How High-Net Worth Couples Can Avoid Fighting Over Finances
Every couple argues over money at some point or other in their relationship. For high-net worth couples, an abundance of money creates opportunities, but it also creates additional potential for conflict over which opportunities to follow.
You should start off by acknowledging that no two people will have exactly the same views on how to spend and save their money. It’s a very common situation for couples to fight over money issues, particularly when significant topics and potential scenarios haven’t been discussed in the past. You need to respect one another’s opinions and, sometimes, will have to agree to disagree.
In fact, it’s almost better if you argue over money. Two married savers may never travel or take advantage of the opportunities that they have access to; while two devout spenders could potentially threaten their retirement plans.
That said, arguments over family finances are a leading indicator of divorce. The earlier you have these difficult conversations – and amicably resolve them – the better.
How to talk to your spouse about money
It’s unrealistic to expect most couples to initiate a conversation about their lifetime financial goals. It’s better to have an independent third-party be the catalyst for this discussion.
Preparing your financial plan with a wealth advisor is a great way to get the conversation started. You can jointly determine what your common goals are and use these as a basis for investment strategies and retirement plans.
Childhood origins for financial conflict
Many of our financial views are very deeply rooted. I typically ask my clients, “What’s your earliest financial memory?” Often, when one shares a significant early experience with money the spouse responds, “You never told me that.”
One client told me that when his family went bankrupt when he was a child, it fuelled his desire to make money and become a multi-millionaire. And he did.
Other times, childhood hardships can carry over into adulthood as a fear of never having enough money, even if the person has more than they could realistically spend in a lifetime.
It’s helpful to understand both spouse’s pre-conceived motivations when having these discussions.
How to handle finances in a marriage
One common spousal complaint it, “My husband controls all the money.” It may make sense to have a joint account for regular household expenses, but once those costs are covered, having separate accounts for discretionary spending is a great solution. For one, it avoids a repetitive variations on the “But you have 10 of those already. Why do you need another one?” conversation.
I’ve used the same approach for couples who have different tolerance levels for risk in their investment strategy. With one couple I work with the wife is very risk averse, while the husband is seeking higher returns by investing more in the stock market. We set them up with separate investment portfolios tailored to each person’s risk level.
Aside from overall investment strategy, there are a number of finance-related topics that can become flashpoints.
Children, and how much – or little – support to provide them is near the top of the list. One person who grew up in hardship may want to shower their children with gifts, while the other may take the “pull themselves up by the bootstraps” approach. Personally, I like Warren Buffet’s philosophy: “a very rich person should leave his kids enough to do anything, but not enough to do nothing.”
Charitable contributions are another area where it may be hard to find common ground. Just bear in mind that donations don’t have to be an all or nothing proposition. You can annually take the pot of money set aside for charity and divide it evenly among each spouse’s favourites, or perhaps one year the husband choose what to support, while the wife chooses the next year.
Financial discussions can be difficult, but avoiding tough conversations can have grave consequences for a relationship when couples are finally forced to face them.
On that note, I’d like to leave you with a bit of levity.
A man and woman were standing at the altar about to be married. The minister asked the bride, “Do you take this man for richer, for poorer, in sickness, and in health?”
The bride replied, “Yes, no, no, yes.”
At least she was upfront and honest about her financial goals.
All material has been prepared by Susan Latremoille. Susan is a Wealth Advisor at Richardson GMP Limited. The opinions expressed in this blog are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP or its affiliates. Richardson GMP Limited, Member Canadian Investor Protection Fund. Richardson is a trade-mark of James Richardson & Sons, Limited. GMP is a registered trade-mark of GMP Securities L.P. Both used under license by Richardson GMP Limited.