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If you're 45 and worth millions, CONGRATULATIONS! Most people would say you're living the dream. But if you're married to someone who blows out the budget, welcome to the club. Couples of all income levels struggle to see eye-to-eye on finances, making this one of the leading causes of divorce. This was a topic that got a lot of traction on Reddit . We have some thoughts on how you can handle this difficult issue, whether you're a millionaire or a "thousandaire."
Overspending is not an issue that affects one gender more than another. In some marriages, the wife is the more responsible party with money and struggles to rein in her husband's spendthrift ways.
A Real-Life Scenario
A specific scenario discussed on Reddit involved a 45-year-old male with a net worth of over $16 million and earning $3-8 million a year. The family has the lifestyle you'd expect: luxury homes, private schools, country clubs, domestic staff, and first-class vacations. The wife has not worked for 15 years while raising the kids. Let's give them names so we don't have to call them "the husband" and "the wife." They can be James and Naomi.
James asked for advice about some specific issues:
- Naomi has begun spending more, in violation of what he calls their "underlying (and maybe somewhat unspoken) agreement."
- She spent a half-million dollars the previous year on about 3,500 American Express charges, usually of less than $500 each. That works out on average to nearly 10 charges a day.
- $90,000 of the charges were for the family's post-Covid vacations.
What Are His Concerns?
The family so far has had plenty of means to absorb Naomi's spending, so what's the problem?
- Naomi is in charge of paying the household bills but does not do it reliably. Last year she paid AMEX late 8 times and the account was charged over $3,000 in penalties.
- James worries what would happen if he passed away. Would she spend all their savings and the children would be left with nothing?
- James takes her financial irresponsibility personally: "I find her behavior with money completely disrespectful (toward me, specifically)."
What Has He Done About It?
These are the steps James has taken so far:
- "While I’ve told her she needs to cut back, I haven’t been able to give her any good advice on how to do that."
- "I've encouraged her to get more involved and become more of a partner when it comes to money."
- He is thinking about moving some money into a trust for the children.
- He is not interested in a divorce. He loves his wife and does not want to break up his family over money. They have plenty of it for now, but he is just concerned about how to reign in her spending so that it is sustainable.
Relationship Suggestion 1: See a therapist
Spending can be an addiction as much as gambling, alcohol, or any number of other things that give the brain a momentary rush of dopamine. James and Naomi need to figure out whether she is self-medicating with spending, and if so, why? Is she bored, lonely, afraid, sad? What are the emotional needs driving her spending, and how could they be met in a better way? Does she need more, relationally, from James? Would she like to go back to school, take a job, or do volunteer work to give her meaningful and rewarding things to do with her time?
And for his part, James admits he takes her spending habits personally and sees it as a sign of disrespect. This needs to be explored. Is that really what she intends? Why does he feel that way? Does he have unspoken expectations for more appreciation for his work? Is he measuring his worth by his bank account? These are all things to explore with a professional third party.
Relationship Suggestion 2: Retire
Why is James still working? Does his work take him away from his family for long periods of time? He has a larger fortune than most people dream of for retirement. He should consider retiring and spending his time with Naomi and the children, building memories before they grow up and leave. His family doesn't need more millions in the bank. They need time with him, even if they don't act like it or realize it.
Relationship Suggestion 3: Communicate
James says that their financial understanding of spending is "somewhat unspoken." This is a major red flag. They need to talk about their expectations and make them explicitly clear, like, YESTERDAY. He has asked her to cut back on spending but hasn't suggested how. That's another thing they can talk about, perhaps with the help of a financial advisor. And he says that he loves her and wants to be with her for the rest of his life. She needs to hear that every day, backed up by giving her and the children his time as generously as he gives them his money.
Financial Suggestion 1: See a Financial Planner
One of the most surprising aspects of James' story is that he has given Naomi responsibility for paying the household bills, even though he has other people to help him with his business and they have hired staff to help with the children and maintaining their homes. They need to come up with a budget and the bills can be managed by an accountant much as his business accounts would be. She has shown she's not good at keeping up with this, so why burden her with this responsibility?
Financial Suggestion 2: Live Within Your Means Although this is an extraordinarily affluent family by any standards, are they trying to live at the level of people who have 10 times more wealth than they do? Living within their means doesn't sound like it is only Naomi's problem here. And it will help her not to feel shamed and scapegoated if James and the children have to make some sacrifices as well.
They could sell their vacation home and surplus cars, boats, etc, reduce the household staff as the children get older, and put a cap on vacation spending. They could move to a more affordable but still comfortable, safe, and upscale neighborhood. If the country club circles they are part of are creating pressure for extravagance, then quit those organizations and find ones that better suit the healthier direction they're taking their family.
Financial Suggestion 3: Protect the Nest Egg
Finally, James' concerns about preserving the family's wealth for their children are well-placed, and his solution is reasonable. He should secure for his children an appropriate amount of money in trust funds that his wife will not legally have any access to. With household expenses managed by an accountant, they should budget a generous but reasonable amount of money Naomi can spend as she wishes, but this should be billed to a debit card with a limited balance, not an open-ended credit card.
What If They Can't (or Won't) Change?
If Naomi is not agreeable to these changes or continues to overspend consistently, then James should look into what legal measures he can take to safeguard the couple's other assets. For example, she could be removed from the deed to their real estate, investments, luxury cars, etc. These, too, might be placed in a trust that she would not have access to. The point is not to punish her, but to isolate her credit history from the rest of the family so that creditors will not be able to seize the family's assets if she cannot get her spending under control.
Good Priorities
A very positive thing about James' post is that he makes it very clear he does not want to end his marriage over money. He loves Naomi, and he knows they have much more than many people will have in their lifetime. He's not a miser, and he wants his family to enjoy the fruit of his labor. However, this problem must be resolved not only for the health of their bank account but for a healthy and happy lifelong relationship as well.
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