Ask the readers: How do we start over?
As relationship month continues at Get Rich Slowly, I'm getting lots of questions from readers about how to handle money when other people are involved. It's a difficult subject!
For instance, here's an email I recently received from LM, who is looking to convince her husband that they need to change how they're handling money:
We've been happily married now for almost ten years. We have two kids (aged five and six). I'm a stay-at-home mom. My husband is an engineer with an above-average salary (about $80,000 per year). We have two cars. We have no debt except for our mortgage. (We have about ten years left on that.)
I feel like we need to totally revamp our finances because we've lost our way. We've slowly fallen off our budget and started to spend money we shouldn't. What should we do? How do we start over? How do I convince my husband we should re-evaluate our finances?
Before I begin, I want to point out to LM that it sounds as if she and her husband have made some smart choices in the past. She may be unhappy with their present course, but she should be proud of what they've accomplished so far. Debt-free except for ten years left on a mortgage? That's great!
The challenge now is to build upon that solid foundation, to continue making smart choices with money.
To that end, I think LM and her husband are perfect candidates for conducting a family goals conference, which I wrote about earlier this week. They should set aside a couple of hours — maybe on a date night? — to seriously talk about their shared vision and how they can work together to achieve it.
This doesn't need to be overly complicated. I think that if LM and her husband were to set maybe three or four goals for their family — not financial goals, but general goals — then they could begin to make decisions in support of those goals. They'd have a better idea of how they should be spending their time and money.
Once they've agreed upon some long-term goals, then I think LM and her husband need to conduct a budget review. Where have they been spending money? Is that spending aligned with their stated goals? If not, what changes can they make so that their money habits and mission match?
Note: I think it's important for LM to approach this as a team thing, as a shared project. She shouldn't set out with the idea that she's trying to change her husband's mind or habits. It's tough to change anyone. And if they know you're trying to change them, it just creates resentment and resistance. Instead, this should be a collaborative effort, filled with the words “we” and “us” instead of the word “you”.
If they're not already tracking their spending, they should start. For a minimum of three months, they should track every penny they earn and spend. During this time, it's less important that they judge their habits than that they document them. The goal with this exercise is to get an accurate assessment of how they handle money. If I were in LM's situation, I'd probably learn to use You Need a Budget. (Actually, I think the You Need a Budget book [my review] would be excellent for LM's family.)
In short, I don't think LM is in a terrible position. My impression is that sure, maybe she and her husband have drifted off course but they have not yet run their financial ship aground. There's still plenty of time to make a course correction so that they can reach their destination. (Wow, what a labored metaphor!)
What do you think? What would you do if you were in LM's shoes? Are shared goals a good thing? Is returning to a budget the right step? Are there other things that she and her husband should be doing to stop spending? And, most importantly, how does she get him on the same page with her?