Please send help – my spouse is spending too much money!

So, your spouse has a spending problem…don’t worry, you’re not alone!

As a financial advisor, I see this issue arise all the time. It’s incredibly common and is one of the topics that most frequently causes issues in a partnership.

Story-time

I was married for almost 34 years. We didn’t fight often but, when we did, the topics of our biggest fights—in order of tears—were:

Money
In-laws
Kids

Allow me to explain, more or less in reverse order…starting with our KIDS!

Our fights over our kids generally dealt with either a) how they should be disciplined, or b) how much financial assistance we should provide.

I was always the bad cop who enforced strict guidelines regarding curfews, school work or ear piercings. If the kids had something big to ask, they spoke with their mother first. Fortunately, Mary was more reasonable and used her persuasion to soften my stance. So together, we managed to eventually agree on almost everything concerning our kids.

The one ongoing conflict would arise when Mary and I discussed whether the kids should use their own money when going out or when buying clothes, haircuts, and so on, or if we should fund them.

Knowing that I’m a financial advisor, I’m sure you know which side of this issue I took…

I argued that I learned valuable money and life lessons by working part-time and paying for my discretionary expenses and most of my university tuition. Mary argued that the kids had their whole lives to learn how to make a living and we didn’t need to rush the process. She believed that while our kids lived under our roof, it was our responsibility to provide the necessities.

Unfortunately, we never came to agreement on this issue. Maybe if Mary had lived longer and we eventually had grandchildren, we would have had a second chance of getting on the same page. I will never know.

The main arguments regarding in-laws (or as some jokingly say, out-laws) always started when one partner felt that the other’s family was interfering with home life.

At the beginning of our relationship, Mary and I would take our own parent’s position, and this naturally infuriated the other spouse. I’m not sure why we didn’t take our spouse’s position. Maybe we were too young and inexperienced to know the damage this approach can have on a relationship.

After a few years of struggling with this problem, we began hearing that some of our best friends were separating and divorcing. The news shocked us.

We had known many of these couples since high school and believed they had strong relationships. Obviously, we were mistaken. We never understood why our friends divorced, but it forced us to realize that we had to stop siding with our respective parents, regardless of the merits of their advice.

We worked hard on this issue and over time improved dramatically. But it was never completely resolved.

This is my counsel if you have grown children: Don’t give advice unless it’s asked for. And even then, tell your kids to discuss the issue with their spouse first. It’s okay if they take a different path in life from yours.

So now we arrived at the biggest topic that caused the biggest fights: MONEY.

I think Mary would agree with calling myself frugal and her spendthrift. I can laugh about these distinctions now, but for most of our married life, this difference was a constant sore point in our relationship.

Mary would buy things we needed, and I would buy things we could afford.

Here’s an example.

When the kids were young, they were involved in hockey, soccer, swimming, dance and other activities, and we often carpooled with other parents. When the time came for us to purchase a car, Mary correctly stated that we needed a safe and reliable vehicle, big enough to carry our three kids plus their friends and everyone’s equipment. I suggested we take a trip to our friendly Honda dealership and have a look around.

Almost immediately, Mary took a liking to the Honda Pilot (today’s approximate price is $55,000 before tax) and I took a liking to the Honda CRV (today’s approximate price is $35,000).

This was our classic stand off.

Of course, from our individual points of view, we were both correct. The Pilot had seven seats and ample trunk space for all our potential passengers. The CRV had less trunk and seating space but was within our budget.

Over the years, I have studied how people can view the same financial issue (and the same group of facts) and reach different conclusions. Our financial profile is partly shaped by the biases we have formed through our life experience, starting as a child.

In our case, I was born into a very modest family where money was a constant concern.

Mary was born into a family where her father owned multiple auto mechanic shops and money was more freely available. Mary was never spoiled, but she didn’t have to worry about the cost of a new pair of shoes.

I know my upbringing has contributed to my frugal attitude toward money and has motivated me to accumulate a significant investment portfolio to buffer against financial stress.

My childhood also influenced my risk tolerance: during market extremes, I am tempted to sell during a crisis (usually at the bottom) and buy during a bull phase (usually at the top).

My biases cause me to be the following type of investor: lower risk tolerance, overly conservative investment mix, high savings rate, large cash position, aversion to debt, delay of gratification.

Consequently, left to my personal biases, I can be overly conservative with my investments and lifestyle.

This attitude leads me to own investments that are too conservative for my age and to save more money in order to offset the low investment returns.

Mary’s upbringing contributed to an attitude of not being overly concerned about her investment portfolio or her spending pattern. She was more confident in her future and her earning abilities. Her biases may lead to a pattern of not saving and investing enough for retirement and taking a hands-off approach with her investment accounts.

I am not saying that our biases are good or bad. I’m saying that they shape how we view financial issues and that it’s important to understand how we are internally motivated to make decisions.

Back to the Honda example.

If I fail to appreciate my natural tendencies, I may simply postpone the purchase of a new vehicle (because of the budget concerns) and make do with the current situation.

Mary, on the other hand, would purchase the Honda Pilot and worry about the cost down the road. Both solutions could create long-term problems.

Researchers refer to the differences I have described as “Behavioural Finance.” This is the study of how our biases shape our decisions, and how we can learn to minimize them to make better decisions.

So it’s no big surprise that Mary spent more money than I did and that this caused friction in our marriage. Yet the research tells us that the conflict should have been expected and that we should have addressed our behaviour with less emotion, preferably before we were married.

My overall point is that money is often the number one issue affecting spouses, and also that the difference in view stems from their individual biases which are shaped by experience, especially the childhood years.

I now include behavioural finance questions in all new client engagements and with existing files.

I ask couples:

How was money treated when you were a child?
Did you work during school years, and what did you do with the money?
What’s your philosophy about money?

Are spouses doomed to argue and be manipulated by their biases into making harmful decisions? Absolutely not.

The solution is to take the time to uncover your biases around money, understand what they mean and how they impact you, and work on improving your communication and decision-making process.

If you find yourselves arguing over money, we can help. Give us a call.

Never Retire Profile

John Grisham

You’ve either read a John Grisham novel or seen at least one of the film adaptations, likely The Firm, The Client, The Pelican Brief, The Rainmaker, or A Time to Kill. Grisham is one of those people who made an abrupt career change midlife, in his case from practicing lawyer and member of the Mississippi House of Representatives to best-selling author (though he would have been a baseball player if he followed his childhood dream). Like many writers, Grisham’s first book (A Time to Kill) was not a success. It was his second, The Firm, that got noticed and began his streak of having a top-10 selling novel every year for two decades following its release. His most recent novel, A Time for Mercy, is his third story involving the characters from A Time to Kill. Just published this month, Grisham is now on to his next book, while he continues his work with the Innocence Project, a not-for-profit committed to using DNA evidence to free those who have been wrongfully convicted of crimes.

The process of finding a financial advisor can be overwhelming. It is our job to make that process simpler and easier. Dri Financial Group’s proprietary Wealth Navigator Process is designed with you in mind. Its structured framework helps you make an informed decision and feel confident in our team and management practices before we get started.

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