Men, women...and money
Think you know what your spouse wants when it comes to money? Better read this.
By Pat Regnier and Amanda Gengler

NEW YORK (MONEY Magazine) - Imagine that you and a partner own a business in which you've invested all your money and most of your emotional energy. Your financial security is wholly tied to the success of this joint enterprise.

But you face one major challenge: Your co-CEO is just, well, not like you.

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The two of you prefer different movies, have different taste in clothes and can't ever seem to agree about what to do on Sunday. Money, in particular, tends to be a delicate topic. All too often, conversations end with one partner walking away, saying, "You just don't understand."

Now if this really were a business, and not just a metaphor for marriage, you'd have hired consultants a long time ago to figure out what was wrong. But since the real problem here is the ancient state of mutual incomprehension between men and women, we don't even try.

The result: We know far less than we should about how the managers of the economy's most important unit -- the family -- talk about money. That's where this special report comes in. It's built around a nationwide survey of 1,000 spouses -- 500 husbands and 500 wives -- conducted for MONEY by Mathew Greenwald & Associates. We then fleshed out the poll results by scouring the existing research and talking to financial planners, psychologists and other experts who deal with men, women and their money every day.

What did we learn? Well, when it comes to getting through to each other about money, spouses generally have some work to do.

Men and women may not exactly be from different planets, but many still operate in distinct financial orbits. For all our supposed financial sophistication and equality, the vast majority of married couples still divide the family's financial labors along traditional lines, with women handling everyday spending and budgeting decisions while men plan and invest for long-term security.

Across the divide, misunderstanding often rules. (The typical couple can't even agree, other research shows, on how much they earn or owe.)

Almost all of our respondents admitted that money is a cause of tension in their marriage. Seven in 10 actually owned up to arguing about it -- in fact, money causes more fights than sex or even in-laws. In the poll's most eye-opening findings, men and women had dramatically different ideas about who does what with the family finances, and what their partners care about.

Husbands were especially clueless, tending to underestimate how much women care about almost every financial issue, from investing and saving for retirement to paying off debt. A hundred years after Freud, and men still don't know what women want.

At bottom, though, this report carries a hopeful conclusion. MONEY's poll found that while couples may not know it, they are remarkably in sync about what really matters to them. Chances are you and your spouse actually share the same priorities (saving for retirement and emergencies), worries (Will one of us lose our job? Can we pay off our debts?) and values.

All that remains is for you to find a way to get this fact through your significant other's thick skull. Start here.

What spouses think their partners think about money is not what they really think

The gap between the financial issues that people care about most and what their spouses think they hold important may not be the Grand Canyon. But some couples will need an awfully big bridge to get across it.

For instance, our survey found that only 27% of men believe their wives think having the right investments is very important. Yet nearly half of women say they do care (approximately the same proportion as men).

Likewise, only 45% of men say that having cash stashed for emergencies is very important to their spouse vs. 67% of women who believe it's crucial.

Women come much closer in gauging what matters to men. If anything, they tend to give guys too much credit, believing their husbands care more about paying off debt and saving for big purchases than men actually do.

Both husbands and wives also tend to attach more importance to their own contributions than their partner does. For example, 73% of the men in our survey say they make most of the investing decisions, but less than half of the women say their husbands are in charge. The rest either report that they do it themselves or say they share decision-making.

A 2005 survey by PNC Advisors similarly found that six out of 10 affluent women said they shared financial decision-making, but less than half the men agreed. Husbands and wives can't even seem to come to terms on basic financial facts.

When asked about their family's income, both men and women say they earn more than their spouses believe they make, according to a study by Jay Zagorsky, a research scientist at Ohio State University. Overall, Zagorsky found, the typical husband says his household earns 5% more and is 10% wealthier than the wife says, while the wife reports that the family owes about $500 more than her husband says.

When it comes to money, spouses tend to typecast eachother -- and themselves

One possible reason for the perception gap: Husbands and wives divvy up money-related tasks along very traditional lines. Despite the strides that women have made in the work force during the past three decades and the greater economic clout they wield as a result, men still tend to do most of the big-picture, long-term planning while women manage the day-today household finances.

The gender divide seems to conform to some of our hardest-to-shake stereotypes. Man hunt food; woman make cave pretty. Or maybe it's more like a 1950s sitcom. Lucy blows the budget on a new dress; Ricky fumes, she's "gotta lotta 'splaining to do."

In real life, though, there's nothing funny about the arguments that can flare when financial roles are so divided. Consider Mark Haase, 37, a helicopter flight nurse from Reno, and his wife Becky, 47, a pediatric nurse manager. Like most of the husbands in our survey, Mark is in charge of the family's investing and long-term planning; Becky does the everyday spending, buying clothes for their two children and items for the house.

They don't talk much about money, both spouses say, but when they do, the discussion usually ends in a fight, mostly over spending. Says Mark: "Do we really need a new bedspread? The closet is full of linens.... Sixty dollars on crayons and paper for the kids? I don't want to deny them, but...." Counters Becky: "He doesn't understand how much things cost." Adds Mark: "The only time we really talk about money is when there's a problem."

Husbands like to talk (and talk and talk) about money; wives, not so much

Talking about money may also be challenging for many couples because men and women seem to have different levels of enthusiasm for the topic.

Consider: While half of the men we surveyed say they like to talk about money at social gatherings, only 22 percent of the women say the same. For some wives, the problem may stem from how their husbands approach the subject.

"Men have been taught this golf course, lockerroom banter they use to talk about money," says financial planner Mary Claire Allvine, co-author of The Family CFO: The Couple's Business Plan for Love and Money. Just watch CNBC some morning. It's ESPN in a suit and tie.

When Toni Cluse of Sagamore Hills, Ohio sits down with her husband Derek to talk about their money, he comes armed with spreadsheets and pie charts. Says Toni, 40, a bank product manager: "I roll my eyes and cooperate, but I find it comical."

Yet after 17 years of marriage, their financial division of labor -- yes, he does the long-term investing, she manages the day-today money -- works well for them, both say. "She's detail-oriented, and I'm more of a big-picture guy," says Derek, 40, a CFO at an education management company. The Cluses check in regularly with each other on the family money, which will help them succeed in the long run, planners say.

But is it wise for most couples to split up money roles in this way? More on that in a moment.

Who's the boss depends on who brings home the bacon

Working wives now contribute more than a third of the typical family's income; in a third of married households, they're the bigger breadwinner. As a woman's contribution to her family's income grows, so does her financial involvement, studies suggest.

In our survey, nearly four in 10 women in households where the wife is the primary earner say they take the lead in investing. That's twice as many as in families where wives earn less. Whether they earn more than their husbands or not, many working women have learned to invest through their employer-sponsored retirement plans.

"My 401(k), those decisions are up to me," says Jennifer Santana, 44, who works in human resources at Walt Disney Parks & Resorts in Burbank, Calif. In fact, she doesn't even share much information with her husband about her retirement account; she prefers to talk about investing with her girlfriends and colleagues at work. At home she covers "both the household finances and long-term planning," she says. "I want to have a handle on where the money goes."

For many women, lack of confidence may be an obstacle to stepping up

Like Santana, more and more women are becoming involved in the family's investments. Only a minority take the lead, though; more commonly, spouses share decisions.

Elizabeth Goldberg of New York City says she and her husband decide on every financial move, including investment calls, together. But she leaves much of the research on fund choices to him: "He's much more interested in figuring out exactly what to do."

It's hardly that Goldberg, 30, couldn't investigate this herself -- she's a reporter for a legal-affairs magazine. But she feels enough anxiety about pulling the investment trigger that it's not as enjoyable for her. So she lets him play market guru.

Numerous surveys support the notion that women don't feel as confident about their financial abilities as men do. For example, a survey by Merrill Lynch found that 47% of women (vs. 30% of men) feel they are not knowledgeable about investing. Women also say they are far less comfortable taking financial risks than men: Only 31% of the wives in our survey label them-selves the couple's bigger risk-taker with money vs. 66% of men.

What's going on here? It's not that women are just risk-averse wimps. They face some serious financial challenges that men typically don't.

One's pretty obvious: They still tend to make less money than men (about 77 on the dollar). What's more, University of Washington economist Shelly Lundberg notes that women have to contend with other economic risks, like possibly having to care for their kids without a spouse's help.

That's a bigger threat to women than to men since they typically live longer and fare worse financially in a divorce. In general, how we think about risk seems linked to where we stand in the societal pecking order.

Scholars at Decision Research in Eugene, Ore. have found that women tend to worry more than men about a host of threats, from natural disasters to asteroids. They dub this the "white-male effect" because nonwhite women and men don't differ as much in their risk assessments, suggesting social, not biological, factors are at play.

"Males who control things don't see the vulnerabilities and feel safer," says researcher Paul Slovic. In any event, if you look at what women do, not what they say, they don't seem that different from men. A Colorado State University study has found, for example, that by 2001 almost 53% of women had invested their retirement plans mostly in stocks -- slightly more than the 51% of men who pursued the same strategy.

For many husbands, investing feels like a good way to show you're a manly man

Women don't just yield the reins of financial power to their husbands; sometimes men reach out and grab them. Being a breadwinner -- even if you're not the only one -- is an important part of male identity.

Managing money to provide for your family's future feels like a natural extension of that role. But the male urge to display competence with money may run deeper than that. It may actually be a good way to get a mate. University of Texas psychologist David Buss has found that, across cultures worldwide, women value "good financial prospects" more highly in a potential partner than men do.

Is it such a leap to suppose that if women value good earners, they'll also value good investors? If so, that gives men a big incentive, even if it's a subconscious one, to show off their market savvy.

Whatever you do, it's best to do it together

Some economists argue that marriage makes financial sense precisely because it allows each partner to specialize in what he or she does best. But you can get into trouble if you use Mars and Venus notions as an excuse not to talk about what's up with the money.

"If you are in a marriage where your husband is handling the money and he's terrible at it, you feel you can't step in," says Caryl Rivers, co-author of Same Difference, a book about gender stereotypes. That is, if you even realize he's terrible at it. Fact is, there's little reason to suppose investing is really something men do better.

A study by finance professors Brad Barber and Terrance Odean found, for example, that men tend to trade stocks more frequently than women. Those trades lowered their returns by roughly one percentage point a year more than the women's trades did. Making investment decisions together seems to be the smartest move. If a woman can persuade her husband to take a more buy-and-hold approach, the family might well end up richer.

What else do you need to do? At a minimum, you both need to know what you've got and where you've got it.

Face facts: All marriages end, one way or another -- and unless the two of you go out together in a blaze of glory, you don't want to be left alone to cope after a lifetime of being a financial bystander in your own marriage.

Women's longer life spans mean that it's particularly crucial for them to be informed. That's always been true, but the stakes are higher now with the decline of pensions and the rise of 401(k)s, says Susan Hirshman, a wealth-planning strategist with J.P. Morgan Asset Management.

Thirty years ago, a woman might have been okay leaving the investing to her husband because "investing" may have only meant a few thousand bucks in Ma Bell or a similar stock; for retirement, she was relying on his pension.

But now those investments are her retirement. Working together on your finances may also strengthen your relationship, since it's clear that money is a divisive subject: 84 percent of our respondents note that money creates tension in their marriages, and 15 percent say they fight about money several times a month or more.

The leading cause of dissension is disagreement about financial priorities. The good news: The problem appears to be one of perception, rather than a difference of opinion about goals.

In the end, our survey found, what husbands wanted and what wives wanted was pretty much the same; they just didn't realize it. Whatever they say in Hollywood, most great romances aren't a case of opposites attracting. In real life, we get married to people who share our goals: a family, a home, a secure future enjoying each other's company.

And those are the things any good money conversation should really be about.

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