3 Big Mistakes Couples Make With Money

3 Big Mistakes Couples Make With Money - picture of roll of bills secured with rubberband on green background

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The following is a guest post from CollegeMom at ConsumerFu.com. If you are interested in guest posting at Club Thrifty, please see our guest posting guidelines.

One of the biggest mistakes couples make is allowing love to render them financially stupid. We’re so afraid of hurt feelings, we fail to sit down and talk about money. We talk about how many children we want, at what age we want to retire, where we want to travel and all sorts of other hopes and dreams. What we don’t do is use common sense to guide discussions about money.

Will you continue to have separate finances after marriage? How much insurance will you buy? Who pays which bill? Will you have joint savings accounts? Will you contribute equally to your IRAs even if one spouse earns twice as much? How will you handle inheritance – expected or otherwise?

My husband and I didn’t talk about all of these things, but we talked about enough of them to know that when it came to money, we were kindred spirits. After almost 21 years of marriage we’ve learned a lot from our own experiences and those of friends and acquaintances.

The following are a few other big mistakes couples make with their finances. The stories that accompany them are true, but the names and some of the details have been changed to avoid needlessly embarrassing anyone who might recognize themselves in these scenarios.

Mistake #1 – Failing to protect premarital assets

If you have assets to protect, get a prenuptial agreement. Don’t cave to the guilt. Your future spouse isn’t marrying your assets. He is marrying you. Good, take the assets out of the equation. Have him sign a prenup.

In this example, the prenup wasn’t required for their first attempt at marriage since neither party had any wealth. Greg and Claudia represented everything that is bad about couples and money. They never communicated about money. He defined the word cheap and she enjoyed spending every cent they both made.

They’d been married about 12 years when Greg received a $300,000 inheritance check after his grandfather died. Claudia got angry after he put it in an account that bore only his name. Within a week, Claudia had packed up the kids and was headed back home to mother. She was determined to get her hands on half of that inheritance, but the law in our state was on his side. She did manage to get a 50/50 split of marital assets and the kids.

Greg pined away and begged for Claudia to come home. About 11 months later, after she’d blown through the $60,000 she took from the marriage, Claudia decided she did love Greg and returned home to him. This is where Greg made his biggest mistakes. Not only did he fail to get a prenup (technically it would have been a postnup) to protect his assets, Greg put both the inheritance and his portion of the marital cash into a joint account. Four years later, she once again walked out and this time she and her attorney got half of everything.

Prenuptials get a bad rap from people who seem to confuse asset protection with selfishness. In some cases selfishness might be the motivator behind the request for a prenup, but in most cases it is no more true than the assumption that all people marrying wealth are greedy gold diggers.

Mistake #2 – Hiding debt from your spouse

Don’t take debt into a relationship without letting your future spouse know and don’t secretly incur debt in a marriage. Eventually, you will be found out.

Max and Leila were friends of ours who seemed to be perfect for one another. He earned a solid six figure income while she stayed home with their two children. Our families did a lot together and outwardly they were the golden couple.

About eight years into the marriage things started to fall apart. It turned out that she had received unsolicited credit card applications in the mail and on the strength of household income(his) she had been approved for two different $25,000 accounts. She then proceeded to max them out. We had a hard time understanding how he didn’t notice her spending habits but apparently she foot the bill for some weekends away with girlfriends and spent on things that didn’t catch his eye like spa services.

Credit has been so easy to obtain over the past 20 years that it is hard to imagine people getting married without bringing some debt along with them. The time for full disclosure is before you walk down the aisle or combine your finances.

Mistake #3 – Making stupid decisions with free money

If you live long enough, you will eventually have money drop in your lap. Don’t be stupid with it. It may not be huge sums, but any money that drops in unannounced deserves to be treated with respect.

My final example involves lottery winnings. Cameron and Shannon won $100,000 in our state’s lottery. They aren’t from this area and often say they want to move back to their home state after their son graduates from high school in four years.

I was stunned when Shannon told me how they would spend their winnings. They are putting about $65,000 into a six year old house they plan to sell in four years. They might as well light a match to the money. Along with a screened-in porch and extensive tiered decking, they are putting in a pool that alone costs $35,000.

If they were planning on staying in their home, some of these decisions would make sense. For this couple, moving home in a few years takes them back to an area with a much higher cost of living. Imagine the down payment that money would have provided for the next home – the one that will probably carry them into retirement.

If money magically appears in your life, take some time to think before you spend. Put it somewhere safe and allow yourself to dream on paper. Do some math. Pay any taxes due before you spend a penny on things you want. That alone might encourage you to save the rest. If not, imagine how you’re going to feel when that money is gone and you are once again living paycheck-to-paycheck or bonus to bonus.

There are plenty of other mistakes couples make with money, but outlining them all would be a truly depressing exercise. Marriage is hard work. Don’t make it harder by making stupid decisions about money.

CollegeMom is a staff writer for ConsumerFu.com and is the mother of two college-age daughters. She and her husband live on four acres of old farmland with two dogs, one cat and a large number of gardens.

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  1. The part about prenups seem very cold indeed, but just by looking at the stats of how many people get divorced it would be stupid not to have one, or keep separate accounts. I am not married and we only have one joint account where we put money for common expenses, all the rest is ours to manage and there are no money fights. We are also very transparent and talk often about money, so we know each other’s goals and net worth.

    1. It might seem cold, but a prenup doesn’t prevent people from using premarital assets to make life more comfortable for those they love. It simply protects premarital assets if they fall in love with the wrong person.

  2. We didn’t go with a pre-nup, but I can certainly see why it would make sense for some people. One of the things that helped us was managing our money as if it was joint before we were married. It wasn’t the same as when we actually did join everything, but it was similar enough that we weren’t shocked at the transition. I also think Pauline’s comment about being transparent and talking about money often cannot be emphasized enough. Whenever we do get into any kind of trouble, it’s usually because we haven’t talked recently enough.

    1. I think managing money together prior to marriage is a great way to work out and ease into a financial life together. My husband and I did the same thing…a long time ago! It didn’t solve every issue, but it gave us great insight into how the other felt about and worked with money.

  3. Prenup should be discussed. But just like said, others avoid it because they might hurt the feeling of the other. If they are only open-minded about it. Not just prenup but other financial matters as well.

  4. These are all really important points! Hiding debt is the worst because finances are difficult enough when NOTHING is hidden from your spouse.

    1. Exactly! Marriage is hard work and so very worth the effort, but why would you want to make it harder by hiding something that will impact the marriage.

  5. I think key in a lot of this is having good communication and knowing where each other stands before getting married. We did not discuss everything before getting married but we had clear communication and cam to the same financial philosophy before we got married. That has made things much smoother for us as new things pop up.

    1. Great point, John. My husband and I have actually gotten closer in our approach to money and savings as time has gone on. It helps that the older I get the more willing I am to admit he is right about a lot of things. 🙂

    1. I agree, but it is too late. After taxes I think they have spent it all on improving a 6 year old home that was already pretty stunning.

  6. Wow that couple who won the money needs to do something better with it! That does not sound like the best idea to me.

    1. Agreed. Unfortunately, it is too late. I may be boring, but there is nothing wrong with having the money saved to handle all the things life throws your way.

  7. Great points. On the Greg and Claudia example….his huge mistake was not recognizing the huge problems in their relationship when she walked out the first time. Leaving when someone gains an inheritance is the last straw, not the first. Great guest post. Thanks for sharing these tips.

    1. Thank you and you’re right. I don’t feel much sympathy for Greg. I have no doubt he would have used the money to benefit his family if Claudia had given him the chance. The inheritance did come as a surprise, so they’d never had a chance to talk about how they would handle the situation. Still…the marriage was obviously already in trouble to all who knew them at the time.

  8. best comment of the entire post “…take some time to think before you spend. Put it somewhere safe and allow yourself to dream on paper.” Hell make a full blown chart of what the money could be used for and rule out the stupid from it before you decide what to do with it. Although if I won $100,000, I would just be forced to take myself and the woman on a 2 week Caribbean vacation lol.

    1. Thanks, Jeremy. That advice comes from personal experience. That’s how I taught my girls to decide what they would do with money they received as gifts.

      Both are teens and are excellent with money. I hope they continue along that path

  9. Yes, all very important points!! I think it’s so important to remember that with marriage in general, you have a duty to make decisions for the good of the team, not just yourself. We have friends too, in which the wife spends carelessly, even though her hubby doesn’t want her too, yet, he will not challenge her, but just lets her do it!!!! Neither one is acting on behalf of the good of the team. When you choose marriage, it’s not all about you anymore.

    1. Beautifully said! Most marriages aren’t going to be perfect 100% of the time, but how much easier is it to work through the rough parts when you know your husband or wife really is doing what they feel is best for the team (family).

  10. I am all for pre-nups. I’ve been called cold and selfish for saying that carelessness with money is a dealbraker to me. I don’t care how rich someone is, if they’re careless with what they have, it will affect you if you marry or partner up with them.

    1. Not cold at all…very smart. Careless, wasteful or lazy….not great qualities.

  11. I kind of agree with the others that the prenup could cause some conflict. Of course with the divorce rate, it may be a necessary evil. I do think that communication of financial goals and other issues is important and many couples don’t like to discuss it. That’s a big mistake.

    1. It makes you wonder if the divorce rate might drop a tad if more couples broached a difficult financial discussion early on.

      Talking about finances can be difficult even when both parties agree on everything. It’s best to talk early and often.

  12. Money and things like these problems will break up a marriage more than anything else. I don’t know why people are so afraid of prenups. I think it addresses the issue earlier versus later.

    1. I think it is a clear sign of future trouble if both partners can’t talk about a prenup without someone taking offense.

  13. I think the fact that Greg knew to put the money in an account with his name only says something about the relationship. Too bad he went against his instincts. I can see the need for a prenup if you are not on the same page financially. I would have never thought to do something like that because I had no money when we got married. Hopefully, it will never be an issue.

    1. Kim, I honestly hadn’t thought about it that way, but I think you’re right. He knew she was spending way too much on their kids and on a lot of wasteful crap. You’re right…it is too bad he went against his instincts.

  14. Wow, crazy stories. But I know money can be a huge problem. My parents have money problems, and it has caused huge arguments between them.

    Hubby and I are on the same page, although we don’t always agree. It’s important to discuss finances, and have an open communication system.

    1. It’s great that you and your husband talk openly. You don’t always have to agree for a strong marriage, but you do have to respect each other when you disagree. It sounds like you guys are on the right track.

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  15. We’ve totally talked about the “What if we won the lottery?” thing before. I kind of hope we don’t. Because we both have very different ideas. Haha. But I think the best defense against making bad decisions with a windfall is to talk about what you’d do if you ever came across one.

    1. When we were younger the lottery winnings would be used to pay off debt. Now…I’m not sure. We’re pretty boring people! Maybe we’d just save it and travel a bit after we retire.

  16. We were advised to get a prenup before we got married, so we did. Fortunately, it turned out to be a waste of money because we felt the same way about money. About the lottery thing (especially with the $600 million Powerball just being won) just Google “lottery winner stories” — it’s enough to make you never buy a ticket again.

    1. There are some serious horror stories out there about lottery winners whose lives fell apart after winning millions. The first thing I’d do is pay taxes so I don’t end up in the pokey…after that, I have no idea!

  17. We have a prenup. It wasn’t so much about protecting our assets from each other as much as removing a potential strain point. By keeping pre-marriage assets separate, it removes any worry or suspicion about why you’re both there. If I was about to marry someone who wouldn’t sign one, I’d be wondering if they were just trying to get my goodies. If they do sign it, then I know why they’re there and it creates a lot of trust.

  18. Awesome read. We didn’t do a pre-nup because we didn’t have any assets. We got married right out of college and I was in debt. We discussed our finances and we have different takes on how our money is spent compared to most couples, but we are on the same page, so it works for us.

  19. Thanks to Greg and Holly for hosting this and thanks to all of you for great comments! I’m not leaving…just wanted to say thank you!

  20. Kyle @ Debt Free Diaries says:

    So many of these scenarios happen all the time to other people around us, but we never think it will happen to us. My girlfriend and I already keep our finances together, and since we don’t have any assets we aren’t worried about a prenup down the road. We also talk openly and candidly about money, but it took us a while to get to that point.

  21. Great points. I know prenups have a lot baggage associated with them, but as you pointed out – it’s just assets. Assuming you married for love, signing a prenup shouldn’t be an insult. It amazes me how couples that can communicate with each other on everything but their finances. Open communication and creating some shared goals can go a long ways toward marital and financial bliss.

    1. Yes, yes, yes! I see so many people younger than I am building wealth much earlier than I did. I’m sure they are all generous people, but I hope they will think about protecting what they’ve worked so hard to build. I can’t imagine that a prenup would get in the way of true love.

  22. Many couples thrive on dreams fail with money because they never did and continue not to talk about it after marriage. I don’t think I’d go the pre-num route unless I had a fortune to protect. I know getting married is all for one one for all but when the divorce rate is so high and money being the top reason, we all know money talks. Not to say everyone is like that but if you worked hard for your fortune you might want to protect it. Even Hefner bought his new young wife a 5 million dollar mansion just in case he kicks the bucket. Do you think there’s a pre-nup, of course. Cheers

    1. We had no reason for a prenup either, but fortunately we talked early about money. As far as Hef goes….I’m sure even with a prenup his new bride will be just fine!

  23. Money is actually NOT one of the things Brian and I fight about, thank God. I think we both regret not saving more when we were younger, but overall, money has never been an issue with us. We’ve been open about money though, and I think couples need to be more open about money in general.

    1. Good for you! We’re right there with you on wishing we saved more when we were younger. That’s why we worked so hard to instill those habits in our children. Couples do need to be more open about money…not only with each other, but with their children.

  24. My partner and I are lucky – even though we started dating at 18 and 21, we still talked about money and are both on the same page. We’re not doing any of these things (at least – I’m not! Haha)

  25. I think the biggest mistake couples can make is hiding purchases, especially large ones, from each other. A marriage is supposed to be something that unifies a couple, and keeping secrets, even about money, will hurt your marriage.

  26. Along with getting married is the open communication of the couples on all issues including money matters.

    1. Absolutely! After 20 years of marriage my husband and I are very different people than we were 23 years ago when we met. You can’t put a marriage on autopilot or you wind up not knowing much about the person you’ve been married to for 20 years!

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