The Money Couple, First Comes Love Then Comes Money:

The money couple have written the book "First comes love, then comes money". They have some very strong views on how couples should act with money. We at Mr Home Budget got to pick there brains. For more information on them check out there website click here.

For the people who are new to “The Money Couple” maybe you can tell me what your history is?
Scott: Bethany and I have been married for 14 years this July, and we have a combined 38 years financial planning experience. So we really came at this whole subject of Love and Money with a financial background, and what we found and what really put us on this journey of how couples view money, talk about money, and work with money, out of our financial planning process.

We would do everything right. We would put their retirement plan together, take care of their insurance, really check off all the boxes which we thought would give a couple a great financial relationship. We found that the divorce rate stayed the same and couples continued to fail, when it came to their marriages and money.

So this put Bethany and me on a journey to really understand how and why couples look at money the way they do and why they deal with money the way they do. And most importantly, how it can hurt their relationships. So while doing our research, we found that 70 percent of all divorces are due to financial difficulties. We really wanted to crack that code and understand why these couples failed.

Bethany: Now we discovered a few things when we dug a little deeper into why 70% of divorces were due to financial conflict. But when we heard financial conflict, what we instantly thought was that there was something wrong with the couples’ financial plan. However, what we found was its not really the financial plan which is broken; it’s the financial communication or what we call the financial relationship.

Basically, what a financial relationship is how well you communicate when a decision about money is involved. If you think about it for a minute, money is involved in just about everything you do as a couple. For the big decisions like what sort of house you are going to buy, or what sort of car you are going to purchase. To the mundane everyday discussions, like whether you are going out to eat— there is a money component to it. What grade of petrol are we going to put in our car? What brand of shoes are we going to buy? Where are we going to get our coffee? Everything has a money component to it.

So every single day there are discussions about where money is involved. And what we know is it is those discussions where we don’t agree and look at things the same way that the conflict happens, and this is what puts pressure on the relationship. Not having a financial plan doesn’t usually stress the relationship. We know this is important, but we are talking about something much deeper, which tests the relationship every day!

Adam: So were you guys always good with money?
Scott: Well, that’s an interesting question. When we first got married, it was a huge wake up call for us. We bought a property which needed to be fixed up. So we fixed up part of the property, but we got into some trouble with the kitchen. Suddenly we found ourselves $17,000 in debt to remodel the kitchen and we had no financial plan.

So part of the reason we try and speak to people so much, and in particular couples, is because we have made the mistakes. We made the mistake of not communicating about money. We have made the mistakes about not understanding our money personalities and how this affects our buying, spending and saving. So as a couple, we have made our own mistakes and dealt with a lot of our own issues through those mistakes which has helped us to work with couples.

Bethany: We have developed a financial relationship system or a series of steps which couples can take to understand each other and have those everyday discussions in a way which will really bring you closer. We have narrowed it down to 5 money personalities. We find that 65% of people who are married are married to their opposite money personality. And if you think about it, if you see money differently and you agree money affects almost every decision that you make as a couple every day and you don’t see it the same way then no wonder there is so much conflict. We believe that understanding each other’s money personality is a key step towards communicating every day. This can have a really positive impact on your marriage, and bring back a connection that you were used to when you were dating.

In your book you talk about financial infidelity. This sounds quite serious. Maybe you can give the readers an overview of this?
Scott: Financial infidelity is really any kind of lying, cheating, or secret bank accounts. It is where you are going out of your way to make sure you are not being 100% transparent when it comes to money. What we have found with financial infidelity is it runs pretty rampant. Especially now, when you can get a credit card and pay it online, because your spouse will never have to know about it.

We really compare sexual infidelity with financial infidelity, because often it starts with a small thing like a cup of coffee but then it blows into a full-blown relationship. Financial infidelity starts the same way. You tell yourself, “I’m only going to have this credit card which my partner does not know about, but I’m only going to put $1000 on it.” But then it turns into $2000, $3000 or $4000. What we find with financial infidelity is because we all hold money so tight and because it does affect nearly all our decisions, that financial infidelity can have the same devastation to a relationship as sexual infidelity because it’s cheating and lying.

We found there are five causes for financial infidelity.

1.Financial Separation: Where couples will say to each other, “What you do with your money is up to you. I will do my own thing with my money. And we will just live separate money lives.” We find financial infidelity is very hard not to have when you are in this situation.

2.Overspending in debt: We find many couples are both lying about secret credit cards and they might each have one. So overspending in debt is huge.

3.Lack of planning: What this comes down to is it usually happens with couples who have been married a little bit longer. Some might be heading into retirement and neither had really talked about their money or done a great deal of planning. It also affects them when their kids are heading off to university and the parents haven’t saved or put any money aside for that. This can cause financial infidelity.

4.Control: This usually means there will be a 100% chance of infidelity. If one person is controlling the finances you are basically pushing the other person into infidelity.

5.Money Hiding: This is hiding money, stashing credit cards or gambling without the other person knowing.

Adam: In your book you talk about money personalities. You have split people into five groups. Could you explain what you mean by this?
Bethany: Now what is the key to making sure financial infidelity does not happen in a relationship? One of the ways we found is to really know what sort of money personality you have. The five types are a saver, a spender, a risk taker, security seeker and a flyer (a flyer is someone who flys by the seat of their pants, and money is not really on their radar).

What we have found is that everybody has two of the five money personalities. A primary one and a secondary one. Let me give you an example of how this plays out in Scott’s and my relationship. We are both primary spenders, so our first instinct is to spend money on ourselves or others.

But our secondary personality is the opposite. I’m a secondary risk taker and Scott is a secondary security seeker. So we are absolute opposites. So when I see an investment opportunity, I want to jump all over it, but Scott in his wisdom, with his security seeker hat on says let’s do the research. It can be very good to be married to your money personality. But you need to understand it, because if you don’t, it will be a big problem.

I could look at this above example like “Oh, give me a break; don’t be such a drip.” Then he could look at me like “Oh gosh, she does whatever comes to her mind.” So this is what wears on relationships because you irritate each other and you don’t understand the other person’s perspective or their decision making process. So it is really important you understand your partner’s money personality, so that when you don’t agree on something, you watch and look for your money personalities and how this plays into the decision.

Scott: Realistically out of the five money personalities, you could have 4 out of the 5 in a relationship. So you have a big opportunity to clash over cash. It doesn’t necessarily mean your relationship is not going to work, or it’s beyond saving; it’s just really important to know, because it will show and explain so much to you when it comes to those different money personalities.

Adam: You have worked with a lot of people over the years. Is there a case in your mind which is a special one that really sticks out?
Scott: We had a couple come in 3 months ago who were on the brink of divorce, and it was all over money. What was happening was he was a spender as his primary. She was a saver as her primary. He was a risk taker as his secondary and she was a security seeker. So they had four of the five money personalities in this relationship.

So she was trying really hard to control the money and sticking them on a very rigid budget. He was fighting against the budget and just going out and spending. A lot of the time he was spending just to annoy her.

When they came in our office there was so much resentment and so much anger, and there were control issues on their side of the table. We gave them an assignment when they left, to talk about some of the positive aspects of their money, and talk about some of the negative aspects of their money. Really, the pros and the cons.

When they came back we had them read through all their pros. What was good was for the first time they heard from each other what the other appreciated about their relationship. They said they appreciated the fact they had a house and the fact they had cars. So they had some positive energy.

Then we had them each choose one of their negatives and that was what they started working on. For instance, she really wanted some money in an emergency fund. But she didn’t even know how much that should be, so we came up with a dollar figure that she would need. They funded this figure in about a month and half. All of a sudden she felt like she had been heard and her needs had been met. And for him, we allowed him a sum of money to spend without any scrutiny from her. This was money he could do whatever he wanted to do, without her looking at every cent.

By the third meeting, we had a whole plan in place about understanding their money personalities. Giving each of them freedom in their relationship, so both felt heard and both of their money needs were being met. Now three months from when they started with us, their marriage, and budget is right back on track.

Adam: What is your opinion on credit cards?
Bethany: One of the things that we have learned is that whether it is a credit card or any other kind of loan it’s important you agree on it. What happens is one person will be a saver in the relationship and the other person will be a spender. The spender will get a credit card and the other person is not too keen on the idea. So there is not a mutual agreement on this decision.

There are two things you need to decide prior to getting a card.

1. 1.How and what you will spend on it.
2. 2.How you will pay it off.

Some people are only comfortable if their credit card is paid off each month. Other people (which we do not encourage) say having some outstanding debt will not hurt anyone. But what is important is you need to agree on it prior to getting into this position. Because there are a lot of people who are risk takers and they want to invest money in order to make money, sometimes you have to get a line of credit to do this. But not everybody agrees with this thinking.

It’s very important as a couple that you talk and agree on your money decisions. Also understanding each other’s way of thinking about money so that in everyday discussions you can be on the same wavelength.

Scott: One of the things which most couples assume in their financial relationship is that if they don’t have any credit card debt they will have a good relationship. If we have this boxed and checked off then everything will be fine, but this is not always the case. What we often find is when couples get out of debt they are still looking at each other and they are still having a hard time talking about money, so it hasn’t really relieved that financial stress because their financial relationship is stressed. So really, getting back to your question is having debt or credit cards a good thing? “NO”. But every family is different; every person will look at it in a different way. It is a family, by family basis on how you view debt, how quickly you get rid of credit cards and you must make sure you are on the same page.

There is nothing worse than one person controlling the situation and getting the family out of debt in 12 months. Then suddenly you slip right back into it because your spending habits slip right back.

Adam: In 2008, the Global Financial Crisis hit. You both have been in the industry a long time. Did you notice a difference in people’s behaviour
Scott: A 100% change. Definitely, the house prices went down, stocks went down, a lot of people lost their houses and unemployment has doubled over the last ten years. There has definitely been a refocus which we have seen. Where in the past, couples have not talked quite as much about money because there was plenty around due to the housing market going up, the stock market going up and unemployment being so low. Now that we are not in this same situation, people have had to rediscover what their new financial norm is. One of the things which has been a new financial norm is a lot of two income families became one-income families. Houses are not supposed to lose money but a lot of people have lost their houses. A lot of couples have had to become more strategic with these new times, and they have to keep their lines of communication open.

Adam: If you guys could go back to your 21^st birthday, what would you tell yourself to learn about money?
Bethany: I would teach myself my money personality. If I knew I was primarily a spender and had a secondary personality as a risk taker, I would have implemented more tools to make sure I had more savings. There is no right or wrong money personality, but it is so crucial to understand yours. You need to know the positive aspects of it and the challenges and then put things in place to help you with the challenges you could have.

For example Scott and I are both spenders, so we have set up an automatic debit from our bank account into savings. This makes sure we don’t see or have the opportunity to spend it. Plus I would tell myself not to take so many risks with money. But had I changed the way I viewed money all the way back to when I was 21, I think I could have done some really good things.

Scott: As already said, my first inkling is to spend. But I also would always assume everything would get better financially. You have high and low financial times. We need to live in the moment but also plan for the future. But at 21, I would have reminded myself that I needed to be a bit more balanced. But be very aware that my primary instinct was to go and spend money.

Adam: Do you think a lot of couples prior to marriage think getting married will change their differences on money. Like marriage will solve all their problems?
Bethany: One thing we know is that talking about money in the traditional sense is a romance killer. You’re dating somebody and you’re all excited, the last thing you will ask is how your debt is going? Let me see your credit rating; do you own a home and those types of questions. This normally does not happen.

But what we need to do is make sure there is some compatibility and understanding of each other’s money situation. You need to talk about this subject because it will rule your life going forward. You need some non-threatening ways to bring up money. If you are with a person and they say they don’t talk about the way they think about money. This in my eyes is a big red flag, and you need to watch that.

How a possible partner views money is going to affect your life, but it has the potential to affect your whole life.

Adam: A lot of Baby Boomers in Australia are on the verge of retirement. However some of these people have little or nothing saved for retirement. Is this something you have a problem with in the USA? And what is your opinion on this?
Bethany: We do as a matter of fact. There are a number of reasons why retirement for baby boomers will be different. A number of baby boomers will have no choice but to work through retirement.

A lot of baby boomers like their current lifestyle. So they need to make sure their resources are there and they are ready for the lifestyle they need as a couple. Baby boomers will look at retirement very differently than we have in the past. It’s really important that couples talk through some of these issues.