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transcript
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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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5
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