Monthly Investment Message: June 2015

Barbara O’Neill, Extension Specialist in Financial Resource Management

Rutgers Cooperative Extension

Eight Tips to Avoid Money Squabbles


June is a month when many weddings occur. Unfortunately, many marriages eventually end in divorce (see for a thorough discussion of the U.S. divorce rate). Money and lack of communication about money-related issues (e.g., spending, use of credit, and investing) are said to be among the leading causes of disagreement among spouses which can lead to subsequent uncoupling.


Want to avoid money squabbles with your spouse? Consider the following eight tips:


  • Determine What’s Important- Make a list of short- (less than 3 years), medium- (3 to 10 years), and long-term (10+ years) financial goals. Rank the goals in priority order and develop and implement an action plan to achieve them. A downloadable Financial Goal-Setting Worksheet from Rutgers Cooperative Extension is available at


  • Communicate Openly and Honestly- Learn as much as you can about your spouse’s “money life” to increase understanding and cooperation.  Regularly share your values and goals, financial hopes and fears, dollar amounts of income, assets, and debts, and credit reports and credit scores. Make sure that each spouse know the location of important financial papers and can access and manage financial accounts and pay bills. A downloadable worksheet that can be used to pull together important financial data is available at


  • Join and Separate- Keep money for emergencies, household expenses, and joint financial goals in joint checking and savings accounts to which both spouses have access. After that, each spouse should control some remaining income individually (e.g., separate bank accounts and credit cards) and be able to make “nag-free” purchases with their own money.


  • Pay Expenses Proportionately- Fund joint accounts for emergencies, household expenses, and savings for family goals proportionately to each spouse’s income. For example, if one spouse earns $40,000 and the other $20,000, the money set aside for expenses should be divided 2/3 and 1/3, respectively. Ditto for family vacations and other “big-ticket” items. To split expenses 50/50 when incomes are unequal will cause resentment by the lower-earning spouse with restricted cash flow.


  • Accumulate a Cash Reserve- Set aside at least three months expenses to handle life’s inevitable surprises. A six month reserve is even better, especially during tough economic times. An emergency fund reduces stress when “stuff” happens and builds a couple’s financial resilience. To assess your financial resiliency, take this quiz:


  • Make Individual Investment Decisions– It is not uncommon for spouses to have different temperaments when it comes to investing. One person may be very conservative in investment choices while the other wants to take greater risks. This is okay and, in fact, provides a measure of diversification. Even if risk tolerance levels are similar, it is wise to select different types of investments (e.g., one domestic mutual fund and one foreign mutual fund) in retirement savings plans than to duplicate each other’s selections.


  • Set a Dollar Decision Limit- Many couples who are successful financially avoid money squabbles by setting a certain spending limit (e.g., $500) above which they will discuss a pending purchase with their spouse. This policy fosters regular communication, increases a spouse’s “buy in” for their partner’s individual purchases, and reduces arguments about “big ticket” items.


  • Anticipate Interaction Effects- Couples need to anticipate how the income and assets of one spouse can affect the other spouse’s finances. Examples include the increased “marriage tax” paid by many 2-earner couples and a working spouse’s income resulting in taxes owed on a retired spouse’s Social Security benefit.


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