Arguing about money leads to divorce
According to research on causes of divorce which was carried out between 2004 and 2017 at the University of California in San Diego (testing 5,300 couples in Germany), differences in risk preferences are likely a root cause of marital separation. Marta Serra-Garcia, associate professor of economics and the study’s author, explained that, while arguing about money was typically cited as a reason for divorce, differences in risk attitudes were a main potential driver of separation. She added that couples who had the most dissimilar risk attitudes were twice as likely to divorce, compared to couples with the most similar preferences. Also, differences in that area were the strongest predictor of divorce, of all the variables analysed in the survey. Naturally, the study also controlled for education level, region of origin or religion.
Couples who report big differences in risk preferences are also less likely to buy a home or have their home renovated because it is a major life decision that has enormous consequences and it will be difficult for them to come to agreement on that when they differ so much. What is more, a person who is not stressed out when making such decisions can even downplay the partner’s problems – “what’s the big deal with signing a few pieces of paper for the bank...”. However, if you were to talk to each partner individually on what a given financial decision means to them, what emotions it evokes and how strong they are (especially when it comes to stress or anxiety), you would probably find out that they talk about completely different types of decision!
As a financial coach, I frequently have clients come to me and discuss serious conflicts in their relationships because of a completely different approach to financial matters (in a broad sense of the term), particularly when it comes to decisions that involve risk, a credit obligation, or the approach to spending and saving.
 Christine Clark, Differences in Financial Risk Preferences Can Make or Break a Marriage, 27.07.2021 https://ucsdnews.ucsd.edu/pressrelease/differences-in-financial-risk-preferences-can-make-or-break-a-marriage
What to do if you don’t want money arguments ruin your relationship?
First of all, money must not be a taboo topic in a family. Hoping that “we will learn one another at some point” can lead to arguing, resentment or even break-up. Even though it may not seem romantic, it is worth discussing certain things when you start running “a joint household”, and especially before you decide to get married or have children; discuss how you are going to divide household chores, what you expect from your relationship, or how your views can affect your life together and your goals as a couple. It is also a good idea to specifically address the issue of money management, budgeting and sharing expenses – are you going to have a joint bank account or individual accounts? Who will be responsible for specific areas of your household budget? Ideally, you have an open and honest discussion on your approach to saving and spending, on your financial risk preferences and whether or not taking on (long- or short-term) debt is acceptable for you (and in what situations), and what gives you enormous stress or anxiety.
When you are in the early days of your relationship, it is helpful to observe how your partner manages his or her money. For example, if they spend almost all of their paycheck on pleasures and have to drastically save, or get into debt, at the end of the month, it should be a warning signal, especially if you get a sense of comfort from spending your money wisely and putting a certain amount aside each month. However, instead of heaping reproaches on one another, it is better to tell your significant other honestly what the situation looks like from your perspective, what emotions it evokes and why you consider it a problem. Talking about your emotional baggage, your experiences, beliefs and habits that you got from your family home and whether you want to repeat those patterns can also help you get to the bottom of things. I heard many of my clients say: “My parents always fought about money/they kept bringing up irresponsible expenditures, and I don’t want that in my relationship.”. However, you may involuntarily repeat those unwanted patterns and if that is the case with you, it is a good idea to analyse what makes you do so.
Frequently you are not even aware of the influence your family home and your childhood had on you or what patterns you have followed in your life which can also be an issue. Improving your self-awareness is key to understanding your approach to financial matters and whether it helps you in life or needs to be changed.
How to talk about money with your loved ones?
When you find something that your partner did to be hurtful or hard to accept and you want to talk about it with him or her, you should prepare for that talk first. Remember about the rules of giving a constructive feedback so that things don’t get out of hand and you end up in a fight, bringing up past grievances. Stick to specific situations or behaviours. Separate facts from your opinions. Avoid such phrases as: “you always spend money irresponsibly”, “you never pay your bills on time”. Such generalities only make your partner more resentful and not willing to hear you out. What is more, it is easy to challenge them by finding even a single example when the person you accuse of certain behavior acted differently.
One method of talking about your emotions or feelings openly but without shifting blame and escalating the conflict is to use the so called “I”-statements. This is a style of communication where you do not attribute bad intentions to your partner but say directly how his or her actions affected you. For example, when your significant other overdrew the card without your knowledge, you could say: “You don’t care how I feel! I told you a hundred times that you should not overdraw our account!”, but it is better to say: “When you overdraw our account, even though you know it freaks me out, I feel like you don’t care about my mental comfort/like you don’t care about my feelings”.
Please remember: don’t let emotions get the best of you when you talk about money. When a discussion gets too heated, it is better to take a break and agree that you will resume it when you both calm down.
When a couple is unable to resolve their financial arguments in a constructive manner, it is worth considering using a financial coach, or even a therapist. Sometimes it can take a lot of digging to get insight into the root cause of your financial conflicts. It can be related to such fundamental issues, like your values, beliefs, safety and security, trust, self-esteem or personality traits.
Independent work on changing your bad habits (for example, failing to make payments on time), destructive patterns of behavior or beliefs, understanding your needs and emotions can also help improve the relationship with your partner.