In a perfect world, couples will align their finances in complete harmony before getting married. It can be a huge problem if your partner is in the habit of spending too much. After all, finances are a major part of the marriage, and if you are not on the same page it could spell disaster. But since this is not a perfect world, many couples find themselves pulling in opposite directions where money and spending is concerned.
How can you deal with a spouse who is overspending, and may even be a spendthrift? As unpleasant as this task will be, it is completely necessary. A spendthrift spouse can leave a couple broke, deep in debt and even with a bad credit rating.
Avoid angry confrontation
Sometimes you know if your spouse is a spendthrift. There are signs – casual ways that spending is taking place, progressively higher credit card bills and an increasing pile of possessions that are not entirely necessary.
Other times, the bad habit is discovered by accident. It comes with the sudden discovery of a large credit card bill that you never knew existed. Or it could be the discovery of a savings account with a once healthy balance, now drained down to next to nothing.
When that kind of event happens, you might lose your temper and get ugly. Hostility is even a natural response to uncovering an ugly secret. But as much as that reaction might feel good, you have to avoid angry confrontation.
Turning the discovery into an instantaneous conflict may cause the offending spouse to get defensive, direct blame toward you (surprise!), or even shut down, resulting in a stalemate. Instead of angry confrontation, you’ll have to approach your spouse in a calm and understanding manner.
The crisis is now out in the open, and the direction needs to center on fixing the problem. If you approach it this way, your spouse might be relieved that it is no longer secret, and agree to improving the situation going forward.
Coming clean about money
If such a situation is uncovered, it is absolutely essential that both parties come clean about any money matters. There can be no hidden credit card accounts, no secret savings accounts, and no draining of common accounts without the other’s knowledge.
The purpose should be to put an end to a pattern of lies about money. Only when you have full disclosure
can you get about the business of developing mutual financial goals that you are both willing to work toward.
Put an end to “yours and mine”
One of the most effective strategies to ending money secrets is by creating joint bank accounts. Separate bank accounts can work if both spouses are roughly on the same wavelength as far as money is concerned. But if one or both spouses are not completely responsible, it separate accounts can enable over-spending.
You will want to have as many accounts held jointly as possible – checking accounts, savings accounts, investment accounts and even credit card accounts. Each of you should review the statements from each account on a regular basis. “Yours and mine” may sound equitable in theory, but in real life separate accounts can feed and hide a spending addiction.
One great way to create financial transparency is to use an online bank like EverBank. They have a wide range of products and services (almost all free) and they also offer wonderful customer service. If you share passwords and simplify your accounts, there will be no financial secrets in your family from that day on.
Establish common financial goals
Once you have confronted your spouse about a spendthrift problem, you both have come clean about monetary affairs, and rearranged your financial accounts, the next step will be to establish common financial goals.
It may not be possible to end spendthrift tendencies directly, so what you can do is create a higher purpose. Think of it as replacing a bad habit with a good one.
In a calm moment, you and your spouse must create a financial vision for your future. This can include big picture goals such as early retirement, paying off your mortgage early, getting out of debt completely, and providing adequate funding for your children’s college education.
The idea is to create financial priorities that will get the lion share of your money, and reduce the amount that is available for free spending.
Allocate money for free spending – after the big stuff has been taken care of
It will be almost impossible to cut off a spendthrift spouse financially. That being the case, there will have to be some provision
made that there is money for free spending. As much is the word “allowance” is a dirty word within a marriage, you may want to set up something similar.
You should sit down each month, pay all the household bills, and then fund your chosen financial priorities. With the money that is left over, each of you can take an allocation that will be yours to do as you wish with.
That will allow the spendthrift spouse to spend money fairly freely, however it will also very limited to keep it from going too far. That will also give each spouse a sense of personal control over your joint finances.
In a way, you’re allowing the spendthrift spouse to continue to spend money, just not so much of it.
Have you have to deal with a spendthrift spouse problem? How did you resolve it?