Who manages your family’s finances?

Back when I was a stay at home mom, my husband and I used to joke that he’s in charge of making money and I’m in charge of spending it. But I’m proud to say that over the last decade, I have proven myself to be a capable investor – and this was NOT an easy decade for investors as we all know!
So now we say that he’s in charge of making (most) of our money, while I’m in charge of investing it and growing it, and – well, I’m still pretty good at spending some of it too.
The Family As a Business Unit

Joking aside, I find that the trust he puts in me, the fact that I can manage our finances on my own and only consult with him prior to making really big decisions, is priceless. A family is of course all about love, friendship and mutual commitment, but it is also a business unit of sorts. Just as it wouldn’t make sense for the CEO of a company to micro-manage the CFO or the CIO, it doesn’t make sense for a couple to micro-manage each other.
Of course, this requires trust. For many couples, there’s very little trust when it comes to finances. A recent, disturbing study from American Express shows that a growing number of couples reports that they argue about money, and that in order to avoid those arguments, they sneak purchases, sock money away in a secret bank account, or keep a credit card account hidden from their significant other.
Assuming you agree with me that this is a sad state of affairs, how do you get to a place where you trust each other – where you know that you are in agreement when it comes to finances, and are working together to build your financial future?
Financial compatibility
I asked you, a while ago, “Is Financial Compatibility Important When Choosing a Life Partner?” Most of you thought that financial compatibility is important, and that marriages suffer when there are big differences between the partners.
Leigh shared her own experience: “I am now going through a divorce, and though there were many issues at play, I’d say it boiled down to money. Significant Other came into the relationship with a monetary philosophy that borrowing against the future is a-okay. While I worked to whittle down that debt, Significant Other refused to make any sacrifices that may have helped put us back in the black.”
I agree with your responses to that post. I believe that financial compatibility makes it easier to trust each other and to work together to build a financial future. If my husband believed I would take all the earnings from our investments and spend them on jewelry and clothes, would he still be able to trust me to manage our portfolio?
Does it make a difference if it’s the woman or the man who manages the family’s finances? I would say it doesn’t – it all boils down to the individual and not so much to their gender. In addition, even if we assume that women and men have different investing styles, with women being more risk averse, each style has its pluses and minuses. I remember reading somewhere that over the long run, portfolios managed by women have better returns, because they trade less often and rack up fewer expenses.
Interestingly, in a 2008 survey by Pew Research Center, 45 percent of women respondents said that they manage the money in the household, while 37 percent of the men said that they do. Perhaps it’s a question of perception, or of needing a better definition of what it means to “manage the household finances” (balance the checkbook? Pay the bills? Make investment decisions?). Whatever the explanation is, it seems that women and men can’t even agree on who runs the household finances. (I wonder what my husband would have answered. :D)
Tell me your story
Who manages your household’s finances? Do you argue a lot over money, or are you generally in agreement? Are you shocked that people hide purchases and bank accounts from their spouses?

Source: Businessday