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Couples and Money by Dr. Douglas Carlsen

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by Douglas Carlsen, DDS

What separates financial matrimonial cheer from calamity?

The House: Next to best schools or as near as possible to Nordstrom? What multiple of a thousand square feet do we need? What will other dentists think? And later: the new kitchen, the remodeled bathroom or the pool? Can’t we do it all now?

The New Car: Leather or fabric, SiriusXM? No GPS? Are you crazy! What will other dentists think?

Emergencies: Mason did what – which hospital this time? Tree house? I didn’t know we had one. Brittany crushed the Honda again? She’s on double iProbation!

Staff Holiday Bonuses: How much do I get?

If any dental couple in America can answer “T” to all the questions on the next page, I’d be shocked, yet the quiz provides a basis for discussion. The preceding quiz was altered from a more detailed treatment in Smart Couples Finish Rich.1 David Bach’s book presents an easy guide to couples and finance which I highly recommend.

Ron Lieber of The New York Times provides four financial issues to be discussed before marriage, but are also appropriate well into marriage.2

Ancestry
Behavior about money is learned and is often emotional. How did your parents treat money and how does it impact your relationship with money? Many parents hide money from each other, involve self-esteem with possessions and fret over any purchase, no matter how insignificant.

My parents almost always paid bills on time, yet my dad was an emotional wreck and tyrant when things got tight. We never splurged and I seldom received anything resembling a “treat,” other than an ice cream cone at the drugstore on some Saturdays or a pack of Lifesavers. We never celebrated any accomplishment.

My behavior as an adult tended early to avoid owing anything to anyone, interest due or not. Yet I’ve always made a point to celebrate special events with those close to me.

Talk to your spouse about your money ancestry. Ah-hahs will quickly emerge, often providing ways to compromise about spending and savings. According to Consumer Reports Money Adviser, “That compromise should include some short- and longterm financial goals and setting up a budget that will help you achieve them.”3

Spending and Credit
Be up front early in your marriage about your credit history and habits. Credit score analysis on a bi-annual basis with discussion is imperative for spouses. Errors on the reports can be corrected as well as having conversations regarding better purchase timing.

Example: A close member of my family found out about her husband’s secret $100,000 credit card debt 12 years into marriage. Divorce was quick and dirty with bankruptcy for both parties. Early financial disclosure might have at least prevented bankruptcy.

Control
Who takes control over personal finance, the one making the most money? CR Money Adviser comments, “Couples with different spending habits may be able to reduce stress by setting up both joint and individual accounts. A joint account can pay household bills and save for mutual goals, like vacations and car purchases. Then you can each set up individual accounts with the remaining funds that can be used to buy whatever you like.”4

To have one spouse handle all the finances might work, yet that person needs to confer with the other at least quarterly. Trouble areas of spending that dental couples need to monitor and discuss:
  • Clothing budget for entire family
  • Home improvements and upgrades
  • Cell phones
  • Holiday gifts
  • Dining out
  • Entertainment, such as sporting events and concerts
  • Vacations
  • Second homes or time-shares
  • Country clubs
  • Hobbies: golf, skiing, boating, flying

The most vocal trouble area is always phone usage. The biggest contenders for stress over time: time-shares, boats and planes. Large purchases: For any large purchase (usually above $1,000), both parties must concur. The biggest immediate messes occur with the surprise new auto, diamond bling, live auction purchase or furniture frenzy.

Who supervises investments? “When there are big discrepancies in investment styles, you don’t want one partner’s investment style to dominate,” says Jake Engle, a financial planner in Portland, Oregon. “That can be especially detrimental if the dominant partner is the one who wants to invest very conservatively.”5

In the same issue, Consumer Reports Money Adviser goes on to point out that many couple’s retirement investments are in individual accounts anyway, which allows each spouse to invest in a way that’s comfortable. If one spouse invests aggressively while the other is more moderate or conservative, that’s OK, says Dawn Brown, a financial planner in New York. Yet make sure your entire portfolio is allocated for your long-term goals.

Affluence
While most people believe that having more income will make them happier, a report from News at Princeton says that the link is greatly exaggerated and mostly an illusion.6 Two Princeton professors, economist Alan B. Krueger and psychologist Daniel Kahneman, collaborated with colleagues from three other universities on the study.

From the report:
Although income is widely assumed to be a good measure of wellbeing, the researchers found that its role is less significant than predicted and that people with higher incomes do not necessarily spend more time in more enjoyable ways.

The belief that high income is associated with good mood is widespread but mostly illusory. The researchers wrote, “People with above-average income are relatively satisfied with their lives but are barely happier than others in moment-tomoment experience, tend to be more tense and do not spend more time in particularly enjoyable activities.”

Despite the weak relationship between income and global life satisfaction or experienced happiness, many people are highly motivated to increase their income, the study reported. “In some cases, this focusing illusion may lead to a misallocation of time, from accepting lengthy commutes (which are among the worst moments of the day) to sacrificing time spent socializing (which are among the best moments of the day).”

Final Thoughts:
  • Does keeping up with the Dr. Jones’ work load and income increase your happiness? Probably not.
  • Does talking about childhood family financial attitudes help? Most likely.
  • Sharing financial information, good and bad, might keep many marriages intact. Having secret accounts won’t.
  • Splurge on your spouse once a week. A rose bought at the supermarket or e-mailing a JibJab love note works wonders. Go to www.jibjab.com. We are all aware that the number one cause of divorce in America is money problems. Yet author and debt-destroyer Dave Ramsey says, “If money is the thing we fight about most, then agreeing on money can completely turn a relationship around.”


References
  1. David Bach, Smart Couples Finish Rich, Broadway Books, NY, NY, 2002, p. 28.
  2. Ron Lieber, “Money Talks to Have Before Marriage,” downloaded at http://www.nytimes.com/2009/10/24/your-money/24money.html on March 30, 2012.
  3. “Don’t Fight Over Money,” Consumer Reports Money Adviser, April 2011, Vol.8, Issue 4, pg. 1.
  4. Ibid, pg. 4.
  5. Ibid.
  6. Downloaded at http://www.princeton.edu/main/news/archive/S15/15/09S18/index.xml?section=topstories on March 29,2012.


Author's Bio
Douglas Carlsen, DDS, has delivered independent financial education to dentists since retiring from his practice in 2004 at age 53.

For Dentists’ Financial Newsletter, visit www.golichcarlsen.com and find the “newsletter” button at the bottom of the home page. Additional Carlsen Dentaltown articles are at http://www.towniecentral.com. Search “Carlsen.” Videos available at drcarlsen@gmail.com or 760-535-1621.
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