The Truth About Love & Money

Couples are spending more, fighting more and lying more about money than ever before. Here's how to keep you both honest, so you can secure your relationship and your financial future.

Theresa Brooks knew that she and her husband, Bill, had been spending a lot, but even she was shocked by the grand total: $50,000 in credit card debt. In October 2004, she, Bill and their four children had moved from a mobile home into the dream house they'd built in Colville, Washington. Between construction costs, new furniture and decorating, the bills had spiraled completely out of control.

For nearly a decade of marriage, Bill had trusted Theresa with the family budget — and they had never even been late on a payment. (Even with all that debt, they maintained a strong credit rating.) Still, the thought of sharing the full picture with Bill was terrifying. "I knew he would be disappointed and angry," recalls Theresa, 38. "My biggest fear was that he would lose all faith in me."

Theresa's fears were hardly overblown — her mismanagement of the couple's finances is the kind of betrayal that can destroy a marriage. And she's not alone. In fact, nearly one in three adults admit they've lied to their spouse or partner about money, according to a Harris Interactive poll commissioned by Redbook and Lawyers.com, a free online attorney database. We asked nearly 1,800 men and women in committed relationships, ages 25 to 55, about who earns what, who spends what, who knows what and who hides what when it comes to money. What emerged were some gratifying truths (women outscored men in basic marital financial know-how!) and a few terrifying ones.

Even for couples on solid financial footing, money is a fraught issue. It's the number one source of marital fights — and it's a frequently cited cause of divorce, according to financial counselor and Redbook Marriage Institute expert David Bach, author of Smart Couples Finish Rich. And couples today are facing more complicated strains on their financial well-being than ever before. The old setup of a responsible breadwinner husband and a budget-conscious homemaker wife has become the exception rather than the rule, and most couples (67 percent) say they make money decisions as a team. But men and women still often fall into traditional financial roles: Twice as many women as men claim solo responsibility for the household budget, and 42 percent of men (compared with only 12 percent of women) say they're in charge of the couple's investments.

Of course, for many couples, investing for the future is a pipe dream anyway. In our era of immediate gratification, the emphasis is on what we can get now. "We're constantly exposed to messages from media and popular culture that say purchasing the right product will make us happier," says psychiatrist Scott Haltzman, M.D., author of the upcoming book The Secrets of Happily Married Men. Not coincidentally, consumer debt has reached an all-time high. Couples feel compelled to buy more cars, gadgets and gewgaws than were once deemed necessary. Before realizing the extent of their debt, Bill and Theresa Brooks owned four trucks and a luxury SUV.

Changing roles, power struggles, unchecked spending: These are the kinds of stressors that breed secrecy and suspicion between couples. In this credit-rich era, the very landscape of marital trust has changed: One in four adults told us that honesty about finances in a relationship is more important than honesty about fidelity. But before you go hunting down your guy's Visa bill, here's the good news. Just a little understanding of his financial values and priorities — as well as your own — will go a long way toward securing your future.

"Conflicts over money arise because underlying the arguments are serious differences in what each partner values, needs and expects from money," says Richard M. Ryan, Ph.D., a psychologist who specializes in money and relationships at the University of Rochester. Couples typically polarize into six categories, says Olivia Mellan, author of Overcoming Overspending. Hoarders are usually married to spenders. Money avoiders pair up with money worriers. Planners hook up with dreamers. Risk takers marry risk avoiders. Money mergers (people who want all cash pooled together) end up with money separatists (those who want their money to be theirs). And money monks (people who think money is dirty) marry money amassers (those who think that she who dies with the most cash wins). "Many people tend to be a combination of types," Mellan notes. "A spender is usually an avoider; a hoarder tends to be a worrier. These combinations of differences create a double whammy on a marriage."

Debt is increasingly adding to the strain. One in three couples that fight over money argue over how to pay off credit card debt, according to the Redbook/lawyers.com poll. And with bigger homes and bigger mortgages, many families find their disposable income dwindling. "Over the last few years, couples have been snapping up adjustable-rate mortgages with minimum payments, so they're building debt rather than equity," says Victoria F. Collins, Ph.D., author of Couples and Money. The average household owes close to $20,000 — and that doesn't include mortgages. David Bach says couples now spend 30 to 50 percent of their income on housing, living paycheck to paycheck and barely covering mortgage payments while racking up credit card debt on purchases like large-screen TVs and what he calls the Latte Factor — small daily luxuries that have come to seem like necessities.

Emily,* a 35-year-old lawyer from Oakland, grew up with a truck-driver father, a stay-at-home mom and, as she puts it, "the repo man always at the door." She loves the fact that she can now afford to buy things with her own money. Her husband, Steve,* 32, a firefighter, grew up in a wealthy family, but feels anxious about spending — and uses money as the outlet to express anxiety about other issues. "Every time we go through any change, we have a week of arguing about how we can't afford to buy a house, have another baby, change jobs, remodel the kitchen, etc.," says Emily. The worst, she says, is when Steve lectures her on her spending habits. "I figure if I can buy it and I really want it — I'm not a crazy spendthrift — then I should buy it." For Steve, spending money, especially on their new house, is much less of a priority. "I don't care at all about home improvement," he says. "I'm much more willing to save, especially since we have two kids we'll need to send to college."

It's when differences lead to deception that couples really find themselves in trouble. While 96 percent of respondents to the Redbook/lawyers.com poll said that both partners in a relationship should be totally honest with each other about finances, one in four women lie to their partners about spending on discretionary items like clothing or shoes. "Lying has become normalized in marriage, especially around money, and especially among women," says Robin Smith, Ph.D., a Philadelphia-based psychologist who sees an increase in passive-aggressive manipulation on the part of many women: They appear to cede financial control to their husbands, but they're secretly spending and socking away money on their own.

Tonia Silas, 31, a stay-at-home mother of three from Panama City, Florida, has some extra cash flow that her engineer husband, James, 33, doesn't know about. On occasion, she'll do freelance computer work and use her earnings on clothes or a spa day. "It helps prevent arguments," she says. "If he knew I had the money to spend, he would want me to spend it on what he wants me to buy." Tonia figures her husband probably keeps a secret stash, too. "He's always coming home with new toys," she notes. "Sometimes he tells me someone gave him something or he borrowed it, but the object in question never leaves the house." Tonia is careful not to lie about more substantive matters. When the couple first married 11 years ago, she lent her brother money without consulting James. He got so upset when he found out that she never did it again.

Stacy, 29 (a saver and worrier), and her husband, Charles, 30 (a spender and an avoider), fight over money on a daily basis. "It starts out because I think he's spending too much," Stacy says. "Then it turns into how much weight each of us is pulling." Three years ago, Stacy got into a car accident and was on disability; now she works for a medical education company, but only part-time, which has reduced their income dramatically. Charles, formerly an elementary school teacher, now does carpentry work — which offers little job security and only increases the tension between the couple.

For the first year of their marriage, Stacy tucked away money so they could buy a house. Now that they own a home in New Milford, Connecticut, she still stashes cash away; she wants six months of living expenses on hand (the kind of emergency fund that financial experts recommend for everyone). "Charles isn't as motivated," she explains. "If he knew we had the money, it would be gone." Stacy worries that if he were to find out how much they've been saving, he wouldn't believe her next time she told him they didn't have the money to buy something. Nor does she tell him how much she spends on lipstick, for example. "He would just come back at me and call me a hypocrite!"

It's one thing to lie about splurging on Bobbi Brown mascara, says Scott Haltzman — it's quite another to lie about investing in shady junk bonds. "The best place to test a couple's ability to communicate and cooperate in their marriage is over big-ticket purchases and major financial decisions," he explains, "because those decisions reflect core, underlying values." And secrets about the big decisions can signal big underlying problems. Indeed, in our poll, people who were dissatisfied with their relationship were twice as likely to say they had lied about money as those who were happily attached.

So how can couples make money choices that will bring them closer and secure their future? Combined accounts only? A firewall between his and hers? How a couple manages their accounts has no effect on whether they fight about money, according to our poll, and experts differ as to whether it's healthier to blend or separate funds. Still, our poll also shows that happy couples are more likely to hold joint accounts.

"When you get married, you choose to become a full partner, and part of that is sharing financial assets," Haltzman explains. "Of course, if he likes to bank online, and she likes to maintain a separate account for her home business, that's understandable." More important than what goes in which bank account is that couples be honest about their priorities and concerns. When 49-year-old Kathy Safer's husband, Neil, 46, found her secret stash five years ago, he was incredibly hurt. The two discussed the matter for days. "I told him, 'It's nothing against you, it's for me,'" she recalls. Neil was afraid she didn't trust him, but Kathy explained that after a bad relationship years before, she needed a stash for her own sense of security. Today, the Kennett Square, Pennsylvania, bookkeeper makes an effort to take a team approach, sharing accounts and keeping Neil abreast of financial developments. "We feel like we're each other's cheerleader," she says. "If he gets a bonus, great. If I get a bonus, great. It all goes in the same pot."

Establishing mutual trust can get many couples through financial distress, even when life is lived paycheck to paycheck. Annamarie Trapasso, 40, a homemaker in Rocky Point, New York, and her husband, Roy, 41, a tugboat captain, are spenders who had to learn to cut back when Annamarie quit her job to raise their two children. "When I worked full-time, my whole check was spent at the mall," she says. "Now I don't spend unnecessarily on clothes." Together, the couple created a household budget, consolidated their debt and then paid it off in full. "We never fight about money," Annamarie says. "If bills start to mount up, I'll tell him he needs to do another job this month to cover school expenses or whatever. He's very easygoing, because he trusts me to spend our money wisely."

Trust is what helped Theresa and Bill Brooks keep their relationship afloat even as their financial stability went down the drain. First, Theresa typed everything — the expenditures, the mistakes, the mountain of debt — into their Microsoft Money program. Then she printed it all out for Bill. Rather than fly into a rage or tumble into despair, Bill sat and thought for a few minutes, then told Theresa he loved her and that they would work through the debt together. After all, he said, they'd gotten into this situation together — both of them were enjoying what was purchased, so both of them should shoulder the burden.

The Brookses are both spenders, but their money backgrounds are very different. Bill grew up in a frugal family, whereas Theresa never learned the meaning of the word "budget." Bill avoids using credit cards, whereas Theresa... Still, the two were able to reconcile their different styles. Bill sold his trucks, and Theresa gave up her SUV for a more modest minivan. She also learned to tame her impulsiveness while using her strong organizational skills to help them both stick to a new, tighter budget. "If one of us wants to buy something, we consult the other," she explains. "There's a lot more thought put into purchases now." In about a year, they've managed to reduce their debt by half. And cutting back has yielded unexpected benefits: "It forced us to slow down a very busy lifestyle," Theresa explains. "Instead of working all week and going out on weekends, we spend them at home. We play more games with the kids instead of going to amusement parks. And the experience has definitely brought us closer."

The number one rule is to communicate, says Alan Kopit, legal editor of Lawyers.com and a specialist in family law, but you should also follow these key steps.

1. Get educated.
Did you know that a house bought after you wed is marital property, even if the title is in one spouse's name? Or that if your husband has personal debt, you could be responsible for it? Bone up on money basics: The more you both know, the easier it is to make decisions as a team.

2. Know your history.
Each partner should find out the other's financial history before they get married. Has your husband ever been in debt? Does he routinely bounce checks? Has he owned a failed business? Even if his credit and finances are in good shape now, his past money moves — good and bad — will affect your future.

3. Yup, consider a prenup.
It sounds unromantic, but Kopit advises that most couples think about a prenuptial agreement, especially if it's a second marriage and there are children involved. Your children's future could depend on it.

4. Get credit.
Even if you pool all resources, each partner should have his or her own checking account and credit card — not to hide assets and spending, but to establish an independent credit history. If anything ever happens to your husband, you'll be better prepared to support your family.

5. Budget.
You don't have to keep a written record of every last Frappuccino, but creating a budget helps spouses communicate their respective needs and priorities while ensuring that each partner understands where all the money is going. Besides, who doesn't need a little more discipline when it comes to spending?

To learn more about our survey and how to build a money-smart marriage, check out lawyers.com/redbook.