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Money disputes lead to divorce
According to research on the causes of divorce conducted between 2004 and 2017 at the University of California, San Diego (involving 5,300 couples in Germany), differences in risk-taking propensity play a key role. Economics professor Marta Serra-Garcia, the author of the study[1] explains that while money disputes are a common cause of divorce, the main factor increasing the likelihood of a breakup is precisely the difference in risk-taking propensity. She adds that couples with the most divergent risk preferences were twice as likely to divorce as those with similar approaches. Discrepancies in this area are also the strongest predictor of divorce among all variables analyzed. Naturally, the study also examined the impact of education level, background, and religion.
Significant differences in willingness to take risks can also lead to couples being less likely to decide to buy or renovate a home, as this is a high-stakes decision and it will be difficult for them to reach an agreement with such different preferences. Furthermore, a person who does not feel much stress when making such decisions may even downplay their partner's problem with "signing a few papers for the bank"... If, however, one were to talk more deeply with each partner about what a given financial decision means to them, what emotions it triggers, and how strong those emotions are (especially on a scale of stress or anxiety), one would get the impression that they are talking about decisions of completely different weight!
People also come to me for financial coaching when they have serious conflicts in their relationships stemming precisely from completely different approaches to broadly defined financial issues. Especially those involving risk, credit obligations, or attitudes toward spending and saving.
[1] Christine Clark, Differences in Financial Risk Preferences Can Make or Break a Marriage, 27.07.2021 https://ucsdnews.ucsd.edu/pressrelease/differences-in-financial-risk-preferences-can-make-or-break-a-marriage
What can you do to ensure money arguments don't destroy your relationship?
First and foremost, money should not be a taboo subject in the family. Hoping that "we'll work it out somehow" can lead to arguments, resentment, and even separation. Although it may sound unromantic, when you start "running a household together"—especially before you decide to get married or have children—it is worth talking to each other not only about the division of chores, mutual expectations regarding the relationship, or the influence of your worldviews on your life together and the goals you are striving for. It is also good to directly address the issue of money management, planning, and the division of expenses: whether bank accounts will be joint or separate and who will be responsible for which areas of the household budget. It is best to say openly and honestly what your approach to saving and spending is, what level of financial risk falls within your psychological comfort zone, and to what extent taking on debt (long-term or short-term and for what expenses) is acceptable to you, versus what generates immense stress or anxiety.
During the formative period of a relationship, it is helpful to observe how your partner manages moneyFor example, if someone spends almost their entire paycheck on luxuries right after payday and then has to drastically cut back or borrow money by the end of the month, that should be a red flag for us—especially if rational spending and monthly savings are essential to our own sense of comfort. Instead of casting blame, it is worth honestly explaining to your partner how you see things from your perspective, what emotions this situation triggers in you, and why you perceive it as a problem. A conversation about the baggage of experiences, beliefs, and habits we brought from our childhood homes, and whether we want to repeat those patterns, can also clarify a lot. I have heard many clients say, "My parents were always fighting about money or throwing expenses in each other's faces, and I don't want that." However, we sometimes inadvertently repeat these unwanted patterns, and that is when it is worth analyzing the mechanisms that drive us to do so.
Another problem is that we are often unaware of how our family home and environment have shaped us or what patterns we are operating under. The key is to increase self-awareness regarding our approach to financial matters and whether it helps us in life or needs to change.
How to talk to loved ones about money?
When a partner's action is painful or difficult for you to accept and you want to talk about it, prepare for the conversation first. Remember the principles of constructive feedback so that the discussion does not turn into an argument or a exchange of grievances. Focus on specific situations or behaviors. Distinguish facts from your opinions. Avoid phrases like: "you always spend money irresponsibly," "you never pay bills on time." Such generalizations only make your partner less willing to listen to you, and they are also easy to refute by finding even one example where the person being criticized acted differently than you claim.
One method for speaking openly about our emotions or feelings—without blaming or escalating conflict—is the so-called "I" statement, where we do not attribute bad intentions to our partner, but instead state directly how we feel about what they did. For example: if a loved one overdraws the account without our knowledge, instead of saying, "You don't care how I feel! I've told you so many times not to overdraw the account!", it is better to say: "When you overdraw the account—even though you know how much it stresses me out—I feel as if you don't care about my peace of mind/as if you don't care about my feelings."
Remember: during conversations about finances, do not let emotions take over. If things get too "heated," it is better to pause the difficult discussion and agree on when you can return to it calmly.
If a couple cannot constructively resolve financial disputes, it is worth considering the help of a financial coach or even a psychotherapist. The root of financial conflicts can prove to be very deep, touching on fundamental issues such as values, beliefs, security, trust, self-esteem, or personality traits.
Working on your own to change bad habits (e.g., missing payment deadlines), destructive behavioral patterns, or limiting beliefs, as well as understanding your own needs and emotions, can also greatly improve your relationship with your partner.
