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Financial Stress and Divorce

Financial stress is often cited as a leading cause of divorce. Financial stress can have an extreme impact on a relationship. It can eventually wear away at the love and affection that one has for another because of how consuming the issue can be in someone's life - exhausting someone emotionally and depleting their personal resources to continue to work hard at being in a healthy committed relationship. Of course, financial stress is usually not the the only cause for the breakdown in a marital relationship, but it can have an impact on more aspects of a couple's life than just their finances.   

Here are 5 ways in which I have seen financial stress lead to divorce in the cases I've handled over the years. By keeping an eye out for these warning signs during marriage, it could help a couple adequately prepare for and navigate through financially stressful times in their marriage so as to avoid the possibility of divorce. 

1) Differing Spending/Saving Habits:   Couples often find themselves in disputes over one party's desire to save for the future, and the other party's desire to expend funds to enjoy the present.  There are so many different driving forces here.  Self-esteem issues, issues related to a desire for financial security as a result of a period in one's past when he or she experienced fear and anxiety over an actual or potential loss of financial stability, attention-seeking behavior, a hedonistic approach to the present day, etc.  

All of these personal traits or belief systems can cause conflict with a partner when they stand in such stark contrast with the other's position.  What I've seen work in this regard is a "no surprises" approach to compromise under an agreed-upon/negotiated system that the parties both agree are within their respective comfort zones.  For example, the ability for one party to carve off a set monthly percentage of his or her net income to be able to spend or save or do with it whatever he or she wants can help.  In this way, by virtue of the negotiated process that took place, which led to an informed agreement between the parties, there are no surprises, no false expectations, and no corresponding disappointments.  Keep in mind that there may be a need to modify the agreement from time to time.  And this should occur in the same way as the original agreement - by way of a process that is informed, and thoughtful, and intended to help accommodate each party's respective needs.

2) Hidden Spending:  Whether it's a drug or alcohol addiction, gambling problems, or as a result of infidelity, spending money covertly, so as to hide it from your partner runs afoul of the open and informed negotiated process that creates financial harmony in a marriage.  The key here is that these hidden expenditures will eventually be discovered, will be considered a betrayal, and will cause distrust in the future that will take a great deal of effort to overcome.  Believe it or not, I've seen some people lay their cards on the table (so to speak) and describe in great detail the specific problems that he faced to his spouse.  In that particular case, it was a severe gambling addiction, and like any other problem facing the family as a whole, the couple rallied and sought out help - together - and there was no discovery of concealed spending, no conspiracy, and no betrayal as result.  That couple made it through that difficult time in the life of their marriage.  It seems they've since become stronger.

3) Controlling Dynamics:  Personality types and disparate earning capacities can create a dynamic in a relationship where one party seeks control over his or her partner through money, and the other party feels subjugated as a result.  Resentment builds because contributions to a family come in so many different forms, and contributions are often taken for granted.  

Once again, a couple should identify one party's need to control a given situation or aspect of marital life, and perhaps the other party by agreement is willing to give up a certain level of control. There may be another area of marital life where he or she can make up the difference.  Communication is the only way to address this issue effectively.  Identify the need to control, the means by which that need is being or will be fulfilled, the impact that is having or will have on the other party, whether that is an acceptable situation, and, if not, how can it be changed to make it acceptable for both sides.

4) Weathering the Financial Storms:  Loss of employment, periods of disability, fluctuations in the market, unexpected expenses can all cause financial stress.  Having a contingency plan in place certainly helps.  Establishing a reserve, for example, that covers a few months of all monthly expenses may be a better initial goal than fully funding a 401K or IRA for a young family.  Having an adequate plan in place, and discussing it ahead of time, practicing its components for familiarity with the plan, periodically reviewing it and modifying it to take into account any necessary changes in circumstances, in my opinion, is part of the overall important process of creating a life plan together as a couple, which breeds trust and a sense of stability - all of which leads to a greater level of intimacy and commitment in the marriage.  

5) Debt Management:  Couples often argue over whether to incur debt, how much to incur, how to pay it off, how quickly to pay it off, where to borrow it, how to use the borrowed funds, etc.  At each and every turn there is an opportunity to engage in conflict - to allow personal views on money management and our individual needs (such as controlling our own financial lives) to drive a wedge through the marriage/partnership.  Here I recommend expressing these various points of view in the presence of a certified financial planner, and allowing that experienced professional to provide valuable advice and assistance.  Often when there is polarization that is causing conflict in a marriage, I've seen that one way to diffuse the conflict is for the parties to agree to defer to the professional advice of another.

Again, financial stress can be a major cause of divorce.  Through education and open communication, however, a couple can develop the trust in each other that will help them navigate through the financial land mines of marriage.  Counseling can help them through this process too.  There are mental health professionals who are knowledgeable about the financial stressors on a marriage, and are sensitive to how such issues can either destroy a relationship or help one grow stronger.  Seeking the advice of such individuals could be made a part of a larger, more global agreement by a couple to keep an eye out for the pitfalls discussed above and to create a fluid plan for how to overcome them.

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