Smart money advice for couples who can’t manage their money

What do you do when you and your spouse can’t agree on how to spend your money? The best answer, of course, is that you talk about it until you do agree. But is that what you really do?

As Bethany Palmer, who, with husband Scott, wrote First Comes Love, Then Comes Money: A Couple’s Guide to Financial Communication, recently told me, “Money touches each and every part of our lives — where we go to school, what we eat, where we work, how we live. You have to make sure you’re talking about money.”

But that doesn’t mean communicating is easy, and after writing a few WalletPop posts about managing money with your spouse, I thought it might be a good idea to find an expert or two who could offer advice to spouses who can’t quite get on the same page when it comes to their finances. Here are some of their top tips:

Talk about your finances regularly.

At least once a month, says Scott Palmer, you should sit down and go over the finances with each other. Thanks to the ease of parting with our money — ATM withdraws and debit cards and shopping online — “It’s so easy to not talk about what you’re spending,” says Scott, “but there’s nothing worse than a bad money surprise.”

Bethany, naturally, concurs. She calls it the “monthly money huddle” where you “talk about what’s coming in and what’s going out.”

Try the three-bucket approach.

Manisha Thakor, author of Get Financially Naked: How to Talk Money With Your Honey, likes this strategy, provided you have a two-income family. “One relatively ‘simple’ solution is to divide your money into three buckets,” she suggests.

Just how does it work? Thakor says that you should “decide what constitutes a joint household expense, and then set up one account out of which those expenses are paid. Each spouse pays into that account in proportion to their earnings. So if the household income is $100,000, with one spouse earning $70,000 and the other earning $30,000, the higher earning spouse contributes 70% of the joint account expenses, and the lower earning spouse [contributes] the remaining 30%. All other funds are kept separate, and each spouse is free to do with those separate funds what they like.”

But what if you’re in a relationship where one person makes an income, and the other doesn’t?

In that case, Thakor suggests, “Set a dollar amount that both spouses are able to spend each month, with no questions asked, and a dollar amount above that where both partners agree to consult with each other before spending.”

Get a referee.

Thakor likes the idea of hiring an hourly fee-based financial planner, and if you go that route, she recommend checking out or (And, no, she’s not an hourly fee-based financial planner herself.) She says that if a couple invests two or three hours in budget setting with some adult supervision (the financial planner), “This money can be very well spent.”

True, it can cost around anywhere from $150 to $250 an hour for a financial planner, acknowledges Thakor, but she feels you might easily make that money back. It sometimes takes a “neutral third party,” Thakor says, “to point out that one person’s spending is way out of whack with a household’s income.”

Sit down with a pad of paper, a pen and a calculator.

If none of the above works, Thakor suggests budgeting with the following in mind. After you’ve paid taxes, the rest of your income should be carved up so that 50% of it falls into your “needs” category (think mortgage, utilities, groceries), 30% in the “wants” section (those shoes you don’t truly need, that DVD or basketball tickets you don’t have to buy) and 20% should be relegated to savings. “Sit down with your sweetie, and see if one of your pie slices is out of whack,” advises Thakor. “If so, that discussion can often help the reckless spender see the light. After all, numbers don’t lie.”

Whatever you do, both the Palmers and Thakor feel that, at a bare minimum, every couple should be discussing money on a regular basis. “The number-one cause of divorce is money conflict,” Scott Palmer maintains.

And it’s easy to see how that conflict can heat up, according to Thakor: “As hard wired as humans are in the courtship stage to be financially attracted to our money opposites — for instance, a frugal person will find the ‘financial otherness’ of a wanton spender intoxicating — the novelty wears off and real life sets in.”