Financial conflict among married couples especially those with high net worth is quite common in today’s society. In fact, money and financial conflict are the primary factors that lead to a divorce according to experts. 

Couples should make monetary issues clear before marriage. Even if you have decided upon a prenuptial agreement, there is no guarantee that you will be free from financial conflicts.

But is the lack of money the only reason for financial conflicts? Well not really.

Even high net-worth couples are not free from this problem. A high net worth individual earns an income of more than RM180,000 per annum or collectively has RM3million worth in assets. Most divorce lawyers would say that rich couples always have their own set of problems.

However, financial conflicts can be overcome if both parties are willing to work things out. This article takes a look into some of the ways in which financial conflicts can be minimized for high net worth couples.

• 5 Ways to Minimize Financial Conflict Between High Net Worth Couples
• What are Some Marriage Killing Issues?
• How can you Handle some of These Marriage Issues?
• What Changes when you get Married Financially?
• How do you deal with Money Problems in a Relationship?

5 Ways to Minimize Financial Conflict Between High Net Worth Couples

Having open communication

Communication is the foundation of every relationship. You should be open to the person you are willing to spend the rest of your life with. Once both of you are clear with each other’s view, it will become a lot easier to tackle financial conflicts and reach a compromise.

Read Also: How to Avoid Financial Nightmare during Divorce

Change your attitude towards money

If talking about money gives you negative feelings, try to find out the root cause. Could it be your past that is controlling your reaction towards money?

For instance, it might be because of something you learned as a child. Once you free yourself from all that negative energy, you will be able to make better and wiser financial decisions and solve any financial conflict.

Learn your partner’s spending habits

It is crucial to know your partner’s spending habit. Try to learn their reaction and attitude towards money. Put yourself in their shoes and try to understand him or her instead of criticizing.

Your partner might be investing in new businesses while you think of it as an overspending. Don’t assume the outcome, clarify and communicate. It might be a great prospect which is going to give high returns in the near future.

Keep personal expenses separate

Everyone has got their own personal expenses, and your partner may not want to share everything about their personal expenses. Keeping them separate will help you avoid financial conflict. With personal budgets, both of you can spend on whatever you want and wherever you want. 

But try to stick with a limit when spending and in case of important financial decisions don’t forget to get the consent of your better half.

Qualified financial professionals

In the case of financial conflicts, the involvement of the third party can come as a great help. Take the advice from trained professionals such as your financial planner or an accountant. They can help figure out better financial plans for you. 

Moreover, with the involvement of a third person, you will get an unbiased opinion. It will help you to make informed decisions instead of being influenced by emotions.

What are Some Marriage Killing Issues?

Arguments about money hamper many marriages. If you consider that about a third of adults with partners report that money is a big source of conflict in their relationships, it’s no wonder that financial problems are a leading cause of divorce.

What you may not know is that the challenges can actually start even before you say “I do.” So it will be easier to solve these issues if you know them.

To help pave the road to better marital finances and relationships, here’s an accounting of the most common financial issues married couples contend with.

1. Who Owns What?

Sometimes, when each spouse works and they can’t agree on financial issues or find the time to talk about them, they decide to split the bills down the middle or allocate them out in some other fair and equitable manner.

Once the bills are covered, each spouse can spend what they have left as they see fit. It sounds like a reasonable plan, but the process often builds resentment over the individual purchases made.

It also divides spending power, eliminating much of the financial value of marriage, as well as the ability to plan for long-term goals, such as buying a home or securing your retirement. And it can lead to such relationship-ruining behavior as financial infidelity, when one spouse hides money from the other.

Bill splitting also pushes down the road any planning and consensus-building about how financial burdens will be handled if one spouse loses a job; decides to cut back on hours or take a pay cut to try out a new career; leaves the workforce to raise children, go back to school, or care for a parent; or if there’s any other situation in which one partner may have to carry the other.

Couples owe it to themselves to have a conversation about such contingencies well before any of them happens.

2. Debt Issues

From school loans to car loans, credit cards to gambling habits, most people come to the altar with financial baggage. If one partner has more debt than the other—or if one partner is debt free—the sparks can start to fly when discussions about income, spending, and debt servicing come up.

People in such situations may take some solace in knowing that debts brought into a marriage stay with the person who incurred them and are not extended to a spouse.

It won’t hurt a credit rating, which is linked to Social Security numbers and tracked individually. That said, in most states (ones that operate under what is called common law) debts incurred after marriage (jointly) are owed by both spouses.

Debts incurred individually are still owed by the individual, with the exception of child care, housing, and food, which are all joint debt no matter what.

Note that there are nine states in which all property (and debts) are shared after marriage regardless of individual or joint account status. They are: Arizona, California, Nevada, Idaho, Washington, New Mexico, Texas, Louisiana, and Wisconsin.

In these states you are not liable for most of your spouse’s debt that was incurred before marriage, but any debt incurred after the wedding is automatically shared—even when applied for individually.

3. Personality

Personality can play a big role in discussions and habits about money. Even if both partners are debt free, the age-old conflict between spenders and savers can play out in multiple ways.

It is important to know what your money personality is, as well as that of your partner, and to discuss these differences openly.

Briefly, some people are natural savers who may be viewed as cheapskates and risk-averse, some are big spenders and like to make a statement, and others take pleasure in shopping and buying.

Others rack up debt—often mindlessly—while some are natural investors who delay satisfaction for future self-sufficiency. Many of us may display more than one of these characteristics at given times, but will usually revert to one main type.

Whichever profile you and your spouse most resemble, it’s best to recognize bad habits and address and moderate them.

4. Who Controls the Finance

Power plays often occur in one of these four scenarios: when one partner has a paid job and the other doesn’t; when both partners would like to be working but one is unemployed; when one spouse earns considerably more than the other; or when one partner comes from a family that has money and the other doesn’t.

When these situations are present, the money earner (or the one who makes or has the most money) often wants to dictate the couple’s spending priorities. Although there may be some rationale behind this idea, it is still important that both partners cooperate as a team.

Keep in mind that while a joint account offers greater transparency and access, it is not in itself a solution to an unbalanced power/money dynamic in a marriage.

5. Children

To have or not to have? That’s usually the first question. Nowadays, it costs $233,610, on average, to raise a child to age 18, according to the U.S. Department of Agriculture. (If projected inflation costs are factored in, the cost rises to $284,570.)

Food, clothing, shelter, little league, ballet, designer jeans, prom gowns, pickup trucks, and college are all part of a long list of child-related expenses. These don’t include expenses for offspring who have already left the nest. That’s assuming your kids will leave the nest. Some kids never do.

Of course, having kids isn’t just about the cost. If one partner cuts their hours, works from home, or leaves a career to raise children, couples should address how that changes marriage dynamics, assumptions about retirement, lifestyle, and more.

6. Extended Family

Co-managing finances and respecting the goals, needs, and expectations a spouse has regarding the extended family can be especially tricky.

Take, for example, her mom—she wants a vacation in Vegas. His parents need a new car. Her deadbeat brother can’t make the rent. His sister’s husband lost his job. Now one spouse is writing a check and the other wants to know why that money wasn’t used to address needs at home or fund a vacation for “us.”

This works the other way too. His mom will pay to fly him home for the holidays. Her mom will fund a new car since the one she’s driving is a Honda, not a Lexus.

Her mom buys the grandkids extravagant gifts and his mom can’t afford to match that kind of spending. The joys of a family often extend right into your wallet (pardon the sarcasm).

How can you Handle some of These Marriage Issues?

From what we have discussed so far, the best way to handle such marriage stressors is with communication and honesty in conveying expectations, hopes, goals, and anxieties.

Couples should also practice empathy, have the maturity to check their egos, and abandon any predilection for control. Yes, that’s a lot easier said than done. And, no, there is no silver bullet.

Some people may never get it right; that doesn’t mean they are bad or they can’t achieve some success by employing certain tools and techniques to address the symptoms.

Take care of debt

For many couples, dealing with debt is often the first issue on the agenda. Knowing what you’re about to get yourself into can help you decide how to deal with it.

Given this fact, both partners should have an honest, nonjudgmental discussion about possible bad spending or financial habits that should be addressed and avoided.

Couples should also perform an accounting of debts and apply one of the several common payoff strategies, such as paying off the higher-interest debt first or paying off the smallest loans first (a.k.a. the debt snowball method).

Sign a prenup (or postnup)

If you just can’t come to an agreement but your heart won’t let you walk away, a prenuptial agreement may be an option. Just be aware that one partner may find that prenup insulting.

The best practice would be to first have a conversation about the financial anxiety that makes one partner think a prenup is the best solution. If this is a second marriage for both partners, for example, they may have financial assets that they want to pass on to their respective children.

If you’ve already said “I do,” and you want more than vows to protect yourself, you may want to create a pain-free postnuptial agreement (or marital contract).

This marital contract can underline your love for each other, though it can be a hard sell and can wind up undermining marital trust if not used as intended or framed the right way.

Know your financial personality

Personality, as noted above, is another aspect of your relationship that will play a major role in your financial plans and your marital bliss or lack thereof.

Pay attention while you are dating, and be honest about who you are. Talking about your views and feelings can help put both partners at ease, or at least let them know what to expect.

Check your ego

The power play issue can get ugly quickly. Few things build resentment faster than being made to feel inferior. If you’ve got the cash, you need to be sensitive about how you present spending decisions.

If you don’t have the money, you need to be prepared for the stress and tension that are almost inevitable, even in good marriages. This subject comes up with increasing frequency when couples wait until later in life to marry.

Studies have shown that people with more power are more likely to act selfishly, impulsively, and aggressively, and approach others with less empathy.

Each partner in a marriage should ask themselves whether their behavior works toward the goal of a more kind, appreciative, and equitable relationship or not.

One solution that has demonstrated success is for the higher-earning spouse to delegate all spending decisions to the lower-earning spouse. It takes a certain personality to be able to make the decision to give up power, but if you can do it, it may be a sound path to peace.

Address family matters

As Tolstoy wrote in “Anna Karenina,” “All happy families are alike; each unhappy family is unhappy in its own way.” Extended family can be a huge challenge and no single piece of advice will properly address every situation and the emotions inevitably attached to them.

Even if you are on the winning side of the argument, the loser can extract a penalty that outweighs the win. Living with a resentful, angry, frustrated spouse can be a miserable experience.

Having a policy agreed upon in advance (such as asking for consent) can help stave off trouble. And defaulting to being understanding will smooth over any small transgressions. Of course, the best policy is “never a borrower or a lender be.”

What Changes when you get Married Financially?

Marriage will affect every aspect of your financial lives. While it might not seem romantic to think about them this way, marriages are basically interpersonal business deals.

Like any business deal, you want to know every way that its going to change your finances. Below, we’re going to break down the financial changes that marriage brings, both good and bad.

Insurance

For a lot people, this is the big one. When you get married, you have the choice to hop on to your spouse’s health insurance policy. For a lot of people, this is huge.

Employer-backed policies often offer more at cheaper prices than policies that you buy yourself. If both of you work, you can choose the policy that offers the best benefits.

There are ways to save money on policies that aren’t offered through your employer as well. Car insurance policies often have better rates for married couples. Why? Easy – married people are better drivers.

One study found that unmarried drivers are twice as likely to get into a car accident as married drivers. Car insurance policies usually have multi-car discounts, another money saver for couples.

Putting all of your pets under the same roof for the first time? Pet insurance policies have multi-pet discounts, too.

Property Rights

If you’re an unmarried couple that’s living together and buying property together (even something as minor as a TV or couch), there are absolutely no state-dictated rules about what happens to that property if you split up.

If you’re married and you decide to split, you have a legal right to all co-owned “marital property” – one reason why divorces can get so messy.

The concept of marital property also makes it easier to inherit property after a partner has died. Even if there is no will, or just a partial will, the spouse will usually automatically inherit property that was co-owned or owned by their partner.

Economies of Scale

Speaking of co-owned property, getting married and starting a life together ends up boosting your overall financial state. Not only do you have the opportunity for double the income, but you also save money by only having one living room, one kitchen, one bedroom, etc., that needs to be furnished.

Your bills are also consolidated – one electricity bill, one gas bill, one phone bill, etc. (You can get these same benefits if you move in together without getting married, but without the legal safety net of marriage.)

While there’s no hard data on how much people will save over time by getting married instead of staying single, some outlets have attempted to quantify overall savings. 

Lisa Arnold and Christina Campbell at The Atlantic believe that a single woman will end up paying anywhere between $500,000 and $1 million more than her married counterpart in areas like housing, health insurance, IRAs, and taxes.

Survivor’s Benefits

Social Security will pay out a variety of survivor’s benefits to both the spouses and children of the deceased. Unmarried partners won’t receive any benefits.

Taxes

Once you’re married, you get two choices when filing for taxes: Married Filing Jointly (MFJ) and Married Filing Separately (MFS). There are pros and cons to both, all of which need to be weighed when you’re preparing your taxes. While most couples will save money on taxes by filing jointly, that’s not always the case.

The biggest drawback to MFJ is something called the “marriage penalty.” When you file jointly, your incomes are combined. This can have two effects. The first occurs when one partner is in a higher income bracket than the other.

Because the two incomes are averaged together, the partner with the higher income will be brought down into a lower income bracket, while the partner with the lower income will be pulled up into the higher income bracket.

While it might sound like it evens out, you’ll want to do the calculations and see if you save money by filing separately.

The second drawback occurs when both partners are in the same income bracket. Because of the way the tax tables are written, a married couple filing jointly can actually be pushed up an income bracket, paying hundreds or thousands of dollars more than they would if they filed separately.

Again, you’ll want to do the calculations on both and see what’s best for your family.

Filing separately has its own drawbacks, however, especially when it comes to people with significant tax deductions. “95% of married people are better off filing jointly,” Joseph Boyce, public accountant, told Learnvest, so take careful consideration and do the math when it comes to deciding how to file.

Loans and Credit

Getting married can greatly increase your chances of getting a loan. Why? If you’re applying together, you can count both of your incomes towards the loan.

Plus, if one of you has below-average credit, your partner’s good credit can help make up the difference. If you both have good credit? Congrats, now you have awesome credit.

Of course, there are risks involved when cosigning on each other’s debt. If you get divorced, you’re still responsible for that debt. As long as your name is on the debt, you’re responsible for it, even if your partner is assigned the debt in your divorce.

If your partner doesn’t pay up, debtors can come after you and ruin your credit score. (Your partner would be in violation of the divorce agreement, which means you could sue them for damages.)

How do you deal with Money Problems in a Relationship?

To put all these tips in proper perspective, learn how to talk about money, and learn to align your financial goals. If you can do those two things, you’ve done more than most couples, and you’ve done a lot to keep your relationship on solid ground.

1. Sit down and talk about financial goals and values.

Many couples often neglect this step, even if it seems obvious and common-sensical. But because talking about finances can be uncomfortable, they leave these important things unsaid, and often don’t even think about it individually.

They have goals and values when it comes to money, but they’re not examined. That’s a mistake, as one person might want to be frugal in order to save for future goals, while the other might like to spend and enjoy things now, while the getting is good.

The differences often come from different upbringings, and they can be emotionally charged. It doesn’t have to be difficult, though. Just tell your partner you’d like to sit down and have a talk about the future — what your goals are and how you can work together, as a team, to achieve them.

In the beginning, just start spitting out different things each of you wants — a house, kids, college education for the kids, a healthy emergency fund, nice cars, travel each year, nice clothes, gadgets and computers, etc. Then start to prioritize, and see if you can come up with things in common.

If you want different things, it is important that you talk about why, and consider the other person’s desires. If that’s what makes the other person happy, you should want to make them happy — that’s the basis of a good relationship.

But relationships aren’t one-sided, either, so you should be able to be happy too. The point is that both sides should be considered, and you should look for a win-win solution or compromise so that you can both be happy.

It might take a few meetings to get to actual written goals, with a timeframe for each, but that’s where you want to be eventually.

2. Remove emotions from financial talk.

From your first meetings about financial goals to your subsequent weekly talks , it’s important that the two of you stay calm, don’t get hurt or angry over any of the issues, and try to look at these issues objectively.

Often financial issues are tied up in all kinds of emotional issues, stemming from childhood, from issues of security to feeling like your way is better to feeling hurt if your way of spending is criticized in any way, and much more.

These emotional issues are all tangled together with financial issues, and it’s important that you untangle them and just deal with financial goals and habits. First, don’t use emotional, accusatory, or inflammatory language. Don’t blame the other person or even be negatively critical.

Simply talk about your financial goals, developing a plan for getting to those goals, developing a system for dealing with finances, and so forth.

Also try not to feel like you’re under attack if the other person talks about your goals or habits — let this be an open discussion, and if you feel under attack, stop and take a breath and remember that this isn’t a discussion about you personally but about how the two of you are going to meet your goals. Again, think of this as a team effort, not as a you-vs-me effort.

3. Come up with a plan to meet your goals.

Once you’re able to come up with common financial goals (a huge step — celebrate!), you need a plan to get you there.

This will take into account your joint income, your debt, your savings, how much you can put towards debt and/or saving each month, whether you want to cut back on certain things in order to meet your savings goals, how long you want to give yourself to meet financial goals, and so forth.

Start by having a definite timeframe for each goal, and then figure out how much you need to save (or pay towards debt) each month to get to your goals. Create a spending plan (if you haven’t yet) for each month, and see if you can adjust it to meet that monthly goal.

You might need to cut back on some things, or earn extra income, or both. Or you might discover that your goals aren’t realistic and you need to cut back on them, reprioritize, or push them back a bit in order to meet them.

This plan to meet your goals is how you will align your daily and monthly spending with your long-term goals. It’s also a great way to resolve minor short-term disputes — you should definitely buy fewer shoes, and I should buy fewer video games, so we can buy that house in three years and travel to Europe in two years.

4. Develop a system for finances that works for both of you.

In order to put your financial plan into action, you’ll need to figure out how you’re going to pay your bills, pay debt, deposit into savings, have money for various spending needs (like gas and groceries and eating out), and so forth.

Someone will have to take responsibility for each part of the system (it’s better if you’re both involved, but you should find what works best for you as a couple).

One person might go to the bank while the other updates your financial program (like Quicken or Money) or your checking register to make sure you’re in balance, for example.

5. Have weekly financial meetings.

This is very important, and it’s a step that many couples overlook. Just because you have common financial goals and a plan and a system doesn’t mean that everything is fine.

If one person takes responsibility for the finances, for example, and the other is out of the loop, then there will likely be problems down the road. There are several couples like this — one partner took care of the finances and the other was blissfully ignorant … until it was revealed that they were way behind on payments and would soon have to file for bankruptcy.

Read Also: How can I be Prepared to Weather a Financial Storm?

That wasn’t a good time in their relationship. To prevent problems like this, have a weekly meeting where you sit down and talk about finances.

You can review your accounts, your spending plan, what is coming up in the next few weeks that you’ll need to budget for, any problem areas, what to do with your annual bonus, where you are with your goals, and so forth. Make sure you’re both caught up on everything, and that you’re working well as a team.

6. Above all, stay positive and be honest.

Remember: you’re a team. You have the same goals and you want each other to be happy. Team members can help each other out and encourage each other, or they can rip the team apart by being negative, by blaming, by working against common goals.

If you always stay positive, you’ll succeed as a team. Be encouraging, stay focused on solutions not blame, and make sure love is the foundation of everything you do.

Summary

Good (and sometimes painfully honest) communication before and after tying the knot can dull the blow of bad financial news and lead to honest exchanges about each partner’s money anxieties, habits, skeletons in the closet, and expectations.

If you’re thinking about entering into what you hope is a lifelong relationship or you are already in a high net worth marriage, you and your partner owe each other such a discussion.

Lack of communication is the source of many marital issues. This space is where the hard work of marriage often lives. Like common health problems, financial anxieties—if not addressed—can become far bigger problems with much more difficult solutions.

The best way to be sure you and your spouse are on the same page with your joint finances is to talk about them regularly, honestly, and without judgment. Don’t do it when you’re mad, tired, or intoxicated.

Some couples may even find it helpful to schedule a time once a month, once a quarter, or once a year to check in on short- and long-term goals. They may even want to enlist the help of a financial advisor or planner for impartial advice.