You’ve heard the advice a million times.
Start a budget, fund your retirement account, eliminate your debt.
But it's not just up to you, is it? You have another person in your life who has an equal say in how you handle finances — your spouse.
Maybe your spouse is someone who can't stick to a budget and spends every dollar you make. Maybe you're constantly worried that with those kinds of spending habits, you'll never be able to retire.
Or maybe your spouse is a controller and a tightwad who never wants to have any fun or go anywhere because every penny must be saved.
Let’s be honest; you have two people in your relationship with their own minds and their own habits, and it’s only natural that you don't see eye to eye on everything.
But if you constantly find yourselves arguing about money issues, it might be time to make an important investment because it might just save your marriage.
If you don’t, you may be surprised by how much it could eventually cost you, both financially and non-financially.
Money: The Number 1 Cause for Divorce
Money … it’s the most common reason couples get divorced.
Money issues lead to stress, tension, and a lack of trust, which begins to pull a marriage apart.
Don’t let it fester to the point where you think calling a lawyer and parting company is the answer.
Financial Cost Of Divorce
Divorce is costly, both financially and non-financially. It could be the most costly mistake you ever make.
Just look at the numbers…
1. The Financial Cost of Divorce
According to an article on Forbes.com, an average contested divorce can range from $15,000 – $20,000, with much of this coming from legal costs, but in cases where the dispute is bitter or a huge estate is involved, the costs can skyrocket. I’m sure you have heard or read about divorces among the rich and famous that dragged on and on in the courts and cost millions in legal fees.
In other words, it costs about the same to get divorced as it does to get married … a lot.
2. Child Support
The average couple has 2.5 kids, but let’s say two. (Who really has 2.5 kids?) The average child support payment is $430 per month (according to a 2010 U.S. Census study) or $860 per month.
This number can vary by state; each has its own rules to determine the amount of support paid by the non-custodial parent.
A divorce settlement could consist of child support only, but a judge may award alimony too. This amount varies depending on how much financial support one spouse provided another, and it varies by state — the health and age of the spouses, length of marriage, and earnings — and no standard formula exists.
4. Loss of Home Equity
The average couple has $50,000 of equity in their home that must now be divided up, either by selling the house and dividing the proceeds, or with one spouse receiving the house and the other having to move. In either case, someone loses.
Sometimes, the home must be sold quickly, and the price obtained is much lower than if the couple sold under normal circumstances.
Sales commissions of 6-7%, on average, also reduce the proceeds from the sale.
The longer a couple have been married and the older they are, to the more significant the amount of the equity can be. A couple in their fifties has an average equity of $97,000 according to the U.S. Census Bureau.
5. Additional Housing Costs
After a divorce, one side (typically the male) must move into an apartment or another home, which can double the cost of housing compared to when they were married. This amount can vary by location from $500 – $2,000 per month with another $200 -$300 for utilities (possibly taxes and insurance too).
6. Lost Tax Benefits
A married couple enjoys tax benefits. For example, a couple making $75,000 per year combined will lose about $4,000 per year if each person files as an individual compared to what they paid under married filing jointly. (Yes, one could file as head of household if children are involved.)
One spouse could also lose benefits of dependent deductions and housing interest/tax deductions.
Are There Non-Financial Costs to Divorce?
You bet. Here are some examples found through recent psychological studies:
1. Psychological Effects on Children
If a couple has children, divorce can cause their kids serious problems in both childhood and later in adulthood. While divorce does not guarantee harm to children, it does greatly increase the risks.
In the 2002 book, For Better or For Worse: Divorce Reconsidered, authors Hetherington and Kelly cite a 25-year study covering the children of both divorced parents and parents who stayed together. They found that 25% of the adults of divorced parents experienced psychological or social issues compared with 10% of those from stable homes. While the rate may not be as high as previously expected, it is still more than twice the norm.
Divorce can cause the following issues:
- Substance abuse
- Difficulties in forming or sustaining relationships
- Higher divorce rates
- Academic difficulties
- Experimentation with crime, drugs, and alcohol
- Increased and more frequent illness with slower recovery times
- Increased likelihood of suffering from child abuse
2. Stress on the Couple
Divorce is one of the most stressful events that a person can have in their life. This stress can lead to illness, depression, poor work performance, and chemical addictions.
Some of the contributors to stress include the following:
- Bitter legal battles
- Loss of child custody
- Stay-at-home parent having to return to the workplace
- Issues with children (see prior section)
- Losing friends and family
- Starting over
- Having less money to live on
- Having another person raise the kids
Why Do Couples Fight About Money?
No two people are alike. We are different in many ways, our views on money being one of them. Everyone has had unique experiences that have shaped their money values. Here are the most common:
- Different Personalities – the two dominate differences are when one spouse is a saver, and the other is a spender. Although marriages where both are savers (never having fun) or spenders (financial ruin) can be disasters too.
- One spouse makes more money than the other.
- Different Goals (One spouse wants to save for boat; the other wants an Italian vacation.)
- Support for grown children or other relatives that drags on for months or years
8 Tips How a Couple Can Protect Their Best Investment
Well, I’ve given you a lot of information. The numbers and psychological studies show that investing in your marriage is where you should focus. Here are eight steps you can take today to make sure your investment is protected and grows:
- Respect each other and agree to disagree, but nicely. Communication is always the key.
- Collaborate, don’t dominate. Don’t try to change the other person. Differences can complement. The key is to meet in the middle where both sides win.
- Examine the root of the issues. Savers tend to have fear-based values about money. They fear going broke, working their whole lives, not having enough money for retirement, and not being able to pay the bills. Spenders desire to live for the moment and spend it while they have it rather than wait until they are too old to enjoy it. They want their rewards now rather than delaying them. Each spouse should be aware of these values and have compassion for the other.
- Setup three bank accounts; one joint account for bills and one account for each spouse to spend as they desire.
- Define financial goals. State the problem you are trying to solve — say retirement. Agree on a solution that is good for both. If one spouse wants to save 50% and the other wants to save nothing, meet in the middle at 25%.
- Compare your numbers to the norm or acceptable levels. If an acceptable debt-to-income ratio is 36%, and yours is 49%, you have an objective reason to reduce your debt to a respectable total that both sides can agree to.
- Help older children or relatives become financially independent when one spouse doesn’t want to support them.
- Allow each spouse to set long-term goals to finance dreams. If one wants to purchase a boat and the other desires a two-week Italian vacation, save for both so that each side wins. Setup accounts to save for both dreams, and look for ways to fund the accounts through spending or retirement savings reductions (assuming you are over-saving). Also consider reducing the purchases by buying a smaller or used boat and taking a one-week vacation instead of two.
Begin a Daily Prayer Session for Your Spouse
In addition to the eight tips mentioned previously, let's dive into some spiritual counseling that will aid us even further.
“…with man this is impossible, but with God all things are possible.” (Matt 19:26)
This is my prayer; that your love may abound more and more in knowledge and depth of insight, so that you may be able to discern what is best and may be pure and blameless until the day of Christ. (Phil 1:9-10)
Don’t pray for God to change your spouse. He made them perfect as they are and brought the two of you together for a reason. Below are selected scriptures to pray over each other.
Men – 15 Verses For Your Wife
LOVE AND RESPECT
“However, let each one of you love his wife as himself, and let the wife see that she respects her husband” (Ephesians 5:33).
“And we know that in all things God works for the good of those who love him, who have been called according to his purpose” (Romans 8:28).
HER STRENGTH and ENDURANCE
“But they who wait for the Lord shall renew their strength; they shall mount up with wings like eagles; they shall run and not be weary; they shall walk and not faint” (Isaiah 40:31).
“But let your adorning be the hidden person of the heart with the imperishable beauty of a gentle and quiet spirit, which in God’s sight is very precious” (1 Peter 3:4).
“His divine power has granted to us all things that pertain to life and godliness, through the knowledge of Him who called us to His own glory and excellence” (2 Peter 1:3).
GRATITUDE FOR YOUR WIFE
“An excellent wife who can find? She is far more precious than jewels” (Proverbs 31:10).
“You guide me with your counsel, and afterward you will take me into glory” (Psalm 73:24).
THINK OF HER GOOD POINTS
“Finally, brothers and sisters, whatever is true, whatever is honorable, whatever is just, whatever is pure, whatever is lovely, whatever is commendable, if there is any excellence, if there is anything worthy of praise, think about these things” (Philippians 4:8).
THINK OF HER HEART
“For the Lord sees not as man sees: man looks on the outward appearance, but the Lord looks on the heart” (1 Samuel 16:7).
FOR HER HEALTH
“I praise You, for I am wonderfully made. Wonderful are your works; my soul knows it very well” (Psalm 139:14).
FOR HER WORDS
“She opens her mouth with wisdom, and the teaching of kindness is on her tongue” (Proverbs 31:26).
WHO YOU SERVE
“Whatever you do, work heartily, as for the Lord and not for men” (Colossians 3:23).
FOR HER JOY
“And he said, My presence shall go with you, and I will give you rest.”
1And he said unto him, “If your presence will not go with me, do not bring us up from here” (Exodus 33:14–15).
“Behold, children are a heritage from the Lord, the fruit of the womb a reward” (Psalm 127:3).
FOR HER RIGHTEOUSNESS
“Whoever pursues righteousness and kindness will find life, righteousness, and honor” (Proverbs 21:21).
Wives – 15 Verses For Your Husbands
“The LORD is on my side; I will not fear. What can man do to me” (Psalm 118:6).
THE TEMPTATIONS OF THE WORLD
“Do not be conformed to this world,[a] but be transformed by the renewal of your mind, that by testing you may discern what is the will of God, what is good and acceptable and perfect” (Romans 12:2).
“And my God will supply every need of yours according to his riches in glory in Christ Jesus” (Philippians 4:19).
THE LORD’S BLESSING ON HIS WORK
“Let the favor of the Lord our God be upon us, and establish the work of our hands upon us” (Psalm 90:17).
“And we know that in all things God works for the good of those who love him, who have been called according to his purpose” (Romans 8:28).
“For I know the plans I have for you, declares the LORD, plans for welfare[a] and not for evil, to give you a future and a hope” (Jeremiah 29:11).
“And to esteem them very highly in love because of their work. Be at peace among yourselves” (1 Thessalonians 5:13).
“Be kind to one another, tenderhearted, forgiving one another, as God in Christ forgave you” (Ephesians 4:32).
“Husbands, love your wives, as Christ loved the church and gave himself up for her” (Ephesians 5:25).
TRUST IN THE LORD
“Trust in the LORD with all your heart, and do not lean on your own understanding. In all your ways acknowledge him, and he will make straight your paths” (Proverbs 3:5-6).
“The LORD is my strength and my shield; in him my heart trusts, and I am helped; my heart exults, and with my song I give thanks to him” (Psalm 28:7).
“Whoever walks with the wise becomes wise, but the companion of fools will suffer harm” (Proverbs 13:20).
“Do you see a man skillful in his work? He will stand before kings; he will not stand before obscure men” (Proverbs 22:29).
“Beloved, I pray that all may go well with you and that you may be in good health, as it goes well with your soul” (3 John 1:2).
“The fear of the LORD is instruction in wisdom, and humility comes before honor” (Proverbs 15:33).
How Will YOU Invest in Your Marriage This Week?
Take the first step.
If you and your spouse are fighting about money, maybe in addition to seeing a marriage counselor, why not make an appointment with a financial counselor too?
Why not sit and talk about those deep-rooted money issues that go back to your childhood?
Choose one or two of the suggested solutions to work on.
And begin a daily prayer session for your spouse.
Marriage is hard, and finance is too, but people give up way too easily.
Don’t be one of them.
This post was written by John. John has been married for 27 years and is the father to two daughters. He blogs at Simple Financial Fitness, where he writes about keeping personal finance easy. He works fulltime in accounting, and as a freelance writer.