When there’s more than one person in the family, budgeting can become harder when you aren’t on the same page.
My recommendation is to try to find common ground.
The idea isn’t to control your husband or wife’s money, but meeting each other half way tends to work well.
My suggestion is to:
Set a savings target that you both agree on and are both motivated to achieve
Set a personal allowance that you are allowed to blow on whatever you want
Use the rest of the money for joint expenses (mortgage, living expenses, child rearing responsibilities etc)
If you earn more, you may wish to contribute more financially to the relationship.
Some may prefer that everything is equal with each person saving 20%, contributing 30% to living expenses and 50% is their own to keep and spend as they desire.
Some like to live off one salary and save the other.
To each their own. Do what works for you.
Things become more difficult when there is an ingrained behavioural difference between two partners.
In the finance world there’s an old saying, “there’s only two types of people of people in the world…spenders and savers”.
If you’re a saver and your partner is a spender, that’s going to be a tough relationship. There’s going to be times of disagreement, times of tension.
It’s difficult to address a fundamental difference in how people think about money.
It can be hard to get someone on board with saving, but some of the ways I have found to be useful are:
Slowly introducing them to concepts around money management. Maybe get them to read a blog article from time to time, or a foundational book on personal finances such as the Barefoot Investor.
Start watching YouTube videos while they are around. They won’t be able to help but listen and pick up on ideas subconsciously.
When you’re in the car, maybe throw on a money podcast (hey they can’t exactly jump out of the car can they!)
Persistence is key. Not everyone wants to dedicate their spare time to reading investing books and creating budgets. But over time, if you are persistent enough, you’ll start to break through, and maybe they will find their own financial mentors to listen to.
Unfortunately, like many things in life, some people don’t want to hear it until something goes wrong. So when something goes wrong, don’t miss the opportunity to educate them.
When they are upset that they can’t afford to pay a bill, or upset that their friend is driving a new car, it’s the perfect opportunity to explain why saving is important, or why your friends are actually financially devastating themselves by being showy.
In the accounting world, we always struggled to sell estate planning services.
Why? Because not many people want to think about their untimely demise.
But when do we most people take up the service offering?
Just after something bad happens to a close friend or family member.
That’s just human nature, so work with it, not against it.
If you and your partner are worlds apart, try to find some common ground where they can commit to a recurring cost, freeing up your funds for investment.
A perfect example might be a husband and wife team, both earning $100k each. One is a spender, one is a saver.
Perhaps you could agree that your partner pays the mortgage, and you are responsible for investing and other expenses. That way, your partner is effectively in a ‘pay yourself first’ approach, where they pay the home loan first and then everything else is for living. Over time they will get use to that amount coming out and adjust their spending.
Another strategy that I believe works well is when a couple agree to live off one income, and invest the other. The beauty behind this approach is that you learn to live below your means, and the magic of compounding works its way to making you rich over the long term.
Like you’ll hear me say a lot, life is about balance. You may want to save 60% of your income, and your partner might want to spend every last dollar. In this case, any improvement in their spending habits is worthwhile.
Money matters consistently rank as one of the top reasons couples fight. A better understanding of the household finances, how the family net worth is growing, and heightened financial education, can only be a good thing.
One thing I know for sure is that partners that are on the same page consistently outperform those that try to go it alone.
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