Coupling Finances: The First 'I Do' For Newlyweds?
MICHEL MARTIN, HOST:
Now we turn to wedding season here at home. And if you're married, you know this. After the toasts are all made and the cake is all eaten up comes the real stuff. We thought that newlyweds could use some help coupling their finances. Experts in both finance and relationships say that a big hurdle couples should cross together is managing their money. And they say frank conversations are a good place to start. Here to give us some advice on that is one of our money coaches, Louis Barajas. Also joining us is Joan Atwood. She's a professor of marriage and family therapy at Hofstra University in New York. And she counsels couples in her own private practice. Thank you both so much for joining us.
LOUIS BARAJAS: My pleasure.
JOAN ATWOOD: Thank you.
MARTIN: So let me start by asking you this, Professor Atwood. People say that money is one of the top two things that couples tend to have disagreements about. Is that true? Have you found that to be the case in your practice?
ATWOOD: Yes, I have. I would say it's probably the last taboo. Couples have a very hard time talking about money. And they can get into big trouble in terms of arguments and deciding how to separate money or how to pull it. So I would say definitely. It's one of the top, top arguments.
MARTIN: And why is that? You use the word taboo. Is it because it's one of those things that people tend not to talk about, or they didn't talk about it growing up? Why is it such a - sort of a third rail issue in relationships?
ATWOOD: Well, both of those reasons. And women also - women - at this point they're a little bit more interested in money than, maybe, 50 years ago or even 25 years ago. But they're not that interested in money. They're more interested in relationships. And so they sort of pooh-pooh it. They want to spend it, but they don't want to deal with how to get it, and how to put it together and how to separate it in terms of the couple themselves.
MARTIN: Louis Barajas, what do you find in this area? When you've worked with couples, what have you found to be the tripwires that are tripping them up?
BARAJAS: Well, recently, what I've found is that I'm attracting more women that are making more money than ever and marrying men who are making less money than they are. And so prior money beliefs, experiences, are really playing a factor in how they're managing money together - a lot of emotional issues behind money.
MARTIN: These days, a lot of couples have lived together before they've gotten married. Does that offer any advantage? Or if you didn't live together - whether you did or not, how should you start this whole conversation off?
ATWOOD: Well, it's interesting. I think that couples who live together, first of all, have worked out some of the issues. In terms of how the conversation should start - it should start by, first of all, not discussing it in an argument so that once the adrenaline starts going, the conversation is not going to be very productive. So they need to sort of make a time when they could sit down and talk about how they want to deal with money. Newlyweds generally pull money if they're young. They tend to pull money. The other way they deal with it is they will - he'll pay his bills. She'll pay her bills. And then they have our bills, or they will have certain house bills that one will pay and certain house bills that the other will pay. And they don't really have a joint account unless it's for something like vacations, or they're saving for a new car, or - what I found, in terms of who makes more money, is I found older women, more so than ever before - older women making more money than the men. And sometimes that's an issue, and sometimes it isn't.
MARTIN: Louis Barajas, how do you recommend that people get started with the money conversation?
BARAJAS: I think that the most ideal thing to do is really to sit down and talk about how they want to handle money as a couple and look towards a future because it becomes...As a financial planner working with couples, it becomes extremely difficult and ineffective when you're managing two separate households with, you know - everybody's got their own checking account. They're not putting money together. They're paying bills disproportionately. They don't have a plan. So they need to sit down and create a plan of action as how are they going to be handling money in the future and also discussing prior life experiences because a lot of women and men will tell me stories about how money was handled in their parents household and how money was used as an issue of control. That's why sometimes I see that there's - there are more issues of control when they're handling money apart.
MARTIN: You know, I was going to ask you about that, Louis, 'cause not all newlyweds are getting married for the first time. I mean, you can see where a person was older and used running his or her own household or perhaps was coming out of a prior, long-term, committed relationship and might have some issues around feeling taken advantage of financially. Or, you know, just used to running...
BARAJAS: Trust issues.
MARTIN: Trust issues or just running stuff their own way. How do you recommend a reset? How would you - how would you manage something like that?
BARAJAS: Well, I'd go back and - it's having some shared goals and shared vision. If you're going to get together with somebody and you're going to create a marriage or relationship with someone, you have to sit down and talk about what are the most important, life-defining moments that you will have as a couple? If retirement is one of them, then you need to work together. If raising children is another, you need to work together. And what happens when somebody's making a lot more money and all of a sudden they get injured, they get hurt, or they decide to stay home with the children, and all of a sudden they're not making money? And they used that money to control the spouse in the first place. So there's a lot of twists and turns in a relationship when somebody's together for a long time. So you have to be cognizant that, you know, you just can't just stick to one rule. You have to be flexible.
MARTIN: If you're just joining us, we are talking about blending your money. It's the wedding season, and we thought that it would be a good idea to bring together both a financial advisor and a couples counselor to talk about the best ways that marrying couples can blend their finances. I'm speaking with Professor Joan Atwood. She's a therapist and professor at Hofstra University. And Louis Barajas, he's an author and personal finance counselor - one of our regular money coach contributors. So I wanted to ask each of you this question. For some people this is a really hot button issue - separate accounts or joint accounts? Professor Atwood, what do you say about that?
MARTIN: OK. How does that work?
ATWOOD: His account, and her account and then a pooled account with shared goals. I think that that seems - at least in my experience - that seems to work well for couples. And again, it depends on - is it a blended family? - how old they are, how much money we're talking about, who makes more, who makes less. So I think there are a lot of other variables that need to be taken into account. But that's what I've seen working the best.
MARTIN: Louis Barajas, what about you?
BARAJAS: I'm going to tell you that I would prefer joint accounts. I've been doing this for almost 30 years, and I've seen what works and what doesn't work. And joint accounts seem to work. Now, with that intended, there are people who also receive inheritances. And they need to keep their assets separate. And so they should have separate accounts in - from that regard. But if it's a couple working together, ideally, joint accounts works the best.
MARTIN: And the final question I have - it's a kind of a bummer to end on this. But I'll do it anyway. I've heard the term financial infidelity used. Professor Atwood, is that a term that you use? What does that mean? And how should one avoid that?
ATWOOD: I don't - it's a secret. It's basically keeping a secret about finances in the family or in the couple. And it's not a good idea. It's women saving money to, you know - on the side, so to speak - or even buying things and hiding those purchases from their husband and vice versa. It works both ways. And I think it's very problematic for a relationship. It's like any other secret. It's not good.
MARTIN: Louis Barajas, what about you? Have you used that term in your practice? And what do you say about that?
BARAJAS: I have, you know. And I always go back to the number one issue or value in a marriage should be trust. And when you're having money infidelity or any other type of infidelity, you're breaking that bond. You're breaking that trust. And usually somebody is hiding something. And they'll have a separate account. And they never want the other person to see what's being spent. And when you've got those kind of issues, you've got other issues in the marriage as well.
MARTIN: Final thought - can I just get a final word of wisdom from each of you? Louis, why don't you start?
BARAJAS: Wow, this is going to be - sound harsh, Michel. But honestly, if you're going into a marriage where you really don't trust the other person with their money, I would think twice about getting married. The other thing is that if everything's open and shared, and even if you have separate accounts, then that's a wonderful way to start a relationship.
MARTIN: OK. Professor Atwood, what about you? I do want to note that you have surveyed, as well as seen, hundreds of couples and their behavior and their attitudes around money - if you could give us one kind of bit of word of wisdom from all that work and research that you've done.
ATWOOD: Well, I'll say communication. And it's a broad term, but there are very specific communication techniques which will keep couples out of trouble, not only with money but in other areas as well. Openness is key. Putting everything on the table is absolutely important. And the trust factor is also important.
MARTIN: Joan Atwood is a therapist, and she's a professor at Hofstra University. She was kind enough to join us from Old Westbury in New York. Louis Barajas is an author and personal finance counselor. He joined us from Irvine, California. Thank you both so much for joining us.
ATWOOD: Thank you.
BARAJAS: Thank you, Michel. Transcript provided by NPR, Copyright NPR.