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Tired of living paycheck to paycheck? Learn how to work as a couple to stop overspending and create a doable budget that allows you to still have some fun!
Stop Overspending; Fight FOMO
Black Friday is a big deal. For millions here in the United States, the floodgates will open and if it's anything like years past we'll see more than $50 billion dollars spent.
Just for one weekend.
An enormous amount for sure. And around 31.8% use credit cards to pay for holiday shopping.
There's a very good chance there are couples and families who will miss their budget and overspend.
That can be a recipe for financial disaster.
But it doesn't have to be.
Hilary Hendershott, founder and CEO of Hilary Hendershott Wealth Management, is here to help me out.
She's a fiduciary financial advisor who has worked with couples in helping them identify the psychological triggers with their finances and guides them towards better habits and building wealth.
Today, we'll get into:
- how FOMO can sabotage our budget
- setting things up so you can get what you want without going broke
- how couples can meaningfully talk about what they want and working together on a plan
Hope you enjoy!
If you want hear more about how to stop overspending, please check out my episode on changing your money habits.
Resources to Stop Overspending
Want to learn more? Here are some resources to check out:
- Best Budget and Money Apps: Personal Capital, Tiller, Mint
- Free 401(k) Analysis:
- Jumpstart Your Marriage and Your Money
- Profit Boss Radio
- Easy and Effective Ways to Budget
- Six Tips for Newlyweds to Manage Finances
- Strengthen Your Marriage and Money with a One Page Financial Plan
- How to Create a Real and Successful Budget Together
How to Deal with FOMO
Hilary Hendershott: So FOMO is fear missing out and I think we look around us and have you watched this television show called Suits?
All these lawyers right and they're so beautiful and they're all wearing Chanel suits and they're carrying Louis Vuitton bags.
They would have to make what a starting paralegal or attorney. I think you're in Chicago. You would have to make like five times a paralegal salary to afford just the stuff that they wear on that show.
Keeping Up with Hollywood
Hilary Hendershott: So FOMO is fear missing out and I think we look around us and have you watched this television show called Suits?
I think Hollywood is just one of the worst criminals when it comes to creating FOMO for people because we want to be like them you know.
And I think there has been someone once wrote an article about Carrie Bradshaw in Sex and The City and maybe your male listeners probably don't didn't watch Sex in The City but Carrie was a freelance writer in New York City and she was known for having this just weakness for brand name especially shoes and clothes.
She was all about the fashion and physically impossible for her to have made enough money to actually afford the stuff that she had on that show. And these are the people that we look up to.
I think you know keeping up with the Joneses is a real thing.
If I see you enjoying luxurious trips and you know let's say you and your husband come over and you tell me about this safari that you want to go on. I think it's normal human nature to think I'm missing out on something.
Elle Martinez: Yeah. I think part of it is driven because most people do have ambition and goals.
Then when it turns into this Oh but I have to follow even though I don't have that foundation whether its finances or if you're in a relationship you're not there at that point yet to take the next leap right.
Hilary Hendershott: I mean discipline is not doesn't always feel good. And psychologically what the context you create for that discipline can really have a big impact on whether or not you actually fulfill on it.
So if discipline feels like scarcity or doing without then you're going to want to rebel from your self from the rules that you made for yourself and especially in a relationship.
Let's say one spouse is more committed to saving than the other. I mean I see these couples in my office all the time.
He's more committed to saving maybe than she is and she doesn't see the point of saving so much money. And so you know that just kind of opens up the door for formal spending. Yeah, she wants a big rock on her finger.
Opening Up About FOMO
Elle Martinez: So how would you advise them as a couple maybe to start having that conversation?
Hilary Hendershott: Let's say you find yourself spending and if you really have like a spending hangover the day after right you look at the things that you bought maybe they're not getting used there or worse they're sitting in the trunk because you can't show your spouse that you bought them.
I think that you really kind of you have the opportunity to say that maybe I have a problem here and to be you know kind of honest and transparent about it.
Dan Ariely on my show the other day I interviewed him he's an economist who talks a lot about irrationality and how we as human beings don't always do what's in our own best interests.
He said, ‘Look having a healthy financial life like making the best choices for you with your money is a function of knowing every opportunity cost that's out there. You know l it would be like if you if you want to spend one hundred dollars you would have to evaluate every item that's out there in the world that you could purchase with that one hundred dollars and really understand if I saved this today instead of spending it what is it likely to be worth in the future'.
It's just impossible for us to wrap our brains around what that looks like and so we have to make these short-sighted decisions.
Just being really I guess adult enough to say I don't think I made my best decisions with these dollars.
Signs That You're Overspending
Hilary Hendershott: Are there any other signs that people should look out for? When people come to me and they have expenses on their line item sheet or on their budget or you know in their bank account.
I'm the last person to judge what you're spending on, but the question is does it work in your plan.
Let's see some of the most common things I see with this kind of justification are really expensive things for your job or private school for the kids. That's a big one.
People will say to me Hilary I have to spend this money like it's justified. It's right it's reasonable. Like I can't have the life that I want to live without spending this money and spending on children is a big bucket that this kind of spending goes into.
It's kind of like you just think about it like ‘OK so you know maybe I'm rationalizing this spending. I mean it isn't true that you have to spend the money because if the money weren't there wasn't there you wouldn't be able to spend it. So you have to be willing to look at all of your expenses as though they're on the chopping block.
If something is an obligation then you have to recognize there's something going on there. Kind of psychologically also there's that kind of person who will they have really good intentions.
They set up the system so that they're they're paying themselves first which means they transfer money into the savings account on the first of the month and then by the 20th that money is getting pulled right back out. So you're you're making a plan or you're making deals with yourself but you always break them.
It gets to when the rubber meets the road and you know if it's in the context of deprivation or scarcity or doing without your and all you have to do is go transfer money you're probably going to do it.
Just so we're kind of clear what I mean by having something be in this in the context of scarcity or deprivation I create it when I transforming my financial life my money. Gamify Your Savings.
Hilary Hendershott: I created a game for myself so it didn't for me not spending on lifestyle or consumption items did not feel like scarcity. It was more like a contest.
In my contest I could have anything that I wanted if I just waited long enough. If I wanted to buy something and it was going to take me six months to save up for it in my little savings account that I had I had my little splurge savings account.
I would be proud of myself I would be excited. I would be waiting for the time to pass. When I was able to make that purchase and it was in line with my plan I was so happy and so proud and so much appreciated that item I was able to create an experience for myself that was inspiring and enrolling so that I wasn't tempted to do formal spending.
Elle Martinez: I love that idea of a savings account for those natural desires but not sabotaging yourself.
Hilary Hendershott: Oh my gosh you have to have a little bit of luxury in your life and it doesn't have to look like society says that it has to look like.
For example, I don't I don't think you need name brand clothes to be successful at all. Sure you need classy clothes and professional clothes or you know well-made clothes but they don't need to cost three hundred and fifty dollars for an item not to say I haven't paid that much for an item I'm just saying it's not necessary. And certainly if you're digging yourself out of debt I mean unless you know buying that Chanel coat unless it makes you feel like a million bucks. Month after month then that's not what's going to be at the top of your wish list your luxury list.
Elle Martinez: Yes I agree and you deal with women but you've also seen men they have their own weaknesses. Is there any particular categories you notice with men with FOMO?
Hilary Hendershott: Cars. I mean come on if your buddy has a Porsche you want to push. And unfortunately men's formal items are typically way more expensive than women's film items. Mean you know you can buy a lot of Chanel clothing for what someone can buy a Porsche for.
Elle Martinez: Yes but I mean it does go to show that couples, spouses we kind of laugh at the other side but to identify our own weaknesses does take an amount of self-awareness. So say a couple is realizing not keeping our budget. They're digging deeper and they notice that both of them are guilty of this. How do you suggest they start to resolve this.
Hilary Hendershott: That's tough. The process of becoming financially mature is so much the process of becoming humanly mature right. You can't do like one without the other. So you're a team and you can't create money as a scarce or a scary place or a point of contention or it's it's just it's not going to be fun. It's not going to be enjoyable. And even if you are able to produce the numbers that you want you still won't have the life that you want. I mean ultimately all of life is a game anyway so try to keep it as light as you can recognize that if you do go there if you do criticize your partner come down on hard on them you know they're going to react they're going to be defensive or they're going to be indignant or they're going to start hiding from you or or they're just going to feel really criticized and small and none of that is going to produce the outcome that you want. So I think if you can get back on the same page in terms of yes this is the number that we said we would spend or I mean look let me start with Plan A Look it's always my favorite plan is if you know if you have a thirty thousand dollar a year golf habit then if the agreement you can make with your spouse is I'm gonna go negotiate a thirty thousand dollar year raise or I'm going to have a side hustle that earns thirty thousand dollars a year like I'm going to pay for it.
Hilary Hendershott: I love that I love that because I think the more you can train your brain to be a brain that brings more money into the ecosystem the you know the the closer you're gonna get to two true financial freedom and the more likely it is that those numbers are going to are going to grow and grow and grow. So I always love raising the ceiling rather than lowering the floor. But I think sometimes what. So let's take golf as an as an example. You have to know your weaknesses. You have to know you know if I go to the inn at Spanish Bay or what's was a famous golf course you know.
Elle Martinez: Pinehurst. OK I'm in North Carolina. That's the only one I know..
Hilary Hendershott: If I'm hanging out with my buddies at the at the bar they're unlikely to buy 18 holes. Right. And I'm just saying be careful where those potholes are on that road that you walk down that's dangerous. So maybe I had better instead be a golf pro at the local driving range. And then I can hit a few balls after I make 80 bucks or something. I like to stay out of stay out of dangerous situations in other words I think as a couple. It would be really great if you could spend time talking about what you want to do with your money in the future just so that you can really get related to your future self. I mean I saw there's a new tool that now I don't actually I don't want this for my accounts but there's a tool now that when you log in to see your money you either see a picture of your children or you see a picture of yourself aged 25 years. I always read about this and I was I thinking OK. Interesting. I don't want that personally. But the point is that you can get related to a what's important to you. Your children like their children are counting on you. They need you to pay for their lifestyle for their college or be your future self. So if you're not a person who's naturally inclined to think about the future. It can really be a great exercise for you and your spouse to sit down and say OK let's fast forward the clock. Twenty five years. Right. So you know maybe we're 60 years old. Where do you want to be like you know our health isn't what it used to be. You know what. Where do you want to be what you want to be doing. And you know at first maybe your mind's going to go blank but if you continue or persevere in the exercise maybe that day or maybe over time pretty soon you're going to get a grasp on like time is passing you know I mean I turned 40 this year and it's interesting to think OK my 20s are gone my 30s are gone.
Hilary Hendershott: It's really interesting. Like I'm not young but on any traditional scales anymore and it's fine. I love aging like fine wine and some of my favorite people are in their 60s. It's not like I don't mind all that it's just I'm getting related to. OK I have now at this point in my life made some choices that are irrevocable. I can't take them back and I'm not saying I would want to. But if you can put yourself in that position what are the choices that you would have to make an for example if you have if you eat a whole pizza tonight that's a choice you can take back because you can exercise every day for a month. You can eat chicken and vegetables every day for a month and your body will recover fully. But imagine if you couldn't write a match. And if you knew that the repercussions of your choices today. This year next year we're gonna be with you forever. What choices would you have. Would you want and wish for yourself to make. And I think that's a really interesting conversation to be in for couples because so many people end up in my office and I say things like where do you see retirement happening.
Well we don't know. And what do you want to do with your with your time in retirement. Now we don't know. And when do you want to start paying for your husband's brother to live in that apartment in Georgia. Well we know I mean I just made that up but people get themselves into situations with an indeterminate end point and and a life at some point will force you to make a choice. But if you postpone making that choice until life forces you to make a choice then it's really out of your control. And so you have the opportunity to say OK we're not going to put off making a decision about this anymore like let's actually put a stake in the ground. And I mean I can't tell you it takes me sometimes being willing to sit in silence and and with the uncomfortable questions to say OK look we actually have to chew I actually need an answer to this question and it's ok that you don't have it right now but let's talk about it until we can come up with something and it can be a range of options in this moment but pretty soon we actually need a definite answer.
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Like the music in this episode? Special thanks to Gentle Regime!
This episode was originally released in November 2016. show notes have been updated in November 2021.