Money & relationships for web

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

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

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 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.

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

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

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.

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?
Sam’s personal account?
the joint account?
• How do you think they will
each feel about their
financial situation?
feel about each other?
• What kinds of conflicts
might arise?

Model 2: PROPORTIONAL CONTRIBUTIONS
the joint account?
might arise?

Model 3: SHARE EVERYTHING
the joint account?
might arise?

Model 4: SHARE EVERYTHING WITH A PERSONAL
ALLOWANCE
the joint account?
might arise?

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?

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 of control!
Sam: For heaven’s sake, Jes, the
boss just yelled at me, and now
you!

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?

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!

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?

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.

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?

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.

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.

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.

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.

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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