As a family lawyer, I have learned a leading cause of divorce is financial infidelity and lack of effective communication about finances. In some marriages, one spouse may have little to no knowledge about the health of the couple’s finances, the amount of spending by either spouse or how income is saved or invested. Additionally, financial issues are rife with emotion and can be difficult to navigate if communication is already poor. For most couples, a successful marriage or civil partnership requires effective communication about financial issues and the ability to make important financial decisions together. Below are tips to improve communication about finances.
1. Be informed. On a regular basis, sit down with your spouse to review all the most recent financial account statements, including retirement, checking, savings, brokerage, stock accounts, credit cards, lines of credit, mortgages and car leases. Inquire about life-insurance and disability policies. Transparency works both ways and is key to building trust about financial issues. If you see a big expenditure, ask your spouse for more information.
2. Create snapshots of your estate. Once a quarter, list all your assets and your spouse’s assets and debts with current values. If done consistently, this exercise will allow you to a.) determine whether you are saving, b.) measure whether you are meeting short-term and long-term financial goals and c.) discuss the mix of your assets and debts and whether that mix is appropriate for your situation.
3. Create a budget. Put together a monthly and yearly budget with your spouse. The budget exercise requires an examination of spending versus earnings, a discussion of financial priorities and goals, and provides a mechanism for accountability to each other regarding your finances.
4. Identify short-term financial goals. With your spouse, identify your short- term financial goals, such as saving for a vacation, putting money aside for an emergency fund, saving for a remodeling project, etc. Discuss the trade-offs for such goals. If both of you know and agree on the short-term savings goals, there is a greater chance you will achieve those goals.
5. Identify long-term financial goals. Together, periodically discuss your long-term financial goals, such as paying for children’s college expenses, retirement, the need for disability insurance or life insurance, and providing for an aging parent or disabled child. Communication, transparency and trust about financial issues are essential for a successful marriage or civil partnership. As a family lawyer, I recognize the importance of communication and managing the financial and emotional costs of family-law matters. If you have questions about prenuptial or cohabitation agreements, or other family-law matters, please contact me at 512.454.8791.
Lindley Bain is a partner in the GoransonBain Ausley Austin office. She offers a constructive and financially minded approach to complex divorces, high-conflict custody matters and property. Bain counsels clients to strive for healthy, attainable goals while minimizing the conflict. Bain has a Master of Business Administration in finance and is board-certified in family law. She practices both collaborative and traditional litigation with creativity and compassion while customizing the exceptional family-law service to each client’s needs.
Article original featured in Austin Woman Magazine.