How Financial Literacy Can Help

March 2020 Issue
by Carrie Schwab-Pomerantz

Dear Readers: If I were to ask couples to name the top three things that keep them together, I don’t imagine that shared knowledge and interest in their finances would make the list. Yet money is often cited as one of the main causes of divorce. A recent survey by Policygenius found that 1 in 5 people say their partner is financially irresponsible. And these people are over 10 times more likely to break up over money issues than people who say their partner is good with money.

I always recommend that couples get to know each other financially at the beginning of their relationship, but that really is just the start. A relationship can be a lifelong journey, and your financial togetherness is an important part of it. There are bound to be gaps in each partner’s financial attitudes and know-how, so, to me, it’s essential for every couple to not only discuss their priorities but also increase their financial knowledge along the way. Because financial literacy is also a lifelong journey.

I’ve had the opportunity to talk to a few couples lately whose own experiences demonstrate how being financially aware and informed can bring people closer together. I thought you might be interested in their stories. (Of course, I’ve changed their names.)

30-somethings Consider a Prenup
Jessica and Aiden, both in their late 30s, were recently engaged. Both had growing careers, and each had already accumulated some assets. One of them had a considerable number of employee stock options. While they had been together for a couple of years and already had a reasonable knowledge of each other’s financial attitudes, marriage made them look more seriously at both their individual and joint financial futures. The big question was: Did they need a prenuptial agreement?

They met with a financial advisor to talk about the pros and cons. Their advisor helped them understand that a prenup isn’t only about what could go wrong but also about helping them figure out positive ways to work together. Because, big picture, creating a prenuptial agreement takes a willingness to be completely open and honest about everything -- what you own, what you owe and how you want to live your financial lives together. That takes absolute trust.

They talked about what assets they’d share and what they’d keep separate; how they’d handle current and future debts; if one or the other would take the financial lead; and, finally, what they’d do if they were to ever split up.

Talking about a prenup not only helped them answer some important questions; it pointed out some holes in their financial knowledge. While Jessica and Aiden ultimately decided they didn’t need a formal prenuptial agreement, talking through it brought any concerns out in the open and made them feel they were on the right financial track—together.

Second Marriage Presents Financial Challenges
When marrying for the second time, John, age 60, and Cynthia, age 55, knew they had to deal upfront with how much they were willing to marry their finances. Each had a home and investments, and Cynthia had two kids to consider. Plus, one of them had considerably more assets than the other. As you can imagine, these circumstances brought up not just financial issues but also emotional issues, which can be especially complex when marrying again later in life.

They really had to put everything on the table, share their feelings and reveal any uncertainties about the financial particulars involved. For instance, would they consider all assets acquired before the marriage separate and those acquired after marriage joint? Would they sell their current homes and move into a new one? The kids and estate planning were a particular concern. Cynthia said it was hard at that time in life to let go of some patterns and attitudes, but having a mutual understanding of how they wanted to handle their finances was absolutely essential. And they agreed to not only listen to each other but also learn from each other’s experiences. That takes a tremendous amount of openness—and togetherness.

Longtime Partners Need to Break Old Patterns
According to an article on, the financial literacy gap often widens in long-term relationships. That’s what happened to Laura and Alex. Alex, an accountant, just naturally handled all their finances. They’d been together since they were quite young, and Laura at first didn’t seem to care. In fact, she wasn’t really interested. But as the years went on, Laura began to feel too dependent on Alex as well as resentful. There were really two problems: Alex had to relax some of his control, and Laura needed to be willing to learn. It was difficult at first, but once Alex agreed to include Laura in more financial decisions and Laura began to understand more about their income, savings and investments, the air was cleared, and each felt more confident in the other.

A Financial Plan Helps at Every Stage of a Relationship
Every couple has unique financial challenges, but one common way for all couples to get on the same page, learn together and solve their financial problems together is to have a financial plan.
When it comes to financial literacy, a financial plan can be an outline for understanding some basic concepts. That’s because it deals with your complete financial picture: goal planning, cash flow, budgeting, debt management, saving, investing, insurance, taxes and estate planning. Ideally, you will work with a financial planner, although an informal plan that you and your partner create yourselves can also increase your financial knowledge and give you financial direction. And it’s something couples can revisit over time to make sure they’re still in agreement.

Make a Date to Renew Your Financial Commitment
Making a date to look back at what we’ve accomplished and look forward to achieving new goals in the future is important. Why not make understanding more about your finances a mutual goal for you and your partner? You can think of it as increasing your financial literacy or as a way to fulfill your dreams. Either way, you’ll be doing it together—and that’s the most important thing.

Carrie Schwab-Pomerantz, Certified Financial Planner, is president of the Charles Schwab Foundation and author of “The Charles Schwab Guide to Finances After Fifty.” Read more at You can email Carrie at This email address is being protected from spambots. You need JavaScript enabled to view it.. The information provided here is for general informational purposes only and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. To find out more about Carrie Schwab-Pomerantz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at ©2020 CHARLES SCHWAB & CO. INC. (MEMBER SIPC)

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