Changes in the housing and credit markets during the past year have led to increased recognition 

that developing comprehensive family-based money and credit strategies is critical in the shortterm to weather financial storms, but also for long-term financial health of the children. Financial 

stability strongly interacts with family relationships. Each area can strengthen or challenge the 

other. Shocks to the pocketbook can foster conflict and seriously impact the stability of a 

couple’s relationship as well as their finances, especially when there are no rainy-day funds and 

little knowledge of where to turn for help. Relationships can become more vulnerable if bills pile 

up. On the other hand, strong relationships and familial support can act as a buffer during 

financial hardship. 

Greater understanding of the similarities, differences, and interdependencies between 

relationships with a partner or spouse and one’s finances can better equip us for the task of 

increasing the stability of American families. Research shows that people who marry build more 

wealth over their lifetime compared with those who remain single. However, credit problems 

remain a leading reason that relationships dissolve. When people marry, they combine their lives, 

their finances, and their credit history, whether it is good or bad. Debts brought into a marriage 

pose one of the biggest problems for young couples.1

 As debt increases, marital satisfaction 

decreases and results in less time spent together as a couple and more arguments over money.2

More than 70 percent of divorcing couples report that money and credit abuse by a spouse are 

contributing factors to their parting.3 Relationship skills and financial educators can play a key 

role in helping couples manage their individual financial histories to create a more financially 

secure future together. 

This is the second of two briefs that examine the interplay between education and skills-building 

programming for lower income individuals and families in the areas of marriage and 

relationships, financial literacy, and asset development. It explores how communication, 

marriage and divorce, money management, credit and debt, children and child support, and other 

issues affect and/or are affected by familial and financial well-being. Also, it offers tips for 

ABOUT THIS ISSUE BRIEF

This brief was prepared by RTI International, under contract to ASPE as part of the “Marriage Education, 

Financial Literacy, and Asset Development” task order. As part of this task order, ASPE convened a Roundtable 

Meeting bringing together researchers and practitioners from the marriage education, financial literacy, and asset 

development fields to begin a dialogue on the relationship between healthy marriages and financial practices. A 

summary of the Roundtable, and a companion brief “Health Relationships and Financial Stability 101,” are 

available online at: http://aspe.hhs.gov/hsp/08/MEFLAD-Roundtable/index.shtml

1 
practitioners working with couples to build intimacy and stable relationships with each other and 

with their finances. These briefs are intended for practitioners working in any of these areas and 

interested in learning more about the other fields and potential collaboration or idea exchange. 

The brief focuses on romantic couple relationships and marriage; however, sharing financial 

resources can also bring benefits and challenges for co-parents, within extended families, and 

even between parents and children. 

The first brief, Stable and Healthy Relationships and Finances, provided an overview of marriage 

and relationship skills education, financial education, and asset building programs and 

highlighted opportunities for collaboration. That brief described these fields’ common goals and 

complementary strategies for improving the stability of low-income families. 

This brief builds on that foundation to focus on key areas where marital and financial stability 

overlap. While relationship education practitioners are generally aware of the importance of 

financial issues within relationships, the relevance of family and relationship issues may be less 

apparent to practitioners in financial education and/or asset building programs. These programs 

are more likely to focus on individuals and may ask an individual to develop goals for his or her 

family, but staff may not be comfortable delving into what are seen as “personal” issues, such as 

romantic and marital relationships. This brief explores concepts that impact both financial and 

familial stability, and describes how helping low-income participants in asset building and 

financial education programs build their relationship skills is relevant to building their financial 

literacy skills and fostering their overall well-being. 

Talking about Money and Credit in Relationships 

Many Americans frequently see or hear about how credit can increase family funds or solve 

money problems, whether by opening a new credit card through an application received in the 

mail or in advertisements about how people who have credit troubles can access new lines of 

credit. While talking about credit has become an everyday phenomenon in the media, 

understanding the intricacies and implications of various credit offers and possibilities is far less 

common. 

When contemplating the future of a relationship, people frequently ask themselves, “Am I ready 

for a serious relationship?” However, people often do not ask, “Am I ready for a serious 

relationship with someone else’s credit?” Both marriage and relationship skills educators and 

financial experts recommend that individuals in a relationship explore how they can make 

financially sound decisions together. These advisors may offer educational programs to help 

couples think through deep emotional relationship and communication issues, as well as the 

financial dos and don’ts that may surface when two lives merge. This “financial intimacy” is a 

core element of a solid relationship or marriage. 

Bringing couples to a shared understanding of what they want to do financially as a team 

requires that they understand themselves and each other, as well as learn more about money and 

credit together. Figure 1 presents a couples quiz suggested by the well-regarded American 

Institute of Certified Public Accountants’ 360 Degrees of Financial Literacy effort. Although 

specific program approaches may differ, many of the underlying messages are the same in 

numerous curricula about marriage and financial planning. First, avoiding the topic of finances 

2 
altogether may be tempting, but it is not constructive. Second, there is no universal right answer, 

but the process of working out a financial plan tailored to the needs and goals of a couple is 

essential because honest communication is the core of both healthy relationships and healthy 

finances. Third, regardless of the financial plan, life circumstances change, and developing skills 

to revise and implement the plan together may build confidence and resilience. Overall, from the 

perspectives of both the financial educator and the marriage and relationship skills educator, 

differences in approaches to finances between life partners are inevitable and natural. How these 

differences are reconciled is what matters. 

Typically, in the transition to becoming a couple, the task of retaining one’s personal identity and 

creating a new joint identity can be tricky. Navigating this transition requires sensitivity and 

developing a shared understanding about what each person brings to the relationship and wants 

from it. One model of relationship attachment, summarized in Figure 2, highlights the 

importance of sequential development of knowledge, trust, reliance, and commitment to a 

partner based on increasing time with and understanding of each other. Many components of this 

sequential model can be applied to individual relationships with credit as well. It suggests that 

gradually demystifying the unknown in marital or financial relationships—instead of rushing 

forward—can be helpful in avoiding some of the downsides of relying on partners or financial 

institutions that one may not understand. 

Building a Joint Relationship with Credit 

This section discusses three financial and three relationship issues that are important to success 

in finances and in love. From a financial perspective, knowledge of the types of credit, joint vs. 

separate accounts, and credit scores will help couples build credit together. In turn, financial 

missteps can be avoided by understanding how to handle the common relationship themes of 

communication, children and child support, and extended family. 

Once couples are ready to invest in their life together, obtaining mainstream credit is important 

and often necessary. Using credit to borrow funds may be imperative because it can serve as the 

bridge that allows couples to purchase desired assets. Although their resources are often limited, 

many low-income families are already saving money and using credit. However, about one fifth 

of low-income families are unbanked, that is they do not have a connection to a formal financial 

institution.4 Therefore, their savings may grow more slowly or lose value in the face of inflation 

and can result in more obstacles to using credit to become an owner or investor.5 Making use of 

mainstream financial institutions is important because there is some evidence that the having to 

withdraw money from the bank or not having money easily accessible in one’s wallet can reduce 

obstacles to saving.6

There are several reasons for couples to use credit to help attain joint financial goals. Some 

constructive suggestions for using credit are explained below. In addition to understanding the 

ways that credit can be helpful, it is important to understand the drawbacks. Because of the 

variety of credit products available, this is not a simple matter. 

3 
Figure 1 

Couples Quiz: What’s Your Financial Compatibility? 

Couples frequently avoid talking about money before marriage. That is unfortunate, because sharing 

perspectives about money can help couples resolve the financial issues that complicate many 

marriages. The following financial compatibility quiz can help couples planning to tie the knot discuss 

financial issues. Answer “true” or “false” to each of the following statements. 

1. We are aware of and comfortable with each other’s money personalities. 

Some of us grew up in families where parents watched every dime; in other families money 

flowed easily. Some people measure self worth in terms of money and possessions. Some 

people are natural spenders; others are savers. Understanding your future spouse’s background 

and values can help avoid problems down the road. 

2. We have discussed our short- and long-term financial goals. 

Setting financial goals helps you develop priorities and define the type of lifestyle you will 

lead. Break down your goals into manageable pieces. If you want to buy a house in five years, 

for example, determine how much you need to save monthly to meet the down payment and to 

meet that goal. 

3. My spouse and I are well-versed in personal finance. 

Parents and schools rarely provide training in personal finance. Work together to develop your 

financial knowledge and build confidence by taking a course, meeting with a financial planner, 

or purchasing a reputable book. 

4. My spouse and I have discussed a plan to structure our finances. 

Will you pool all your resources into joint accounts, maintain separate accounts, or devise 

some combination of the two? There is no right or wrong answer; the key is to come up with a 

plan that works for you both. 

5. We have planned for the impact that marriage will have on our taxes. 

The marriage “penalty” means that you and your spouse together are likely to pay more taxes 

than you each did as singles. Check with a CPA or tax professional to ensure that you are 

prepared to meet your tax responsibilities and aware of any tax law changes in this area. 

6. We have decided how to divide the money management tasks. 

Decide who will be responsible for balancing the checkbook, filing taxes, and tracking 

investments. Better yet, set up a plan for rotating these and other financial tasks

7. We understand the importance of establishing a realistic budget. 

Couples without a budget tend to live and spend from day-to-day. A well thought out budget 

helps you save regularly, utilize income wisely, and avoid misunderstandings about how 

money is spent.

8. I know my future spouse’s investment personality and risk tolerance. 

Investing styles are different, ranging from conservative to risky. Take the time to arrive at a 

level of risk where you both feel comfortable.

9. I know how much debt my spouse is bringing into our relationship. 

Couples must enter marriage knowing how much debt they each carry and how it will be paid. 

10. We have made a commitment to discuss money regularly. 

Differences are inevitable. How you handle them is important to your marriage. 

SOURCE: http://www.360financialliteracy.org/Life+Stages/Couples+and+Marriage/ 

Copyright 2009 American Institute of Chartered Public Accountants 

4 
f Certified 

Figure 2 

Relationship Attachment Model 

This model of relationships, developed by author John Van Epp, Ph.D., provides an 

overview of major stages individuals go through to get to know and bond with each other. 

At each stage of the relationship, people can gather information about their potential 

partners’ relationships with money and credit as well as their own. Thinking about why and 

how partners use credit can help with making healthy choices for finances and 

relationships. 

1. Knowledge: In this stage, people gather information about partner’s family 

background, the choices they make, their goals, and their past relationships. 

• Think about partners’ past financial choices, how finances were dealt with in 

past relationships, financial values, what are the financial implications of 

past behavior (debt, credit, and earnings). 

2. Trust: In this stage, people evaluate the mental picture they have developed about 

this person and assess whether the picture is accurate. Is the potential partner an IRS 

hazard, that is, are they what the model calls Idealized, a Rescuer, or a Substitution 

for someone else? 

• Talk openly about financial habits and current financial situation, observe 

financial practices and decision-making about spending, saving and credit. 

Does partner have credit cards that s/he can’t pay off? 

3. Reliance: In this stage, people start to test the trust they have developed with the 

person they are getting to know and whether they are able to meet needs and are 

dependable. Does trust go up or down as reliance increases? 

• Check out whether the financial trust that has been established is accurate by 

openly checking out each other’s credit scores and other financial 

documents. 

4. Commitment: In this stage, people think about the positive and not so positive 

reasons to commit to a partner. 

• Have partners been open about what debt they have accrued, why they have 

debt, and how they will pay it off? What does it mean for you or your 

partner to take on each other’s debt, financial spending and savings habits? 

Are we financially compatible? 

5. Sexual Touch: In this stage, romantic partners consider the extent of physical and 

sexual touch based on the extent that they know the trustworthiness and reliability 

of a partner. 

• Imprudent sexual involvement can lead to emotional and financial 

dependency upon a partner who is unreliable. Is my partner a high financial 

risk? Does my partner mismanage finances? 

For more information, visit http://www.nojerks.com/

5 
Although obtaining credit can be helpful to reaching a couple’s goals, it can be risky and requires 

taking on debt. It is important for couples to distinguish between good and bad debt to 

understand when taking out a loan will actually help increase their assets in the long run. Good 

debt is an investment, like student loans, retirement savings, or starting a business, and it creates 

value. Whereas bad debt has no potential to increase in value, except for the creditor. When 

faced with bad debt, it is vital to reduce and eventually alleviate it. 

Types of Credit 

There are different types of credit to meet different short-term and long-term needs, such as 

credit cards and loans. Credit cards allow cardholders to make purchases on credit and then they 

receive a monthly bill, which they can choose to pay in full each month or pay less, allowing a 

revolving credit to form. This means that credit card companies will allow individuals to carry 

balances, on which they charge interest. Accumulation of credit card debt is especially risky for 

economically vulnerable families.7

 

Loans include mortgages, home equity loans, and student loans that allow couples to make 

immediate investments in assets, such as a home or investments in education that can build 

earnings potential. Two of the most popular mortgage loans are fixed-rate and adjustable-rate 

mortgages (ARM). A fixed-rate mortgage, which has traditionally been the industry standard, is 

a loan for a fixed number of years at an unchangeable interest rate. ARMs change based on the 

fluctuations of the interest rate.8 There are three major categories of education loans: student 

loans, parent loans, and private student loans. 

Joint versus Separate Accounts 

The different forms of savings or credit account ownership are individual, authorized user, 

cosigner, and joint types. Spouses most often have joint accounts, allowing two named borrowers 

on an account. In this case, the credit history of both borrowers is used to determine eligibility 

and both are responsible for the debt accrued. Figure 3 addresses some of the issues to consider 

when deciding whether couples join accounts and credit or keep them separate. 

Credit Scores 

Because credit history is important to obtaining credit, knowledge of each partners’ credit scores 

is critical. A FICO score (named for the Fair Isaac Corporation that created it) is a mainstream 

credit score that determines the interest rate on credit cards, car loans, home mortgages, as well 

as one’s ability to obtain a cell phone or get an application for a rental apartment accepted. Low 

credit scores translate into paying higher interest rates on credit cards and loans. 

FICO scores are determined by five factors: 

• record of paying bills on time, 

• total balance on credit cards and other loans compared to total credit limit, 

• length of credit history, 

• new accounts and recent applications for credit; and 

• and mix of credit cards and loans. 

6 
Figure 3 

Joint versus Separate: Checking Accounts, Credit, and Mortgages—Things to Consider 

Checking accounts: Many couples find that the best solution is to have a joint account in 

addition to each keeping an individual account. When two people have access to the same 

account, keeping track becomes more difficult and requires more communication between the 

parties involved. Therefore, it is very important to keep a master account register up to date, 

recording all deposits, checks, and withdrawals. Couples do not want to bounce checks 

because one partner wrote one or made a withdrawal and did not record it. Joint checking can 

not only give couples more of a sense of “being in this together” but also makes keeping a 

joint record of these expenses much simpler if partners communicate well. 

However, each partner may still prefer to have access to some money to call his/her own, and 

for which partners are not accountable. In some cases, this may be simply a cash allowance 

for which you may not need a separate checking account. In other cases, particularly if both 

partners are working, one partner may continue to handle some of these expenses separately. 

If either partner wants to establish credit individually, s/he may decide to maintain separate 

checking accounts at least until credit has been established. 

Checking and credit: Separate checking accounts can be used as a lever to help obtain 

credit. If either partner has poor credit, couples may wish to keep funds separate to 

circumvent attachment of joint funds to pay one partner’s bad debt. If money is pooled in a 

joint account, the entire amount is legally available to either partner. A creditor is then 

justified in attaching those funds to pay a debt that only one partner may have incurred. If a 

marriage is foundering or if there are severe disagreements about how to manage money, 

partners may want to maintain separate accounts. With joint accounts, either party can “clean 

out” the other simply by withdrawing all the funds in the account. 

In terms of access to credit, if one partner has had credit problems, s/he can prevent a couple 

from getting credit after they are married. Finally, seriously consider keeping credit separate, 

at least until a spouse’s credit record improves. Credit does not have to be combined after 

marriage. For instance, one partner can apply for credit instead of applying for joint credit 

after marriage. Separate “associate” cards can be issued for a spouse to use. Even if one 

spouse has bad credit, the other spouse’s credit rating will remain unaffected but it is possible 

that the spouse with good credit will have a harder time qualifying for loans (e.g., a mortgage) 

alone than if a spouse's income could also be counted. 

Liability for debt: While the general rule is that spouses are not responsible for each other's 

debts, there are exceptions. Many states will hold both spouses responsible for a debt incurred 

by one spouse if the debt constituted a family expense (e.g., child care or groceries). In 

addition, community property states will hold one spouse responsible for the other's debts 

because both spouses have equal rights to each other's income. Also, spouses are both 

responsible for any debt that is in both names (e.g., mortgage, home equity loan, credit card). 

SOURCE: 360 Degrees of Financial Literacy, American Institute of Certified Public 

Accountants. 

7 
While some may believe not having a FICO score can help avoid being seen as a bad credit risk, 

it is actually necessary to have one. Without a score, it is difficult to get a loan because without a 

credit history a person is an unknown to companies and banks. To start building a credit history, 

companies will allow individuals to obtain cards based on income. It is important to note that 

interest rates may be higher for unknowns. 

Building Credit Together 

Because couples share their personal and financial lives, they must take steps toward building 

credit together. Before doing so, it is necessary to determine how much debt and the sources of 

debt that a couple has accumulated. Experts urge people to write down everything they owe, 

listing debts with the highest interest rates first. Then, a couple can look at their list and start 

saving money by switching to credit or charge cards with lower interest rates. 

When a couple gets married, they share debt from credit cards and loans as well as each other’s 

credit ratings. Marrying someone with good credit allows an individual to gain access to this 

good credit. Unfortunately, the opposite is true as well. Marrying someone with bad credit has 

negative implications, subjecting someone to higher interest rates or being denied credit because 

of the risk a partner may pose.9

To illustrate how different couples approach building their credit together, Figure 4 presents the 

stories of two hypothetical couples that face similar challenges as they decide to take the next 

step in their relationships. Each couple handles their relationships and finances in diverse ways 

that lead to different outcomes. The first story illustrates how a couple’s relationships with each 

other and with credit became more attached over time. This couple did not start off with the same 

approach to finances, but developed strategies to build healthy communication and spending 

habits. The second story illustrates a couple who remained stuck in a pattern of unhealthy 

communication and spending that augmented over time. Instead of becoming more attached, 

their relationship with each other and their credit histories both suffered. 

Communication 

As illustrated in Figure 4, healthy communication between two partners is essential to the 

success of a marriage. Avoidance of certain topics, like finances or credit history, may indicate 

hidden issues and concerns about acceptance. Money can be a difficult topic, especially talking 

about different cultural or socioeconomic backgrounds, the meaning of money and spending 

styles. Without addressing the topic of money, the relationship and finances may suffer.10

Conflict resolution, whether with a specific partner or a creditor or both, can be a key to 

improving financial and relationship situations. 

Child Support 

When parents are divorced or never married, child support is the obligation for a periodic 

payment made directly or indirectly by a non-custodial parent to a custodial parent, caregiver, or 

guardian. Non-custodial fathers who have never been married to the mother of their child are 

obligated to pay child support as long as paternity for that child is established. If child support 

payments are not made, non-custodial parents accrue arrears and can face penalties depending on 

their state of residence. Paying child support, and providing for children that are not shared with 

8 
Figure 4 

Two Hypothetical Couples’ Approaches to 

Financial and Relationship Decision-Making 

“Andrew and Erica” 

It was instantly clear that Erica and Andrew had different styles of spending and different views on the 

meaning of money. To Erica, money caused anxiety. Growing up, money was tight and her parents were 

compulsive savers. To her, money was security and never came easy. Andrew came from a family that was not 

as concerned with money, and never worried financially about their future. He viewed money as enjoyment 

and status and was thus inclined to spend more than his wife. As they recognized their differences, they 

decided that the best way to avoid misunderstandings was to learn about each other’s histories and habits. The 

couple wanted to buy a car but Andrew’s credit history wasn’t perfect because he had a history of not paying 

his credit card bills on time. Once Andrew shared his history with Erica, they decided together to merge some 

of their finances but keep a checking account and one credit card in each of their names. So when they applied 

for a car loan, they decided to use her name to apply, avoiding high rates. They used their joint account for all 

living expenses so that they both contributed their fair share. In addition, Erica helped her husband start to 

improve his credit score by working together to handle finances and teaching him to get into a routine of 

paying all bills on time. Together, they checked both of their scores twice a year to monitor their progress. 

Once they had their finances on track, Andrew helped show Erica that spending money does not always have 

to be scary and making purchases can improve their quality of life. 

When Erica and Andrew got married they were aware of the financial implications that follow, that they would 

now be sharing responsibilities in their relationship and in their finances. Erica made an effort to be involved in 

the financial decision-making and Andrew was happy to share the responsibility. They knew that by working 

together instead of allowing one person to be in control, they would be more satisfied in their decisions. By 

establishing trust, subsequent financial obstacles were easier to overcome successfully. Erica and Andrew 

agreed on how to spend and were not overly concerned with how their partner was handling their money. 

“Kim and Gabe” 

Andrew’s sister, Kim, had also just decided to move in with her significant other, Gabe. Like Andrew, Kim 

shared her brother’s spending style and poor credit history. She was embarrassed because of her debts so she 

didn’t tell Gabe about them. Similarly, Gabe had a son from a previous marriage that he was too scared to tell 

Kim about. He assumed she wouldn’t want to deal with the extra baggage he would bring to the relationship. 

So, he kept his child support payments secret and avoided any discussion of finances with Kim. The couple 

figured that by hiding their financial shortcomings, they could avoid fighting and embarrassment so they only 

brought up money when it was absolutely necessary. Like Erica and Andrew, Gabe and Kim were looking to 

buy a car. Unfortunately, since they did not talk about their financial histories, they did not take their credit 

scores into consideration and ended up obtaining a loan with a higher interest rate, paying $75 more a month, 

or $900 more a year, than Erica and Andrew. They were now making large monthly payments to a car loan; 

while Gabe was also secretly making his monthly child support payments. Erica didn’t understand why they 

didn’t have more money and why Gabe seemed to lie about his spending. Instead of facing their debt, the 

couple began to use their credit cards to buy almost everything because it was convenient and to them it 

seemed like they weren’t paying out of pocket. Their credit histories suffered even more as they struggled to 

pay their bills on time and their money saved was dwindling. They knew that they were in trouble but were too 

embarrassed to be honest with each other. They had never established any trust or commitment to work 

together in dealing with their finances and became more secretive and separate. The damages to their finances 

and relationship were apparent with more arguments and criticism. 

Kim and Gabe did not build knowledge, trust, reliance and commitment in their relationship as Andrew and 

Erica had. They made the decision to share their lives but not their finances. They thought by hiding their 

flaws, they could avoid problems, but instead they created deeper issues that are difficult to fix. 

9 
a current partner, can add a layer of complexity when parents are establishing new marital and 

financial relationships. 

Extended Family 

Lending money between family members can be tricky with consequences affecting the closest, 

most important relationships, as well as finances. It is easy to feel no pressure to pay back a 

family member; however, it is vital to treat a family loan just like a financial institution. Experts 

urge family members to be as specific as possible about the terms of the loan: how often 

payments will be made, what day they will be made, and the interest rate.11 Conversely, it is easy 

to feel an obligation to support family members in times of trouble. Being able to set boundaries 

and assure that the couple relationship is respected in the context of competing requests from 

different family members and even families is not a simple matter. 

Credit Changes as Life Changes 

Plan for the Best and Prepare for the Worst 

Life brings anticipated and unanticipated events that can affect a couple’s financial decisionmaking and relationship. These events can enhance or disrupt the credit path, creating 

consequences for credit and solvency. Often, these major life events can be the catalyst for 

financial and credit damage. Financial consequences of negative life events include fines, 

negative credit rating, loss of home, and bankruptcy. While it is possible to plan for positive life 

events, negative ones are often unpredictable. The best strategy for couples to circumvent 

financial distress is to make plans together to prepare themselves for anything and everything. As 

illustrated by the two couples scenarios in Figure 4, couples such as Andrew and Erica who have 

strong communication skills and have thought about their finances start off in a better place to 

deal with life changes. Overall, couples should be encouraged to plan for the best and prepare for 

the worst. 

Marriage 

Getting married and starting a family are life events that many individuals strive for. Research 

has shown the positive financial benefits in terms of wages and accumulation of wealth for 

couples who are married and stay married.12 If something serious happens such as 

unemployment or health problems, having a spouse can help one to get through the hard times. 

However, being married also can increase the risks of negative life events and it is vital for 

couples to be financially prepared. 

Obtaining financial goals can demand an increase in expenses and requires strategic and 

informed planning. For instance, couples must think ahead about how to keep their finances 

afloat if one will leave the workforce to raise children. Questions that experts recommend 

couples ask themselves include, “Can your family survive only on one income?”; “Can you 

downshift the fixed expenses?”; and “What is your emergency backup plan?”13 

Other negative life events—such as involuntary job loss, illness or disability of oneself or a 

family member, and divorce—may have negative financial consequences and can increase the 

immediate need for cash flow, which can threaten healthy finances if credit is not used wisely. 

10 
Studies have shown that the risk of these events has increased dramatically in the past 30 years.14

The table below provides a few examples of negative life events and the possible consequences. 

Life Event Threats to Healthy Finances and Credit 

Involuntary job loss Lack of sufficient savings to pay bills and 

credit payments 

Wage earner misses work due to either his or 

her or a family member’s illness or disability 

Lack of insurance and/or paid leave to 

defray the costs of missing work 

Divorce Abuse of credit by partners, child support 

payments 

If a disastrous life event strikes, financial ruin may start slowly, but it can quickly pick up speed. 

Not many families have enough money saved to cope with a devastating life event and they can 

run out of money within a short amount of time. Job loss, divorce, and medical emergencies all 

result in the loss of funds that are needed to keep up with minimum credit payments. Once this 

happens, credit scores can begin to fall. 

Surviving Job Loss 

Surviving financially after losing a job can be daunting, but there are strategies to help. Job loss 

often causes debt to accumulate fast, especially because it is difficult to pay off debt when out of 

work. Planning is a key step and experts recommend preparing a budget that reflects the money 

that will be needed while looking for a new job. Couples who have developed a family financial 

strategy and have experience communicating about financial issues are in a stronger position 

when they experience a job loss. For example, Andrew and Erica from the couples scenario have 

already come together to resolve their financial differences and are more likely than Kim and 

Gabe, the couple that has not developed healthy communication about finances, to successfully 

negotiate a new financial strategy under stress. 

Insurance 

Insurance can help couples protect their families. Health insurance and disability coverage are 

critical for couples because of rising health care costs and because they are more likely to 

experience disability than premature death. Although health insurance often does not cover all 

health care costs, it can provide enough assistance to make the difference between staying afloat 

and declaring bankruptcy. Experiencing a medical problem and lacking health insurance also is 

associated with increased credit card debt.15 If couples have joint credit cards, this means that 

that both partners will be assuming this debt for the health care crisis. 

Divorce 

Divorce can render relations hostile between partners, so protecting credit and assets can help 

people avoid financial consequences. Although divorce is emotionally charged for both partners, 

couples who have developed a financial plan and have strong knowledge of total family finances 

will likely be in better positions to negotiate with each about how to separate finances. For 

couples where one partner has all financial knowledge or where partners have been dishonest 

with each other (such as the hidden child support payments of Gabe from the couples scenario) 

can make a difficult situation even worse. 

11 
Some financial dos and don’ts when divorcing include the following: 

• Do prepare a budget and financial plan to sustain you until the divorce is final. 

• Do review monthly bank and financial statements. 

• Don't make large purchases or create additional debt that might later cause financial 

hardship 

• Don't transfer or give away assets that are owned jointly. 

Where to Turn for Help 

In addition to marriage and relationship skills educators and financial educators, there are other 

financial tools that provide couples with options for improving their relationship with their 

partner and their credit. These tools include electronic payroll transfers, alternative credit scores, 

envelope budgeting, credit counseling, bankruptcy as well as programs to use credit to build 

assets, such as Individual Development Accounts (IDAs) and Marriage Development Accounts 

(which were discussed in Brief 1). Resources that can help address financial consequences 

brought on by family issues include help with child support payments and divorce mediation. 

Other practical steps can make good financial practices the “default option” for couples. For 

example, direct deposit of earnings has been shown to lead to higher rates of savings.16 However, 

this option may be less available for employees who have lower wages or work less than full 

time. Secured credit cards are another example that can provide a training experience with credit. 

Automating the process of ordering a free credit report annually, thereby making receiving the 

report the default option, might also be helpful to couples. 

Electronic Direct Deposit or Electronic Payroll Cards 

If employers offer direct deposit of paychecks into savings or checking accounts, most financial 

experts recommend doing this because, on average, people who use direct deposit services save 

more than if they received their paycheck in traditional hard-copy form. For couples who are 

attempting to stay on their family budget, this can be a simple yet effective solution to curbing 

spending. 

Alternative Credit Scores 

For low- and moderate-income couples with bad credit or a lack of credit, alternative credit 

scores can provide a solution. Many people with low incomes use cash, write checks, or use 

debit cards instead of using credit, and therefore do not develop credit histories. The Fair Isaac 

Corporation, creators of the FICO score, introduced the FICO Expansion score to aid individuals 

without established credit histories. This method of credit scoring involves using utility 

payments, such as water and electricity, as a way to measure an individual’s ability to pay their 

debts. An Anthem score is another nontraditional credit score. Designed to assess the risk of 

potential borrowers with little or no traditional credit history, it incorporates additional indicators 

like rental history and utility payments into its model. Making use of alterative credit scores can 

give couples with low incomes improved access to credit based on their past success in making 

payments. 

12 
Envelope Method 

Envelope budgeting is a method where cash is divided into different, categorized envelopes. 

These envelopes are labeled for categories of spending including required spending, like a 

mortgage, groceries, and medical bills, and discretionary spending, such as eating out, 

entertainment, and shopping. As cash is divided into envelopes, it is immediately visible to all 

family members what on-hand cash is available to pay bills, make purchases, and contribute to 

savings. This method is simple to set up and manage and allows each partner to be completely 

aware of their financial situation. 

Credit Counseling 

Families must carefully consider if it makes sense to work with such a credit counselor, as much 

of this work can be done by the individual. Selecting a reputable, responsible organization is 

critical since some disreputable organizations prey on struggling families. Check out credit 

counselors with the state Attorney General, local consumer protection agency, or the Better 

Business Bureau. 

Managing debt and building good credit can be challenging and there are some very good, wellknown nonprofit and community organizations that can help couples get back on track. One 

organization is the National Foundation for Credit Counseling (NFCC) (www.nfcc.org). 

Programs like NFCC ask borrowers to turn over all their credit cards and for a $10 monthly fee 

and a check, NFCC will pay the debtor’s bills. By doing this, the counselors are able to negotiate 

and secure a lower interest rate than the borrower; thereby reducing the total loan amount and 

time required for payback. However, if both members of a couple with joint accounts do not 

agree to be involved, there is little that credit counseling can do for joint debt. Another drawback 

to this service is that in most cases, for seven years a borrower’s credit report will contain a line 

stating that he or she paid through NFCC. However, some credit companies view this as a 

positive move toward taking control of debt. Some credit counseling operations are financed by 

lenders and using them may have other consequences. And couples should be cautious that if it 

seems too good to be true, it probably is. Figure 5 presents the basic steps in acquiring credit 

counseling assistance. 

Bankruptcy 

As a last resort, bankruptcy is sometimes the only answer to starting fresh and rebuilding credit 

and finances. Declaring bankruptcy has serious long term financial implications and therefore 

should not be undertaken lightly. When an individual files for bankruptcy, the court takes control 

over all assets and orders them to be liquidated and used to repay creditors. For 10 years, the 

declaration of bankruptcy will appear on credit reports, which will likely make insurance and 

payments more expensive. When considering bankruptcy, first look to see if it is possible to pay 

off debts within the next two years. If the answer is no, then filing for bankruptcy might be 

considered. 

13 
Figure 5 

Credit Counseling: What are the Steps? 

If couples in difficult financial positions contact a credit counseling service, valuable advice 

can be available on specific financial situations as well as referrals to money management and 

credit education services. While each credit counseling agency may have different procedures 

to connect families to counselors, there are general steps that each follows. 

1. Pick a Reputable Counseling Agency—Financial educators recommend 

contacting an agency that is a member of the National Foundation for Credit 

Counseling (NFCC) or The Association of Independent Consumer Credit 

Counseling Agencies (AICCCA). Another option is to obtain a direct referral to a 

reputable counselor through a community service provider who may already be 

assisting or a local social services department. A reputable credit counseling 

agency will send free information about itself and its services without requiring the 

consumer to provide any personal financial details. The Better Business Bureau 

and the state Attorney General’s office should also be consulted. The FTC provides 

tips on choosing a credit counselor and avoiding untrustworthy organizations at: 

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre26.shtm 

2. Set up an Appointment—Many credit agencies are part of national networks so 

the first step is to set up a user profile in their system. This can be done over the 

phone or on the internet. After this step, families are put in touch with a credit 

counselor if one is immediately available, a phone appointment is set up, or an 

appointment at a local agency who is a member of the network is made. During 

times when consumer spending is high such as the holidays, there may be a delay 

in getting an appointment. 

3. Talk to the Certified Credit Counselor—In an hour-long appointment that is free 

of charge, credit counselors will talk to families about the details of their debts and 

living expenses. Contacting a credit counselor for a free appointment does not ruin 

clients’ credit report so it is best to encourage accurate disclosure of debt and living 

expenses. Sometimes counselors are available through internet chats and e-mails to 

address specific questions. 

4. Decide on Customized Plan—At the end of a counseling session, the credit 

counselor will explore specific options that are available through their 

organization. Recommendations are made based on what debt couples face. Not all 

credit counseling agencies offer help with the full range of debt relief and credit 

repair options, some just specialize in particular debt relief options such as credit 

card consolidation. In this case, these agencies make referrals to other agencies that 

help deal with collection agencies or mortgage delinquency. It is likely that credit 

counselors will discuss education options to encourage healthy financial spending 

and credit options in the future. 

SOURCE: Personal Communication, Consumer Credit Counseling Services. 

14 
Family breakup is one of the top three reasons that families with children cite as the cause of 

bankruptcy.17 Experts advise families to wait until the crisis that resulted in financial disaster 

passes before filing for bankruptcy, so the risk of increased debts after filing is minimized. If 

there is nowhere else to turn, bankruptcy offers the opportunity to have a fresh start, but at a cost 

that is better avoided if possible. 

Help With Child Support Payments 

Research shows that child support is an important source of income for single parents, yet many 

low-income single parents, who are often mothers, receive inconsistent payments from noncustodial parents.18 There are several reasons for the irregular payments that include: constraints 

on non-custodial parents’ ability to pay such as spells of unemployment; non-custodial parent is 

incarcerated; tensions about the amount of the child support payment especially if they are 

several delinquent payments; non-custodial parents’ concerns about how the income is spent by 

the custodial parent. 

There are currently programs in different states designed to help non-custodial parents who make 

a good faith effort to make more consistent payments. These programs assist with the following: 

1. Better align obligations with fathers’ ability to pay and make it easier to modify order 

if needed. 

2. Forgive arrears if non-custodial parents make good faith efforts to make payments. 

3. Reduce the amount of child support that non-custodial parent reimburses the 

government so that more income goes to low-income children. 

4. Through marriage and family strengthening programs, improve parents’ 

communications skills to help deflate conflicts over child support payments could 

lead to more consistent payments over time. 

5. Set up electronic payment systems that include direct deposits into savings account or 

debit cards. 

Although child support payments are cash transfers that occur within families from one parent to 

another, they can also be used build by families to build future assets for children. 

Divorce and Child Custody Mediation 

Divorce has both emotional and financial consequences for parents and can be especially hard on 

children during child custody negotiations. Although divorce is difficult, encouraging a process 

to keep parents’ communication levels open and honest about their children and their financial 

situations is important for children’s well being during and after the divorce. Experts suggest that 

parents consider using collaborative forums for child custody negotiation such as mediation 

rather than litigation. Research has shown that for families who had been randomly assigned to 

mediate rather than litigate child custody disputes, nonresidential parents who were more 

involved in their children’s lives, had lower conflicts with the residential parent and had greater 

influence in co-parenting 12 years after their child custody dispute was resolved. 

15 
Fostering Collaboration to Resolve Couples Financial Problems 

Forgiveness is an important concept for couples who have financial problems. Couples need to 

talk over past mistakes, come to a level of forgiveness, and focus on going through every bill and 

financial statement to develop a viable financial strategy. This process takes time, trust, and 

commitment in relationships to move forward. The advice of marriage and relationship skills and 

financial educators working together can help couples to set realistic goals and work through 

problems. 

Financial and relationship skills educators are often in the position of helping couples to address 

past mistakes. Some of these mistakes may have been individual mistakes and some may have 

occurred with other partners. Either way, the financial aspects are often linked with emotional 

issues. A few key preventive steps may save a great deal of trauma later. The financial checklist 

that is often part of premarital preparation is also a key part of financial literacy for couples. It 

highlights that avoiding the day-to-day issues of financial health can lead to day-to-day 

problems. Figure 6 provides some tips from practitioners working with couples to help their 

financial planning and solving financial problems. 

Another common theme from both fields is that there is no one solution that fits every couple, 

and part of creating a healthy relationship and healthy finances is that couples need to work 

through their own situation together. Building the communication and conflict resolution skills to 

be able to do this is hard work. Again, both financial and marriage skills educators agree that 

success comes from how problems are handled, as all couples face emotional and financial 

decisions and complexities. 

Perhaps the most common theme for financial and relationship skills educators is finding an 

early point of entry into a couple’s life. Help-seeking steps are often taken when problems have 

become large and overwhelming, yet resolution may be easier the earlier that the problems are 

detected. In looking for ways to change the default options to promote financial and family 

stability, it could be that premarital counseling is a natural point of entry. Other potential entry 

points where materials could be distributed, practitioners could refer to other programs, or staff 

could be cross-trained include: 

• credit counseling specialists, 

• bank loan officers, 

• local pastors, 

• wedding planners, 

• pediatricians at well-baby visits, 

• new parents’ goodie bags, 

• IDA participants, and 

• marriage education participants. 

16 
Figure 6 

Tips from the Field: Helping Couples to Plan Finances and Resolve Financial Issues 

• Advise couples against “backward budgeting”—rather than spending and 

budgeting after the fact, consciously choose their lifestyle first and budget 

accordingly rather than the other way around. 

• Think about whole family life—how do other family members or friends factor in 

to couples’ financial decision-making? 

• Provide examples and questions that provide food for thought: is excessive 

spending or debt by one or both partners the sign of more deeply rooted issues? Be 

careful about commitments made in life, if you are not ready to make it a top 

priority, do not commit yourself to it. 

• Draw analogies: successful financial planning for couples is similar to successful 

weight loss—setting a goal and developing a plan to curb eating and increasing 

exercise. Need the support of both partners. 

• Encourage couples to always ask the question before any major financial decision, 

“Are my spouse (or partner) and I in complete agreement and unity over this 

decision?” 

• Have couples identify their financial needs vs. financial wants and practice 

negotiating the joint allocation of resources. Take this practice a step further by 

adding in a life event such as job loss—how would couples cut back? 

• For couples considering marriage or who have made the decision to get married: 

pre-marriage counseling, whether secular or non-secular, helps identify hidden 

money issues. 

SOURCES: Personal Communication with staff at the Shriver National Center for Poverty 

Law and A.G. Edwards and Sons. The ABCs of Money Management by A.G. 

Edwards and Sons. 

In addition, marriage and relationship skills education providers who are helping noncustodial 

parents improve communication with their partners can also help them develop financial 

strategies by working with the local child support agency to help develop realistic payment plans 

to address accumulated arrears, make immediate referrals to reputable credit counselors, and 

make referrals to employment and job training programs. Several community-based marriage 

education programs serving couples have forged strong links with financial literacy and home 

ownership programs to help couples continue to address immediate financial issues, plan for the 

future, and develop assets. At the same time, IDA programs are encouraged to build linkages 

with local marriage education and family strengthening programs to address the sometimes 

thorny conversations about money and credit. 

17 
18 

 

Conclusion

Family-focused services that build both relationship and financial skills have much promise. In 

this tumultuous economy, recognizing that couples with stable relationships accumulate greater 

levels of wealth over time and have the potential to better ride out the ebbs and flows of market 

changes, more and more service providers are keen to work with couples, especially parents, to 

enhance financial stability for families and children rather than let unexpected events undermine 

it. 

1

 Jenkins, N., Stanley, S.M., Bailey, W.C., & Markman, H.J. (2002). You Paid How Much for 

That?: How to Win at Money Without Losing at Love. San Francisco, CA: Jossey-Bass. 

2

 Dew, J. (2008). Debt change and marital satisfaction in recently married couples. Family 

Relations 57(1), 60-71. 

3

 Jenkins, N., Stanley, S.M., Bailey, W.C., & Markman, H.J. (2002). You Paid How Much for 

That?: How to Win at Money Without Losing at Love. San Francisco, CA: Jossey-Bass. 

4

 Caskey, J.P. (1997). Beyond cash-and-carry: Financial savings, financial services, and low 

income households in two communities (Report written for the Consumer Federation of 

American and the Ford Foundation). Swarthmore, PA: Swarthmore College. 

5

 Seidman, E., & Tescher, J. (2005). Unbanked to homeowner: Improving financial services for 

low-income, low-asset customers. The Brookings Institution Press, 316-347. 

6

 Mann, R. Credit Cards for the Poor. Paper presented at the National Poverty Center Conference 

“Access, Assets and Poverty” in October 2007. 

http://www.npc.umich.edu/news/events/access_assets_agenda/mann.pdf.

7

 Mann, R. Credit Cards for the Poor. Paper presented at the National Poverty Center Conference 

“Access, Assets and Poverty” in October 2007. 

http://www.npc.umich.edu/news/events/access_assets_agenda/mann.pdf.

8

 Jenkins, N., Stanley, S.M., Bailey, W.C., & Markman, H.J. (2002). You Paid How Much for 

That?: How to Win at Money Without Losing at Love. San Francisco, CA: Jossey-Bass. 

9 Building Assets Building Strong Families: A Guide for Combining Asset Building with Family 

Strengthening and Healthy Marriage Services, Model 8: Credit and Debt. U.S. Department of 

Health and Human Services, Office of Community Services, Administration for Children and 

Families. 

10 Jenkins, N., Stanley, S.M., Bailey, W.C., & Markman, H.J. (2002). You Paid How Much for 

That?: How to Win at Money Without Losing at Love. San Francisco, CA: Jossey-Bass. 

11 Orman, S. (2007). The Money Book for the Young, Fabulous & Broke. New York: Riverhead 

Books. 
19 

 

12 Conley, D., & Ryvicker, M. (2005). The price of female headship: Gender, inheritance, and 

wealth accumulation in the United States. Journal of Income Distribution, 41-56. Also see, 

Lerman, R. (2002). Impacts of marital status and parental presence on the material hardship of 

families and children. Demography, 44 (3). 

13 Warren, E., & Tyagi Warren, A. (2003). The Two-Income Trap: Why Middle-Class Mothers & 

Fathers are Going Broke. New York: Basic Books. 

14 Warren, E., & Tyagi Warren, A. (2003). The Two-Income Trap: Why Middle-Class Mothers & 

Fathers are Going Broke. New York: Basic Books. 

15 Rukavina, M., & Zeldin, C. (2007). Borrowing to stay healthy: How credit card is related to 

medical expenses. Demos: A Network for Ideas and Action. 

16 Seidman, E., & Tescher, J. (2005). Unbanked to homeowner: Improving financial services for 

low-income, low-asset customers. The Brookings Institution Press, 316-347. 

17 Orman, S. (2007). The Money Book for the Young, Fabulous & Broke. New York: Riverhead 

Books. 

18 Sorenson, E. & Zibman, C. (2000) “Child Support Offers Some Protection Against Poverty” 

The Urban Institute, Number B-10 in Series, "New Federalism: National Survey of America's 

Families.”