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Who wants to talk about money today?! Anyone? Anyone? (Cue crickets chirping).
Yeah, so talking about finances can be a huge downer. It's one of the reasons why, for a long time, my preferred method of talking about money with Mike was to essentially stick my head in the sand. It's such a common behavior that economists have a name for it: the ostrich effect. While we were never dealing with any particularly risky financial situations, the day-to-day decisions of trying to agree on how to allocate a finite income into what seemed to be an infinite number of needs and wants was enough to make me crazy. If we didn't talk about it, things would just sort themselves out eventually, right?
Not so much. Handling finances is one of those things that will continue to pester you until you and your spouse or partner come to some system that works for both of you. It's been said that couples tend to have variations of the same few arguments over and over throughout their marriage, and it comes as no surprise that arguments about money top the list.
I recently read a statistic on Dave Ramsey's blog said 57% of divorced couples cited money fights as the primary reason they didn't get along. And yet most of us still prefer to spend our time hedging the money conversation – pretending it's not an issue, putting out financial fires as they pop up, and arguing about it rather than finding a solution. In the same article, the author asks how we would feel if we knew that 50% of our neighbors were being attacked by bears. Would we do something about it? Perhaps talk to our families about it, and come up with a plan of how to avoid a bear attack? Last time I checked, there were no bears in my suburban 'hood, but I bet each and every one of us gets a bill or two in our mailbox. Maybe it's time for a plan.
It took us over 10 years of marriage to finally get a system in place that takes into account each of personalities, but we finally have a solid method of handling our finances together. Here's what we've found works for us.
We start each month with a fresh budget. We use a spreadsheet on the computer, but experiment with different systems until you find one that works for you (There are online resources like Pear Budget and Mint.com. Dave Ramsey, of course, has online tools. And there's always the good, old-fashioned pen and paper). We tally up our projected expenses in each category and estimate our income for the month. The goal is a zero-based budget, where expenses – income = zero. Every dollar has a name, whether it goes to eating out or saving up for a car.
2. Budget Meetings
We set aside time to talk about the budget twice a month – once at the beginning of the month to set up the budget, and once mid-month to see if we need to make any adjustments.
Here's where you might get frustrated, as in the beginning these meetings can be synonymous with arguing. It takes time to figure out a good, working budget. It's hard to change spending habits and compromise. By coming to the table over and over again and discussing finances, you get better at it. Habits and perspectives will shift and you'll find yourselves working together. Set aside a block of time when you're both able to focus fully on each other. I find a glass of wine and agreeing to do something fun together when it's over works miracles on your outlook.
3. Spending Policy
We have a specific dollar amount where, if we want to buy something over that number, we agree to check in with the other person first. It helps keep spending in check and it avoids any number of arguments that begin with, "You spent how much on what?!"
By committing to following those three things, we've experienced tremendous rewards in our marriage.
- Relief: Knowing that you are on the same page and that you have a plan eliminates stress and worry.
- Trust: We know the other person isn't going to blow a significant chunk of money on a whim.
- Confidence: I'm not inclined to think about financial planning (see reference to my denial above). Working on this stuff together has given me the confidence to feel secure that if anything ever happens to Mike, I know exactly what to do to keep myself financially sound.
- Vision: The ability to have calm, honest discussions about money has opened doors for us to talk about our plans for the future.
The time and energy we've invested into finding a way to manage our finances together has been so worth it. Now we have more energy to devote to our other big arguments, like whose job it is to wash stinky things! Just kidding (mostly).
Do you have a system that works for you? Or are you struggling with your inner ostrich?