NEW YORK (MainStreet) — Once you're married or in a committed relationship, money should be the least of your concerns, right? Shared expenses, perhaps more than one income – how could something like an old loan or a credit score get in the way? Is your money history really that important?
In fact, it's very important.
"Some studies suggest that financial stress is the top cause of marriages collapsing," says Bruce Provda, a New York-based divorce and family law attorney for some 40 years. "When credit scores are more or less similar and neither party enters the marriage with a burdensome debt load, the couple is more free to focus on building the relationship."
Provda is right, at least according to a survey released earlier this month by SunTrust bank. Of those surveyed who admitted stress in their relationship, finances were the #1 cause, noted by 35% of respondents overall. And it's not an issue that necessarily gets easier with time. Of those aged 45 to 54, money issues were ranked the top cause of marital stress by 44% of those surveyed. And Provda claims the catalyst can be a matter as mundane as a FICO score.
"Credit scores really come into play when the couple share a 'must-have-it-now' mentality and aren’t willing to work and save towards major purchases," he told MainStreet. "If one, or both, parties have lousy credit scores, it tips the playing field in the relationship and adds to the stress. However, if the couple hasn’t developed trust in each other, learned to communicate honestly and openly, then the credit scores and debt are secondary to the real problems facing them."
Good Credit Preempts Conflicts
Angela and Kirby Jacobson are a young married couple living in Dallas. She is a marketing professional; he's an investment analyst. Given that they've been married for nearly five years and sharing finances for eight, you would think that -- like many couples -- there would have been some serious financial discussions along the way. Serious, maybe. But Angela says they never fight about money.
"I think that people think we're lying when we say that we haven't fought about money, but it's genuinely true," she told MainStreet. "There doesn't always have to be strife in order to have a remarkably positive outcome, and I like to think that we're a living, breathing example of a couple who agreed on goals before we had any money to speak of and have stayed committed to those goals even as our priorities have changed."
The couple's primary goal: earn fast, retire early. Amid stable employment and reasonable budgeting, that's entailed responsible credit use with on-time repayment of loans. They've maintained a happy home by keeping their credit scores relatively immaculate.
"We've actually never fought about money, because we have both agreed from the beginning on the same goals - make as much money as we can as quickly as we can, so we can get to actually living our lives and enjoying our lives together," she adds.
For the newly married, money issues can be triggered by something as simple as deciding about whether to maintain separate or joint banking accounts. Contrary to popular belief, marriage does not result in a merged credit report; credit reports will, instead, list accounts you and your spouse open together and those that name your spouse as a co-signer. A couple with a credit score disparity between both parties may be less likely to have a joint account for fear that a wife, say, with tarnished credit will sully her husband's lending terms or ability to take out a line of credit.
If someone's bad credit discourages a joint account, that could stifle a potentially beneficial arrangement.
"A young couple, just starting out, may find it beneficial to share a joint account for household bills, vacations and so on while maintaining separate accounts for personal bills, hobbies, etc.," Provda said.
Equal footing in terms of credit score facilitates this joint-account situation. And in Provda's experience, joint accounts are also beneficial in the long-term for successful couples.
"As they mature, I have found that many of my clients have slowly merged individual accounts into one joint account as the level of trust has grown," he says. "The question of joint or separate accounts is a great question, but not one that can be answered definitively for every couple. Each couple needs to do what works best for them."
From the beginning, Angela says she was reluctant to fully merge finances, so the couple created a system where they each paid a share of the household bills based on the percentage of total income they individually contributed. But still, they share joint accounts -- unencumbered by poor credit and propelled by level of trust.
"Having separate accounts implies that one or more individuals in the relationship aren't willing to be fully honest about their spending habits," Angela says. "Rarely are separate accounts desired so that one person can constantly shower the other with surprises."
The Jacobsons share their thoughts about finances at TheSimpleMoneyBlog.com.
"Separate accounts also implies that there is a certain amount of yours versus mine, and we're very opposed to that," she says. "Marriage is a partnership, and that means finding a way to agree on how money is acquired and spent. Respecting each other enough to manage against shared expectations is fundamental to a successful marriage."
Of course, the ramifications of spouses with good credit can go beyond opening a joint account. Even though it's possible for one spouse with good credit to apply for a line of credit individually, applications for some large loans, such as mortgages, may benefit from the presentation of dual-income and combined assets. Indeed, robust credit scores for both parties eliminates the potential for financial snags.
The Waiting Game
Of course, not all couples can expect this nuptial silver bullet, especially when just starting out. Millennials like the Jacobsons are waiting longer to marry, choosing to deal with things like student loan debt and career issues first before committing to a long-term relationship. That allows them to build credit, secure financial footing -- all ingredients to smoother sailing in a romantic partnership.
"Maybe they’re being reactive because of the student loans," Provda says.
Of course, study after study has shown that the longer a couple waits, the more mature they are, increasing the odds for marital success.
"Maybe the longer wait allows them time to mature and develop sufficient inter-personal skills which allow them to better manage — and discuss — the household finances," he says.
Intact credit fuels transparency, and that openness solidifies a relationship's foundation.
"Yes, keeping financial secrets from each other is a sure way to destroy the marriage, but a relationship built on secrets about anything — not just money -- is doomed to fail," Provda says. "If each party doesn’t have a sufficient comfort level to trust the other in financial matters, how can they possibly have trust in other areas of married life? Open communication is the signpost towards a successful marriage and that means open communication about everything the couple faces."
The Jacobsons have put in place a system of checks and balances to maintain this transparency.
"We don't run all decisions by one another -- like going out for lunch or groceries -- but every purchase throughout a month is reviewed by both of us in our own ways of tracking," Kirby says. For Angela that means pen and paper, and for Kirby, a CFP, it's Mint.com.
"Trying to hide something or buying something the other wouldn't agree with would very quickly lend itself to disaster," Kirby says. "At each point in our careers, we've thought of things as 'ours' regardless of who made more for the year, so it's not a 'his' versus 'hers' type of mentality since all buckets collectively help benefit us together."
Credit Where Credit Is Due--As With Blame
And while money is often blamed for the failure of marriages, the seasoned attorney -- who has sat across the table from his share of those in wedded deadlock – thinks that in most cases, it is not the root of all evil.
Intact credit can help couples avoid conflict issues over joint accounts or borrowing money as they maintain transparency. Of course, it's not the end-all, be-all.
"Money issues in marriages, which aren’t adequately dealt with, are just a symptom of more serious problems in the relationship," Provda says. "It’s easier to point to the inanimate object of cash as being the reason for a couple’s divorce than to take responsibility and look at one’s own issues which contributed to the demise of the union. Lack of trust, poor communication, different life goals, etc., are the primary causes of divorce. Money issues are merely the symptom."
-- Hal M. Bundrick is a Certified Financial Planner and contributor to MainStreet. Follow him on Twitter: @HalMBundrick