I usually write about somewhat lighter topics – a podcast review or a blog about how to combine finances with a partner. Today I want to talk about a subject that alarms me, and I see it with some regularity: an imbalance of power regarding finances. I’m looking at this as it relates to married couples or long-term partners who share finances.
It’s fine if one partner is the primary financial person in the household – paying the bills and possibly making most of the investment decisions. Sometimes it falls much more in one partner’s skillset and interests than the other person. However, both partners should have a voice in how the money is spent, saved, donated, or invested. Each has a responsibility to have a basic understanding of the assets, debts, income, and expenses.
Here are some examples of the types of items that I think both people should have some idea about:
• The balances and monthly payments on any debts. You don’t need to be able to tell me your mortgage balance down to the penny off the top of your head, but you should have some idea what it is, and you should be able to look it up relatively quickly and easily.
• Which banks or investment firms are holding your money and roughly how much is in the accounts. Is your 401(k) balance $10,000 or $500,000? What about your spouse’s?
• How much money is coming into your household every month.
• Are you saving and/or investing every month? How much and into what accounts?
• How much did you spend on your vehicles? How did you pay for them – savings or loans?
To clarify, I think it’s okay for each party to have a level of privacy around some money. For example, you might both contribute to a joint account for the household expenses proportionally to each of your incomes, and each maintain a separate account that you can spend at your pleasure and don’t have to account for to the other person. That’s a healthy system if it’s jointly agreed to, and it doesn’t worry me at all if that’s what you’ve decided works for you.
However, both parties should have a sense of all investments, regardless of whose name they’re in. Retirement accounts can only have one person’s name on them, but they’re being built for the future financial health of the couple, and the balances should be available to both parties. I was a stay-at-home mom for a while, and so all of our retirement savings was done through my husband’s employer retirement plan. That doesn’t mean it’s all his money and I have none from that time period.
But what if we’re not talking about a healthy balance of decision-making? If all of the financial decisions are dominated by one person, the culprit is likely one of two things:
(a) the passive party is intentionally putting their head in the sand and not stepping up to shoulder their share of the financial decisions, or
(b) the decision maker is controlling the information to the other party, which is a form of financial abuse
If you are a person who has eagerly abdicated all financial decisions to your spouse, consider your reasons for that. Does the thought of money make you so anxious that you avoid it at all costs? Talk to your partner. Ask them how the arrangement is working for them, and find out whether your relinquishing of all responsibility is negatively affecting them. You are leaving them to shoulder the whole burden themselves, without a real partner to lean on.
I’ve seen marriages where one party is deeply immersed in the daily money management and is keenly aware of mounting debt, while the other person is blissfully ignorant and is then treated to a shock when they have to face reality. It’s not fair to either party, and regular and honest communication is the only real solution. If the thought of open conversations about money is stressful to you or causes a lot of anxiety, this is an area where therapy might help.
If you need more motivation beyond being a good partner, consider what you would do if your spouse or partner got sick or died. How would you access your accounts and make sure the bills are paid? Do you know where the passwords are kept? Would you know where to look to track down your investments or retirement accounts? If your spouse has a will or life insurance, do you know where you’d go to access those important documents?
Option b, financial abuse, is very real, very common, and deeply alarming. Here are some frequent signs of financial abuse:
• Your partner controls all of the accounts and won’t allow you access to them.
• Your partner gets defensive or angry when you ask basic questions about your joint finances.
• If your signature is required to file a tax return or get a loan, your partner doesn’t show you all the related documents – you’re only allowed to see the signature page.
• You’re asked to sign forms that you know contain fraudulent information.
• You are discouraged from working or having your own money, or the other person controls your paycheck from the moment it is deposited.
• Your partner refuses to tell you how much they earn.
• Your spending is scrutinized and criticized.
If these red flags sound familiar to you, please take a step back and consider what might be going on. Financial abuse keeps many spouses from leaving their partners because they’re afraid they won’t be able to support themselves and their children, but there are resources and legal protections for people who have been subjected to financial abuse.
Consider who in your life might be knowledgeable about professionals or resources that might help. Your local bank teller might have had training on financial abuse, or might be able to direct you to someone who has. If you’ve been hiding your spouse’s misconduct from your family, consider reaching out to them. If you’re concerned that your partner is looking at your internet browser history, head to the public library and search for resources on the public computers there. Search for “IRS Innocent Spouse Relief” if you’re worried that you signed a fraudulent tax return (or someone signed on your behalf). Your state may have laws on the books which provide relief for someone who was subjected to financial abuse. Search your state’s name and the term “financial abuse” or “economic abuse.” Contact your local domestic violence organization and find out if they have information or resources. The two articles below are a good place to start.
You’re also welcome to contact me, and I will give you the best advice I can, free of charge. You are not alone.