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Frustrated because your budget isn't working for you or you can't get your spouse on board? Today we'll learn how to create a family budget that you actually want to stick with!
Building a Better Budget Together
One of the best ways you can pivot your finances is by creating a roadmap for your money. For most families, that means creating a better budget.
A better budget not only allows you to hit your financial goals, but also make sure that some of that money is going towards the things that you love and enjoy.
One problem couples have though is sinking up on exactly what those goals are. Today we're going to look at how you can create a budget together.
Rob Bertman is a certified financial planner and the creator of Family Budget Expert.
He's worked with families on reconfiguring their budgets so that it reflects them and their specific goals.
During our discussion, we get into:
- the biggest obstacles couples have when creating a budget
- A different way to trim back your expenses so that you're still having fun while hitting your goals
- how to create a budget that you both love.
I hope you enjoy!
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This interview transcription is edited for clarity and time.
The Art of Budgeting as a Couple
Elle Martinez: I get questions about this constantly. I love what you're doing. You're helping people, not just build the budget with the numbers, but you're actually building a budget around that particular couple or that particular family and their goals. There's kind of an art to it.
I wanted to chat with you about some of the hurdles the couples face when they're creating that budget.
What do you see as being some of the biggest issues that keep coming up with couples, trying to figure out a budget that they're both happy with?
Rob Bertman: Yeah. The biggest issue is that most couples, they start a budget that is doomed to fail in the first place. It's going to fall flat right off the get go. Because first of all, you know, numbers are pulled out of a hat based upon what they've heard they should do with their money.
Maybe only one spouse or partner is involved in putting it together so there's not buy-in from the other one.
Also, anytime you're creating a budget, you're making changes to the way that you spend. spending no matter what you do in your life like chances are you're spending money on it.
And budgets don't really focus on the habit, changes needed to make that stick.
A question I get is, well, ‘how do you create a budget that sticks?' Where I like to start is not with the numbers, but just identifying what the values and priorities are for them; not only as a couple, but as individuals and as a family.
A lot of times people focus on the family goals or the goals as a couple, but they never really think about what they want to do as an individual.
surprisingly enough where most arguments come into around budgets and spending has to do with something that's really, really important to one and the other person just does not understand at all, why that's important and vice versa. Right?
those are the things that we really should pay attention to because oftentimes when we're budgeting, we're thinking about the future of the unit, as opposed to making sure that we have our own individual needs satisfied in the budgeting process.
Defining Your Priorities Before Your Budget
Rob Bertman: So first step is deciding values and priorities as an individual, as a couple, and as a family, if you have kids.
the second thing is before even adding numbers is track your spending to know what you're spending right now.
A lot of times couples will create this food budget of, I don't know, 600 or $800 a month, but they might be spending a lot more than that.
they don't understand what it takes to get there because they don't know. You have to understand what you're spending money on first, before you can understand how to budget around and make the habit changes like we talked about before.
the other thing is that people don't visit their budget often enough. A lot of times it's one person doing it. They're looking at it once a month. And I subscribe really to like really a weekly spending review.
maybe there's one person who is in charge of the budget and the numbers. They've gotten the buy in from their spouse or partner and everything like that but at least once a week, for five minutes, they take a look at their spending as a whole. So they'll go through and review their transactions as a couple. It takes like two seconds.
If they have a budgeting app, take a look at, their overall net cashflow in and cashflow out and see how they're tracking for the month so far.
then one or two of those budget categories where you really need to track or else they get out of control. Oftentimes it's food. just track that one budget item, it takes literally five minutes. if a couple sat down once a month or once a week to do that, then a budget is more likely to stay to stick.
Don't Focus on the Perfect Budget, Focus a Real One
Elle Martinez: You bring up a lot of good points and I want to drill down a little bit more on each of them. I know from personal experience, we went the route of jumping into the numbers. if I had to do it again, I would start with the goals.
Something that I do see come up often is when they create that budget they base it on a template.
There's not space in the budget for things that matter to each of you. many times, if you ask someone what's really important , they might not immediately jump out at that.
for my husband, It's obvious on certain things like tech, he's an it guy, he loves tech. He won't spend too much on anything else, but that's kind of his like big deal
if you look at my spending, I like to eat out with friends. I enjoyed the social aspect of that. So I think that's fantastic that you bring that up, cause that can quickly derail a budget.
And then tracking. I think right now it's fantastic that there are so many different tools and different styles, whether you're an app person or a spreadsheet person, or you want something else, to track your money.
again, it's that awareness , are we aware of where we're spending it?
How do you approach when they, are trying to track their money? Do you do that for them, like set it up or is this more like you suggest a tool? How does that go?
Rob Bertman: Yeah, usually I suggest a budgeting app. Usually mint. there's plenty of them out there , as long as they're comfortable. , I'm a big believer that people should do what they're comfortable with.
I try not to prescribe anything. I try to help identify what's gonna work best for them.
usually it's just a budgeting app that will aggregate all the credit card transactions, all the bank transactions so they don't have to go looking through all the different statements to find the information.
They can literally see what's happening in every account on every day and look through the transactions, just, it serves as a reminder.
a lot of people will wait until the end of the month. They get the credit card bill and they think, Oh man, how was our bill this high, again? It happens every month, but if you track on a weekly basis, understanding that usually the months are front end loaded with rent and other bills and stuff like that.
then you can actually see, Oh, we're we're two weeks in and we're way over. We're in danger of getting over so let's make adjustments the final two weeks as opposed to waiting to the end of the month and trying again, the following month. You can change on the fly.
Elle Martinez: Yeah. I feel the same way. It's whatever app or system that fits your personality because the one that you're going to keep is the one you're going to actually make some progress with.
I noticed for us in some other couples, just even reviewing, like you said, weekly, What purchases, it's not a guilt trip, but it's discussing like, Hey, I went out three times.
Did I need to go out? Did I really enjoy that? I know we're going out less because of COVID , but just reviewing that awareness, are you getting value?
with a budget, one of the conflicts I see, couples value things differently.
it's not the bills they have to pay, we all acknowledge that. But afterwards, how do we divvy up between the things that we enjoy and then the things we have to do in building that financial stability and hopefully getting a little security?
Typically not all the time with couples, one kind of pushes in one direction and one in the other. So have you any suggestions or tips to make that easier for couples to find that balance?
Rob Bertman: It's very common, obviously. I mean, I'd say most people marry someone who has opposite qualities of them because they balance them out, right?
Maybe someone who is a quote, unquote saver might marry a spender and vice versa because they want to have that balance in their life. But rather than sort of trying to come together, they usually butt heads about it.
I think it's important to start with again, what are your priorities?
So if each spouse or partner, writes down what are their top three priorities and rank them in order? Let's say one is, to max out their retirement account. And another one is, well, I want to take a vacation when we can all do that again.
if those are the most important things to each of you, then there should be room to do those in the budget, or at least you should make room in the budget.
And then from there you can Negotiate or talk through the other things you can agree on.
The most important thing is we want to start with the things we agree on. A lot of times people start with the things that they want to cut or that they disagree about rather than starting on the things that are on the same page.
with the budgeting process and reviewing transactions I don't use the traditional budget category method. I have one that I call, keep cut back eliminate.
what this does is it makes sure the spending is in alignment with the values and priorities.
So the keeps are literally you're looking through your transactions and they're the things that bring a smile to your face.
Not only because of what you did or where you went. or the experience you had, but because the amount you spent you felt like was a good number. And we, again, we look at keeps for individually As a couple and as a family.
a lot of times when we have kids, especially we forget that we should be spending money on our relationship and enhancing our relationship and we also lose sight of ourselves as individuals.
So, but these things really have no veto power. So if there's a keep for one spouse, the other spouse can't say, no, that's not okay unless they're like really, really sabotaging their finances.
then the cutback are things where people were just looking for agreement on things that they can cut back by 20 to 25% on think about someone who goes out to lunch five days a week, maybe they could go up four days a week.
Eliminate are a hundred percent reductions. once we're doing that with our spending, our spending is really lean and now we have money leftover for, to bring other things into the picture.
we now have the room to build in those other priorities that we have for ourselves in terms of saving, investing, paying back debt goals, along with those special occasion type of spending like for birthdays or holidays or, or trips or whatever.
the other thing that that couples can do, depending on what your income situation is right now, Since we're in COVID 19 times, if it's depressed, then as income comes back up and even if it is normal, as people get bonuses, raises tax refund, stimulus checks, assuming you have you assuming you can eat, put food on the table and like maintain your shelter.
There's a rule I call the 50 50 rule. it's basically a way to expand and grow the savings rate, the percentage of money that you're saving, not the dollar amount, but the percentage and the dollar amount.
let's just say that someone gets, you know, a stimulus check. Maybe they'll do another round of those.
I guess we'll see what happens, but let's just say someone gets a year-end bonus and it's a take home pay of $3,000. Well, the 50 50 rule would say, okay, let's take 1500 of that and add it to what we're currently saving, investing in, paying back debt with take the other 1500 and do some spend it.
Right? Cause then we're automatically having a 50% savings rate on every additional dollar that we make as a couple. And that extra $1,500, that's going towards the building wealth, retirement kids, college paying off house, whatever those goals, half of it's going there.
the other half is going towards the fun stuff that will satisfy the spender in the family too. It's kind of a good balance between the two as the 50 50 rule.
Elle Martinez: Yeah, I like that because 20, 20 has been a reminder for many that, yes, we definitely need to be prepared for the future, but especially like the time we have now, we need to enjoy.
it's hard to find that balance but if you're working as a couple, this is something actually that can be to your strength if you have different perspectives.
another challenge I wanted to talk to you about a lot of families are finding, either their income has been reduced or hours reduced and they are more aware of what's going on with their finances.
And the issue of financial infidelity is coming up. it's been an issue in marriages throughout time but now it's especially hurting the family.
I think we've all seen those shows where it's like something dramatic where it's like, Oh my goodness, I have $50,000 of debt I haven't been telling you about, but in a lot of marriages, it's in smaller things.
I've noticed extra purchases on the credit card maybe you have a credit card account you haven't told your spouse about.
In your experience how does it manifest? how can they work through this? Because it is more serious than just spending extra money from the budget.
Rob Bertman: it can be really damaging to relationship when this happens, but I think we all have to give each other some grace and give some patients. whatever choices were made in the past, those were kind of in the past.
So when uncovering or finding out about something like this, or thinking about telling your spouse about maybe something you've been doing that, that they didn't know about, we're going to focus on making better choices in the future.
we kind of have to let the past lie and kind of get over it and to make for a better future
and a good relationships we'll be able to overcome this kind of a thing, but really I'd say the main cause of this is because one person is doing the budgeting or handling the finances without the other one's involvement.
that can come in one of two ways, right? One is that you have someone who sets a really super rigid budget. They're in charge of the finances is very restrictive and they don't get the other ones buy-in. So what does the other spouse do? They rebel and they rebel, by having a secret bank account or secret credit card.
I've actually seen things and heard of other situations like this, where someone will go to like a target or Walmart, or like a CVS or Walgreens buy a gift card for a store they really want to shop at at those places.
So you can buy an Amazon gift card at target. Or you can buy a Nordstrom gift card at target. And so some spouses who feel really restricted will go buy those gift cards and buy what they want. And the spouse who's controlling the spending doesn't know because they just see it as a, as a Walmart or Walgreens expense.
that's one side of the coin. The other side of the coin is that someone is managing the family finances, maybe out of reluctance in this case, not out of control, but because the only one that is able to do it .
they kind of get that toe over the line, we're like, okay, maybe I scared a little bit too much this month on our family stuff or whatever.
And all of a sudden it spirals out of control and they feel guilty . They don't want to talk about it with their spouse because they feel bad about it and guilty, and they're afraid of what's going to happen. And by the time they want to talk with them, it's like way out of control from where it was at the first step.
either case, like I said, I think the more that we can come together and the more that couples can work together on their spending and review this on a weekly basis, the less likely it's going to happen. And we know that when couples argue about money, that's a big stress on relationships and sometimes ends in relationships ending.
So this is critically important that both spouses work together and kind of get rid of the past and start a new future if you're in one of those circumstances.
one other quick thing I'll say is that sometimes people do have a true compulsive spender.
if you feel like your spouse or you are in this situation, definitely seek professional help from a therapist or counselor or psychiatrist, some professional help.
but for the most part, it can be, discussed as a couple .
Elle Martinez: I'm glad you brought up that case too with the, spending addiction.
sometimes we have a hard time diagnosing the cause of this.
also just a reminder that regular check-ins even, small ones, five minutes, 10 minutes a week can keep anything that maybe went wrong or off tracks for that week, just for that week, you know?
I had an extreme case, and I met them after the fact, but it was a couple and. It was a hundred, like $109,000 of debt just snowballed through the years.
he had taken the numbers. She wasn't interested, but he felt like the next raise will fix it. And next raise. there wasn't that communication. of course that's an extreme example, but , when we live in a time where some families are struggling right now, just living paycheck to paycheck, you can't afford to wait until it's really bad.
So I love that you say have these regular, check-ins have this communication. And I know Rob, we just scratched the surface and we could really dive in deep, but I know that there's probably some families listening, thinking, okay. I would love to have another perspective, someone to talk us through working on the budget.
If anybody wanted to work with you, what's the best way they could reach out to you.
Rob Bertman: The best way to reach out to me is, my website, family budget experts.com, and I have a free guide to cut spending so that you free up that extra money to pay off debt and invest. That's a free download.
you can also just email me, Rob at family budget, expert.com. I'm happy to talk with anybody I do offer actually, this is probably the best thing to do really is, I offer a free 30 minute session for anyone who wants it.
so if you go to family budget, expert.com/free consult, you can find a time to book with me.
I do require that both spouses are on the call. I don't ever want to feel like I'm being a wedge or a tool to make something happen in a relationship. I want to make sure both people are on board. So if you do sign up for that, please make sure that both of you can be on the call.
it's never too late and it's never too early to start talking about budgeting.
the way that I came about thinking about budgeting, it was, I used to be an investment advisor and I found out that the main problem isn't helping people optimize their investment returns. It's really.
How do you come up with the money in the first place to free up so that you can use it to reach your goals? And that stems all from budgeting and focusing on spending. So that's, that's why I focus here. I love working with couples. It's really good. Like tactical stuff. I see relationships improve and, I'm happy to, to share, all the things we talked about.
I really appreciate you having me on.