Tom complained that his wife Sherri was spending money faster than he could make it. Sherri complained that Tom was a tight wad and didn’t want a dime spent unless it was a bare necessity. They both were angry and…they both were off.
Money is a common struggle with couples from all economic levels. Those who don’t have enough are often so stressed they can’t seem to think about anything else. They’re often at each other’s throats playing the blame game about who’s not working hard enough or earning enough to help the family. Their stress seeps over onto the children and it’s miserable for everyone.
For those who are more financially stable, there’s often a mismatch in spending, financial goals, and financial philosophies. Consequently they’re constantly fighting about what’s responsible vs. irresponsible spending. Each partner is adamant that the other is wrong and rigidly holds to that position. Typically there’s truth in both their stories.
Couples need to get off their rigid positions and move from a position of blame to a position of solution and negotiation. If you’re constantly accusing your partner of over spending s/he will defend his or her spending to the hilt and likely accuse you of the exact opposite; then you’re both off to the races and no solutions are likely to happen.
Instead, couples need to have an honest conversation about their finances. The finances should be an open book to both partners so everyone’s on the same page about their financial picture. Both parties should, minimally, be aware of the following information:
- Total household monthly income (from all sources: employment, alimony, child support etc.)
- Total monthly expenses (household and otherwise)
- List and amount of all investments
- Account balances to all bank accounts
Once each partner is aware of the basic input and output necessary to run the household they need to sit down and come up with a budget that both partners feel comfortable with. When you make the budget be certain you have accurate numbers so you actually know how much discretionary income you have available to play with. If you’re bringing in $3000.00 per month but your bills are $3100.00 per month then you don’t have any income to play with and instead you need to start cutting back. If however you are making more than you’re spending, then here are some things to think about and negotiate regarding the budget:
- How much should go in savings each month? (Something should be put in savings every month…this is your safety net so don’t skip it).
- What are your financial goals (i.e. savings, retirement, and children’s schools/colleges)?
- What is each partner’s weekly budget? They can spend this amount however they wish (food, books, and clothes) without resentment from the other partner. This amount should be the same for each partner. This does NOT include expenses for basic household needs such as diapers, groceries etc.
- How much can each partner spend without running it by the other partner? This fee will depend on where you are financially; when you’re in dire straights anything above $25.00 or $50.00 should be discussed. When there’s no financial stress you may want to discuss anything over $100-$500.00. The amount is not as important as both of you feeling comfortable with the agreement. Big ticket items, I believe, should always be discussed prior to purchase. For example, a big ticket item that should be discussed is a car, boat, motorcycle, or any other expensive purchase. This is not about control; it’s about being respectful and considerate of our partner. You both are a team and any large purchase impacts the system.
- What is your entertainment budget for the week/month? What happens if it’s only Wednesday and you already spent your allotted amount?
These are just a few things to think about regarding money. Being smart and responsible with your money, starts with both of you having an accurate picture of your finances. Money is a sore spot for many couples. Until couples realize they are financial partners who need to negotiate not blame, it will continue to be a source of strife in relationships.
For those of you who think your partner is a tight wad, this doesn’t mean you don’t have to cut back on your expenses. Similarly, for those who think your partner is a spendthrift, this doesn’t mean you don’t need to relax more around spending. Stop thinking your partner is wrong and start working your side of the equation. When couples stop polarizing, they’re often surprised at how many financial goals they actually do share.
CHALLENGE: If money is an issue in your relationship then start thinking as a team and coming up with a budget, goals, and action plan that works for everyone. Commit to following a budget for minimally three months and then re-evaluate depending on what’s working or not.