By The Advocates
For a lot of families, Christmas is a time when spending is under extra scrutiny. Every year, I make a list of people to buy for and how much to spend on each person. Then, I promptly blow that budget out of the water. We enjoy the holidays, but then there’s the January reckoning with the credit card bill.
Some of us experience this throughout the year, creating and exceeding budgets in an attempt to get a hold of the family’s finances, which can put great strain on a marriage.
Lots of couples take a “divide and conquer” approach to household tasks and chores. One gets the groceries, another mows yard, perhaps. 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 benefits your money provides and maybe even make Christmas a less stressful time.
1. Review your finances (at the right time).
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 handles all 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, and due dates, etc. This ensures that both spouses can handle household finances in the event of an emergency.
3. Get honest with each other.
Some couples might still have banking or credit accounts that are only in one spouse’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.
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.
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.
The good news is there are myriad tools to help couples budget like Mint, Quicken, GoodBudget, EveryDollar and even good ol’ Google Sheets. Pick what works best for you and start tracking your spending, together.
5. Get help
If there’s a spending gap between you and your spouse that seems impossible to bridge, we can help. 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. Give us a shout if you’re ready to start planning for the life you want with the ones you love.