resources | The Business of Marriage

Being married is good for the bottom line. We explore possible reasons behind this finding.

By: Melissa Thoma | 08/18/2010

It turns out, according to the Census Bureau, that lasting marriages create more wealth for their partners than single life. A 15-year study of 9,000 people found that those who married and stayed married during that time built up nearly twice the net worth of people who stayed single. In fact, married couples realized the equivalent of an extra 4 percent of income growth annually.

What accounts for this marked difference in wealth creation? Nothing jumps out in the data, but several things jump out at me as I think about my own marriage. First off, if both people in the marriage are working, they’re likely making more than a single individual would make. But there are other considerations, as well.

For example, it’s just common sense that two people live more efficiently together than separately. And two people who are intimately connected feel comfortable sharing more than the average set of roommates shares. It’s just more reasonable to share large expenses like cars, homes, vacation rentals and major appliances with the person we plan to be with for the lifetime of the purchase.

And then there is the motivation factor. Part of the juice behind marriage is the drive to set goals and achieve dreams with the help and support of a lifelong partner. We know that reaching goals is greatly helped by being accountable to a group rather than simply depending on yourself. Behavioral change programs such as Alcoholics Anonymous and Weight Watchers are successful largely because of the extra support that comes with being accountable to a group. Wealth-building is a slow, difficult process that requires judgment and perseverance. Having the accountability and support of a spouse surely adds to the success of the endeavor.

How about the added resources of marriage? Marriage brings a network of familial support in the form of parents, aunts, uncles, cousins, nieces and nephews who all know something or someone who can help you along the way. As often as we might feel life would be easier without all that additional family, we have to accept that the larger network of folks who are invested in our marriage are also invested in our future and our goals.

As I think about my marriage, I am struck that Martin and I co-created almost every major piece of intellectual property that we have used to generate income. Each of us looks at the world a little differently. When we bring those complementary outlooks together, we usually hit on a solution that is better than what we would have arrived at individually. That’s the beauty of shared resources. None of us knows it all. A couple can create more and better together.

Martin and I have a little saying that there are no unreasonable goals, only unrealistic time frames. And we often remind ourselves and our staff that while the shortest distance between two points is a straight line, most often we tend to zigzag to our goals. Life just doesn’t work as neatly as math. But one little observation I’ve made about being married to Martin is that when I am about to zig, sometimes Martin stops me before I zig too far. And when Martin is about to zag, I’m usually the one who can catch it and catch him. Perhaps that means that by working together toward common goals, we can forge a little straighter path for ourselves and get there a bit faster. Maybe that is contributing to our wealth-generating ability.

The nasty recession, coupled with the responsibilities of college-educating our kids and equipping the family with motor vehicles, insurance and the like have left me feeling as if our wealth-generating efforts are largely going flat. But where will I look to shore up our savings and regenerate lost income from investments that are no longer earning what they used to? To Martin, of course. To my marriage. And I know that two of us working together will certainly make a bigger impact than I could alone.

I’m also struck by how much more effective any wealth generation effort is when couples use the practices that work inside a viable business. Nobody creates and keeps wealth without a sound financial plan. Every couple should understand the basics of agreement, shared vision, budgeting and planning. These tools make the marital business more successful.

So it goes without saying that if marriage is good business, then business can be good for marriage. And it is gratifying to know there are benefits beyond the obvious when you choose to make a lifelong commitment to another person.

Bring the Budget Process Home

The concepts that keep business cash flow in order can do the same at home.

By: Melissa Thoma | 10/20/2009

It’s the most argued about, most costly, most dangerous issue in most relationships. Money.

Money is handled in a fairly straightforward way in the business world. We budget for it. We account for it. We invest it and spend it, and we have methods for safeguarding it. And we all know that the aim of a healthy business is profit. So let me ask you a question: How do you intend to profit from your relationship with your spouse or life partner?

Start by considering the “profits” you hope to reap as a couple or as a family. Through my marriage I hope to gain access to experiences that I might not have by myself. I profit from the ability to co-create on every level: from having children to building a business to creating a home environment and a lifestyle that are rich and satisfying. And it goes deeper than that. I will profit from having the support of my spouse in sickness and old age. This is no small list of profitable outcomes.

We expect such amazingly rich outcomes from our relationships. But do we budget, plan, invest and safeguard our resources to ensure that we will be able to achieve these outcomes? Do we bring a businesslike discipline and mind-set to producing results in our relationship? It makes sense to do so. Money is, after all, the No. 1 area of conflict and cause of divorce in marriage.

Let’s assume you’ve laid out a budget at home. Now let’s talk about how to manage those budgeted finances. In an earlier column I talked about designating a CFO for the family. This is the person who is accountable for overseeing the family resources, the budget, investments, savings and real assets (cars and land and houses). Note that this person doesn’t get to decide how it all gets spent; he or she just oversees and manages the money stuff. Martin is our family CFO. He tracks the financial and tax data that come into the household and makes sure the bills are paid on time. Why is he the CFO? Because he has the time and the attention to detail to be good at it. Does he decide how much money should be spent at this week’s grocery run? No. We agreed on a budget together in December.

In a well-run business, the CFO doesn’t approve the expenditure of every little penny. That is micromanagement, and it doesn’t empower employees to use their insight or enable ideas to shine. At home it should be no different. Each of you should have discretionary budget amounts that you may spend freely without the input of the other. Likewise, you should agree to a cap on the dollars each can spend without the knowledge and input of the other. It’s a purely personal decision. There’s no right or wrong to it. At our house, Martin and I feel comfortable spending upward of $1,000 without consulting each other. That expenditure should be tied to that overall budget–no spending beyond your resources without a talk. But otherwise, we’re free to take advantage of sales or deals, or to treat ourselves or the other to a gift.

I know that many couples have joint accounts and separate accounts with discretionary spending privileges. That’s great. Still, couples should agree to an amount that they feel calls for a discussion even when it comes from those individual accounts. Consider a business. No matter who you are and what authority you have, there comes a level of investment or expenditure on which you’ll seek counsel and agreement from other managers or owners. It’s no different in the business of marriage. You might purchase that darling red BMW convertible from your discretionary checking account, only to find that your spouse is infuriated because you have put the family at risk should one of you lose your job and you need to reassign your resources. Open financial books and open communication are the best way to deal with money in marriage.

At Thoma Thoma, we practice “open-book management.” Our employees all contribute to the bottom line. As such, they all have a right to know about our basic financial situation and how that impacts them. Even if you’re keeping separate accounts, we recommend that anyone who is contributing toward a shared purpose (and contributing doesn’t just mean dollars) has the right and the obligation to see the basic financial picture. Keep the books open, and be accountable to one another.

Smart businesses employ professionals to assist them with financial management. So should you. I really don’t understand why we don’t have required classes in personal finance at the high school level to prepare us for running a household. Managing money is complicated, and most of us didn’t learn much more than how to balance a checkbook (obsolete information these days, when we run our checking account off a debit card and internet banking). So seek out as much counsel as you can. The two of you probably came to your relationship with different views about money and how to use it. Proper counsel can open you both up to new ideas about money and help you negotiate an agreement about how the two of you will use money together.

How can you assess the well-being of a company? Just look at the bottom line. The same can be said of a marriage. Any couple with financial trouble is undergoing stress that is detrimental to the relationship. So don’t wait another minute. We’re coming up on the end of the year. Make this the year that you address your budget, your finances and start generating real profit in your marriage.