How to deal with an overspending spouse

Charles Pitt, Private Client Wealth Manager at Alexander Forbes Wealth.

How to deal with an overspending spouse

Most married couples take a “divide and conquer” approach to household tasks and chores. One spouse might handle weekly shopping, the other the garbage and recycling, one might drive the kids to school while the other handles pickup and extracurricular activities.

“But household spending and budgeting is one of those responsibilities that’s best tackled together” says Charles Pitt, Private Client Wealth Manager at Alexander Forbes Wealth.

Money issues are a leading factor in divorce. Pitt offers five ways that you and your spouse can make sure you agree on your household spending, avoid surprises, and maximize your financial well-being for life

  1. Have an open and honest discussion

Many couples assume their attitudes about money are aligned. Then one day, the roof needs an emergency repair that taps a savings account, or someone walks in the door with an unexpected splurge purchase (or worse yet, hides it!).

“Stressful situations are not the ideal time for a couple to discover significant differences in spending habits. Sit down with your spouse and review your finances including your monthly budget. Find compromises that will allow you to save for the future while still enjoying your present,” Pitt says.

  1. Understand the household cash flow

In many households, one spouse handles all the bill payments. This can lead to misunderstandings, and arguments, about where the money goes every month.

“Both spouses should understand how much the household spends every month, and how your bills get paid. If you’re the one who’s usually in charge of bills, take an hour to walk your spouse through your process. Show him or her which bills are paid electronically, which are paid by cash, the monthly amounts and due dates. This won’t just help both spouses understand the monthly cash flow, it will ensure that both spouses can handle household finances in the event of an emergency or death of the other partner.”

  1. Be transparent about all assets and liabilities

Newly married couples might still have banking or credit accounts that are only in the original account holder’s name. The other spouse might not find out about these accounts until a credit card is maxed out, or a cheque account is overdrawn.

“Financial secrets tend to come out at the worst times, compounding stress, hurt feelings, and strain on your budget,” says Pitt. “Your spouse should be a aware of all of your accounts, and vice-versa. If one of those accounts carries a large liability, talk about how to start paying it down. Discuss the ramifications of combining any large individual assets with a tax professional or your financial adviser.”

  1. Agree on a budget

If one spouse is responsible for budgeting and bill paying, that person often becomes The One Who Has to Say No. No eating out this week. No weekend trip to the waterpark. No new cell phones. No new clothes.

“Nobody likes being in that position, especially if you’re saying “no” to your children. Eventually, you or your spouse will resent being the negative one. You should both understand the household’s monthly cash flow and agree on how your money is – and isn’t – spent.”

  1. Get help

There are many online tools available to help households set and maintain a budget. Automating select bill payments and regular contributions to retirement and savings accounts can also help to clarify your monthly budgeting picture.

Finally, if there’s a spending gap between you and your spouse that seems impossible to bridge, a financial adviser, is an excellent resource.

“We make sure we understand where clients’ attitudes about money come from, how they’ve developed, and how they can diverge between couples. Facilitating this dialogue is key to making sure both people have the best life possible with the money they have,” Pitt adds.

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