Love and Money: The Three Golden Rules

September 2007

There is nothing more dangerous to a marriage or committed relationship than two people who do not understand their own money issues or who do not communicate well about their differences with regards to money, according to Gemma B. Allen, a Chicago "Super Lawyer" who has been practicing matrimonial law for 25 years and concentrates in complex cases involving divorce, financial settlements, custody and mediation.

"What I have found in thousands of divorce 'intake interviews' is that the fundamental problem couples face is far more likely to be about money than sex," said Allen, a former estate planner. . "Newly married couples are really 'left at the altar' because society gives them no support system on the money management issue. Sadly, the very first time couples often communicate about money is through their respective divorce attorneys."

Allen, a strong advocate of mandatory pre-marital education as a means of strengthening a marriage, believes her experience as a professional has provided her with a unique window to the world of relationships and money. She offers three golden rules on managing money and relationships.

Rule 1: Don't keep financial secrets from your partner. "More often than you would believe, the very first time either spouse knows that they are in deep financial trouble is when they review each other's required divorce court financial filings," she said. "That's when certain secrets emerge, such as a secret stash or secret vice."

Allen recalls a divorcing couple, each of whom was a successful professional. Because they were a "modern" couple, each had kept his/her own checking account and contributed to the household pool in equal amounts. Lack of overall communication let to divorce proceedings where it became evident that they were unknowingly deep in debt.

"I have seen a variation on this theme so many times," said Allen. "The guy who is addicted to online porn, the woman who soothes herself with retail shopping but hides the goods at a friend's house, the guy obsessed with electronic toys and the woman not noticing all the expensive upgrades. If you keep your finances separate so that you can be 'safe,' you may be surprised to find out just how high the price of secrecy is."

Rule 2: Assess how you spend the marital money by preparing a balance sheet that covers the last 12 months. This process, though burdensome, enables a couple to determine both their extravagances and shortfalls.

Everyone spends money differently no matter how much they make, Allen pointed out. "When people get divorced, it's not the amount of money they make that makes the difference but the choices they made spending the money that really matters," she said. "Any two people, be they partners, friends, lovers or spouses, need first to recognize and then reconcile their differences."

Allen advises couples to make a detailed written list of their expenses and weigh them against their income (her law firm provides clients with a written form to expedite the process). "Candidly, unless this type of exercise is undertaken periodically, even with couples who are happy, it's easy to fall into the trap of believing the family's finances are in good shape," she stated. "Both men and women frequently operate on the 'don't look, don't tell' basis and hope that the income covers the outstanding bills at month's end."

"A couple needs to face their financial situation as a team," she said. "If there's a shortfall, it can be tackled by bringing in more money or spending less. If there's an excess, they should discuss savings and investment goals. They may not always agree, but they will be communicating their hopes and dreams for the future."

Rules 3: Recognize the fact that women have more financial fear than men. In Allen's experience, most women express real fear of becoming a "bag lady" while not one man she ever met, not even the bankrupt ones, expressed that fear.

"The fear is culturally inbred, but it's curable," she said, noting that part of the fear is reality based. Women generally earn less, and they don't tend to discuss financial issues with friends. An element of the fear is also cultural. "Both men and woman have been acculturated to believe that financial dependency equals feminine desirability," she said. "We believe that no one will love us if we do not need them, or even worse, that someone will love us only for our money."

Women can become financially literate through education and coaching. At a basic minimum, they need to be aware of and understand the family budget, know their financial risk tolerance, and have a clear picture of their own and the partnership's finances. Over the years, Allen said she has witnessed the shock experienced by many widows who never shared in the family's financial decisions. Often, they were left penniless.

"Two savvy people in a financially aware and financially stable relationship are a force to be reckoned with," she said. "It is a goal worth pursuing."

Ladden & Allen is located at 55 West Monroe Street, Suite 3950, in Chicago, IL 60603, and can be reached at (312) 853-3000.

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