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He saves, she saves

Negotiating skills are a must, experts say, in order for couples to resolve their money squabbles.

By Marilyn GardnerStaff writer of The Christian Science Monitor / June 13, 2005

After Dennis and Erika O'Connor were married nine months ago, it wasn't long before money became an issue. "Skirmishes," Mrs. O'Connor calls those conversations. "I was more conservative in my spending habits, and Dennis was more extravagant."

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Both had been married before. Neither was a great budgeter. Yet money was a subject the couple wanted to get right. "We've had to set aside baggage from our first marriages to work together on finances," Mr. O'Connor says. And slowly, they've turned confrontation into cooperation.

It isn't easy. Disagreements about money are one of the major flash points in long-term relationships - and often a reason for divorce, surveys consistently show. But as recent cultural changes, such as rising rates of divorce and remarriage, have reshaped family life, they have also altered the dynamics of family finances. Husbands and wives who might once have been passive or silent about spending, saving, and investing are realizing the value of negotiating.

For example: Although more than half of couples fight about money issues - at least once a month, nearly a third say - more than 40 percent say they almost never do, according to a new study by Tango, a magazine focusing on relationships. The same study also shows couples' growing financial independence. Only 46 percent share a checking account, and only 44 percent share a credit-card account. Almost half consult with each other before buying anything over $250. Two-thirds check before making purchases over $1,000.

Clearly, there are ways to handle dollars without creating conflict. The O'Connors maintain a joint checking account, where they deposit all paychecks and pay all bills. Mrs. O'Connor keeps a separate account for child-support payments for her daughter from a previous marriage. Mr. O'Connor has his own checking account - "his play money," she teasingly puts it.

Mr. O'Connor knew the down side of finances from his first marriage. "Talking about finances was very difficult," he recalls. "It got very territorial. I unfortunately brought that perspective into this marriage. We were both in our camps, defensive. I was being defensive by defending where I spent money."

As a single mother for six years, Mrs. O'Connor had become independent - and a careful spender.

To enhance communication, they worked out a system: "Erika pays the bills and tracks them when they come into the house," explains Mr. O'Connor. "Then I track our bank account through an Excel spreadsheet, so I know where expenditures are, even ones that haven't hit our bank account yet."

Both say that handling finances together has built mutual trust. That trust served them well when Mr. O'Connor opened a public-relations firm in Natick, Mass., two months ago. "Because we had learned to work together financially, it wasn't such a huge leap," Mrs. O'Connor says.

Many remarried couples face another challenge: deciding who pays for what for whose children. "It's an area where couples could get tripped up - 'You spent X on your kid, I only spent Y on my kids,' " says Mr. O'Connor.

Cindy Rakowitz and her husband, David Adelman, of Agoura Hills, Calif., also brought lessons from their first marriages. She and her first husband never learned how to pay bills or plan financially for taxes and their children, she says. This time she has learned to treat money with a new respect.

She and Mr. Adelman, a lawyer, each agree to pay certain bills. "If for some reason either one of us has hit an obstacle in our cash flow, we communicate to each other about it," says Ms. Rakowitz, who owns a public-relations and production business. They are also completing their estate planning and health proxies. "Tax planning, college planning, estate planning, insurance coverage, and communicating openly about month-to-month budgets aren't 'fun' all the time," she says. "But at least we've minimized our conflicts about financial matters."

As more women like Rakowitz own businesses - women account for nearly half of all new small businesses - many are bringing financial savvy to their family finances as well. "Women are controlling more of the wealth in America, their earnings have grown significantly, and they're more self-reliant," says Robert Reby, author of "Retire Without Worry." "All that leads in the right direction for financial planning."

After Barbara Wright Abernathy's first marriage ended in a financially devastating divorce, she declared bankruptcy. When she remarried, she wanted to be sure to protect her assets, which include an interior-design firm in Portland, Ore. Now she handles all the couple's money.