Between talking with people and listening to callers on The Dave Ramsey Show,
I’m surprised by the number of married people who talk about their
finances and converse as if their spouse doesn’t even exist: “When I do
the budget”, “When I pay the bills”, “I am working two jobs to provide
extra income”, “I…I…I”.
Shouldn’t they be saying “We”? With so many “I”s everywhere, it’s no
wonder couples are fighting — they aren’t communicating! The best way
to manage your finances is together. Create your financial plan
together, do the bills together, review your net worth together. If you
do anything related to your finances, make sure your spouse is involved
and has a say so in the decision process.
Develop a budget — together!
From personal experience, one cause of fights (or “fussing”, as we call
it in the South) is one spouse spending what the other spouse considers
too much money. This is generally a problem when the couple is already
fairly tight on finances, or when one spouse is far more frugal than
the other.
To resolve this issue, create a budget together. It’s not important how you do it or what method you use, but that you create the budget together.
If both spouses don’t have input in the budget, they won’t “have any
skin in the game”. Both should provide input on the numbers and be part
of the process.
Hold weekly budget review meetings
If one spouse is doing all of the finances, it’s very difficult for the
other spouse to know the current financial state. Even with a budget, a
lack of communication can make it difficult to know how much is left in
the “grocery category” or the “entertainment category”.
To solve this problem, pick one night of the week to review your
finances. Pick a time when you and your spouse can devote 15-30 minutes
without interruption. For us, this is after our younger children are in
bed. I generally update our finances daily, but I always make sure the
budget is updated before our meeting.
I print a copy of the budget that shows the amount we allocated for
each category and how much we have remaining. We review each category
and discuss the amounts remaining and any expected expenditures for the
week. If we are short in one area and over in another, we move the
money around. If we are just short, we either decide to cut back and
not spend, or we pull the funds from the emergency fund.
Review your finances frequently. Communicate. You’ll be amazed at the difference a little communication makes.
Establish an emergency fund
The most important thing you can do to keep your finances under control
— and to avoid using credit cards and going into debt — is to establish
an emergency fund. Nothing stresses a couple more than running out of
money before all the bills are paid. Even worse is having the air
conditioner or the car break down without money to get it fixed.
Establish a $1000-$2000 emergency fund and put it in a high-interest savings account.
The emergency fund will cover those unexpected expenses. The key is
that each spouse must agree to not touch these funds without the
other’s agreement. This keeps the emergency fund from being used to buy
big-screen TVs or designer pocket books.
It’s okay to make mistakes
Being the detailed geeky type that I am, when we first started
budgeting, I wanted the budget to be perfect. I wanted us to follow it
perfectly. While discussing our finances one night, I found that my
wife hated the budgeting process. After some discussion, I realized it
wasn’t the budgeting process she hated, but how I handled it.
The budget isn’t going to be perfect. It should get better as you do
it more, but it will never be perfect. That’s okay. If you are off,
just move the money around. If you overspend, tap the emergency fund —
just be sure to put the money back. You’ll find that the longer you
follow a budget, the easier and more accurate it becomes.
Like everything else, it’s a journey. If you’re like us, just having a budget will be a huge leap in the right direction.
Agree to hold each other accountable
After we agree on the budget for the upcoming month, my wife and I do a
pinky shake. Is this a little silly? Sure, but it works for us. Every
time I am in the store and see some new shiny electronic gadget I want,
that pinky shake reminds me of the commitment I made. That little shake
makes me question if I need the item or not. I can’t tell you how many
times I’ve walked out of a store empty-handed because of that little
shake.
The point is to think of something both of you can do to commit to
each other. That little reminder is worth its weight in gold.
Debt is a dark cloud that follows you constantly. Debt puts pressure on
your finances, and ultimately on your marriage. Getting out of debt
will give you financial freedom and peace of mind. If you are in debt,
stop getting further in debt right now. If you have credit cards, shred
them. Is your car payment way too high? Sell it and buy something you
can afford. Is your mortgage beyond your means? Sell the house.
Once you have stopped going further into debt, begin aggressively
paying what you owe. My wife and I started this process about six
months ago, and it’s brought us closer together.
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