Well, my wife and I met last night to discuss our 2009 budget. We have been talking about this for several months (pretty much since we got married in 2008). We have put off discussing finances until now because I wanted her to pay off some credit card debt prior to the discussion (I wanted an accurate picture of the cash she would have available to save).
We both completed spreadsheets listing how much we spend on various living expenses and how much we save. Personally, I felt like completing the spreadsheet was a waste of time because I've always kept track of these items in my head. Nothing really surprised me. My wife did the same thing. When we got together, we both went over our sheets. After that discussion, I didn't know how to proceed further. It occurred to me that I had no clue about what to discuss in a budget meeting. I didn't want to change any of my habits; I feel like I save an adequate amount, and I am not frivolous with my money. I am not unhappy with my wife's financial choices although her credit card debt of $1400 from our wedding really upsets me (as I've never had cc debt).
My question to you all is what topics should be discussed at a budget meeting? Part of the problem is that we earn drastically different amounts of money. Me saving 20% is much easier than her saving 20% (I am a lawyer; she works for a non-profit). One of her biggest gripes is that her lifestyle costs have increased since she met me. She used to save a lot more because she ate cereal every night and lived with her brother. Now she lives in a more expensive house and I like to cook gourmet food (a hobby of mine). I can't fault her for not saving as much money given her increased standard of living. How should I reconcile this problem?
When she does set aside money, we disagree on how to invest the money. For her, putting the money in the bank is the best way to save money. I prefer tax advantaged accounts. Because of our vastly different educational levels on investing, I feel like it's a lost cause trying to explain the advantages of roth IRAs/403(b)s etc. The overarching problem is that I am much more visionary when it comes to long-term financial planning. How can I overcome these problems? Any advice from the long-time married individuals would be appreciated!
Budget meeting disaster
January 12th, 2009 at 08:56 pm
January 12th, 2009 at 09:02 pm 1231794177
January 12th, 2009 at 09:18 pm 1231795097
At a budget meeting, I would look at what financial goals you want to accomplish together. Frugal retirement, lavish or in between. Are you buying a house anytime soon...or moving? Saving for a car? Do you have the basics, such as an emergency fund? Do you need life insurance? Just putting some ideas out there...things to talk about if you already haven't.
January 12th, 2009 at 09:18 pm 1231795137
I would think that the first obstacle here is the attitidue of "my money" and "her money". Since your union, it should be seen as "your money". Her credit card is from "her" wedding to you. I would suggest that you pay it off (it isn't from a wedding to someone else, you were there). What will happen when/if you have children and your wife becomes a SAHM and you are the primary breadwinner? Work these issues out now and try to see about merging your finances.
I have been married for going on 19 years and have five children. I married young (20) and we both got through college and I got through graduate school before having children. We also purchased our first home and travelled extensively before the children started coming.
I would suggest starting out with your shared vision and goals of what is important. Early retirement? Travel? Children? Show your wife what the tax advantages are of different investment vehicles. My DH is a financial analyst, but I make most of the money making decisions. I don't understand the innerworks of big business, but I do understand retirement funds and the stock market.
Good luck to you on your future conversations. Work on the idea of merging your finances and having "one" money life. It will help things in the long-run.
January 12th, 2009 at 09:20 pm 1231795205
I have been married for going on 19 years and have five children. I married young (20) and we both got through college and I got through graduate school before having children. We also purchased our first home and travelled extensively before the children started coming.
I would suggest starting out with your shared vision and goals of what is important. Early retirement? Travel? Children? Show your wife what the tax advantages are of different investment vehicles. My DH is a financial analyst, but I make most of the money making decisions. I don't understand the innerworks of big business, but I do understand retirement funds and the stock market.
Good luck to you on your future conversations. Work on the idea of merging your finances and having "one" money life. It will help things in the long-run.
January 12th, 2009 at 09:23 pm 1231795436
I am not a saver by nature of my personality, but because I understand how they work I feel I HAVE TO max out tax-advantageous accounts or I am loosing out on free money.
January 12th, 2009 at 09:54 pm 1231797252
My normal expenses per week are more than BF's - he does not have to pay for his phone, car insurance or a car loan as I do.
Once we are settled in our new home, we will work out the most effective way of handling our money. At this stage we are thinking of living off my income and banking BF's, or us both equally sharing the mortgage payment, and then pooling everything else and dividing into extra payments, savings and living expenses.
When you are in a partnership and you know it is 'for keeps', these issues over 'my money, her money' shouldn't exist. Personally, BF and I have kept our money separate until now because of the tax implications. We both trust each other enough to know that if any large purcahses are being made, the other needs to be involved, and we both are not by nature ones to rack up a credit card bill. We're both excited by the fact that our finances will be merged and we can begin on the next step in our future.
To answer your question, though, about a budget meeting. (which we will also be doing). You should probably combine all of your expenses into one. Instead of having yours and hers expenses, you should have one big long list of 'our expenses'. A budget meeting really is all about finding out where your financial boundaries are, what you're spending your money on, where it could decrease, and basically to get your head around where all your money is going. You might find some things that could be changed to decrease both of your expenses, like merged insurance or cell phone deals. You might want to discuss what you are saving for. Also think of things you might need or have thought about getting in the future. For instance, BF and I know that once we move into our new home we have a couple of things we need to focus on getting, like a new fridge, a chest freezer and a digital set top box. These are items that affect us both and we need to work out a plan of attack to acquire them.
January 12th, 2009 at 09:54 pm 1231797288
My normal expenses per week are more than BF's - he does not have to pay for his phone, car insurance or a car loan as I do.
Once we are settled in our new home, we will work out the most effective way of handling our money. At this stage we are thinking of living off my income and banking BF's, or us both equally sharing the mortgage payment, and then pooling everything else and dividing into extra payments, savings and living expenses.
When you are in a partnership and you know it is 'for keeps', these issues over 'my money, her money' shouldn't exist. Personally, BF and I have kept our money separate until now because of the tax implications. We both trust each other enough to know that if any large purcahses are being made, the other needs to be involved, and we both are not by nature ones to rack up a credit card bill. We're both excited by the fact that our finances will be merged and we can begin on the next step in our future.
To answer your question, though, about a budget meeting. (which we will also be doing). You should probably combine all of your expenses into one. Instead of having yours and hers expenses, you should have one big long list of 'our expenses'. A budget meeting really is all about finding out where your financial boundaries are, what you're spending your money on, where it could decrease, and basically to get your head around where all your money is going. You might find some things that could be changed to decrease both of your expenses, like merged insurance or cell phone deals. You might want to discuss what you are saving for. Also think of things you might need or have thought about getting in the future. For instance, BF and I know that once we move into our new home we have a couple of things we need to focus on getting, like a new fridge, a chest freezer and a digital set top box. These are items that affect us both and we need to work out a plan of attack to acquire them.
Sorry about the rambling post, hope i helped in some way!
January 12th, 2009 at 10:57 pm 1231801069
But, anyhow, back on track, as an outsider looking in, I think the advice so far is good. I know some couples do the "his money, my money" thing, but I'm not sure that they are financially savvy couples. Perhaps meeting with a financial planner would help your wife to understand the benefits of tax-deferred savings. It would be an impartial party, rather than YOU telling her what is the "smarter" way to invest. Just as long as you pretend you are learning something new also, and not ganging up on her. Or maybe you each figure out a percent to save, and you focus on the tax-deferred aspect for BOTH OF YOU, and she focuses on the emergency fund savings for BOTH OF YOU.
I think the statement that her lifestyle costs have increased because you like to cook gourmet food is really throwing me off. Is it because she does the grocery shopping? Food for two will always cost more than food for one. It is definitely an adjustment once you get married and it takes a little while to get used to the changes. Maybe get a handle on how much the groceries are costing and set a budget for that, so that the gourmet hobby doesn't get in the way of the new fridge & freezer.
Sorry if this is a little jumbled - it's just the random thoughts I had while I read your post.
January 12th, 2009 at 11:25 pm 1231802758
1. Do not keep all inner thoughts or feelings to yourself when you go over your budget, otherwise it does not count if your spouse is not aware of them.
2. Be patience with each other. Both of you are going through an adjustment of a new life together. From your message, it seems like it might be possible that your wife has to make a bigger lifestyle adjustments than you. You both need to form new habits together otherwise resentment will come into the picture. Both of you are important beings with your own needs.
3. It takes time to implement the financial plan you both put together. I give it a year to work out all of the kinks.
4. After working out the current budget, find out each other's goals and dreams for the future and see if you both can come up with a plan to build up the finance and timeframe to make it happen. Life happens so not everything might work out perfect but at least you have a starting point.
5. I am sure you already do, Love each other truly.
January 13th, 2009 at 12:48 am 1231807710
The secret? Keep talking, and C-O-M-P-R-O-M-I-S-E.
Since you are both interested in working together on your finances, I'd suggest reading "Smart Couples Finish Rich" and completing the exercises in the companion Workbook together. It will help you see how you may be viewing money differently, and will help you establish long-term goals together as well as working through the nitty-gritty details such as budgeting together.
Based on your comments, a couple suggestions spring to mind:
- If you are working on both building up your emergency fund and maxing tax-deferred savings, perhaps you could let your wife handle the former and you handle the latter? She could be in charge of the banking end of things, and you could be in charge of the investing end?
- On the lifestyle costs issue, you're probably going to keep living in the house where you live, but on the food issue there certainly is room for compromise. How about cereal (or maybe upgrade from cereal to pancakes or scrambled eggs) one or two nights a week? And perhaps your wife would find it challenging to look for ways to trim the grocery budget for your gourmet food items by clipping coupons, looking for sales, buying in bulk, etc?
I think the 2 of you are off to a great start. I like your attitude about your different earning power.
When we first married, I earned a bit more than my husband. (He was a recent immigrant and had to take a job that paid quite a bit less than what he earned in his native country when he first arrived in the USA.) And when he quit his job and started his own company, I was the sole bread winner for awhile. But for most of our marriage, my husband has earned more, and since his business took off he has earned QUITE a bit more. But I am always looking for ways to contribute to our financial growth, especially by looking for ways to keep our spending down, striving to have our savings earn as much as possible (I'm the bank rate shopper in the family and take that "job" very seriously), developing investment strategies (asset allocation, appropriate mutual funds, etc) and helping my husband out with his business whenever I can. I also pay the bills, balance the checkbooks, go to the bank, do the taxes, keep all of the financial records, make sure the will is up-to-date, and prepare net worth statements for my husband every month so he can see how we're doing. So you see, your wife can have a very active role in your financial life even if she is not a big wage earner.
Once you're done with Smart Couples Finish Rich, you may enjoy reading "The Millionaire Mind." In that book, decamillionaires rate the qualities that contributed to their success. Most of the people in question were male, and "Supportive Spouse" was ranked as one of the 5 most important traits.
January 13th, 2009 at 06:24 am 1231827841
If you think of personal finance as a football game, the fact that your wife is more comfortable with defense and you are more comfortable with offense is typical. Better that than you both offensive or defensive.