Lack of communication surrounding finances is the leading cause of divorce and separation.
Disagreements around finances are often cited as one of the major reasons for divorce. Natalia Wilson, managing partner with Ain & Bank, a top national family law firm which oversees separation and divorces for some of the country’s top executives, celebrities, athletes and politicians, has witnessed thousands of cases. Wilson and her partners often observe many of the same issues leading to divorce with financial issues at the top. “So many people find it difficult to discuss money,” says Wilson. “And it can lead to a very painful and expensive divorce.”
“Often this is avoidable with good communication from the start. If couples were to approach the topic of money in the same way that they discuss religion, raising children and other critical topics before and during marriage, there would be many more happy marriages and fewer divorces,” adds Wilson. “I would be doing a lot more prenuptial agreements and a lot less divorces.”
Noting the uptick in prenuptial agreements with millennials and older GenZ couples, she shares, "These generations are better about planning ahead and prenuptial agreements are a good way to discuss finances, savings and spending habits, and to ensure both parties are on the same page and working as a team."
Based on her experiences, Wilson dives deeper on the topic for EBONY, providing some tips on how couples can navigate a discussion around money and increase their chances of a happy union.
Couples should discuss money habits before getting married.
They should ask each other: Are you a spender or a saver? Is my partner the same or the opposite? If he/she is the opposite, can I find common ground? Is the spender willing to regularly check in with the saver to make sure spending is not considered excessive by the saver?
The best way to appease both partners is to determine monthly income vs. expenses as well as debt (student loans, etc.) and investments, and decide together how to proceed. If income exceeds monthly bills and debt and investments are satisfied, there’s room for a special fund for spending (this may be a savings account for travel, household items, etc).
Make realistic budgets and agree on them.
If couples with varied spending habits can agree to monthly budgets and stick to them, it will be easier to maintain a peaceful household where money is not a difficult topic each month.
Decide who handles finances.
Decide upfront which partner is best to handle household finances. This does not mean that the other partner does not know what’s going on; it just means t that one person should make sure that the bills are paid and the bill pay account/ checkbook is balanced.
Have realistic rules.
No one wants to be controlled to the point that he/she can’t go out for lunch without the other partner’s permission or can’t make small purchases. Spouses who want to control how every dollar is spent are not OK. (This type of behavior is considered financial abuse). The other end of the spectrum are those who make large purchases without input from the other spouse. You have to decide where to draw the line. The rule may be that anything over $500 requires approval of both parties. You can set the number according to your income as a couple.
Talk about it.
Having a monthly check-in on bills, spending, savings and investments is a good idea. A regular check in will make last minute and surprise costs much easier to address, when necessary. Have a set monthly date for a finance check-in where you and your partner can discuss expenditures, savings, or anything you plan to purchase in the coming month. If expenditures are too high, discuss amending the budget. If there’s excess income, decide whether it goes to savings for expenditures or investment.
Work with an expert.
Hire a good financial planner that both partners agree on, who can explain the best path forward for investing, paying off debt, etc. Ask around for someone who has a great reputation, read reviews and call references. Then make sure you understand the approach and don’t just hand off your money.
Have a prenuptial agreement.
Wilson is a big proponent of prenuptial agreements. Even for couples who come to a marriage without any assets, a prenup is a smart move. This can be a jump start to broaching topics you should be talking about. When negotiating a prenuptial and postnuptial agreement you share financial information and it can eliminate some of the unknown and misconceptions about divorce and what your partner has or does not have because together you outline a roadmap in the event of divorce or separation. It’s better to negotiate with someone who is in love with you when things are good. Anyone who is already married could consider a post-nuptial agreement.
Ignore your neighbors, family and friends. Social media has become a negative catalyst for making some people feel like they have to keep up. Just because the neighbors bought an expensive boat or just enrolled all of their children in an expensive private school, doesn’t mean you have to. And don’t listen to investment advice that is not from professionals. You need to stick with the best path for your income and your household, not others.
Be sensitive if one partner is covering most of the financial obligations. Stop and think about what day of the month it is before discussing household finances. Try your best not to broach the topic when the household bills have just been paid. No matter how constructive you believe the conversation could be, if one person is covering everything or covering most financial obligations, one party may feel underappreciated and the other may feel that the other does not recognize their nonmonetary contributions. Emotions are raw at the first of the month.
