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How to manage money as a couple

Conflicting attitudes about spending and saving can create strife in a relationship. But there are strategies couples can adopt to deal with their differences.
/ Source: The Associated Press

For Dax Gonzalez, money management meant collecting his paycheck and spending it on eating out and buying gifts for his friends and family until it was all gone. Then he would wait for his next check and start again.

That approach was unsettling to his girlfriend, Laura Cruzada. "I'm much more concerned about paying the bills, making sure everything is covered, before spending money on myself or someone else," she said.

As Valentine's Day observers know well, opposites do attract, in love and money, and conflicting attitudes about spending and saving can create strife in a relationship. But there are strategies couples can adopt to deal with their differences, whether it's opening "his," "hers" and "ours" checking accounts, developing a budget or seeking professional help.

The solution for Gonzalez, 28, who works as a publicist with the Physician Insurers Association of America in Washington, D.C., and Cruzada, 24, a press officer for a national trade group, was getting a money management program.

Now they sit at their computer every week or so and work out a spending plan. They even generate graphs and charts to see how close they are to their spending and savings targets.

"We've set goals for ourselves," Gonzalez said. "I'm not eating out as much, not buying as much. But we put some money away every paycheck and maybe, in a year or two, we'll have enough to buy a house."

Communicate — early
Financial planners say couples should confront their money differences before they head to the altar.

"Some people think that if they talk about money, it dampens the romance," said Violet P. Woodhouse, a financial planner in Newport Beach, Calif. "But marriage isn't only about romance. It's a partnership, and money is a big component."

That's because money is about more than cash in and cash out, she said. "It's about power. It's about the ability — or inability — to communicate your position. It's about the ability to compromise, to negotiate. It goes to the very fundamentals of how we're going to relate in marriage."

Woodhouse is an advocate of budgeting because the process forces couples to communicate and because the very exercise of planning together "means you're more likely to get compliance."

Lisa Cohn and her husband, William Merkel, of Portland, Ore., have a blended family and find that the "his," "hers" and "ours" strategy works well for them. Cohn, 47, a freelance writer, has one child from an earlier marriage; Merkel, 59, a clinical psychologist, has two of his own; and the couple has one together.

The couple keeps separate accounts for their personal needs and their own kids, and a joint account for housing, maintenance, vacations and other family activities.

Merkel balances his account and the family account to the penny every month, Cohn said. She's more casual about hers.

"I kind of balance my checkbook as I go, but I round off the numbers," she said. "I check with the bank once in a while and ask them for a balance. That works for me."

Cohn believes separate accounts have helped her family avoid the anger she's seen in others "when someone starts to feel angry about being asked to do too much or there are hassles from ex-spouses."

Understand each other's values
Peter Catalano, a financial adviser in Beverly Hills, Calif., said couples need to understand what each other really values if they're going to manage their money well. He said he conducts an extended conversation with new clients to help them understand how they use their money, and why.

"On one level, money provides for basic needs," Catalano said. "But in the end, money ends up being about something you want to achieve, your core value. When you get to that value — and each spouse can see it — it's powerful in the relationship."

Catalano suggests people seek professional help if they can't reach a consensus on money, because an adviser can bring objectivity to what can be an emotional debate.

Plan on change
Roberta Carlton, vice president of the SparkSource Inc. public relations and marketing firm in Lexington, Mass., hates to balance her checkbook. So she's happy leaving management of the family accounts to her spouse, Nathaniel Hefferman, who is currently staying home with their two young sons.

Carlton, 39, said their money system developed when she was pregnant with their first child.

"We decided to experiment with how it would work living off my salary, so we banked his salary," she recalled. "I started paying the bills and it was a shock. Two days after I got paid, there'd be no money left, and I kept thinking, how are we going to do this?"

There were several answers, she said.

"We discovered that when we had a child, our lifestyles changed," Carlton said. "You don't go out to eat as much, for example. And we haven't seen a movie in I don't know how long. And we didn't account for all the expenses of his working."

Meanwhile, Hefferman took over the books, managing the separate checking account that she keeps as well as the household account.

"If I had married someone like me when it comes to money, we'd be in trouble," Carlton said. "I love the fact that he's so good at managing money."