Do You and Your Spouse Have Congruent Spending Habits?

Most married couples take a “divide and conquer” approach to household tasks and chores. One spouse might handle weekly shopping, the other might handle garbage and recycling. One spouse might handle laundry and cleaning, the other might handle yardwork and maintenance. One spouse might drive the kids to school, the other might handle pickup and extracurricular activities.

But household spending and budgeting is one of those responsibilities that’s best tackled together. Money issues are one of the biggest sources of marital tension, and a leading factor in divorces. Here are five ways that you and your spouse can make sure you agree on your household spending, avoid surprises, and maximize the Return on Life ™ your money provides.

1. Have an open and honest discussion.

Many couples assume their attitudes about money are aligned. Then one day the roof needs an emergency repair that taps a savings account, or someone walks in the door with an unexpected splurge purchase (or worse yet, hides it!).

Stressful situations are not the ideal time for a couple to discover significant differences in spending habits. Sit down with your spouse and have a thorough review of your finances and your monthly budget. Find compromises that will allow you to save for the future while still enjoying your present.

2. Understand the total household cash flow.

In many households one spouse often handles all of the bill payments. This can lead to misunderstandings and arguments about where the money goes every month.

Both spouses should understand how much the household spends every month and how your bills get paid. If you’re the one who’s usually in charge of bills, take an hour to walk your spouse through your process. Show him or her which bills are paid electronically, which are paid by check, the monthly amounts, due dates, etc. This won’t just help both spouses understand the monthly cash flow, it will ensure that both spouses can handle household finances in the event of an emergency.

3. Be transparent about all assets and liabilities.

Newly married couples might still have banking or credit accounts that are only in the original account holder’s name. The other spouse might not find out about these accounts until a credit card is maxed out, or a checking account is overdrawn.

Again, the less stressful your reason for talking to your spouse, the more positive the outcome will be. Financial secrets tend to come out at the worst times, compounding stress, hurt feelings, and strain on your budget.

Your spouse should be a cosigner and beneficiary on all of your accounts and vice-versa. If one of those accounts carries a large liability, get out in front of the problem and talk about how to start paying it down. Discuss the ramifications of combining any large individual assets with a tax professional or your financial advisor.

4. Agree on a budget.

If one spouse is responsible for budgeting and bill pay, that person often becomes The One Who Has to Say “No.” No eating out this week. No weekend trip to the waterpark. No new cell phones. No new clothes.

No fun!

Nobody likes being in that position, especially if you’re saying “No” to your children. Eventually, you or your spouse will resent being The One Who Has to Say “No.” You should both understand the household’s monthly cash flow and agree on how your money is – and isn’t – spent.

5. Get help

WFP clients have access to a tool within our financial planning software that help households set and maintain a budget. If you’re a small business owner, Intuit offers a line of bookkeeping and tax prep solutions to fit any needs. Automating select bill payments and regular contributions to retirement and savings accounts can also help to clarify your monthly budgeting picture.

Finally, if there’s a spending gap between you and your spouse that seems impossible to bridge, we can be an excellent resource. It’s important to us that we understand where clients’ attitudes about money come from, how they’ve developed, and how they can diverge between couples. Facilitating this dialogue is key to making sure both people have the best life possible with the money they have…and we can help you do that.

Plan to Maximize the Most ROL Today and Tomorrow

The last couple of years have been filled with uncertainty and many people have been concerned about their future. This often leads to a feeling of stasis when it comes to how we think about our money. But improving Return on Life isn't something that happens in an undefined future. ROL is an ongoing process that allows you to balance in-the-moment enjoyment with your family's long-term security.

Here are three ways that you can leverage your financial plan to find your balance and start enjoying your money more.

1. Give Yourself Permission to Spend

Old-fashioned financial planning puts a heavy emphasis on saving and investment goals you need to hit on your way to retirement. Folks who follow this model are often extremely focused on "hitting a number" above all other financial considerations. Often that means living more frugally and working longer than they really need to.

A healthier approach might be to pay yourself first by making automatic monthly contributions into your retirement accounts, budgeting for the month's expenses ... and then having a little fun! Yes, a solid financial plan includes setting some limits and monitoring your progress. But within those boundaries you should still have room to replace your old car, build that backyard swimming pool, or take a family vacation you've been putting off for too long.

2. Build-Up Reserves

One of the golden rules of financial planning is: "Plan for what you know is coming and prepare for the unexpected."

To that end, we often advise our clients to create a special savings reserve, ideally in a separate bank account. These are the funds that you will rely on if you or your spouse suffer an unexpected job loss, or if you have a sudden medical emergency, or if your home needs a repair that insurance doesn't cover.

Sometimes these funds are called "emergency buckets," but there could be more positive situations where you'll appreciate having this reserve. For example, perhaps you need a little extra support as you transition to a new career. Or maybe you use reserve funds when you retire early and need to pay health care premiums before you're eligible for Medicare at age 65.

Your reserves should be able to cover 3 - 6 months of your living expenses. Setting a long-term goal and filling that bucket with a comfortable cushion can provide real peace of mind, especially once you retire.

3. Prioritize

If you have the resources to improve your Return on Life now but you don't feel free to enjoy yourself more, you might need to reassess your relationship to your money.

One question we often discuss with our clients is, "What is your money really for?" The ultimate purpose of money isn't to keep earning more of it. Your money is supposed to be a vehicle that takes you from where you are right now to where you want to be. And, hopefully, along the way, you use your money to take some pitstops where you can enjoy the sites, the people, and the activities that make your life worthwhile. Too many people who wait for "the right time" to enjoy the rewards of a lifetime of hard work find that "the right time" never comes.

Are you having trouble connecting your time and your money to your top priorities? The $Lifeline tool can help you prepare for upcoming transitions. Schedule a call and let's start planning to make every stage of your life as fulfilling as possible.