Image courtesy of Stuart Miles / FreeDigitalPhotos.net
The foundation of a couple being successful with their finances requires a clearly defined method of budgeting, and frequent, open, and honest communication between the two people involved.
Do you have this foundation?
Vonnie and I didn’t for the first thirteen years of our marriage. Our budget, and I use that term extremely loosely, consisted of a piece of paper that listed about half of our monthly bills that I folded up and stored in the back of my checkbook folder. Our communication about our finances was non-existent, so it was no wonder that our finances failed miserably.
Building a successful budgeting system that includes the needed level of communication is something that we have worked very hard at over the last four and a half years. Over that time, through trial and error, we have developed our method of handling our finances, which I would like to share with you.
Bi-Monthly Budget Cycle:
My income as a software engineer represents 80% of our total income, therefore our budget cycles are built around my bi-monthly paychecks. The first cycle runs from the 1st of the month to the 14th, and the second cycle runs from the 15th to the end of the month. The night before the beginning of a new budget cycle we discuss the following:
- Expected Income
- Bills due
- Any events occurring
- Discretionary funds left over
Building Our Financial Information Two Ways:
Vonnie and I visualize information differently. I prefer to see two lists, one of bills and one of income added up so I can see the total of both. Then I can subtract the bills from the income and get the amount of money left over for discretionary spending. My wife prefers to pull out a giant calendar that she gets from her employer, and enter bills on the day they are due in red, and income on the day they are received in black.
During our budget cycle meeting we each build the information in parallel using our preferred method. Once this is complete, we can easily discuss our finances by looking at the information in a form that makes sense to each of us.
Bi-Weekly Budget Discussions :
We have formal budget discussions twice a week:
- Thursday/Friday : Before the weekend begins we discuss what we have available for funds, and what spending we plan to do. I then go to the ATM and withdraw cash for Gas, Groceries, Allowance for the kids, as well as our discretionary spending. Admittedly sometimes the withdrawing cash thing gets skipped. Although through experience it’s obvious that we are much more likely to stick to our spending plan if we do make that trip to the ATM and spend only cash.
- Sunday: We discuss how we did with our spending over the weekend, and make any adjustments necessary. We also discuss any spending needed during the work week.
Daily Checking Account Discussion:
We don’t do this every day, but it certainly wouldn’t hurt. During breakfast, Vonnie signs into our online banking portal, and we review any transactions that posted over night. We reconcile the checkbook and discuss any transactions that haven’t posted yet.
Couples have to find a budgeting system that works for them. What works for one couple would be a disaster for another. We’re always looking for ways to tweak and improve the system, but thus far it’s working very well for us. I’m sharing it just as an example for those that may be struggling with their finances to help percolate some ideas to get you started. It may also spark ides for successful couples to take their system to a new level.
What does your budget system look like? Do you have suggestions for people struggling to get started with a budget?
Before we started budgeting years ago, our finances were a mess. We didn’t have any sort of system to keep track of things. I literally paid bills when they arrived in the mail and had no sort of organization. We made plenty of money, but we were keeping very little of it.
We use a zero-sum budget now and writing things down makes all the difference. We just create a budget at the beginning of the month, then pay bills according to the budget as the month progresses. Then I check them off once they’re paid. It’s not a fancy system but it works!
It’s amazing how messed up your finances can be even if you make plenty of money if you don’t manage it well, isn’t it Holly? It doesn’t have to be fancy, it just needs to work – thanks for sharing!!
Really great advice, Travis. For my wife and I almost all our money is going towards fixed expenses and things that don’t change all that much month-over-month. What we have found to work for us is once a month recording all our spending and income and putting all the data into a spreadsheet. It makes it easy to look at month-over-month spending and identify any unexpected changes or outliers.
I like the spreadsheet idea, DC…..my wife would hate it. LOL. I also like the idea of tracking every expenditure, as a person could forget about something from month to month. Good technique!
Great advice Travis! Most of the things in our budget are generally fixed, so that really doesn’t require a whole lot of upkeep. Where we really discuss things is with the extra that we have coming in from month to month, which can get tricky since that fluctuates so much for us with the business. We tend to discuss things once a week to have a run down of where we’re at and things coming on the horizon so we can be on the same page together. For those just starting, I think the starting aspect is obviously key, but don’t be afraid to try different things/methods out and find what works for you and run with it.
Many of life’s expenses are fixed from month to month – but there are always those infrequent ‘events’ that pop up that you have to plan for such as a kid’s confirmation, graduation, or sports expenses. Communication is key! For those just starting out, doing “something” is better than nothing – over time you can add and tweak your system until you find the system that works best for you. Thanks for stopping by John!
Great great advice. I too often see people try to start running with their budget before they even know how to walk. It’s so important to remember that it’s a process — not a one-and-done thing
Great analogy, Mario! Also, a budgeting system has to be flexible, to change as time goes on. Life doesn’t stay the same, and neither will a successful budget system. What works today, may not fit well into the lives of a couple tomorrow – you have to be willing to change!
My mom always said that the wife could throw money out the front door using a teaspoon faster than the husband could shovel it in the back door using a scoop shovel. In her mind, the wife was always at fault! Just a humorous memory. My husband and I have always been on the same page regarding our financial priorities and I can honestly say that in 37 years of marriage we have never fought about money. Sometimes we respectfully disagreed about something but we never let it get to the point of fighting over it. Both spouses absolutely have to feel the same about what they plan to accomplish or they will never be able to accomplish anything. They will be working against each other, which I think, is what my mom meant with her anecdote.
Wow, Kathy – 37 years of marriage (CONGRATS!) – I hope I can say that one day! Also to be able to say you’ve never fought about money – that’s a testament to your willingness as a couple to work together. You two are a great role model!
I think it’s great that you have dedicated formal budget discussions and that you do daily checking account discussions. I hope that someday I have a partner that I can be that collaborative with.
Those daily checkins only take a few minutes, and they’re key to staying on the same page – AND it makes our weekly budget discussions shorter and infinitely easier because not much should have changed since the last checkin! Thanks for reading, Stefanie!
It’s great that you and Vonnie have built such a great system that works for both of you. Too often I see couples with either no system or one person trying to manage it all. It definitely needs to be a collaboration. Our bill remain pretty consistent so we spend most of our time talking about what’s going on for the week/month to ensure we set aside enough money to cover those expenses.
I used to be the one trying to handle it all, Shannon….and it didn’t work well at all. Even if one person handles most of the grunt work in actually paying the bills, I firmly believe that it is beneficial for both people to know where the money is going and when. Thanks for your comment!
That is an awesome system that would never, ever work at our house. Jim likes to have money and be debt free but has no interest really in financial record keeping or planning and totally defers to me. When we both did our own thing was when we got in trouble. We discuss big plans like how we want to try and max out my employee and employer portions of the solo 401k, how much we want to save or spend for non-recurring expenses, or when and if we want to purchase a property. Day to day bills, he let’s me take care of and he really barely spends money anymore unless it’s for gas or snacks. That would not work for everyone, but it works for us. I just hope my spreadsheet makes enough sense if I get hit by a bus or something.
LOL, great comment, Kim. The thing that would concern me the most is the last sentence – if one person takes on so much responsibility of the finances, what happens if the unthinkable happened? That was one of Vonnie’s fears, which is why she gets out her giant calendar as both her viewpoint of our finances for that month, but she keeps them as reference to cross check the next month to ensure we didn’t forget anything. I’m confident that if something would happen to me, she would know exactly what needs to be done. Thanks for stopping by!
Hi everyone, I’m the frustrated half of a “no budget discussion” couple. His pronouncement is “just don’t spend money”. And then when something unexpected comes up “just pay it, that’s why we work”. I’m one of those people who needs parameters and rules. I laughed reading Travis wanting a spreadsheet and Vonnie wanting a calendar – I’d use both. I suspect my husband is ADD, and formal approaches to organisation repel him. On the other hand, he has a lot of money issues and that we’re not rolling in cash at the end of the week must mean I have squirreled money away for myself or have frittered it away – both not true. If I can pin him down to discuss finance, he’s not interested in the day to day stuff, no he wants to know why we aren’t freehold and we need to up our weekly payments and next thing I know we have an appointment with a mortgage broker. Apart from that he is a great guy – does anyone have any bright ideas? Maybe a less formal way?
That’s a tough one, MoniMoni – what to do when your partner just isn’t interested in talking about day to day finances? Here’s a thought…what if you would track your expenses for the week, document it on a “one pager,” (start with just the big stuff) and then post it somewhere for him to see? By the toilet, on the bathroom counter, or at his place on the kitchen table – somewhere where he will see it, but that he can grab and glance at it at his own pace (maybe through a couple of viewings). He would at least have the opportunity to consume the information…I mean seriously, if you’re sitting on the toilet, or brushing your teeth, how could he help but glance at it?? If it works, over time you could start adding more info little by little. What do you think, worth a try???
Wow I love the bi-weekly chats! Maybe I should do these more often. I feel like I do a mid-way report and let my hubs know how we’re doing and then an end of the month report to tell him how it went as well. However, it might be good getting things to more of a weekly schedule for sure!
As far as I’m concerned, we cannot communicate too much about our finances, Cat…but then again when you take into account where we came from (no communication causing $109,000 in credit card debt), one could understand why I would feel that way. 🙂 Great to hear from you!
The key for us was the first sit down and getting our money on paper. That was an eye opener. Before that we managed paycheck to paycheck without a plan. We now check in a few times a month, and include our 3 children in on the decision as well.
We were in the same boat, Brian. When we sat down and really figured out how much money we had left over after the bills were paid (In the beginning of our DMP), we were SHOCKED at how little money we had left over. Seeing is believing, and writing down those expenses is the best place to start!
We keep track of everything in an excel spreadsheet. I’m really the only one who updates it. I keep my husband informed if things change or if adjustments need to be made. We talk about different strategies and the importance of making the changes I suggest. He doesn’t love personal finance but he has learned a lot from our discussions and sometimes he surprises me with great suggestions or keeps me in line if I start to deviate from the plan.
As long as you’re both comfortable with the level of participation, and it works for you….keep it up! Thanks for sharing, Raquel!
Like Kim’s hubby, Rick has absolutely no interest in the finances, just as long as he knows I’m managing well and we’re on track with the goals we’ve set as a couple. And honestly, I love working the numbers – it’s fun to me, and painful for him. 🙂 He’s good about spending too; he just takes out a certain amount each month to spend on whatever he needs/wants during the month, and we just deduct that out of the budget, so that I don’t ever have to keep track of his expenses. In the olden days when I wasn’t so frugal, there was some contention there, even though he still didn’t want to have anything to do with managing the money (naughty!) but now that I’m crazy frugal, it’s all good. 🙂
I’m gonna be honest…I don’t love it either. There I said it. I’m a personal finance blogger, and I view talking about money as a necessary evil. The thing is, I know the consequences if we don’t talk about it, so…..on marches the beat of the twice a week discussion. 🙂
You are very methodical! Impressive! Each week I have a discussion with my cat about how he needs to get a job…for some reason he never listens and still I keep putting up with it. 🙂
Cats, what can you do? We are definitely very methodical….it’s the engineer in me. 😉