This is a guest post from GLBL, who writes about personal finance at Gather Little by Little.
Many sources cite money as the number one cause of marital strife. Some of you probably know this from first-hand experience. I can relate, too. My wife and I are very close, but money has always been a touchy subject, and unfortunately has led to a more than a few “disagreements”.
Last year, we decided to get control of our money instead of allowing our money to control us. I did extensive reading and research, and we began to put some changes into place. Since then, we’ve learned what works for us and what doesn’t. We are not experts, but I will say this: since we began this journey, we haven’t once fought over our money.
Here are seven actions you can take today to stop fighting with your spouse about money. They worked for us, and they’ll probably work for you.
Be a team: There is no “I” in “Team”
Between talking with people and listening to callers on The Dave Ramsey Show, I’m surprised by the number of married people who talk about their finances and converse as if their spouse doesn’t even exist: “When I do the budget”, “When I pay the bills”, “I am working two jobs to provide extra income”, “I…I…I”.
Shouldn’t they be saying “We”? With so many “I”s everywhere, it’s no wonder couples are fighting — they aren’t communicating! The best way to manage your finances is together. Create your financial plan together, do the bills together, review your net worth together. If you do anything related to your finances, make sure your spouse is involved and has a say so in the decision process.
Develop a budget — together!
From personal experience, one cause of fights (or “fussing”, as we call it in the South) is one spouse spending what the other spouse considers too much money. This is generally a problem when the couple is already fairly tight on finances, or when one spouse is far more frugal than the other.
To resolve this issue, create a budget together. It’s not important how you do it or what method you use, but that you create the budget together. If both spouses don’t have input in the budget, they won’t “have any skin in the game”. Both should provide input on the numbers and be part of the process.
Hold weekly budget review meetings
If one spouse is doing all of the finances, it’s very difficult for the other spouse to know the current financial state. Even with a budget, a lack of communication can make it difficult to know how much is left in the “grocery category” or the “entertainment category”.
To solve this problem, pick one night of the week to review your finances. Pick a time when you and your spouse can devote 15-30 minutes without interruption. For us, this is after our younger children are in bed. I generally update our finances daily, but I always make sure the budget is updated before our meeting.
I print a copy of the budget that shows the amount we allocated for each category and how much we have remaining. We review each category and discuss the amounts remaining and any expected expenditures for the week. If we are short in one area and over in another, we move the money around. If we are just short, we either decide to cut back and not spend, or we pull the funds from the emergency fund.
Review your finances frequently. Communicate. You’ll be amazed at the difference a little communication makes.
Establish an emergency fund
The most important thing you can do to keep your finances under control — and to avoid using credit cards and going into debt — is to establish an emergency fund. Nothing stresses a couple more than running out of money before all the bills are paid. Even worse is having the air conditioner or the car break down without money to get it fixed.
Establish a $1000-$2000 emergency fund and put it in a high-interest savings account. The emergency fund will cover those unexpected expenses. The key is that each spouse must agree to not touch these funds without the other’s agreement. This keeps the emergency fund from being used to buy big-screen TVs or designer pocket books.
It’s okay to make mistakes
Being the detailed geeky type that I am, when we first started budgeting, I wanted the budget to be perfect. I wanted us to follow it perfectly. While discussing our finances one night, I found that my wife hated the budgeting process. After some discussion, I realized it wasn’t the budgeting process she hated, but how I handled it.
The budget isn’t going to be perfect. It should get better as you do it more, but it will never be perfect. That’s okay. If you are off, just move the money around. If you overspend, tap the emergency fund — just be sure to put the money back. You’ll find that the longer you follow a budget, the easier and more accurate it becomes.
Like everything else, it’s a journey. If you’re like us, just having a budget will be a huge leap in the right direction.
Agree to hold each other accountable
After we agree on the budget for the upcoming month, my wife and I do a pinky shake. Is this a little silly? Sure, but it works for us. Every time I am in the store and see some new shiny electronic gadget I want, that pinky shake reminds me of the commitment I made. That little shake makes me question if I need the item or not. I can’t tell you how many times I’ve walked out of a store empty-handed because of that little shake.
The point is to think of something both of you can do to commit to each other. That little reminder is worth its weight in gold.
Get out of debt
Debt is a dark cloud that follows you constantly. Debt puts pressure on your finances, and ultimately on your marriage. Getting out of debt will give you financial freedom and peace of mind. If you are in debt, stop getting further in debt right now. If you have credit cards, shred them. Is your car payment way too high? Sell it and buy something you can afford. Is your mortgage beyond your means? Sell the house.
Once you have stopped going further into debt, begin aggressively paying what you owe. My wife and I started this process about six months ago, and it’s brought us closer together.
What do you do to keep from fighting over your finances? Have you used any of these ideas? Have they worked for you? Kris and I mostly keep separate finances, so our approach is different. I’m curious to hear what works for people with joint accounts.