Couple Money » Family and Finances

When To Call Your Partner Out On Over-Spending

guest poster — Wed, 18 Apr 2012 11:30:20 +0000

One of the toughest aspects of managing a relationship is organizing finances and getting on the same page as far as budgeting, saving, and spending. Rarely does a relationship work if both partners are not in agreement on what counts as a splurge and what doesn’t.

The failure to have this conversation can lead to not knowing when it’s time to call someone out on over-spending, which in turn can lead to a slow, simmering resentment and, worse, long-term debt. Here is a checklist on when a couples’ spending needs to be better managed:

Frequently Charging to a Credit Card

Obviously using a credit card for small purchases that will be easily repaid is not a big deal. A trip out to buy some cheap sunglasses does not need to be discussed with your partner, nor does an inexpensive lunch or even an afternoon at the movies—with popcorn and soda!

But if the credit card is being utilized for things that you can’t afford, that’s when you have a problem. This ties into the next two indicators, as credit card expenses needs to be figured into your monthly budget for both big and small expenditures.

Monthly Budgets Not Planned in Advance

A couple who shares much of their lives together should also share their finances. This doesn’t mean that one partner’s money belongs to the other, but it does mean that you should be discussing your expenses together and preparing a budget. Whether your bank accounts are linked or not, you should both be on the same page as to what your utility bills will be, insurance costs, car insurance, student loans, etc. This will prevent one partner from spending the last hundred dollars on a new smartphone instead of more pressing expenses.

Big Purchases are not Discussed Beforehand

A sure sign that a couple is not on the same financial page is when one of them makes a big, expensive purchase without discussing it beforehand without the other. This could be as simple as an iPad or as egregious as a new car. Regardless of your combined income, big purchases should always be discussed prior to sliding the plastic. Perhaps your other half has a more pressing financial need that he or she has been reluctant to bring up.

A financially responsible and respectful couple stands to gain more than just a sound bank account, it can also lead to a healthier relationship. Money is nothing to be scoffed at, and being open and honest with your partner should not be underestimated as a huge bellwether test in your relationship.

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Financial Choices and their Impact 5 Years Later

Elle — Thu, 05 Apr 2012 13:18:15 +0000

Recently I guest posted on My Money Blog about our baby expenses so far with our first kid. Jonathan shared the happy news that they were expecting their first kid. He also put out a call for readers to offer their own experiences and the financial impact of having kids:

In financial terms, how was having a baby different than you expected? Did it cost more money than you thought? Less money (ha)? What items were really important to buy properly? What things did you buy that weren’t very useful? General advice, specific recommendations, whatever.

I submitted our story and it got published. I was going through the comments on the post, curious to see how other families adjust their finances with children. There seems to be a few points that people debated. I understand our expenses are lower than normal, but I don’t think it’s unrealistic. As I mentioned in the post and my follow-up comment, a big reason why our expenses are lower than the typical family is due to decisions we made early in our marriage.

After talking over with my husband I thought it would be helpful to show how decisions we made 5 years ago affected us- the good and the bad.

Live on One Income

When we got married I was still in college as a full time student and had an internship. My husband was at his first post graduate job working in programming. Our income wasn’t great, but we could live decently off of it. However with the school and workload I had, we thought it would be smart to not rely on my internship pay. Instead we looked at my husband’s income and we devised a budget that would take care of our necessities.

As our income grew we did our best to fight lifestyle inflation. One of the My Money Blog readers commented that keeping living expenses under one income was not feasible for most couples. I will say that learning to live on one income was just a bit easier for us because we started off with that mentality, but I do think it’s doable for some couples.

This financial decision allowed us to explore different avenues, one of which was working from home. With not having to stress out about paying the bills while making the leap to self-employment, it made the transition doable. We’re grateful it has worked out so far.

No Car Loans if Possible

This mindset has also led us to work towards not having a car loan. I know some people feel that buying used cars means more bills with repairs, but the numbers don’t support that. If you’re willing to hunt and find a reliable used car in your budget, you can save a bit of money and not have to stress over about repairs.

You can then use that money that was going to be for car repairs for other goals, perhaps contributing to your child(ren)’s college fund.

Paying Down Debts

I wish I could say we started off our marriage with no debts we would be rolling in the dough, but that wasn’t the case. When we got engaged we chatted about our finances – what we owned and what we owed. I made it a personal goal to pay off my credit cards before I headed down the aisle.

That said, having debt does slow down reaching our financial goals. The money spent to pay these debts off could’ve been invested or spent on other pursuits.

Once we were married we worked on paying down a car loan I took on that was hurting our monthly budget. Happy to say that we paid that off early. While it was good we were paying down debts, having those debts in the first place was great. Most of it was mine that I acquire while attending college.

Much of the debt reductions was to reduce our monthly expenses in the long run. Looking at our financial game plan, we like to be in a position where both of us could work from home (not saying we would).

Making the Leap – Moving

The job market where we were living at while I was in college was fantastic. I had a great internship, but it involved at like a 45 minute commute. My husband also had to work in a different city to find a suitable job for him. If we wanted to buy a house, it would be extremely expensive for our budget. We decided that after I graduated that we’d look at jobs in different cities to see if moving was a possibility. We wanted to stay close enough to our families that we could do weekend trips so the areas we looked at were in the 4 hour or less range.

It happened that I heard about a job opening in the Triangle area and after looking at the city as a whole, we decided to move. I’ve since left that job and my husband actually moved to an area where his programming skills could be put to good use with better pay.

This decision also meant we could find a townhouse within our budget to buy and to keep our living expenses under one income.

Thoughts on Financial Decisions and Their Impact

I don’t think we’re much different from many couples, we worked hard plus certain circumstances worked in our favor. We’ve made mistakes with money and we’ll continue to make changes. But enough about us, what about you? How have your past money choices affected your finances today?

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Budgeting as a Team

Elle — Tue, 06 Mar 2012 13:53:05 +0000

This post is part of Women’s Money Week 2012. I believe that for married women to feel empowered and confident with their finances they need to know to communicate with their spouse on the family’s finances. Everyone has their own specific style; however there are a few principles that can help couples with their budget. For more posts about Relationships & Money see Relationships and Money Roundup.

Creating a budget for the family has never been boring for us. We’ve worked hard to make sure that our family’s budget works for both of us.

Recognizing Differences in Budgeting Styles

I think many couples agree that even if the two of you are perfect for each other, it does not mean that you always on the same wavelength. Each couple has their own rhythm and many times the tricky part is getting the two of you to sync up on the important matters.

My husband is a meticulous planner that enjoys savings. Before making a purchase he spends a ton of time researching what’s out there and will weigh the pros and cons for months before buying.He’s great with shopping around for the big purchases because he will sit down and look at everything before spending his money. Unfortunately it can also mean that our money isn’t being optimized; instead of using it to pay down debt or invested, it can stay at a low interest account until a decision is being made.

I’m a spender, not in the sense that I buy a lot of things (most purchases we make are joint), it means I want to direct that money to a goal as quickly as possible. If we get a small windfall, like a bonus or a tax refund, I want to immediately use it to pay down debt or use it for some other goal. That can sometimes mean I have almost no buffer in checking because it’s been transferred or sent as a payment. Irregular bills are not my friends.

While we have changed a bit in the 5 years we have been married (learning from one another), we’re pretty much the same with our overall money styles. That means we have to create family budgets that work for both of us.

Working With Our Styles

We feel that the family’s budget should be a reflection of the two of us. For my husband, we have a buffer included with the checking account. He feels much better and irregular bills don’t derail our financial goals. For me, we create an overall plan for the year and when windfalls and extra income come in, I can immediately direct them towards goals we both agreed to. Our money is more efficiently and effectively used by incorporating both of our styles and we’re both less stressed about the budget.

Using Numbers to Budget

Sometimes budgets are derailed because we don’t always look at the objective numbers. We have assumptions about our spouse’s spending and our own and sometimes they’re not true. Before we created 2012′s budget, we went through our actual spending for 2011.

I used Quicken to upload our joint accounts’ information and after sorting through the transactions and categorizing the data we had our numbers. We were both surprised at a few things about our expenses. For one thing, we needed to do a better job of including irregular expenses like life insurance premiums. We have a buffer with checking and it covers it, but once in a awhile the timing of bills means we go below our buffer (which makes my husband uncomfortable).

The baby expenses at that point had been less than what we expected. That meant we could reallocate that money towards other goals, like getting the next family car.

Keeping Each Other in the Loop

For us the budget is adaptable and does change as our circumstances change. To reflect this and to make it easy to keep each other in the loop, we’ve been using a Google Docs spreadsheet that we share with one another. If one of us adjusts the numbers on expenses the other can see it next time they long in.

We also review our budget every month, which I record on this site with the net worth review. The purpose of the net worth reviews is to give us a regular system to look at our accounts, see what’s changed, and analyze what went well and what we need to work on.

Is our system perfectly optimized? No, but it’s works for us and we’ve managed to reach our goals and build our relationship as a team.

Thoughts on Family Budget

I think sharing with one another our budgeting methods can make all of us wiser with our finances. How do you create a family budget? What has worked really well for you? What hasn’t? Have you looked at your budget recently?

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Financial Benefits of Being Married

guest poster — Fri, 13 Jan 2012 13:00:10 +0000

This post was written by Wayne at Young Family Finance. He writes about the every day financial challenges that young families face, like the cost of owning a dog.

Some people may suggest that managing your finances as a couple is more difficult than as a single individual. After all, it takes much more communication and control because you would be in financial ruins if you both went on a shopping spree without telling the other person.

While there may be certain challenges to managing your personal finances as a couple, there are many benefits as well. In fact, I want to suggest that the benefits of being married (or serious relationship) outweigh the costs. In other words, it is financially better to be a couple than two individuals.

Financial Improvements When I Got Married

When I got married, I was doing pretty well with myself. I was working as a Resident Director in a dormitory at a college campus while finishing up my undergrad. I was receiving full-tuition as a benefit of my job, while earning a salary. I had practically no living expenses, so I decided to save first before doing anything else. As a result, I was able to fund my entire emergency fund of $10,000+ in less than 6 months. I could have easily spent the money elsewhere, but in preparation for getting married, I wanted to save all that I could. It is easy to see that my financial situation was pretty good before getting married. So, how could it be better after getting married and increasing my expenses?

Yet, when I get married I found that my finances improved radically. While there is nothing magic about getting married (you don’t say, “I do” and automatically receive a $10,000 deposit from uncle Sam or anything) there are inherent benefits to getting married.

When I got married, I found out that my wife, who had little savings, already had a Roth IRA. She didn’t have a lot of savings because her father-in-law, who is a CPA, had strongly recommended her to open this retirement account while in college. She had put most of her savings into this account. While it doesn’t sound like a great move (to move 90% of your liquid assets into a retirement fund), it was a huge benefit for us. It helped us realized the benefit of saving for retirement at an early age. If I had remained single, who knows how long it would have taken for me to open this account. In case you are wondering – we both have Roth IRA’s (and maxed them out last year – even in our mid 20′s).

Another huge financial benefit for me after getting married was the transition to eating in. During college, I enjoyed eating out like any other college student. I didn’t go overboard, but I did eat out at least once a week on average. Once I got married – this came to a stop. I realized that in managing our finances, there was someone else that felt the impact of my every day decisions. Instead of spending money to go out to lunch every day (like most of our coworkers do), we bring out brown bag from home. This is just one example of how the priorities change when you get married. When you are a couple (and actually care about the other person more than a cheap thrill), you become more frugal. The little things don’t matter as much as the big things like anniversary vacations or life insurance coverage for each other in case something happens to the other person. Simply put: Your priorities change and with them, so do your finances.

Other Financial Benefits of Couples

While I recognize that my situation is different than everyone else’s, I still hold that managing your finances as a couple has more benefits than being single even without considering the priceless aspect of love. Some of the other benefits include:

Less Rent per person: If you are renting and able to keep the same size of apartment (or close to it), living with someone is always the cheaper option. You pay less rent per person. Think about it this way. If you can rent a 2 bedroom apartment and are trying to save money, what do you do? You find a roommate because that means you are paying less rent.
Double the Income: Another way to improve your financial situation is to have two incomes in the same household. Who would ever think that you could spend all the time that you want with someone while also practically doubling your income. If your partner or spouse doesn’t work, think of the other money you are savings in lack of daycare or not hiring someone to manage home life, etc. Either way, it’s an easy way to radically increase your earnings.

Regardless of how you look at it, being married or a couple has its clear advantages. I’m not saying you should go out there and marry someone just for the money. That would most likely lead to divorce and cost you more money in the long run. But, I am saying that being in a relationship does not just mean more expenses.

What are some other financial advantages to being in a relationship?

This post was written by Wayne at Young Family Finance. He writes about the every day financial challenges that young families face, like the cost of owning a dog.

Photo Credit: epSos.de

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The Best of Couple Money (2011 Edition)

Elle — Mon, 26 Dec 2011 13:00:42 +0000

This week I’m catching on some items on my to -do list that I’ve been putting off. It’s been an amazing year for me, both personally (our baby girl!) and professionally. I’m happy with how 2011 went and I’m looking forward to improving Couple Money in 2012.

I want to thank those of you who have been with me since the beginning and those who have joined recently.

As a way to wind down this year, I wanted to share some popular posts of 2011:

January – March 2011

The beginning of last year was memorable. I started having morning sickness and was feeling miserable. I kept myself positive as I kept thinking that soon we were going to have our baby some time in the summer. At that point don’t ask me why, but I thought we were going to have a boy. I only became confident when nearly everyone else was guessing boy as well. The only ones that mentioned girl were my husband and a family friend.

In February we went to get the more detailed ultrasound we found our we were going to have a little girl – my husband was right! Naturally he’s excited about being right and spend the rest of the month trying to reclaim the better parent title

As for Couple Money we had a great month with the netbook contest and being a part of Free Money Finances’ March Madness. With your votes of support, Couple Money raised $100 for Charity: Water.

April – June 2011

Anticipating the baby’s arrival, I decided to start banking some of my posts and scheduling them around her due date. This is very helpful for me because time seemed to crawl. June couldn’t get here quick enough. With the heat wave it feels even a bit longer.

I was also surprised to see how people felt about saving money for their kids’ college fund. I still believe you need to be out of high interest debt and have a retirement plan in place for yourself before you start saving up for a college fund, but some parents disagreed. I understand that parents want to give the best to their kids; I just believe that also includes leading by example.

July -September 2011

Our baby girl arrives in July and we’re off! Well, I was pretty much off the month of August. I did some light posting, but the schedule remained pretty much the same on the site since I had already written ahead. Exciting and fun times as we learned to survive on less sleep. Eventually things improve and our baby realized that nights are for sleeping, not playing or eating.

To add to our new insanity we drive up to Chicago for the Financial Blogger Conference. Couple Money was nominated for a Plutus Award, but alas, J. Money won. We had an awesome time and my little girl was a great conversation starter

October – December 2011

I got back into my new routine her on Couple Money, sharing tips about family and finances. We had 2 back to back contests that were popular – the tablet giveaway to celebrate Couple Money’s 2nd anniversary and the 50/50 Challenge where Julie picked up a new Kindle Fire. I already decided we’ll have both contests again next year, but I’m spreading them out.

Speaking of anniversaries, this month was our 5th and we had a great time celebrating it with our baby girl and friends.

Thoughts on Couple Money

Thank you again for a fantastic year! Which are your favorite Couple Money posts from the past year?

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