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Savers & SpendersPredicting Financial Conflict in Couple Relationships

Derek Lawson, CFP®

Kansas State University

Special thanks to co-authors

E. Jeffrey Hill, Ph.D., Ashley LeBaron, & Roy Bean, Ph.D., LMFT

Brigham Young University

Sonya Britt, Ph.D., CFP®

Kansas State University

TOP STRESSOR

CONFLICTDISSATISFACTION

DIVORCE

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Understanding Couple Conflict

UHH = α* UA + (1 – α)* UB

What is the influence of spouse’s perception of spending personality on couple’s financial conflict?

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Perceptions of a spendy wife are most predictive of conflict

for husbands and wives

FLOURISHING FAMILIES DATA (2007 - 2015)

692 eligible families contacted/

423 agreed to participate

We use Wave 2 (2008) data

Men M age = 46 (28-63)Women M age = 45 (14-57)

Relationship duration M = 18 (2-30)

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47%

53%

45%

55%

0 10 20 30 40 50 60

Never/Rarely

Sometimes/Often/Very Often

Have Financial Conflict

Men Women

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0

10

20

30

40

50

60

70

80

Good Spender Saver

Wife's Perception of Husband

Husband's Perception of Wife

Power Dynamics

.

Womenperception of husband M = 30.75 α = .92

Menperception of wife M = 34.62 α = .92

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Financial Communication

Women M = 21.03 α = .88

Men M = 21.19 α = .88

My partner and I have good communication about household financial issues.

My partner and I are working toward the same financial goals.

I enjoy talking to my partner about household financial matters.

My partner and I work together on the household financial budget.

My partner and I discuss major household purchases before spending the money.

0

5

10

15

20

25

30

Women Men

INCOME

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24%

29%

17%

27%

< $10k $10-40k $40k-$60k > $60k

Wife's Income

26%

21%

17%

33%

< $40k $40-60k $60-100k > $100k

Husband's Income

Have Financial WorriesWomen 90%

Men 85%

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Top Predictors of Financial Conflict

HUSBANDS

1. Having a spendy wife

2. Having a low income

3. Having 3 or more children

4. Having a wife who thinks you’re too spendy

WIVES

1. Having a husband who thinks you’re too spendy

2. Feeling a lack of financial communication with husband

3. Having a spendyhusband

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Key FindingsHaving a SPENDY WIFE is most predictive of conflict for husbands

and wives.

Conflict rises when men are seen as spendy, too.

Husband’s perception of conflict increaseswith more children.

Wife’s perception of conflict decreases with

feelings of good communication.

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Limitations

• Average marital duration of 18 years

• Everyone had at least one child

• Spending personality was based on spousal perceptions versus actual spending

Who Cares?•Financial conflict is a top predictor of relationship satisfaction and divorce.

•Married couples are better prepared for retirement.

•Feeling that your partner is a spender could contribute to lower asset accumulation.

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What can financial planners do?

70

Calm, cool, and collected

Serene

Concentration is wavering.

Inhale as you count to 5.Exhale as you count back from 5.Your brain needs a break.

80

90

What is it that brings you in today?

At the end of our meeting today, how will you know that it has been successful?

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Reduce Conflict

• Whether they are accurate representations of spending or not, perceptions of spousal spending is highly predictive of financial conflict.

• Step 1: Encourage low-stress communication • Look for tension (crossed arms, daydreaming, leg shaking, finger tapping,

clinched fists, cold hands, etc.)

• Take a deep breath

• Take a break

• Walk around

Stress myopic decision making…

Is some stress necessary to motivate change?

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Not considering

change

Stages of Change

Stages of Change

Identifying Readiness to Change (modified from Kerkmann, 1998)

Response Response Response

Do you seriously

intend to

improve your

credit score in

the next 6

months?

NO YES YES

Do you plan to

improve your

score in the next

30 days?

NO NO YES

Stage of Change Precontemplation Contemplation Preparation

/Action

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Step 2 in reducing conflict:Involve the Wife• Traditionally, many financial planners have focused their conversation

with the husbands as they were the “breadwinners” (O’Connor and Ettinger 2015)

Communication Strategies

• Regularly schedule time to discuss finances

• Establish balanced strategy (ledger of merits)

• Build in “Mad Money”

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Ledger of Merit

Spouse A Spouse B

Main source of income Stays at home to care for young children

Financial household management Cleans home

Some household shopping Cooks meals

Helps with outdoor/yard tasks Does laundry

Majority of grocery and other shopping

Helps with outdoor/yard tasks

Coordinates majority of family activities

$59,862

Savers & SpendersPredicting Financial Conflict in Couple Relationships

Derek Lawson, CFP®

Kansas State University

Special thanks to co-authors

E. Jeffrey Hill, Ph.D., Ashley LeBaron, & Roy Bean, Ph.D., LMFT

Brigham Young University

Sonya Britt, Ph.D., CFP®

Kansas State University