Spendthrift loves Cheapskate
When couples argue over finances, money is almost never the real problem. It’s a symptom of the real problem. We learn about money as children. We didn’t analyze our parents’ bank statements when we were 10 years old, but we did experience where their money went. Did we live paycheck to paycheck? Did we go to Disney World every year? Did we donate to charitable organizations? If we got a bike for Christmas, we knew we had money. If the heat got turned off at Christmas, we knew we didn’t. These experiences influence our relationship with money. It’s common for couples to have vastly different opinions regarding money, while simultaneously assuming everyone else’s attitude toward it is the same as ours. Saver marries Spender oblivious our spouse’s financial philosophy will quickly drive us crazy, but couples overcome financial differences every day. As with most things in life, it’s all in the approach.
We Need to Talk
Saver and Spender should talk about money priorities at a time that is good for both and in a relaxed setting. We come to this date with a list of what is important to us to both spend money on and save money for. First, we figure out how much money we each make every month. Next, we go through the monthly bills (e.g., mortgage/rent, utilities, internet, phone, gas, groceries, etc.) and see how much we have to spend on these fixed expenses. Ideally, what we have to spend is less than what we make (If not, that’s a whole ‘nuther blog post).
The difference in those two figures is disposable income. This is the money we have to talk about. Does Saver like putting money in a savings account? Does Spender like to eat out? Agree on monthly limits for both. We also need to agree on an amount each can spend without the other’s blessing and we should set parameters on what qualifies as a big purchase (e.g., a car). The goal is for Saver to feel secure and Spender to not feel confined.
For additional comfort and freedom, we can open separate accounts in addition to our joint account. The joint account is for bill paying and each spouse can contribute proportional to our income. We define what purchases qualify as household expenses (e.g., child care) and pay those out of the joint account. Discretionary spending comes from the individual accounts.
We consider debt. How much are we comfortable with (e.g., credit card debt)? What are we willing to go in debt for (e.g., our children’s education)?
We ought to discuss saving and investment goals. Do we want to buy a house? Go on a month-long vacation? Retire early?
The more couples talk about money (how we spend it and why), the easier it gets. We aren’t just building our finances, we’re building our trust in each other.
How do you and your spouse deal with money issues? Please share in the comments section.