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Does your spouse know how much you earn?

Consider how much you are sharing about your finances.

Few people today would consider anything other than love as the main consideration when getting married. This is, however, a relatively modern way of looking at things.

For most of human history, marriage had nothing to do with love at all. In fact, in many cultures, including those of ancient Greece and Rome, love in a marriage was considered a bit of a nuisance.

The point of getting married was to tie two families together – to secure wealth, property and heirs. Women, unfortunately, were largely seen as tools of these transactions, with daughters ‘given’ to whichever husband could secure her family the best position.

Thankfully the era of enlightenment and the idea that people should pursue their own happiness led to a more romantic way of thinking from around the end of the 18th century. Marrying for love rather than wealth or status became acceptable, and ultimately desirable.

Financial implications

While this clearly has its benefits, it’s important not to forget that marriage, at its core, remains a contract. It is a transaction, with real financial consequences.

Unlike the past, where these had more to do with the families of the two individuals tying the knot, today the consequences are for those in the marriage itself. On their wedding day, the two people involved are always combining their financial positions to some extent.

This is true, no matter how the marriage is entered into. A couple that marries out of community of property under an ante-nuptial contract might keep their assets and liabilities separate, but they still have to work out how to live together. Any other agreement means the finances of the two spouses will become more closely intertwined.

Yet money remains something that many couples struggle to talk about or agree on. A poll of over 2 000 British adults by law firm Slater and Gordon last year revealed that money problems were the main reason that couples split up. For 20% of them, money was the biggest cause of marital strife.

The American Psychological Association (APA) has made similar findings. A survey found that 31% of adults reported that “money is a major source of conflict in their relationship”.

Dealing with it

The most productive way to deal with conflict is of course to face it and discuss it openly. However, this remains a challenge for many people.

Fidelity Investments conducts an annual survey in the US that asks how couples manage their finances. The 2018 survey found that 34% of couples can’t agree on how much their partner earns, and 15% can’t even accurately report on their other half’s employment status.

Anyone who has listened to the Wondery podcast Dirty John, or watched the Netflix series it spawned, should know why this is particularly disturbing. Yet even excluding that kind of worst-case scenario, consider what it means that more than a third of couples don’t even accurately share their salaries with each other.

This is almost a basic starting point when discussing finances. If you don’t know how much you are earning as a couple, you are unable budget together, you can’t decide on an appropriate level of risk cover, and you won’t know how much you should be saving for retirement.

Big, bad debt

It is also likely that if you aren’t even sharing this information, you aren’t talking about how much debt you have, or your investments. These are things that can fundamentally affect your partner, and should therefore be discussed openly, not just in a marriage, but preferably before it even takes place.

“The road to the pulpit may be short, but the journey with your partner isn’t,” says Jeanette Marais, deputy CEO of MMI Holdings.

“Make sure that you start off on the right foot by being honest about money matters, even before the marriage.”

Debt is a particularly significant issue. The Fidelity survey found that 67% of couples who are concerned about debt argue about money. That compares with only 41% of couples who are not concerned about debt.

Conversely, 76% of couples who are not worried about debt communicate ‘very well’ or ‘extremely well’ about money. Only 57% of couples with debt reported the same level of communication.

It’s obvious that these two issues are closely correlated. There is a strong relationship between open communication about money, and better managed finances.

Forty six percent of couples concerned about debt agree that money is their biggest relationship challenge. Only 16% of couples who are not concerned about debt share that perspective.

Shared responsibility

This is compounded by another of the APA’s survey findings:

“Only 33% of ‘Stress in America’ survey respondents said both partners share an equal role in financial decision-making. Similarly, only 23% reported that management of household finances is shared equally.”

Dealing with money in a marriage has to be a shared responsibility. Both partners need to feel that they have a role to play and that their contribution is valued.

“You’re investing in your future when you talk about [money] and make decisions together,” Marais says. “When you talk about your finances it doesn’t mean you don’t trust each other, but rather that you’re a team that talks about everything and can trust each other.”

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This also opens the whole debate about marital regimes. In or out of community, and if out, with or without the accrual. It seems almost like the default these days is out of community with the accrual. Take good advice before you take the step. The accrual is not necessarily ideal in second marriages. If the trust levels between the couple are high, out of community without accrual but with ownership of valuable assets split equally could be ideal. And start doing financial planning BEFORE the marriage.

I must confess that I am the victim of a planned wedding. I was forced into this agreement against my will. My spouse knows all my little secrets. My spouse knows what I earn, what I spend it on, and even where I hide some of it. I have been trying to get rid of my spouse for so long. I tried changing my address, and I even moved some assets offshore, but to no avail. This partner of mine is a spendthrift and I am expected to fund all the extravagance. My life partner is the tax man and I hate his guts.

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