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If 2020 has proved anything, it’s that we need to have a budget that actually works. Today we’ll dive in to see how you two can build a budget that fits you and your goals!
Build a Better Budget Together
I think a lot of people can appreciate why budgets matter because now more than ever, we’re seeing like our finances are reflecting our lives.
For those of us who’ve been hit hard by the pandemic, either directly or indirectly, the budget has had to be completely redone.
But even if things are relatively stable job-wise, we’re still reflecting on how we could do better.
A budget is not going to fix all of our problems, but a good budget – the one we actually enjoy and can stick with – that can be a huge help and stress relief.
But how do you make a budget that fits your family’s circumstances and goals? How do you make one that still allows some room for fun?
While I enjoy helping couples figure out their budget, I brought in someone who understands and enjoys budgeting.
Peter Polson the founder of Tiller, a fantastic and customizable budgeting tool, he’s also a husband who understands firsthand that it takes effort to find a budget that fits your goals. But it’s so worth it.
In this episode we discuss:
- Defining your budget’s priorities
- The two biggest obstacles couples face with budgets
- How to build a better budget together
Let’s get started!
Resources to Easily Stay on Top of Your Money
Here are some resources we mentioned in the episode as well as some other handy articles to check out:
- Best Budget and Money Apps: Personal Capital, Tiller, Mint
- Grow Your Stash Faster: High Yield Savings with CiT Bank
- Jumpstart Your Marriage and Your Money
- Deep Work by Cal Newport
- 5 Easy Ways to Simplify and Reboot Your Money
- Is the 50/20/30 Budget Right for You?
- How to Successfully Budget as a Couple
Thank You to Our Sponsor Coastal!
Support for this podcast comes from Coastal Credit Union. If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today!
Defining Your Budget’s Priorities
Elle Martinez: Yeah. And I know you guys have this, philosophy of your money is important because your life is more important.
And I think a lot of people can appreciate that because now more than ever, we’re seeing like our finances are reflecting our lives.
If we want to either maintain a certain lifestyle or adjust or change, you’re really does come down to like, Are your finances aligned towards your situation and your goals?
So I want to jump in. I think people have a misconception is the idea of a budget. Like they feel like its a straight jacket or they feel like it’s a restriction. And everybody has a different philosophy.
What would you say the budget is?
Peter Polson: I would just go back, you know, the whole money matters cause life matters more.
I think money, what we are seeing right now is that, money can be one of those things. That is something that’s stressful, something that weighs on us when we’re uncertain about it.
As we feel a little bit more control, it allows us to then focus on everything else that is more important. Our family, our work, our friends, our, our life. So yeah, what is the budget?
There are many ways to do things, but one age old tenant is if you want to improve something, you can’t do that without tracking and seeing where you are.
A budget is simply a plan that says, here’s what I think I’m going to make over this next period of time.
Here’s what I think I’m going to spend and then tracking and saying, how do I compare? Did I actually make that? And did I actually spend that? And that’s, that’s all a budget is it doesn’t need to be any more complicated than that.
Also life has its curve balls. No one saw this situation we’re in right now coming. A lot of us have lost some or all of our incomes. It’s affected us all.
It’s also affected how we spend money. And so no one’s budget had the, well here’s the pandemic scenario in it and that’s okay. Right. Because the whole part of a budget is it’s life so let’s stay flexible with it.
It’s a place where we can check in and say, here’s what I thought I was going spend and make. Here’s what I’m actually spending and making. And then let’s take it into the next month and the month after with the goal being that we can live within our means.
Which Budget is Right for Us?
Elle Martinez: A [good, sustainable] budget does reflect that and can be so powerful and helpful.
I know there’s so many different ways you can slice it. but the philosophy I like about the 50 20 30 budget is if you look at a budget ; it’s basic goals.
You want to take care of those essential bills, right? try to give yourself some financial stability, hopefully, you know, build up some wealth for your family or next generation. And then of course, enjoying now, you know, they enjoy that.
Now I see a lot of conflicts with couples, where one spouse is going towards this aspect, which is maybe long-term and the other is more like, well, we’re making this money. Let’s enjoy it. So it can be tricky, right? It can be hard to find a budget that fits.
A lot of families now are directly or indirectly affected. their budgets have shifted , what can they do?
Do you have any tips on how a couple can kind of look at their numbers and make their budget fit them in their goals?
Peter Polson: Sure. That’s a good question. You know, the 50, 30, 20 is a great. Framework, because it gives us a place to start. Ultimately, I think everyone comes to a number that fits their situation and it might be different than that.
It might be 30, 30, 30, or it might be 80 19 one or, or, [00:04:00] it really, and so, going back also, there’s no judgment here. It’s just about. Let’s let’s dive into our numbers.
So where’s the place to start? What’s interesting is that many people actually, most people, and this was, this was sort of a shocker as well in the early days of tiller money.
When I started Tiller Money, talking to people about their finances and realizing how many of us had no idea of where our money went.
if you actually were to ask someone, walk down the street, And ask some of the socially distance draw a pie chart and show me where your money is allocated, most people are during the headlights and they draw a blank.
And if that’s you, that’s okay. That’s actually a common situation to be in.
Technology makes it so easy to spend that makes it. With a click and a swipe. And, we, technology has made it possible to spend without keeping in touch.
And so a good place to start is to actually look at a month of expenses.
If you’re partway through the month and just say, okay, let’s start here. And, and maybe we can sketch out what we think we’re going to be spending this month.
We know we’re going to get that wrong. So let’s actually just track it.
So we have our rent or mortgage. We have groceries. That’s a moving target, right now. Cause we’re all eating in more can let’s let’s let’s actually track this month and see where we spend our money. And that gives us a really good baseline.
What’s interesting is that tracking is literally half the battle because as soon as we start tracking. We’re more aware.
And we’re more in the numbers and all of a sudden that pie chart starts to fill in, in our head even when we’re not through the month.
We can start to acknowledge, Oh yeah. We’ve already been spending a lot of discretionary or maybe we haven’t been spending a lot of discretionary and probably have a little wiggle room.
You’re going to be in the know, it be much more immersed in the numbers in a better position to have an intuitive feel. And then as the month goes, you’ll actually have a very detailed analytical assessment of the month. And that is a really, really good place to start.
Let’s track all of our expenses for a month and you can do it on a sheet of paper, obviously here. So our money we’re big proponents of a spreadsheet, but the tool doesn’t matter. Do it in a place that makes sense to you and do it for a month. That’s going to give you a great baseline.
Now with the next month, then you can say, okay, we know last month we spent this, this, this, and this. Now, we have a firm baseline and this going into the new month, we think it will be a little higher here, a little lower there last month, maybe we spent above our means, or maybe we spent well within.
And so here’s how we want to adjust. And you’ll have an informed baseline to start.
Don’t go for the ‘Perfect’ Budget
Elle Martinez: Yeah. I love that. I know how hard it is. Sometimes when I chat with people in the community, they feel like they have to do everything at once.
And I agree with you completely just tracking the numbers is so powerful because of that awareness that you have.
Because no one is a perfect robot where they stick 100% to the plan. And that’s not necessarily a bad thing if you kind of budget that and with, your spending have a little bit of buffer, but we all have like these little small kind of expenses that add up and kind of surprise us.
But if you can, one track – that is a huge win. And then[like you said to be] judgment-free, is sit down. It can be a separate night and review those spending, like, was that a good expense? And it’s not, again, like eating out, this was worth it?
We’ve ate out once, once a week, like supporting a local business. So that’s more than we’re. Usually spending for like a family dinner, but we’re like, it was worth it.
And then other expenses you might say, yeah, we can cut back on or we can redirect. But that first part absolutely necessary is like tracking the numbers.
The Two Biggest Obstacles Couples Face with Their Budgets
Peter Polson: Yeah. I’m just going to dive in on a couple of points here. Well said.
When you think about the stress, there’s two kinds of stress that I see with couples.
One kind of a stress is purely based on misinformation. And that’s really easy in a relationship because often one of the couples is paying the bills.
Maybe they’re paying the Visa bill. Maybe they’re also doing have started some of this tracking, but then maybe not. And the other, might not be paying the bills. It might be out of the loop.
It’s really hard to calibrate because one might feel, gosh, aren’t we spending a lot on shoes or, gosh, don’t you think we’re spending a lot on this or that.
And so having the numbers in one place where were both partners can look at them, creates, already create some alignment because now, now it’s not based on misinformation.
Now, the second is your goals may diverge. One of you may be wanting to, to save for a vacation on the other may simply be wanting to pay down that. Credit card bill or make an improvement the house.
And so then you can start to come together on the goals. if you’ve tackled the misinformation, cause you have the shared sheet where you can look at your expenses together, And a lot of that is, is talking and even acknowledging the goals.
It’s really important for me to make this improvement to the house. And I would say in our household, Shannon, like she’s often the one who’s saying it’s really important to me, for us to do this trip as a family and, and it’s, and rather than having it be this back of sort of this tension that lies just, Just outside of the conversation when we actually can hear it.
When I hear her say that, and I’m like, I actually love that time when we can take a vacation and we’re out together as a, as a foursome and let’s make that happen. And so it gets vocalized. It’s not that [00:10:00] our goal is exactly match each other, but we can, we start talking about the goals.
We start to calibrate. And so tackle them the misinformation and start having the conversation about goals.
And again, that you may not have the same goals, but merely talking about them, you’ll start to empathize for each other’s goals and you can start to creatively, come up with ideas for how you can both, accommodate those goals.
And if you can address both of those, you’re on a much firmer footing as a couple.
Elle Martinez: I don’t think that gets discussed enough, especially when you’re in a relationship and you’re both having your input is how helpful it is to have that clarity, to have the numbers in front of you where you might think, Oh my, this vacation and fixing up the house, maybe it’s updating the bathroom, the kitchen, or bedroom.
Sometimes we can’t do both. But when you have the numbers in front of you, you’re thinking , We’re going to have the space this out, or how are we going to do this?
Now you’re working together as a team, because you have that information in front of you because kind of circling back to this budget, really, it should be reflective of what’s going on in your life and what matters to you and kind of helping you get to where you want to go based on where you are now.
Win Big By Breaking Down Your Goals and Budgets
Peter Polson: That’s right. The budget is a way to manifest your priorities and, and, your goals are part of your priorities and, and the budget is a way to help make them happen. And if you have a budget, your odds of actually getting there and achieving them go up badly because you’re coming up with a methodical way to do it, which is the same if you want to run a marathon.
You’re much better off saying, okay, I’m going to try to run a mile tomorrow and then next I’m going to run three miles and then I’m going to build up and build up and, you’ll know along the way, or am I on track or not?
If you don’t track how much you grow up to run. It’s a little harder to know if you’re actually gonna get to that marathon. Cause the marathon requires getting out there and running a specific distance.
Finding the Right Budget for You
Elle Martinez: Yeah, exactly. Now we’ve talked about kind of like high level, you know, what a budget can do and, and empowering, but you know, when you’re actually putting pen to the paper or spreadsheet and you’re filling that out, there’s so many ways you can do a budget.
Now you kind of get to see what templates people use. You have an idea at Tiller. I’d love to know, first of all, as the CEO, founder, what you see and then kind of get your personal take of how you budget as a family too.
Peter Polson: Yeah. it’s as varied, as you might imagine, and what I have come to believe makes for an effective budget is coming up with a workflow that reflects how you think, how you work and your goals,
An analogy is if we’re both listening to a talk and we’re taking notes, my notes on my note ook are going to look different than yours because my goals are different.
My brain works differently. I’m trying to get something different out of it. And so embrace that flexibility, right?
Yours is gonna look different than mine. To pick a few examples. one of our customers, we don’t, as a privacy first solution, we don’t see our customer’s data. We don’t see their budgets.
Occasionally customers are really excited and they want to share it with us. And so they’ll take a screenshot or they’ll share their spreadsheet with us, or they’ll just talk about it. It’s always fun to hear what they’re doing.
So one area that’s really interesting, which I think will resonate anyone who’s tried this before is there’s a lot of variants around how people think about categories and I’ll pick one extreme, which is an extreme, there are some people who are like, let’s not get lost in the details of categories.
Let’s have our discretionary and our. Non-discretionary living two categories and let’s put everything in under those categories and let’s not try to get into the weeds on 30 or a hundred different categories.
It’s totally elective or had to do this. Groceries gas for the car, maybe for us, that’s a have to do. And, and let’s just look at it that way.
Another, actually one of our team members, Braston; the way he and his family budget, which I [00:14:00] really like is every month they have a clean sheet and they look at, and they see their transactions come in from the feeds, from tiller money.
As that month accumulates, they sort of budget manage, manage work with that data in that month. And then. Wipe it up, basically make a copy of that, throw it into another sheet.
And then the next month they start with a new sheet and it’s sort of a clean slate, which also gives you the flexibility.
Like this month, we may slice things this way. Next month we may do it differently. That kind of reports, the analysis. The categories use can vary month to month because each month is a new sheet.
We have or the tiller money. We have our foundation template, which is a middle of the road approach to, budgeting and, and provides a. place for people to start also because it’s built in a Google sheet.
Spreadsheet gives people a lot of flexibility, but it is really interesting to see the directions people take.
I think, you gotta make it work for you and, and own it and make it yours and that’ll make it stick.
Elle Martinez: Yeah, absolutely.
One of the mistakes and we made this too, when we first started the budget, we went with, a template and we in our minds thought we were going to follow this. Exactly. But it really didn’t reflect who we were, and our spending.
It actually just cause more frustration because whoever created that budget template was fine for them.
What Are Your ‘Must-Haves’ in Your Budget?
Elle Martinez: So I love how you, talk about that and then also good to optimize your budget. I know that trying to get everything in check, do want to spend less than you earn, but realistically and actually to enjoy life.
There’s going to be certain things that you spend money on, that bring you some kind of joy, some kind of level. And I know I have mine it’s books. That’s like one of my things or, you know, weekend trips. How about you? How do you find that balance of, spending and not feeling guilty about it?
Peter Polson: Yeah. that’s a good question. And especially right now, right? I think when I think about the best, spending we’ve done that has given us tremendous joy, it comes to the top of my mind as a new bike. We just bought for our 10 year old. And we’re doing a lot of biking as a family .
So his bike became our seven year olds bike and he got a new bike and we put miles on it this month. We it’s about a month old now. And, and he’s been on it on his own. We’ve been out on family rides, in it. And it’s, so that’s been an incredible win,
I think a good book… Deep Work by Cal Newport right now, which I’m really enjoying,
And so, a good book is, that’s the way I enjoy spending money.
The other thing I’d say right now is there’s some, real big needs out there and one of the things we’ve been talking about in our family, there’s a statistic that came out recently. That’s just sobering, but one in five children under 12 are not getting enough to eat right now.
And we just made a gift as a family, to the Cove, which is the local food bank here. But I think that’s, that’s really meaningful for us. And also something that gives us some small sense of, trying to. Contribute in areas where we can at a time that’s really hurting for a lot of people. So, when I think about where we spent money this month, those are, those are, those are stories that come to mind.
Elle Martinez: Those are good points. because people think a budget is only about saving and investing and paying the bills. But, when you can share and give, when you include that, you get a joy out of that as well.
I think that’s fantastic. And also that you guys are having a discussion as a family, introducing your kids to that, not just, budgets, being a number, but budgets as being a tool to help you kind of build the life that you want or get closer. One step closer there.
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