One of the most common problems married couples face is not managing their money
effectively. It’s not unusual for money problems to cause serious friction in a marriage
and sometimes even lead to divorce.
When married clients contact us, we stress the importance of both spouses being
involved in the financial planning process. Yet, on occasion, only one spouse shows up
at the first meeting and tells us the other spouse has no interest in being involved in
their finances. While this troubles us deeply, we try to make the best of the situation.
So why do both spouses need to be involved in a couple’s finances? And what roles
should they play?
At a minimum, both need to be involved because their future depends on it. A marriage
should be a partnership with both parties involved in setting goals, managing their
resources and monitoring their progress. When the first spouse passes on, it’s
extremely helpful for the survivor to be knowledgeable of their financial situation.
Unfortunately, it’s too often a case that a husband dies and his wife has no idea of their
financial affairs. It should also be noted that a significant percentage of marriages end
in divorce. If the wife is not financially savvy, it can add additional strain to an already
difficult situation.
Surveys by a variety of brokerage firms indicate that women often manage the
household budget, pay the bills and balance the checkbook. On the other hand, men
typically handle the investing. The surveys show that women are often less
knowledgeable of investing and tend to be more conservative than men. As a result, if
only one spouse is involved in managing the money, that spouse may be too
conservative or too aggressive with the couple’s investments.
While women often shy away from investing and lack confidence, it’s not unusual for
them to outperform men when they do get involved in investing. They tend to do more
research before investing and trade less often than men.
Clearly it’s dangerous to use survey results to make assumptions about the roles each
spouse should take in managing a couple’s money. You may decide to split the tasks
up between you and your spouse so that you can each maximize your individual
strengths. You may make a conscious decision to have one spouse do everything or
maybe you decide to trade off on the financial tasks every so often. There’s no one
best way to tackle the job.
Regardless of what you do, one thing is critical. You both need to be involved. You
need to both take part in meetings with your attorney, accountant, insurance agent and
financial advisor. You need to share in your goal setting, review financial statements
together, discuss the types of investments you will make, how much you will save, how
you’ll fund your children’s college education and so on. The more you are both involved
in your finances and manage them as a team, the better.
David C. Patterson, CFP® and Erin Patterson, CFP® are the owners of Patterson Advisors, LLC, a fee-
for-service-only financial advisory firm. Patterson Advisors, LLC is a Registered Investment Advisor,
registered with the State of Michigan, helping clients in Waterford, Clarkston and Royal Oak, Michigan
as well as other Oakland County, Michigan communities . Visit www.pattersonadvisorsllc.com for more
information or call 248-674-2108.
Published in the Oakland Insider, May, 2008
Who Should Manage the Money?
By David Patterson and Erin Preston (formerly Patterson)