Marriage and money

MONEY MANAGEMENT is one of the most common challenges in a marriage – and when I am asked to consult or assist with money problems in relationships, it’s often because one of the partners is overspending, or not producing enough, or not sharing enough where there is perceived fair exchange. So I have the following advice to couples who are about to get married, on how to work out their finances…
 
When both partners have equal incomes

When two people both have equal incomes, and they get married, there’s generally a mutual economic respect. In that case, it’s generally wise to set up three financial accounts: his account, her account and a joint account, which can either be 50/50 or a ratio that is agreed upon. They then need to negotiate and agree on whether the third account will be used to pay all the bills, to save for mutually agreed future goals, or whether each partner is going to pay the bills from their own account.
 
So in one scenario, the third account is for things that both agree on, that they want to put money towards. It could be education for the children, it could be a home, or it could be travel. Their independent accounts are for their two separate value systems and are used for paying their portion of the bills and for money for their own desires. In another scenario they each have their own separate accounts with which they do exactly what they want, and a joint account through which they pay the bills.

Now, the previous financial structure works well when both partners are earning the same amount. But if one partner is the breadwinner and the other is raising the family, that’s another situation entirely. In this case, the partner who is raising the family has to work out the replacement value of those activities or services, in other words, how much those services would cost if they were no longer part of the couple.
 
For this type of situation, I recommend that you have the same three accounts, but since one partner is providing the income and the other is doing household activities and raising the family, the amount going into that person’s account would be the most accurately estimated replacement value of those activities, which is what it would cost to replace that person to do the same home based job description. In some cases husbands may not be able to afford the replacement value of their wives. In other cases it would be wise for their professional wives to go and do part-time work.
 
Now, if both partners are working, but are not making the same amount of money, that is an unequal exchange from a purely economic perspective. If there is a huge disparity in salaries, the partners will have to negotiate, as this could be a source of resentment, particularly if there are children involved. Perhaps the breadwinner, the person making the most, pays two-thirds and the other person pays a third. It’s got to be reassessed whenever tension builds up if it’s not perceived as fair by one or both parties.
 
Calculating fair exchange

The greater the discrepancy of income, the more negotiations may have to be done to make a sustainable fair exchange. If there is a huge discrepancy it would be wise as part of their financial negotiations to ensure that the so-called perceived financial underdog makes a list in their mind, or on paper and makes the other person aware of all the value that they add so that they bring the other contributory assets as well as financial assets up to a perceived equal. And if you’re the financial underdog, it’s your responsibility to keep that equation in check. By bringing all the other assets to the negotiation table you can negotiate more effectively and fairly.
 
These other assets may fall under any of the seven primary areas of life, such as their spiritual / inspirational assets, mental / intellectual assets, vocational / business assets, familial / relational assets, social / cultural assets and physical / attractiveness assets. All of these other assets can be converted into financial assets, so that there can be a fair exchange.
 
Now if there is a vast discrepancy in economic assets, where one is making 10 or more times what the other one is making, if the other partner is not providing assets in the other six areas of life, that’s a vulnerable relationship. But if they are providing equal amounts of overall value, but in the other six areas of life, as long as they maintain this, it can be a stable relationship. But if they let all those other powers slide, then the relationship may begin to become unstable. Regardless of romance, after the infatuation phase is over, people are striving for fair exchange. If they don’t get their fair exchange, there will be problems and others may just come into the equation.
 
You can’t live in a fantasy about your true contribution to the relationship. It has to be consistently renegotiated. Because, although fantasy books like to think otherwise, one person is not committed to another; they are committed to the fulfillment of highest values. If they don’t get their highest values fulfilled, their eyes can wander. So you have the responsibility to constantly make sure that there’s equanimity and that what you’re offering is equal to what they are offering in one or all of those seven areas, not just financial.
 
Prenuptial agreements

Where financial situations are extremely different, prenuptial agreements are usually wise. Many of them can be done on a pro rata basis – the longer the marriage, the more the previous economic imbalances can become more evenly balanced. In a marriage, there is a negotiated percentage of outcomes. It must be perceived as fair exchange. If there’s a pro rata arrangement, you deserve something if you have been in the relationship or marriage for, say, 10 years.
 
The bottom line is that there has to be fair exchange and if fairness is not maintained at least in perception, resentments can occur when there is no perceived fair exchange. All relationships strive towards equity – and any time a relationship is not equal or not in fair exchange, partners store these imbalances in their memories and build up resentments until they are rebalanced.
 
* Dr John Demartini is a human behaviour specialist, educator, author and the founder of the Demartini Institute. See www.DrDemartini.com