Monday, December 29, 2008

Share Your Financial Plans With Your Spouse

Tip #46 - Share Your Financial Plans With Your Spouse or Significant Other. This one can sometimes be tough. Some of us are savers. Some are spenders. Some are spenders who want to become savers. If you are single, then you have it easy. If you are married or living with a significant other then you both need to be on the same page financially. Easier said than done. I know. Trust me. I know.

If both parties are savers and are happy to cut back on extras, then great. If both parties are spenders, this is not good; but until one of them sees the light then there is nothing we can help them with here. If one of you wants to save money and cut back and the other still is spend-happy, then this topic is for you. What do you do if your family has been spending more than you earn? What do you do if you have some debt and you suddenly realize you need to change your ways but your spouse does not? You need to have a talk with your spouse. You cannot tell him/her what your family is going to do because no grown-up likes to be told what to do. But you can present to him or her a plan for your family to get out of debt or to start saving some of your money.

Let's start with your plan of action. First, write down all of your expected sources of income for the year. Then write up a monthly budget. Ideally, this is something you and your spouse would do together. But, if your spouse wants nothing to do with it, then do it yourself. We went over a budget in another post, but we'll summarize it here. Write down your fixed expenses - those you cannot change - such as your mortgage or rent. Write down any credit card or other debts you owe. Write down your utilities - gas, electricity, phone, etc. Write down your food and clothing expenses and your other expenses - vacation, gifts, miscellaneous. And don't forget the line for savings!

When your spouse is in a good mood, tell him/her that you wrote up a budget to see how much you have coming in and how much you have going out. When your spouse sees everything written down, it is hard to argue whether or not there is extra money for unnecessary expenses. It is this extra money that can be the source of problems. This might be money your spouse wants to spend on eating out or tools, or purses. And it's money you want to save toward retirement. Or perhaps your spouse justs wants to spend money freely without seeing how much you really have extra each month. You need to get across that the budget shows you what you have and how much you have to spend. If he or she is still not convinced, suggest following it for two or three months and seeing how it works.

If you have $4,000 coming in each month and your expenses total $3,600, then tell your spouse that there is an extra $400 per month to play with. Suggest splitting it. He/She can spend $200 each month however he/she wants. You can do the same. As someone who wants to save money, you can put it in a savings account or a CD. Or if you have debt, you can start paying it off with your half. You may not be able to change your spouse, but if you can control how much he or she spends, then you are still better off than if he/she is spending uncontrollably.

On top of that, you can still control the portion of the budget that you usually are in charge of. If you are the food shopper, in the house, you can cut back and save there. If you are in charge of buying the cell phones, you can look for a better deal. If you plan the vacations in the family, you can plan a frugal one. If your spouse is in charge of the cable, you may not be able to convince him or her of a better plan. If your spouse buys his/her own clothes, you may not be able to convince him or her to buy used. But do what you can. After two or three months, maybe you can show your spouse that you have $500 emergency money in your savings account or that you have paid off one of your credit cards. Or that your monthly food bill is now $100 less and you are putting it toward a vacation. Maybe your spouse will catch on at that point or maybe not.

If you are in it alone, then do what you can using what you know about budgets. And at least talk with your spouse about what you are doing. Don't berate him or her for his spending because that won't get you anywhere. All you can do is hope that he or she will eventually come around.

In Real Life (IRL) - I have said this many times in this blog. I am a saver. I always have been. I imagine I always will be. My husband, on the other hand, not so much. He likes to spend. He likes to shop. And I don't think he heard about saving until he met me. To be fair, his dad died when he was young, so he didn't have him to teach him. And to be frank, it was usually the dad who did the finances. So I'm not sure his mother knew how to teach him to save.

When we got married 9 years ago, my husband had $20,000 to his name from the sale of his home. And I think he had about $30,000 in a 401K from work. I had $70,000 I had saved that was earmarked for a home. And I had about $100,000 in retirement accounts. We used $70,000 toward a down payment on a home and we put $20,000 aside for money that could be used toward repairs, furniture, etc. Then I told my husband all I knew about saving for retirement. I told him that he should be putting away the maximum allowed by the law toward a retirement IRA, which he did. Then I told him he should be putting away the maximum allowed by the law toward his 401(k), which he did.

I was lucky because my husband trusted my financial advice. I have a degree in finance. I have a dad who taught me about savings. And I have a brother who is a financial planner. So I had some good sources for my information. He, on the other hand, admitted he didn't know much about finances. So all was good. I was in charge of the finances and he was fine with it. At the time, we both made good incomes. I put money away into savings each month. And we could still eat out when we wanted and shop as we wished.

But then I got pregnant and I wanted to stay home with my child. And that is when I wrote up a budget to see how we could live on his income. Fortunately, we could. It just meant eating out less, buying fewer things, taking fewer vacations, etc. My plan was to go back to work part-time after we had our children and become full-time once they got to be school age. It hasn't exactly happened that way so I am still at home. And now our budget is a bit stricter. But I cannot convince my husband to cut back on his shopping habits. I have a food budget of $400 per month. I brought home 20 yogurts that I bought on sale last week for 40 cents each. They were earmarked to be used for school and work lunches. He didn't care and ate them for snacks. Aaah, I screamed. Those are lunches! He goes to work and stops at the market on the way and picks up crab dip and bread. Luxeries in my food budget. Not so much for him. He likes to eat what he eats. And he likes to stop at Home Depot on the way home.

So what did I do? I adjusted the budget. I control the things I can. We eat dinners that I prepare with food I've bought on my food budget. We go on vacations that I plan using skills I've learned about purchasing train tickets and hotel roooms and cheap places to visit. I found cheaper ways to get our Internet, phone, and t.v. But I've added in a line to our budget for his lunches and his little purchases. I cannot control those. And I'm okay with it (just don't tell him!). We're still socking money away into his 401k and our IRAs and our children's college funds. And I will go back to work in the next couple of years. And because I've been a hyper saver, we are actually more than okay with our savings, so it really doesn't matter if my husband eats fancy supermarket food and buys the latest tool once in awhile.

So if your spouse isn't on board with you yet about savings and spending, write up a budget, present it to him or her. And then do what you can.

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