“I am frustrated with the way my husband spends money. Although we agreed that we need to stick to a budget to keep costs under control, he refuses to give up spending money on things like clubs and sporting events. I want to plan for the future, but he seems to be happy living in the present. Please help!”

Studies have shown that disagreements about money are one of the leading causes of marital breakdown. Compromise is perhaps the most important ingredient for a successful union, especially when it comes to financial matters.

But what happens when the two parties in a marriage have vastly different money beliefs and practices? How can they arrive at a workable arrangement when they have opposite money personalities?

The key to arriving at a happy middle ground is to create spending and savings plans that will address both individuals’ needs and the overall family requirements. Both partners must be committed to and satisfied with the process to ensure its success.

The first step is to have a clear picture of all the expenses that must be covered, and to determine if the income is sufficient to meet these needs. Use a personal budget to record all the bills and the joint earning amounts. Go to the financial tools section of www.financiallysmartonline.com to download a personal budget.

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Next, both partners must agree on a method of paying for these expenses. Here are some strategies of managing marital finances which are suited to different money personalities:

He Pays, She Pays

After recording all the household costs, each party selects the items that he or she will be responsible for paying. For example, the husband may take care of the rent, insurance payments and children’s expenses, while the wife handles the grocery shopping and utilities. Individual needs such as lunch, gifts and entertainment will be covered by the responsible party.

This strategy works best for persons who don’t wish to defend their personal spending choices, and can be successful if both parties live up to their agreements and pay the joint bills on time.

Straight Down The Middle

In this method, couples decide that they will split the costs of the expenses equally. Each person contributes to a joint bank account from which the monthly bills are paid. Personal expenses that are outside of the household will be borne by each party.

This works well for persons with similar incomes, who want to ensure that each party is carrying his or her own weight in the relationship.

Pay As You Earn

As many partners earn different salary amounts, they may decide to split the bills in proportion to their earnings. So if the husband makes $150,000 and the wife takes home $50,000, he will pay 75 per cent of the total household expenses. The contributions would be pooled in a joint account.

This plan is ideal when there is a significant disparity in incomes; but it may still leave the lower-income partner short of funds to deal with personal spending needs.

All For One, One For All

An ideal money partnership exists where both partners decide to pool all their earnings into a joint account, from which all the household and personal bills are paid. There is complete sharing, where the two parties have merged into one spending unit.

This concept is best suited for couples who share similar money styles, or where there is total trust and co-operation on financial matters.

Determining the best method to pay household bills is only one of the steps towards successful money management in marriage. Here are some other important tasks that couples need to work together on:

– Decide who will take responsibility for different activities, such as balancing the joint chequing account or paying joint bills;

– Agree on basic financial principles to abide by, such as how much of the income should be saved or given to charity, and when and why debt should be incurred;

– Choose appropriate savings accounts and investment institutions;

– Set goals for home ownership, retirement and children’s college funds;

– Plan for property transfer after death.

However, major problems can arise in the marriage if one partner refuses to participate in creating joint money policies. Deficits, disagreements and even divorce are some of the negative consequences. Despite the resistance from an uncooperative spouse, it’s important for the other party to continue to practise financially smart principles.

Even when couples successfully agree on financial strategies, they will probably encounter challenges over time. Resolve money issues by forgiving the mistakes, making note of the lessons learnt, and keeping focused on the family’s goals.

Copyright © 2009 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, July 23, 2009

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl