By Tim Grant Pittsburgh Post-Gazette
WWR Article Summary (tl;dr) Ameriprise Financial recently surveyed couples ages 25 to 70 to find out how they best work together financially. One of the most interesting findings is that couples who set spending limits often experience better harmony in the home.
While Pittsburgh-area residents Collin and Jasmine McHenry have never imposed a limit on how much they can spend on a big-ticket item without consulting each other, what they do have is an agreement on how much each will contribute to the household budget each month. That seems to be enough to keep their finances on track.
"If I were to buy a new car or a house, that is something I would run by my wife," said McHenry, 32. "The man who doesn't do that is looking to stir up something."
Couples don't always see eye-to-eye on managing their finances, which is why Minneapolis-based Ameriprise Financial recently surveyed 1,500 couples ages 25 to 70 to find out how they work together and what lessons could be learned from those who have figured out how to get on the same page.
One of the most compelling findings is that couples who live in financial harmony often set spending limits on any purchase they make without consulting their partner. The average limit for millennial couples in their 20s and early 30s was around $100. For baby boomers, the limit was around $400 on average.
"Couples who had spending limits said it did help them, but many couples, about one-third of them, did not have a spending limit," said Marcy Keckler, vice president of financial advice strategies at Ameriprise. "The ones who were most content and happy had agreed to a spending limit."
That doesn't mean checking on every little purchase.
"We did find out some couples do some spending without consulting their partner," Keckler said. "The most common reason was they didn't feel the purchase was large enough to justify checking with their partner. But the important thing is not the dollar amount. It's good communication. Couples who have greater communication about their money tend to have greater harmony."
Even when Jeff Nayhouse, 59, and his wife Patty, 58, also residents of the Pittsburgh region, were starting out and money was tight, they never set a limit on how much each could spend. Now that they have built successful businesses and can afford more luxuries, they still see no need for establishing guidelines, especially since they trust each other not to spend foolishly.
"We are both reasonable enough not to spend $2,000 on something if we don't have it. Neither of us are flagrant spenders either," Nayhouse said.
He said he knows someone who found out during the course of a divorce that the wife had maxed out all of the couple's credit cards without his knowledge.
"My wife and I don't have that issue," Nayhouse said. "She doesn't even own a piece of jewelry. I tell her sometimes to please go buy something. If she wants to buy a jacket and it costs $200, she is not going to have to call me up and ask if she can buy the jacket."
Melissa Richey, executive vice president at Fragasso Financial Advisors in Pittsburgh, hasn't seen much evidence of people establishing spending benchmarks.
"In my experience of 20 years as an adviser, I have never seen a couple come to the table with a defined expectation of what they can spend without consulting the other," she said. "Couples are not talking about this stuff. They barely have time to eat dinner together as a family, let alone talk about how much money they can spend."
The most common scenario she has seen is that the right hand often is not aware of what the left hand is doing.
Noncommunication is a leading factor in financial ruin and relationship failure, she said.
"If couples don't get on the same page about money, it will lead to other problems, such as trust issues," Richey said. "If someone feels they can spend whatever they want without consulting their spouse, there won't be a lot of trust in that relationship."
McHenry doesn't plan to change a system that's working.
"I'm sure my wife spends more than $100 on things she wants without checking with me, and I do the same thing," he said. "If you are not able to make rent or pay the mortgage, something is wrong and you have to check on that," he said. "But if everything is going right, there is no need to nit-pick each other."