responsibilities between each other to maximize time and efficiency.  Perhaps one spouse handles the grocery shopping and school pick-ups, while the other is responsible for paying the bills and managing household finances.  Although this “divide and conquer” approach provides a solution for tackling a never-ending “to do” list, it also may create significant and long-lasting consequences when only one spouse handles the couple’s finances.

This article discusses three reasons spouses should regularly discuss their finances, regardless of who is actually paying the bills, and how to incorporate money discussions into the marriage.

1.  Preparing for the Unexpected

Few things in life are certain, a fact made abundantly clear by the COVID-19 pandemic.  Sudden joblessness, illness, injury, or the death of a spouse can turn life as you know it upside down.  The sudden loss of income can create an enormous financial burden for most families, who depend on their wages to meet their financial obligations.

In a situation where one spouse is incapacitated or deceased, the well spouse may be unable to access bank accounts and the funds contained in them.  While a lack of access could result from the well spouse not knowing where the money is kept, far more commonly, it results from the accounts being kept in only one spouse’s name.  Banks care about whose name is on the account, or whether there is paperwork on file granting access to someone if the account holder passes away or becomes incapacitated.  In this scenario, the well spouse may need additional paperwork, or perhaps a court order to gain access to the account.  This can be costly, both in time and money.  

Spouses who communicate about finances, and ensure both people know about the accounts and can access funds, are able to minimize, and even eliminate, some of the harsh consequences that occur when life inevitably throws a curveball.

2.  Reducing Conflict

Whether planning for retirement, saving to buy a house, or squirreling money away for your child’s college tuition, communicating with your spouse about finances will help both of you.  Disagreements over finances continue to be a leading cause of divorce.  Reaching agreements and setting clearly defined expectations on topics such as spending habits and tackling debt, may help achieve your financial goals, and put an end to potentially marriage-ending arguments over money.

3.  Divorce

Unfortunately, not all marriages end in happily ever after.  Many end in divorce. California is a community property state, which means, generally, each spouse is entitled to one-half of the property acquired during the marriage, regardless of who acquired it.  The property, and debts acquired during the marriage, are called the community estate.

Determining what the community estate consists of, and what each spouse is entitled to at divorce, is difficult for a spouse who takes a hands-off approach to finances during marriage.  Because that spouse has no reference point, the knowledgeable spouse could be less than forthcoming when the time comes to disclose the location and values of assets (or the extent of any liabilities).  Having an attorney will help you in these situations, but having a clear picture of the marital finances from the outset places your attorney in the best position to advocate for an equal and fair division of property.

During a contentious divorce, mistrust takes hold and communication becomes strained.  This makes it critical to have regular conversations about finances during marriage.

Talking about money can be uncomfortable, especially in the beginning.  Try the following:

Reframe the way you view the subject

Admittedly, reviewing bank statements and exchanging budget ideas is not romantic.  However, clear communication is the foundation of any good team, and marriage requires teamwork.  Additionally, having a plan in place to deal with finances in cases where life takes an unexpected turn is no different than planning for any other emergency, like a fire or earthquake.  The purpose is to protect each other’s safety and well-being.  When you treat money discussions as a way to care for the person you love, it becomes clear why it should be a priority.

Ensure both spouses can access important financial information

Information related to all financial accounts, including passwords for online banking, should be shared and regularly updated.  Keeping a spreadsheet that both spouses have access to is a great way to accomplish this goal.  Additionally, make sure the bank has any necessary paperwork on file for any accounts that are not joint, granting the other spouse access in the event of death or incapacity.

Schedule it

Carving out dedicated time to talk about finances allows spouses to provide each other with important updates and to make adjustments when needed or when circumstances change.  Another benefit of scheduling financial conversations is that people become comfortable engaging in activities they have previously performed.  The more regularly you have these conversations, the easier they become.

The bottom line is money matters in a marriage.  Talking about finances does not mean spouses cannot divvy up tasks, it means transforming an often feared and avoided topic of conversation into just another conversation, as a way of saying “I love you.”