Prof. Lawrence
Bus. 12
Money and Relationships
Money and relationships
4 models for sharing a financial life
Class exercis...
Most common causes of divorce:
• Poor communication
• Money problems
• Lack of commitment to the
marriage
• Dramatic chang...
Jessica and Sam
Practical problem for a young
couple just starting out:
How to share income
and expenses?
Let’s meet the couple…
Jessica: Sam:
• Is working towards her
nursing degree at SJSU.
• Works part time as a
medical assis...
Jessica’s monthly budget:
Take-home pay:
$ 2,000
Personal expenses:
$ 500 tuition and fees
100 books and school supplies
2...
Sam’s monthly budget:
Take-home pay:
$ 3,000
Personal expenses:
50 transit pass
100 poker club
50 cell phone
500 clothing,...
Joint monthly expenses:
$ 1,000 condo rental & fees
500 groceries and supplies
200 utilities - PG&E, Comcast
300 entertain...
4 models for sharing a financial life:
Model 1: EQUAL AND INDEPENDENT
At the end of one year…
• How much money will be in
...
4 models for sharing a financial life:
Model 2: PROPORTIONAL CONTRIBUTIONS
At the end of one year…
• How much money will b...
4 models for sharing a financial life:
Model 3: SHARE EVERYTHING
At the end of one year…
• How much money will be in
Jessi...
4 models for sharing a financial life:
Model 4: SHARE EVERYTHING WITH A PERSONAL
ALLOWANCE
At the end of one year…
• How m...
What are the pros and cons
of these 4 models? Which do
you think would be most
appropriate for Jessica and
Sam? Are differ...
Five basic rules for communicating
effectively about money in a
relationship:
Rule 1: Make an appointment.
BAD WAY:
Jessica: [as soon as Sam gets home
from work] Your poker spending
is completely out ...
Rule 1: Make an appointment.
GOOD WAY:
Jessica: I’d like to talk with you
about your poker playing. Is now
a good time?
Sa...
Rule 2: Start with an “I” statement.
BAD WAY:
Jessica: You’re spending way, way
too much at the poker club. It’s a
ridicul...
Rule 2: Start with an “I” statement.
GOOD WAY:
Jessica: I’m concerned that you are
spending $100 a month at the
poker club...
Rule 3: State your interest (not
position).
BAD WAY:
Jessica: I want you to stop playing
poker.
Sam: It’s my money, and I’...
Rule 3: State your interest (not
position).
GOOD WAY:
Jessica: I really want a fabulous
honeymoon, and I’m worried that
we...
Rule 4: Use facts, not opinions.
BAD WAY:
Sam: I’m sure we’re saving
enough. I heard there are some
cheap charter flights ...
Rule 4: Use facts, not opinions.
GOOD WAY:
Sam: How much do you think it
would cost for the kind of
honeymoon we want?
Jes...
Rule 5: Invent “win-win” solutions.
BAD WAY:
Sam: I’m doing a hard job, and
poker is one way I can blow off
some steam and...
Rule 5: Invent “win win” solutions.”
GOOD WAY:
Jessica: I hear you saying that you
enjoy poker and like to blow off a
litt...
Conflict (especially about money!) is
inevitable in relationships…
…the point is to resolve conflict constructively
and to...
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Money & relationships for web

  1. 1. Prof. Lawrence Bus. 12 Money and Relationships Money and relationships 4 models for sharing a financial life Class exercise: financial and emotional consequences of the 4 models 5 rules of good communication Class exercise: Practicing good communication skills
  2. 2. Most common causes of divorce: • Poor communication • Money problems • Lack of commitment to the marriage • Dramatic change in priorities • Infidelity Source: American Academy of Matrimonial Lawyers
  3. 3. Jessica and Sam
  4. 4. Practical problem for a young couple just starting out: How to share income and expenses?
  5. 5. Let’s meet the couple… Jessica: Sam: • Is working towards her nursing degree at SJSU. • Works part time as a medical assistant at a local hospital. • Owns a car, which she uses to commute to school and work. • Enjoys eating out and going to movies. • Aspires to have a fabulous honeymoon. • Completed his degree in civil engineering at SJSU last year. • Recently got his first full- time job working for the City of San Jose. • Commutes to work by light rail. • Enjoys playing poker. • Is a sharp dresser. • Uses Jessica’s car when they go out together.
  6. 6. Jessica’s monthly budget: Take-home pay: $ 2,000 Personal expenses: $ 500 tuition and fees 100 books and school supplies 200 car payment 50 cell phone 150 clothing, toiletries Total: $1,000
  7. 7. Sam’s monthly budget: Take-home pay: $ 3,000 Personal expenses: 50 transit pass 100 poker club 50 cell phone 500 clothing, toiletries Total: $ 700
  8. 8. Joint monthly expenses: $ 1,000 condo rental & fees 500 groceries and supplies 200 utilities - PG&E, Comcast 300 entertainment (movies, eating out, clubs) Total: $ 2,000 In addition, Jessica and Sam have decided they want to save money to pay for their honeymoon. They would like to save $500 a month, if possible.
  9. 9. 4 models for sharing a financial life: Model 1: EQUAL AND INDEPENDENT At the end of one year… • How much money will be in Jessica’s personal account? • How much money will be in Sam’s personal account? • How much money will be in the joint account? • How do you think they will each feel about their financial situation? • How do you think they will feel about each other? • What kinds of conflicts might arise?
  10. 10. 4 models for sharing a financial life: Model 2: PROPORTIONAL CONTRIBUTIONS At the end of one year… • How much money will be in Jessica’s personal account? • How much money will be in Sam’s personal account? • How much money will be in the joint account? • How do you think they will each feel about their financial situation? • How do you think they will feel about each other? • What kinds of conflicts might arise?
  11. 11. 4 models for sharing a financial life: Model 3: SHARE EVERYTHING At the end of one year… • How much money will be in Jessica’s personal account? • How much money will be in Sam’s personal account? • How much money will be in the joint account? • How do you think they will each feel about their financial situation? • How do you think they will feel about each other? • What kinds of conflicts might arise?
  12. 12. 4 models for sharing a financial life: Model 4: SHARE EVERYTHING WITH A PERSONAL ALLOWANCE At the end of one year… • How much money will be in Jessica’s personal account? • How much money will be in Sam’s personal account? • How much money will be in the joint account? • How do you think they will each feel about their financial situation? • How do you think they will feel about each other? • What kinds of conflicts might arise?
  13. 13. What are the pros and cons of these 4 models? Which do you think would be most appropriate for Jessica and Sam? Are different models appropriate for different kinds of people, or people at different life stages? Can you think of any other possible models?
  14. 14. Five basic rules for communicating effectively about money in a relationship:
  15. 15. Rule 1: Make an appointment. BAD WAY: Jessica: [as soon as Sam gets home from work] Your poker spending is completely out of control! Sam: For heaven’s sake, Jes, the boss just yelled at me, and now you!
  16. 16. Rule 1: Make an appointment. GOOD WAY: Jessica: I’d like to talk with you about your poker playing. Is now a good time? Sam: No, I just got home from work, and I’m stressed out. How about tomorrow morning?
  17. 17. Rule 2: Start with an “I” statement. BAD WAY: Jessica: You’re spending way, way too much at the poker club. It’s a ridiculous waste of money. Sam: No, I’m not! $100 a month isn’t that much, considering what I’m making now. And, you spend more than that on your fancy car!
  18. 18. Rule 2: Start with an “I” statement. GOOD WAY: Jessica: I’m concerned that you are spending $100 a month at the poker club. Sam: I didn’t know you felt that way. Why are you concerned?
  19. 19. Rule 3: State your interest (not position). BAD WAY: Jessica: I want you to stop playing poker. Sam: It’s my money, and I’m going to spend it the way I want to.
  20. 20. Rule 3: State your interest (not position). GOOD WAY: Jessica: I really want a fabulous honeymoon, and I’m worried that we aren’t saving enough. Sam: I didn’t know you felt that way. You don’t think we’re saving enough for our honeymoon?
  21. 21. Rule 4: Use facts, not opinions. BAD WAY: Sam: I’m sure we’re saving enough. I heard there are some cheap charter flights to Hawaii, and my friend stayed at a great hotel in Maui for just $95 a night. Jessica: We couldn’t possibly get those kinds of deals during the peak tourist season.
  22. 22. Rule 4: Use facts, not opinions. GOOD WAY: Sam: How much do you think it would cost for the kind of honeymoon we want? Jessica: Let’s go online and do some research on air fares and hotel packages around the time of the wedding.
  23. 23. Rule 5: Invent “win-win” solutions. BAD WAY: Sam: I’m doing a hard job, and poker is one way I can blow off some steam and have a little fun. Besides, I’m becoming a pretty good player, you know. Jessica: Our honeymoon is much more important than your poker game.
  24. 24. Rule 5: Invent “win win” solutions.” GOOD WAY: Jessica: I hear you saying that you enjoy poker and like to blow off a little steam with your friends. What if we hosted a party at the condo once a month for a friendly poker game? We could provide beer and snacks. Sam: That’s a good idea. We could even play for chips, instead of real money. If we saved an extra $100 a month, we might even be able to afford to stay at the Westin.
  25. 25. Conflict (especially about money!) is inevitable in relationships… …the point is to resolve conflict constructively and to use it to build, rather than weaken, the relationship. Class exercise: Practice the 5 rules, using the handout provided. Class report-back.

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