Can you imagine what would happen if I bought a house without consulting my spouse, Anna? I would probably be living in that house alone for quite some time. What about a car or an animal shelter? It would not go over well. This is because: a) married couples should be a team making joint decisions and b) people have different attitudes towards money due to their own personal history. One of the main triggers for fights in a marriage is money, and there are many factors that influence behavior and opinions in financial situations. The article below highlights some of the major differences on what people find attractive, what is an acceptable amount to spend, and what stresses them out. There were a few things that were interesting to me with the first being that most people find themselves more rational than their spouse and found their spouse more impulsive than themselves. The other interesting graphic was the average amount people spend before discussing the purchase – $396 for women and a ridiculous $1231 for men. I am no marriage expert (just completed 1 year, wohoo), but it seems foreign to me to spend $1231 without first consulting with your spouse. Now this article is not about marriage counseling but about some of the things Anna and I do that we find helpful and some areas that we had to work through.
As I mentioned in a previous post, Anna and I have a budget we created together based on our income and things we wanted to save for or spend money on. What we try to do is sit down twice a month to input our expenditures and compare them to our budget. When this happens, we both are present, and read out all of the expenses (even the 90 cents I spent on two double chocolate cookies at the work cafeteria which Anna now knows that expense by heart!), and input it in Excel. The reason we use Excel instead of say Quicken or Mint is due to the pain and thinking it takes to enter in the value, it makes the money more real and painful. Our goal is to review our progress in the middle of the month and then our results at the end of the month against our budget. If our spending was way out of the range, we talk about it and understand why it happened and whether we need to change behavior. While we could enter in our expenses at different times, we find that sitting down together and sharing our transactions helps to facilitate discussions and provides transparency.
A second financial exercise I particularly enjoy is at the end of every quarter updating our Net Worth. For those who are not familiar, Net Worth is assets (we just do financial assets and not material assets) minus liabilities (loans, mortgages, etc.). Now some people might think it’s crazy, and Bill Gates probably spends more on a pool then what Anna and I are financially worth, but it allows us to document where our money is going on a larger scale. It is exciting and rewarding to see our Net Worth increase over time and how much of an increase we get every quarter by saving, paying down debt, and investing. It makes me happy since I see some of the delayed gratification from saving.
A third area of importance for me and Anna is setting boundaries on expenses. We discussed the sharing of all of our expenses so she knows if I somehow bought a 5lb bag of M&Ms but we identify purchases that would need more discussion if they exceed a certain dollar amount. For us it is lower than most at $100 but if I want to buy a new golf club, and we are managing our financials as expected the conversation is more of a “hey, I plan to buy this, is that ok – sure” type deal. It is helpful to define expectations on both the amount of money that needs to be discussed and what are some things that are important to a person; golfing, doing races, concerts, trying new food, etc.. Setting expectations is something that has helped in my marriage.
Now I don’t want to pretend like Anna and I are perfect and don’t have any disagreements about money because that is not the case. We have had many discussions on the topic and had to talk through differences and come to compromises. For example, when we married, I had been used to an Engineering salary for 4 years and could spend money on almost anything I wanted, so I had no concerns buying an iPad or a new set of golf clubs. On the flip side, Anna just graduated PT school with large student loans and being accustomed to saving as much money as possible and a $10 dinner out was a treat. It was a clashing of expectations and we had to come to a compromise on prioritizing her student loans but still having enough left over to spend on fun experiences. Even to this day, Anna is much more conservative and less excited about personal Finance then me (if she wrote a blog I think it would be about ice cream) so I have to be careful not to steamroll her with my ideas or opinions and ensure her input is factored in. We will continue to have to work through our differences, but I find it refreshing that we have differing views – I mean we both can’t be spending all of our money on candy.
In closing, with how important money is in any relationship, it is imperative to have open discussions. I have shared what works for me and Anna, and something else might work for you, but the biggest thing is to communicate and compromise since everyone is different. I am no marriage expert, but it seems like a healthy marriage would consist of an agreed upon financial plan.
http://www.wsj.com/articles/how-couples-can-resolve-their-biggest-fights-over-money-1428895317
FutureMillenniares 