Marriage-Busting Money Mistakes: Five Things to Avoid

Money is a hot topic in marriage and unfortunately, a common catalyst for divorce. More than 60 percent of newly singles believe that financial infidelity is just as damaging as an affair. Avoid the following mistakes in your own relationship. Why allow currency to interfere with companionship?

Mistake #1: Lying.

Infidelity: the word covers all manner of sins. When it comes to finances, infidelity in the form of lying can lead to distrust, debt, and eventual divorce court. Whether you are lying about the occasional shopping spree, a secret bank account or the amount of your latest bonus check, dishonesty is hardly a breeding ground for a successful relationship. Let’s follow one couple through the demise of their marriage.

Michael and Shari are newlyweds. Although they dated for two years, they didn’t like to talk about specific financial issues. During their church’s pre-marital counseling, Michael lies about his student loan debt, claiming to owe $15,000 rather than the actual amount of $45,000. Shari has $5,000 in credit card debt but claims that her balance is almost completely paid off. She secretly plans to pay down her debt before Michael notices. Despite their lies and compounding debt, they apply for a joint credit card shortly after the wedding.

Michael and Shari are setting the stage for credit damage and marital discord. The moral: Give your spouse the respect they deserve by operating under a full disclosure policy. The result will keep your relationship and your bank account out of serious trouble.

Mistake #2: Avoiding the truth.

You may be asking how this mistake is different from lying. Avoiding the truth through passive omission can be just as damaging as an outright lie. The worst part: Both parties are usually to blame. As Michael and Shari learned, this mistake is easy when money is tight.

Michael and Shari have been married for two years. Although they have been happy and financially comfortable, things changed recently when Michael was laid off and forced to take a low-paying position with another company. Their money problems are gaining traction and neither spouse feels comfortable discussing it. They owe $7,900 in joint credit card debt. Michael has secretly put his student loan into forbearance because he can’t afford the payments. Shari’s personal credit card debt has ballooned to $7,500 and has increased her monthly payments. They live beyond their means but neither is willing to breach the topic and risk an argument.  Both of their credit scores have dipped below the 700 mark.

Michael and Shari’s situation is a common one. While it’s difficult to accept a change in financial stability, it’s far worse to avoid the truth and sink deeper into debt. Make the right decision by facing your financial problems. Make a list of goals to pursue (e.g., savings, debt reduction, etc.) and find ways to achieve them together. This strategy will strengthen your relationship by reducing your stress and allowing you both to function as a team. You can’t lose.

Mistake #3: Carrying too much debt.

The average person brings some amount of debt into their marriage, whether it’s student loans, a mortgage or unpaid medical bills. “For better or worse” applies in this situation; making the most of your marital income is part of the deal, but that doesn’t mean you should overlook future transgressions:

Michael and Shari decide to buy a home in their fourth year of marriage. Their gross annual income is $75,000 and they want to spend no more than $225,000 on a mortgage. When they meet with a broker for loan preapproval, they are shocked when their application is denied. “I’m sorry,” he says, “but your individual and joint debt affects how much we can offer you and your credit scores are significantly lower than we’d like.” This is the moment Michael and Shari discover the whole truth about their financial situation.

Maxing out credit cards and overspending on homes and cars can drastically affect your relationship’s stability and your ability to pursue new opportunities. Focus on the lessons in Mistake #2 to avoid this mistake as well. Don’t abuse the language in your marriage vows.

Mistake #4: Making unilateral decisions.

“I don’t feel heard” is uttered daily in marriage counseling sessions throughout the world. No one likes to feel insignificant, and making unilateral decisions is a great way to accomplish just that in your own relationship. Both members should understand the facts surrounding their finances and stay involved in monetary decisions. Consider Shari and Michael’s plight:

After seven years of marriage, Shari and Michael are struggling. Despite their newfound financial honesty, they are years away from paying off their debts and repairing their credit score damage. Shari is content to take things slow but Michael is impatient. Unbeknownst to Shari, he decides to use their savings to pay off one of their credit cards. Shari discovers his deception a month later when she checks the balance of their savings account. She is furious with him and terrified that Michael has exposed them to future hardship.

The lesson: When in doubt, talk. It’s important to keep both spouses on the same page. Discuss important financial issues before making decisions on your own.

Mistake #5: Failing to communicate.

Relationships rely on communication to function and flourish. Without it, your marriage is doomed before saying “I do.” If you have ever bounced a check because your husband overdrew from the account or missed a mortgage payment because your wife assumed you would take care of it, you understand the importance of active communication. As Shari and Michael learned, failure to communicate could lead to a failed marriage and long-term financial woes:

Lack of communication has taken its toll on Michael and Shari; they file for divorce after 10 years of marriage. Despite their legal freedom, both spouses continue to struggle after the divorce settlement:

  • Michael’s credit score is 660.
  • He is still paying off his student loan balance, which increased to $54,000 after deferring payments for several years.
  • He is responsible for half of the joint debt acquired during the marriage, including a $5,700 credit card balance and a $355 monthly car payment.
  • He cannot afford his own apartment and is forced to find a roommate.

Shari continues to experience financial trouble as well:

  • Her credit score has dipped into the 620’s.
  • The stress of the divorce forced her to quit her job, leaving her without a steady income. She moves in with her parents.
  • She cannot afford to pay her half of the marital debt and the remainder of her personal debt.
  • Collection agencies begin to call and threaten to sue. Shari considers filing for bankruptcy if she cannot find a new job, a decision that will destroy her credit score for up to 10 years.

The bottom line: Financial responsibility doesn’t end with divorce. Prioritize your marriage and your money by practicing an open dialogue. Don’t allow silence to envelope your happiness. 

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