When it comes to marriage and finances, burying your head in the sand can carry a big price.
Financial Faux Pas
One year into my marriage, I occasionally find myself spending with a newfound guilt. To balance out a shopping spree for myself, I'll pick up a few things for my husband — mostly out of love but, if we're being totally honest, also for fear of appearing selfish. So, while buying myself, say, a new pair of pumps, I'll pick up a cashmere sweater for him. My husband could care less about cashmere, and he never gives me a hard time for spending my money. It's just a voice in my head, likely the same one that whispers other baseless insecurities.
No matter how squeaky clean your financial life may have been as an independent, single woman, being in a relationship can open the door to a whole new set of emotionally charged financial faux pas.
Here are the top six — and what you can do to make them right.
1. Blindly Trusting
Nearly one in four women say their partners primarily manage the household finances, according to Pew Research. Whether it stems from self-doubt over making the right financial moves, a lack of interest in money matters or a controlling partner (or all three), financial planner Brittney Castro sees it all too often. "Even though women may be in control of the day-to-day budget," she says, "most still have no idea what is going on with the long-term investments."
Burying your head in the sand can carry a big price. For 34-year-old Amy, a small business owner living in Florida, it came to a whopping $50,000. It was only after she and her husband split that she discovered he'd covertly racked up that much debt on her American Express card.
"Because I had better credit, we opened this card in my name, but with the understanding that he’d use and pay it off every month," she says. "I was naive... He was my husband. I trusted him."
Turning a blind eye to your money matters could leave you severely strapped in the event of a breakup or an unexpected expense. "Both people need to be involved in the decision making," says Castro.
How to get back on track: Improve your knowledge of your financial basics and get the contact information for the financial professionals in your lives (lawyers, financial planners, accountants, etc.). Make sure you could step in and pay the bills in case of an emergency. Take turns managing the accounts each month so you can confidently jump in the driver's seat on a moment's notice.
Don't forget to ask questions if you don't understand something, especially before signing any joint documents. And be aware that a joint tax return with your signature puts you equally on the hook if the IRS uncovers mistakes or, worse, fraud. So read it carefully.
2. Off-Ramping Without a Plan to On-Ramp
It's no secret that opting out completely from the workforce carries major financial risks. But even for those of us who opt out temporarily or "off-ramp," as it's known, there can be some financial drawbacks. Sheryl Sandberg writes in her book Lean In that "women's average annual earnings decrease by 20 percent if they are out of the workforce for just one year ... Thirty percent after two or three years, which is the average amount of time professional women off-ramp from the workforce."
Of course, with rising child care costs, the math may work in favor of having the parent who makes less — usually mom (though that's changing) — quit her job and become the primary caretaker. But consider the longer-term financial risks. When your child enters school full time and you’re ready to go back to work, can you afford to potentially make less money?
How to get back on track: Ignore the voices in your head that tell you a working mom can’t possibly raise happy, healthy kids -- a reason some women feel compelled to opt out. The kids are going to be all right. A recent study by the Campaign for Social Science in the U.K. found no harm done to a child's literacy, math ability and behavior if raised by a working mom. And a new paper by the National Bureau of Economic Research says kids with working mothers earn better grades in school.
If you do take time off — no matter the reason — know that there are always ways to keep your earning potential strong, says Stacy Francis, founder of Francis Financial. "Stay in contact with colleagues, continue education and stay active socially." This way you're better prepared and positioned for returning to the workforce.
3. Thinking 'What's Mine is Ours'
While it may seem romantic to throw all your money into a big pot, this can spark more money arguments than necessary, since it can be challenging to set spending thresholds and justify personal purchases. Incidentally, breadwinning wives may be more inclined to protest that their money is the family's money to let their husbands feel more in control and not as emasculated. "In general, when women make more, they say, 'It's our money,' and they'll do the 'our money' thing to soothe their husband's ego," says Brad Klontz, Psy.D., CFP, financial psychologist and author of Mind Over Money.
How to get back on track: Be open to a financial threeway consisting of what’s yours, mine and ours, says Manisha Thakor, author of On My Own Two Feet: A Modern Girl's Guide to Personal Finance. She says, “The beauty of this concept is each couple can decide for themselves what goes in the 'ours' bucket. It creates an environment where both savers and spenders can feel they are having their individual and joint needs met."
4. Putting Kids First
It's not uncommon to see moms financially coddle their kids to a fault. Marcia Brixey, author of The Money Therapist: A Woman's Guide to Creating a Healthy Financial Life, blames it on our tendency to put others before ourselves, calling it a top female "money malfunction." Brixey says, "We are nurturers and caregivers. We take care of everyone else but ourselves and it hinders us later in life."
On my previous reality makeover show, soapNET's Bank of Mom and Dad, we showcased debt-ridden young adults and their doting parents. On it I encountered many mothers who occasionally dipped into their personal savings to help struggling adult children pay off debt or make rent. But of course that only further enabled their kids to be financially dependent. Handouts do not help!
"It's natural to want to give your children everything, but overindulging your love bundles, especially as they get older — at the expense of your retirement — isn't good for anyone," says Thakor. "A better long-run gift may very well be teaching your kids to financially fish for themselves and limiting financial help to clearly defined timeframes during periods of true economic stress," she says.
How to get back on track: If an adult child is desperate for some financial R&R, offer as many non-financial resources as you want — free meals, shelter or advice on ways to negotiate with creditors. Come up with a plan together that incentivizes your children to solve their financial issues independently. For example, if your daughter successfully pays off her $2,000 credit card balance in the next three months, you may then reward her with $100 to help pay for groceries. Or for every $100 she saves, you'll throw in $10 up to her first $1,000 saved.
5. Failing to Ask for Help
In the pursuit of "having it all," many of us forget that we don't have to necessarily do it all. As Anne Marie Slaughter wrote last year in her buzzy Atlantic piece, "Why Women Still Can't Have It All," we subscribe to this idealism because many of us feel it's our feminist duty. "Women of my generation have clung to the feminist credo we were raised with, even as our ranks have been steadily thinned by unresolvable tensions between family and career, because we are determined not to drop the flag for the next generation."
While some women defer all financial decision-making to their husbands, others fail to involve their spouses at all. "Since women make about 83 percent of the households purchasing decisions, I work with many women who are in charge of the day-to-day money management, yet are still overwhelmed by it all," says Castro. "They don't ask for help and often feel alone in the financial arena, which can put a strain on the relationship."
How to get back on track: Castro’s advice: Commit to weekly money dates to go over household spending, investments and financial goals. Delegate some tasks like reviewing retirement plans, paying certain bills and comparison shopping. "[This way] women feel it's not all up to them to make sure they are reaching their financial goals overtime," she says. Outsourcing some tasks to a certified financial planner can also pay off. (Just make sure you stay involved in the decision-making.)
6. Secretly Spending
More women than men admit to shopping after a bad day. The guilt and shame tied to buying things we don't need — and probably can’t afford — keep us from coming clean about our spending. We also keep it to ourselves to avoid confrontation and fights in our relationships, especially if we're married to savers.
In fact, a survey by TODAY.com and SELF.com found nearly twice as many women as men said they’ve hidden store bags or receipts from their spouses (32 percent versus 17 percent).
I consulted a young married woman last year living in New Jersey whose compulsive emotional shopping had driven her family $14,000 into debt. Her husband was totally in the dark. At the time she told me, "We keep separate accounts. He doesn’t know about my seven credit cards. I get the mail, so I’m able to keep it a secret. He thinks we are up to date with everything, but I am maxed out and interest continues to build."
How to get back on track: If you find yourself in this situation, open communication is the only way to mend the trust you've broken. My advice to her: Confess before the lies ruin your marriage, create a joint bank account for more transparency, set a monthly limit for guiltless spending (a "slush fund" of sorts) and seek counseling for your uncontrollable spending.
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