Sunday, February 24, 2008

Couples and Money: Don't Ask, Don't Tell vs. Complete Disclosure

It's no secret that each member for a couple often thinks his/her partner's spending habits are cuckoo. And the partner usually returns the favor. Financial columnists' personal stories are no exception, as M.P. Dunleavey highlighted in Basic Instincts in yesterday's NYTimes. She relates that her husband hit the roof when he learned how much she had spent on a gift for one of her relatives. It wasn't clear if he would have been so out of joint if she had spent it on herself, but it did point to a sticky point in relationships: how much financial autonomy, and are the parameters different for varying categories of spending?
This brought to mind a 2007 New York Times story which really grossed me out, reporting on affluent women who buy luxury items with cash so their husbands, who would disapprove, won't know. The idea of people spending $2000 on pocketbooks and lingerie riled my inner-Puritan and it suggested cash-only fraud. But more because deception of this nature in a relationship reflects badly on both partners: husbands who seem cheap, at least by their wives' reckoning, and wives who seem ridiculously self-indulgent to their high-earning husbands, with neither being able to take responsibility for these stances.
One way of handling this age-old conflict is to agree on the discretionary amount that one does not need to account for. My husband and I set that amount at $100 after just such a fight. [I had bought myself a necklace, and while had he been with me, I'm sure he would have been happy for me to buy it, he thought it was high-handed of me to make the decision independently. I never, ever wear that piece of jewelry - the spat totally tainted it....] Eventually we raised the amount to $200. If I want to spend more than that on an item, I just tell him. I don't recall his ever questioning the purchase, since we have built up a lot of mutual trust and this amount is a trivial percentage of our assets, but still, it is common courtesy. We were very young when we married, so we've had a lot of time to work this out. This strategy also applies to charitable contributions, though the ceiling is more like $50.
Couples who marry when they are older and accustomed to financial independence may opt to budget individual discretionary funds. That way trade offs are fairly allocated. He wants cable, she wants theater tickets with friends. For some, knowing they have funds that they don't need to account for can offset the stress of clashing values. This approach assumes, of course, that the couple is in a healthy financial state and are not living beyond their means. I do think that the amounts should be equal, even if their earnings are not.
How do you and your partner handle this potential land mine?

(Illustration by Robert Neubecker for The Washington Post)


Jacob said...

Not completely optimally. We split the income, but some things like cable and the car are common expenses even though we disagree on whether we should have them. Before we got married we did not have cable and DW had her own car. Since I eat more I paid 2/3s or the food and so on.

The thing that bothers me is that I save a lot more and that I an financially about 10-15 years ahead of DW. Down the line this could mean that there are things we can't do because she's still paying for past and present consumption and saving for retirement.

Anonymous said...

Whatever you work out together, open and honest communication is what's really important. Everyone's situation will be at least slightly different but if you're honest and open with each other things will generally work out.

Sam said...

We're on the same page completely and we're both I can't recall a time when we argued over money (been together for 8 years).

Until very recently we kept our finances separate and split everything 50-50 (I have dumped guys when I was dating who refused to go dutch). But we weren't strict about the rule...occasionally I would buy something and have husband not pay and vice versa. There have been things that was mine (a mailbox or a cell phone) and I paid for it completely without input. We generally talk about every single purchase so I suppose our thresh hold is $0.01. We're pretty good about talking each other out of something extravagant and unnecessary.

My mother used to hide purchases from my father and I thought it was in poor taste. I can't imagine doing that to my husband...I mean every single cent has been planned for so I think its silly to hide. I guess having the same goals and view points do play a huge part in how we deal with our finances.

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Anonymous said...

We've only been married for 6 months, so am I even allowed to speak yet? :)

Although our budget is really tight and we really don't buy new things, one thing we do is budget for fun that can be used for whatever we want. We actually take that money out of our account at the first of the month, and then when it's gone, we have to consult and find if there's a place in our budget for an additional purchase.

This also includes eating out at lunch, beer (which she doesn't drink and shouldn't have to pay for!), new shoes, or anything we spend on ourselves. Anyone else do something like this? It wasn't our idea by any means, but it works well so far (all 6 months!). :)


Anonymous said...

We've been married 11 years and share all expenses, have just one account, etc. But we each get an "allowance" each month that we can spend any way we choose. Our friends find this amusing, but when I save mine to buy, say, a new piece of electronics and he spends his on basketball tickets, nobody gets upset. It works for us! No discussion, no guilt, no worrying about who gets more, etc.