In this episode, Jake Gilbreath and Brian Walters discuss a recent article by the New York Post, 40% Have Ended a Relationship Over a Poor Financial Decision. Brian and Jake discuss their experience handling divorce cases where financial decisions contribute to marital conflicts that ultimately lead to divorce. They also detail what economic decisions they see cause the most strain on a marriage and the advice they give during consultations in these situations.
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Brian Walters: Thanks for tuning in to For Better, Worse, or Divorce podcast, where we provide you tips and insights on how to navigate divorce and child custody situations in the State of Texas. I’m Brian Walters. I’m joined by Jake Gilbreath, and today we’re going to discuss an article from the New York Post from just a few days ago, January 30th, about trends in the average American’s decision making processes.
In particular, this article found research that shows money mistakes or money conflicts can affect relationships. A survey of about 2,000 Americans concluded that 40% of them have ended a relationship over poor financial decisions. It’s no secret that money is and oftentimes is a leading cause of divorce. Money is always a sensitive topic in any relationship, and it can be hard to find common ground when it comes to finances. A national survey of family studies has said that money was the second most common subject couples fight about, the first being infidelity.
So here we are to discuss our thoughts on this as Texas family law attorneys. And also our experience working with clients who’ve decided to get divorced based on a financial decision. Or are facing a decision about whether to get divorced based on these kinds of financial conflicts.
Jake, let me ask you just generally, has that been your observation in your practice over these years? That money’s a big source of conflict in the marriage?
Jake Gilbreath: Yeah, I think it is. I think it’s two-part. One, marriage is a partnership. I always tell people that there’s lots of things that go into a marriage. There’s a romantic aspect and a sexual aspect to it. There’s obviously raising children and a family, that aspect to it. Then at the end of the day, it’s a financial partnership. We don’t think about that a lot when going into any relationship and going into a marriage. That we’re going to be making partnership style decisions together, a lot of times together, in a relationship.
Frankly, I don’t find that it’s talked about a lot leading up to marriage. It’s really not something, I think when people are on their third or fourth date or whatever, it’s been a while since I’ve dated. But over dinner when they’re dating, people talk about children and whether or not you want to have kids. “How do you want to see your family growing?” It’s usually not a topic, as I understand it, a topic of CNN. “Oh, by the way, how much of your income do you like to save and what type of interest rate do you like to see on a mortgage before taking one out?” I think a lot of people go into a relationship, even a marriage, maybe not understanding where each other sees. How the other one sees finances and that can lead to conflict.
The other thing is I think that people naturally fight over what stresses us out. For example, there’s studies out there that say when you’re raising a child with special needs that unfortunately has a really high divorce rate because it can be really stressful. Kids are stressful enough, as us parents know, but it can particularly be stressful raising a child with special needs. Things that stress us out lead to conflict. For most Americans whether or not you make a thousand dollars a month, a hundred thousand dollars a month, or a million dollars a month, one thing I’ve learned since the very beginning of practicing family law is that people are stressed out by finances no matter how much money they make. When you’re stressed about it you fight about it with your spouse. If you’re not on the same page then that just exacerbates the situation.
Brian Walters: One of the first trends I noticed as a young divorce lawyer was to put people into two categories, spenders and savers. There’s three types of marriages, where they’re both spenders, they’re both savers, or you’ve got one of each. Again, it’s always a spectrum but I’ve found that when you had one spender and one saver that was a lot of conflict. Because the saver wanted to save and the spender wanted to spend. When you had two spenders, that was usually a problem because there wasn’t enough money to go around. The couples that seemed to have the fewest problems were the ones that both like saving money. But there’s not that many marriages that probably go into that category.
Here’s some specific questions and maybe we’ll alternate between them.
How often do you hear about finances in consults that you have about divorces, even if it’s an unmarried couple that’s living together? Is that something you speak about very often in those consults?
Jake Gilbreath: Yeah, a lot when talking about the breakup of the marriage or the conflicts that you have. I will say it’s rare that somebody would come in and say, “I’m getting divorced because we see finances differently,” or “I’m getting divorced because he spends and I save and I don’t like that.” It is usually not cited as the reason for divorce, but it’s talked about because it’s often a huge area of dispute that people have. Or it’s something that they’ve never really discussed with their spouse or actually had a full-blown discussion with their spouse about the differences that they see. They carry the resentment or they’ve had a little bit of discussion on it and they don’t like the way the other spouse responded and they carry that resentment. For infidelity, obviously if you ask somebody in a consult, “Why are you getting divorce,” “Well, he cheated on me” or “She cheated on me,” that’s usually brought up.
Other than that, the question of why are you getting divorced, it’s usually a variety of things that lead to the divorce. While somebody may not say, “We’re getting divorced because we fight like cats and dogs over money,” when you dig, it’s usually a significant source of conflict. Which can then lead to conflict in the divorce because they’re going to see finances differently. You usually see things that cause problems in the marriage bleed over and cause problems in the divorce.
As a young associate when I worked for Jim Piper, he always would tell people, “Why would you expect your spouse to behave differently in a divorce than he or she behaved during the marriage?” If you fight about finances when you are married, you’re going to see people fight about finances typically when they’re going through a divorce.
Brian Walters: Something that you mentioned infidelity is another big reason, but there’s something I’ve heard referred to these days as financial infidelity. To me that typically meant somebody was spending money, not necessarily on a girlfriend or boyfriend, but just spending money without telling the other side or doing it in a much larger amount than they expected. Oftentimes you either find that out and that can be a trigger for a divorce, or we find it out in the divorce process when the finances get opened up. I think that’s been particularly common when one of two things is the case. Either people keep their finances separate, which doesn’t actually separate your finances in Texas under community property law, but people do that sometimes. I understand that.
The other one could be when one of the adults, one of the spouses, just isn’t interested in the finances and just goes about their daily business and spends money but doesn’t worry about it. It may just be an agreement and it may not even be anything very nefarious, but the other spouse that controls the finances is spending money on something that the other spouse didn’t know about. Often we get into arguments, “Well, I told her. She didn’t care or she never asked,” or “I thought it was fine,” or whatever the situation is. That can feel like you’ve been cheated on too, just about money instead of romantically.
Jake Gilbreath: I think that’s particularly the case when you see people start approaching retirement age, and particularly if you’ve left it to the other spouse to be in charge of that. Either explicitly or implicitly it’s known in the relationship that the husband or wife is the one that’s monitoring these things and whether or not we discuss goals about retirement and when we’re going to retire. Then you find out that as you approach that age and you start being more curious about what do we have, what’s it look like, when can we retire? Then you find out that somebody’s not been a good steward of the money or spent it nefariously.
I’ve had lots of divorces where unfortunately one spouse will be in charge of the finances and they decide that they are a part-time stock trader. They think that they know what they’re doing and take very aggressive actions in the trading. A lot of times you’ll see it with futures. They’ll take very aggressive actions with futures thinking that they’re smarter than all of us and smarter than all the professional traders. And they can lose a great deal of money and not tell their spouse.
I’ve had that really unfortunate situation where somebody’s going through a divorce and, “Well, we’ve got a couple million dollars in this E-Trade brokerage account so I think we’re going to be doing okay”. Then you get the statements and you find out that we’re not doing okay because one spouse, whoever’s in charge of it, didn’t feel like two million was enough. “So I’m going to go sit there and trade and double our money and, whoops, it’s all gone”. I’ve seen various levels of that.
Sometimes you see it when one spouse is being really controlling, and that’s not okay. But sometimes that’s just the natural division of responsibilities in the partnership. Then when the person that’s not in charge starts asking questions and stuff they find out that things are not as either were represented to that person, or that person believed that they were. That can cause a lot of conflict. First it will cause a lot of fear and anxiety, which can then lead to a bunch of conflict.
Brian Walters: Yeah, I agree. One more war story and then we’ll move on, but I had a case a few years ago, it was the second marriage of both of them. They both had older or adult kids. They had very separate finances and they both made good money. When the divorce rolled around, the wife had put away two or three million dollars. The husband made more money, so she figured he had three or four million. It turns out he had much less than that because he had put all three of his adult children through college and then grad school and supported them. He thought that was a totally appropriate thing to do. She thought, “That’s our community property. You didn’t discuss it with me and you just did that. Now we’re much less well off. Not only the lost money from the actual tuition and living expenses, but also the gains that would’ve come from saving it”. A really big issue for sure.
Again, it was lack of communication and lack of transparency. I think if they’d just talked that through and did some basic disclosure to each other each year, that would have headed off that issue or it would have made it an issue much earlier. They could have divorced earlier and never had a problem. But again, they were both, like you said, getting closer to retirement age and it was a little late to be trying to fix that.
One last issue before we wrap this up, just your thoughts about how an attorney can help with these types of situations. That doesn’t necessarily mean in the divorce process, but potentially earlier on, partway through it. I get all kinds of consults that they’re not going to file for divorce right away, but they want to know where things might go. So any thoughts that you’d have to help people before they get too far down the road with this problem?
Jake Gilbreath: It’s just like you said, because it’s not always, “Hey, you need to get a divorce.” We never tell people, “You need to get a divorce” unless there’s a safety issue. Otherwise, we’re not divorce lawyers saying, “Well, you need to divorce this person and how could you be with them?” Obviously if it’s time and it’s appropriate to go through divorce, we’re there for you. A lot of times people will come and say, “This is an issue, what can I do because I don’t want to get divorced”. There’s lots of options. The advice I give people whether or not they’re consulting with me or there’s just people that I know, it’s really all about communication and being open. A lot of people don’t like talking about finances. It can be a very awkward conversation. It can be stress producing. We like to bury our heads in the sand. The way to head these issues off is to communicate.
Brian, going back to your situation, if they had communicated and knew that was going on, there’s more than one option. One option, like you said, “Look, we just don’t see it eye to eye and this isn’t working out and we’re going to get a divorce”. That’s obviously an option. That may be what is the right option. The other option is, “We’re going to go to counseling. We’re going to put in place some rules and boundaries of how we approach this in our relationship and we’re going to work through this problem”. Then another option is that you could combine with that or just do standalone. You could have a post marital agreement, which we get drafted all the time.
Frankly, good fences make good neighbors and that includes married spouses. Obviously you can set up your own boundaries in your relationship, but you can also legally set up boundaries. Some people just operate better like that. It’s just, “We know what the rules are. This is your money, this is my money, this is how we spend it, these are the rules”. That helps the relationships, so you don’t see finances destroy all the good in a relationship that is worth salvaging.
Again, sometimes it’s not. Sometimes the partnership doesn’t work out. That’s why we get those calls. That’s why people go through a divorce. There’s nothing wrong with that. Sometimes that’s the appropriate next step. We can also be there to help head that off. We’re not just there rah-raging people to go get a divorce. We’re there to help head off problems in the marriage so you’re not going through a divorce. Or if you are going through a divorce where it’s not World War III. We’re going through the process and not fighting like cats and dogs.
We’ve talked about it in other episodes, but some of our clients do fight like cats and dogs. That’s when there’s a personality disorder and we’re certainly there for that. But we’re also there to help people avoid those awful situations.
Brian Walters: Yeah, I agree. All right, well, that’s all we have for today. If there’s a topic you’d like to discuss or if you would like to speak with someone from our team, just email us at podcast@waltersgilbreath.com or visit us at waltersgilbreath.com. And thanks for listening.
For information about the topics covered in today’s episode and more, you can visit our website at waltersgilbreath.com. Thanks for tuning into today’s episode of For Better, Worse, or Divorce, where we post new episodes every first and third Wednesday. Do you have a topic you want discussed or a question for our hosts? Email us at podcast@waltersgilbreath.com. Thanks for listening. Until next time.