Spendthrift Spouses

I was recently quoted in an article on moneycentral at msn.com. Liz Weston wrote a great article about spendthrift spouses. You can read it at http://tiny.cc/6bzw4

Financial issues is one of the top two reasons couples divorce. (The other is lack of communication.) Differences in spending habits is one of the most common types of incompatible financial attitudes. And money is very difficult for many couples to talk about. So there is the double whammy of financial issues and lack of communication.

I have seen a lot of marriages tipped to divorce because of money and debt. Those couples who have chosen to divorce in the traditional litigated pattern have fared the worst. The costs of those divorces were substantially greater than the collaborative divorces of similar circumstances.

When it comes to divorcing a spendthrift spouse, the best divorce method is the collaborative law process. In this process, as the financial professional, I am usually asked to educate the spendthrift spouse about cash flow and budgeting. The couple gives me their bank statements and credit card statements for a period of time no less than three months. I pull together an accurate, detailed picture of their expenses. They are always surprised. Everyone thinks they spend less than they actually do. The spendthrift spouse and I work together to create a cash flow plan that works in their unique living situation. The spouse chooses where to cut back on spending. This is the crucial buy-in that assures the new budget commitment. It also reduces the chances that this spouse will boomerang back to the other spouse in future years to ask for more money.

Budgeting is one of the foundations of financial literacy. The AICPA (American Institute of Certified Public Accountants) and the TSCPA (Texas Society of CPAs) have been providing educational tools on financial literacy for years. You can read more about these at http://tiny.cc/sk2zz