Struggling with financial dynamics in your relationship? You’re not alone. Melissa Joy delves into the power balance in marriage and money and explores how this affects all partnerships, offering valuable tips for combining finances, open communication, and shared planning. No matter the stage of your relationship, this conversation is for you.
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Links are being provided for information purposes only. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Pearl Planning cannot guarantee that the information herein is accurate, complete, or timely. Pearl Planning makes no warranties with regard to such information or results obtained by its use and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation. Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. Pearl Planning financial advisors do not render advice on tax matters. You should discuss any tax matters with the appropriate professional.
Data Sources: Capital Group, RIMES, Standard & Poor's.
Struggling with financial dynamics in your relationship? You’re not alone. Melissa Joy delves into the power balance in marriage and money and explores how this affects all partnerships, offering valuable tips for combining finances, open communication, and shared planning. No matter the stage of your relationship, this conversation is for you.
Listen and Learn:
Resources:
Links are being provided for information purposes only. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Pearl Planning cannot guarantee that the information herein is accurate, complete, or timely. Pearl Planning makes no warranties with regard to such information or results obtained by its use and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation. Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. Pearl Planning financial advisors do not render advice on tax matters. You should discuss any tax matters with the appropriate professional.
Data Sources: Capital Group, RIMES, Standard & Poor's.
Welcome to the Women's Money Wisdom Podcast. I'm Melissa Joy, a Certified Financial Planner and the Founder of Pearl Planning. My goal is to help you streamline and organize your finances, navigate big money decisions with confidence and be strategic in order to grow your wealth. As a woman, you work hard for your money and I'm here to help you make the most of it. Now let's get into the show. Hi everybody, welcome back to the podcast.
Melissa Joy:I am excited to be talking about this topic, even though when you hear the topic, you may think, oh gosh, this is just hard and difficult and I don't know if I want to go there. Today I am talking about, even in the power scales, on marriage and money. This is a topic that I hear about often when people reach out to me, because so many times people start working with me. It's the female in the relationship often in a heterosexual relationship who calls and says hey, I want to talk to you, I want to work with you, and my husband and I have been talking about this, but I feel like I don't have the right information about our finances or money and perhaps you would be able to help me understand more, educate myself as well. So I had one of those calls this week and it made me think, gosh. It would be so good to talk about how marriages work in partnerships, whether you're married or not, and how you can address differences in terms of information and control when it comes to finances. I'm generalizing, saying women come to me about this, but I feel like more and more there's just one member of the relationship who flexes their money muscles a little bit more or has traditionally had more control over finances. Sometimes it can also be the male or in a same-sex relationship. One or the other person feels a little more confident with money or has had better success when it comes to money decisions, and that may create a dynamic where one person is seen as the good money person and another is seen as either the person who is not acting when it comes to money, or is out of the money decision-making realm, or just doesn't know, or they've made bad decisions, and thus they are always identified as the person who made mistakes. So I think it's really healthy to have these types of discussions and I'm coming from a financial practitioner perspective, telling you a little bit anecdotally of what I've seen, as well as some statistical information but this has so much to do with relationship dynamics. It has to do with psychology and can be really powerful to kind of setting the skills right and helping you to feel when there can be more trust and balance in this area of marriage, then it can really help the whole entire relationship.
Melissa Joy:In fact, I'm going to include links to show notes, but sources say that relationship conflict is most prevalent when it comes to money. This is the biggest source of conflict and it comes up more than 40% of the time in long-term relationships just conflict and disagreements when it comes to money. So I thought it might make sense I'm going to include links to research from Pew Research that goes over social trends and talks about different dynamics in marriage when it comes to finances and money. And the first thing I'm going to start with is the five basic types of marriage when it comes to who makes the money, and you can think of this as kind of a rainbow or a scale which goes from one end of the spectrum to the other, going from the first group being the wife being the sole breadwinner, to the wife or spouse and this is for traditional marriages being the primary breadwinner and then an egalitarian marriage, and then husband being primary breadwinner and then husband being sole breadwinner, and just think of those dynamics. The same in a relationship, a same-sex relationship or a partnership. That's not a marriage, I mean. It just depends whether everybody kind of makes the same amount or whether there are differences, and oftentimes there's a switch during the relationship. So over many years one person may have made more money at one point in time and then it kind of transitions to differences over time.
Melissa Joy:So, based on these groups, some interesting stats. In male female relationships, only about 6% of marriages have females being the soul breadwinner, although that is growing. And sometimes there are people where the husband in the relationship is not working More than in relationships where the wife is a primary breadwinner. This is identified as the female spouse earning more than 60% of combined earnings in a relationship but the husband having earnings. Statistically, when you have an egalitarian marriage where it's about 50-50 in terms of between 40 and 60% of each having earnings, still the female in the relationship is tending to do more activities and work in the household, while the husband tends to have more leisure activities. And then also in situations where the husband is a soul breadwinner, that's just a fewer and fewer. It was 49% of the population of married couples in the 1970s and it's gone down to 23% today. So there can be I think these statistics show that me saying.
Melissa Joy:I get conversations from women reaching out who say they have less information. It may start from just the power dynamics that you were raised with and then also kind of initiated upon marriage. Women tend to have more gaps in employment for having children and taking care of family. But we also know that there are certain sources of a conflict and I think diving into some of those sources would be additionally helpful in thinking about where that conflict comes up and maybe you could just like be listening to hear even if it's unspoken or unacknowledged or under the surface some of the situations where you may feel either discomfort or conflict.
Melissa Joy:One of them is just distrust, like if you are in a relationship where your spouse has made financial decisions that impacted you negatively, that you were not aware of or you were not a participant in the decision. That can lead to longer term distrust, where you just feel hurt by that action in the past and you're just not sure if it's going to come up again, whether it was unacknowledged debt that you jointly need to pay off or a gap in employment that you were not aware of. These can really hit hard and hit home in a way where even after the initial action has been mitigated or addressed, then you have a longer term lack of trust that may not kind of permeate into the rest of relationship. You may feel trustful in other aspects of the relationship, but this is just lingering and can be very difficult. Also, there could be a power imbalance where, whether or not you are making similar amounts of money, one of you is kind of making money decisions while the other is not in the room for those decisions, and that might be a preference.
Melissa Joy:You know, in many relationships, whether it's the male or the female, there's one person who really, like you know, either was raised with the money conversations in the household or has gotten themselves a little bit more up to speed than the other member of the relationship, and so then habits were formed where they handled quote unquote, either the taxes, the investments etc. But then it can start to feel like a power imbalance over time, especially as you either have goals or you just feel uneducated with that, you have less information and you don't even know where to start. If you're the person who has less power in the relationship. There can also be just like discomfort, disease and disease and stress.
Melissa Joy:Just because there's not high functioning kind of communication going on when it comes to money and things are happening in a more reactive than proactive and planned way, you may not feel that your finances are organized, you may feel that things are being put off and you're not rolling up your sleeves and getting jobs done. But you don't have the capability of figuring that out on your own. You know kind of DIY strategies aren't necessarily helping, or people. You know each member of the partnership is on a different page and some of you may just value different things. You know one of you really wants to be a saver and the other wants to reward yourself for the money that you're making and spend a little more. I find that to be very typical. Not the worst thing to have one person a little more austere and one person a little more spendy, but you've got to have good communication skills to get things you know kind of better organized. And so all of these kind of sources of conflict can show themselves both in a financial planning relationship, especially at initial stages, as well as just like be a lingering source of discontent in a relationship and if you leave it unaddressed, it can lead to more challenges, whether it's just relationship difficulty or divorce. In fact, I'm going to also include links to an article that indicate that typically when couples some research says that when couples merge their finances they may be happier, which is interesting, and I'm not someone who says, hey, every dollar needs to go into the same pot and then you guys need to collectively make decisions. I hope you don't hear that.
Melissa Joy:I wanted to mention some strategies today that I thought could be useful for people. These are strategies that I often utilize when I work with people in a financial planning engagement, and, of course, I'm coming to you speaking as a certified financial planner or practitioner, and so I have a bias that you know. These types of methods are my tried and true methods and so they're what often work for people. But I think that some of these can be kind of self-administered and you can think about them and say, oh, I think I'd like to do that, and others may need to be, you know, kind of set aside time and working with a professional, and it may depend on the family in terms of what's a better fit. But let me give you five kind of tips for success and strategies for feeling like you're combining money and, like I said, this isn't just take every single dollar and put it into the exact same pot. I really feel like a combined conversation, a really adult conversation, and plan when it comes to your money decisions is a combination.
Melissa Joy:If you are planning together for goals, then to me that is a coordinated approach to handling your money and oftentimes can get to some of these challenges, at least get them above, you know, out from under the surface. So the number one thing I think you could do is organize all of your accounts so everyone understands what you have, and that goes for your assets and your liabilities, and you know, some of us may take this for granted if this is information that you already have. But just get started by making a list of all of your accounts, and we have, you know, talked about what a net worth statement might look like. But you could start with all of your bank accounts, because I wouldn't be surprised if most of us listening if you're in a relationship, have a list of accounts that you have and a list of accounts that your partner has, as well as combined accounts, and so list all those out first your bank accounts, any investment accounts that you have. You could list those as well. Also, retirement accounts are another batch that probably are for many of you, or most of you are for a collective goal. If you have any education accounts that you're saving and or family members have education accounts sometimes, whether it's grandparents or aunts or uncles, talk about those.
Melissa Joy:List your real estate, any business assets. Now, this is a big one, because I find that sometimes one person in the family is a business owner and the other family member has no idea whether how the business is doing. They may even have exposure to risks or the business might not be doing well and they're not aware. Make sure you're listing those business assets as well. Then also list out any debt, so your mortgage, any credit cards, student loans. Of course, credit cards are certainly a source of conflict as well.
Melissa Joy:So make a list of everything. Organize it up. You could have a column for yours, you could have a column for theirs, but then tally it up. This is so good because I mean so many times just one of you has the logins, or one of you you know there's a disparity in income, or one of you is doing more of the saving and you guys are spending out of someone else's account, and if you're not going in a meeting with a financial planner not just an investment advisor, but somebody who's looking at your whole financial life or you're not logging into like a quick in or something like that where you're keeping track yourself, you may have no idea, you may think your spouse knows and they don't, but you've got every single penny and dime you know kind of accounted for.
Melissa Joy:So organizing everything and then talking about what you've got is just such a good place to start and it may sound basic to some of you but for others you may be like not even being like that's all I need, like I just want that and that is reasonable to ask for in almost every case that I can think of in a relationship where you kind of have shared goals, you know you're living in the same home, you have shared needs, like do you get that information out in the open? You may be uncomfortable about sharing certain information. If you have an account that you haven't shared because it's an inherited account, it's separate assets, things like that, hey, that's okay. But you know, for the bulk of it, I would think in most situations if you're kind of planning lives together that you would be comfortable giving that sort of information. It's not handing the account over necessarily if it's in your own name, but it's just information sharing and it's a trust exercise to talk about, you know, kind of the current situation.
Melissa Joy:The second thing I would recommend and this can be difficult for some, but just I love to articulate what I would be going for is give space to each person in the relationship for them acknowledging where they're at. So talk about what your sources of either stress and frustration or pride and confidence are when it comes to money. And you may not be on the same pages with each other, so do know that you may have differences when it comes to that. That's not a problem at all. But getting it out in the open versus, you know, only bringing disappointments or stress up in situations where you are more oh how should I say it when you are more reactive because you're in an argument, can be a difficult time to do that. So set aside a coffee date or dinner date where you're going to get, you know, kind of talk about money. Or it may be appropriate, either in a counseling engagement or with a financial planner, to have that space to talk about your feelings about money.
Melissa Joy:The third suggestion I would have would be to work together on your collective goals. So you know, in many, if not most, cases you're going to have a shared pot of money and each of your financial circumstances are going to matter when it comes to retirement, educating your kids for college. If you're in a blended family, then even though you might not each have an obligation to pay for a kid's from a previous marriage or relationship, their school, it will impact your family's circumstances. So I encourage you to talk about those circumstances big home improvements, home purchases, plans to buy vehicles, etc. If you can work collectively and of course, you know again, I'm someone who's a financial planning practitioner, so that's what we do is plan for things like that and set goals and then hopefully work together to achieve them over time. But if you can have these conversations collectively versus perhaps one of you is really doing the work on planning for retirement, the other is like hoping they get that information, but there's not a good way to articulate it I strongly encourage you to talk about what is important to you.
Melissa Joy:You may not have the same list of things that are important, so if you struggle to kind of work to a place where you are trying to get on the same page and it's not working for you. Bringing in a professional can be a way to help, but do you spend the time and do the work to collectively share in those goals? I find that people who know their goals and are working toward them and if you're not sure how you're doing, of course, then you could work with a financial professional to kind of figure it out. Whether goals are achievable, is stress reducing can be a confidence building activity and just it's nice to know how you're doing and focusing on ways to improve. But if you don't get to the point where you define what's important to you for example, if one of you wants to retire early or something like that, is it even possible? If you don't get to that point of identifying the friction or the point or what you're working toward, then it's really difficult to collectively work on those shared goals.
Melissa Joy:My fourth strategy for combining finances is to leave some space for individual decisions. So, even though some people would suggest that you should just put everything together, I love the idea of autonomy when it comes to finances and money. I know that everybody doesn't share a brain. When it comes to a relationship, hopefully, you collectively appreciate each other's differences as well as the things that you have in common. So do you space to make individual decisions, and this could look like having an individual account or identifying the things that are more important to one of you versus the other and being comfortable in funding that hobby, especially once you find out when you're working on step three that collectively you're kind of on track for your goals. So there could be room for the things that are more important for each of you individually. So I hope you don't hear that I'm saying just do what you want to do and caution to the wind, don't talk to your partner. But I am all for autonomy and independence in a portion of your financial life, whether that's separate accounts for the money that you would prefer to have full control over with collective decisions, or just your personal preferences, and or just making space for the things that kind of make each of you tick individually, celebrating those differences and also honoring the differences of where are your strengths and weaknesses when it comes to your financial decisions. Maybe one of you is a really terrific saver and the other of you is kind of able to calm down when you're in a situation that feels more stressful Also, those can have value and it may be a different person who brings those strengths to the relationship.
Melissa Joy:And then number five on my strategies for successfully combining your finances and having better communication and skills is to celebrate wins. Communicate as effectively as you can, both about information and facts as well as feelings. So that celebration part, I think, is just so important because so much of the work that we do at Pearl Planning and I think a great financial planner would do is to honor and acknowledge when you've done a great job. And I often tell people when we're starting an engagement that part of my job will just be to tell you where you're doing well and then give you some ideas for opportunity. So so often when you're just like kind of stuck by yourself with your inner voice, even when you're in a relationship, you're like so focused on the negative of I should have, I could have, I need to be doing that I'm not yet that you end up with more of a scarcity mentality and more of a negative connotation when it comes to money conversation and by celebrating when you achieve something, whether it's paying off the mortgage or bumping up your 401k contribution or achieving a goal that you have had.
Melissa Joy:I think that celebration is very healthy and appropriate when it comes to money and it can help turn the tables where you don't just feel like a negative Nancy when it comes to your feelings about money and, with that, communicating together to say, hey, we're going to try to keep on the same page, we know what those wins are and we're going to reward each other for the hard work we're doing and we're not just going to think about information and facts although that was my number one thing is like organize the information of what your financial life looks like, but you're also going to acknowledge the feelings that come with money. That may have been, you know, rooted in your childhood, rooted in mistakes you made when you were younger, rooted in always being told you're good with money, whatever they may be. Acknowledge that money isn't just math. Money is all about feelings as well, and you can have a more mature kind of relationship with your partner, both on the dollars and cents as well as the feelings that are associated and emotions that are associated with those dollars and cents, if you can be working on those five things the organize, making space for both people working collectively but leaving space for individual decisions and then celebrating wins with effective communication. That I think you would be well on the way to a successful year and success over time.
Melissa Joy:When it comes with money, if you have feedback for us, if you're thinking about topics that you think we need to talk about, I would sure love to hear them. I appreciate the opportunity to talk about important topics like this. I appreciate those of you that share with us the things that make you tick and with that, have a great week. Let us know how it goes. Thank you for listening to the Women's Money Wisdom Podcast. If you found value in this episode, the best way you can support the podcast is to forward an episode to a friend or leave a review. Go to PearlPlan. com and the podcast link to get all the resources and links.