“Help! My spouse is spending all my money!” We’ve all been there before.
You think your spouse is spending all your money. Maybe you’re the one being accused of spending all the money.
According to the Institute for Divorce Financial Analysts, money issues account for 22% of divorces. It’s no surprise. Couples find it hard to talk about money.
Talking about money should be commonplace, but how do you talk about money without getting in a fight?
Like much of what we talk about on Million Dollar Hacker, have a plan.
Step #1: Write down the 3 most important priorities in your lives
Sit down as a couple at a table. This is important. Both of you need to stay focused. No TV. No cell phones.
While you may not get it right the first time, write down the 3 most important priorities in your lives. You can and should change these later.
A best practice is to review these priorities every three months. Reviewing your top three priorities will allow you to pat yourself on the back when you succeed.
Here’s an example top three priorities of one couple:
[table id=1 /]
For their top priority, they want to continue paying off their student loans. This could mean making minimum payments.
On the other hand, they may want to pay a little extra each month to pay down their loans faster. If you’re looking to pay off your student loans, I recommend taking a look at our guide to paying off your student loans.
Next, the couple wants to build their emergency fund. Emergency funds are well-documented and recommended by the top financial gurus like Dave Ramsey.
An emergency fund can help keep your savings plan on track. If your furnace breaks in the dead of winter, you can tap into your emergency fun to make sure you don’t freeze your family.
Finally, the couple has a goal to save for a vacation. Notice how this priority is last on the list.
It doesn’t mean their vacation priority isn’t important.
On the other hand, they want to meet their first two goals first. For example, if the couple hasn’t been paying down their student loans and they still don’t have an emergency fund, saving for the vacation should be delayed.
Related Reading: Get started with budgeting by using these beginner budgeting tips.
Step #2: Start a budget
Once you have your top priorities written down, you and your spouse can start a budget together.
Using your top priorities as a guide, you can begin to ask these questions while you decide on a budget.
- Where is the most important place to allocate this money?
- Does allocating money here match our priorities?
- If our goals aren’t met, should we spend money on this?
The answers to these questions may change and that’s ok. Adjust your priorities as you go.
The main purpose of going through these exercises is common ground with your spouse. No surprises.
1. Use a tool like YNAB
Armed with your priorities and the questions you should be asking, start your budget.
There are many budgeting tools out there, but YNAB is my favorite and I highly recommend it. There’s a 30 day trial after which, it’s only $5 per month.Use a tool like YNAB to budget your money. Click To Tweet
Following their top three priorities, here’s the budget the couple came up with:
[table id=example-budget /]
After meeting their immediate obligations, the couple allocated $300 to their student loans. Their emergency fund and vacation categories are $0.
2. Follow your top three priorities to allocate additional income
Following the couple’s top three priorities, what should the couple do with any additional income?
If you guessed emergency fund, you’re correct.
Although the vacation is tempting to fund first, it doesn’t align with their priorities. The couple knows they agreed to save an emergency fund first.
Following their priorities is important. When their top two priorities are met, saving for a vacation becomes much easier.
In YNAB’s quick start guide, they tell you how to view your budget categories. Never touch your immediate obligations which are required to survive. You can adjust your budgets for clothing and travel and you can completely cut your budgets for dining out and recreation.
Step #3: Cut spending to meet priorities
If you studied the couple’s budget, you may have noticed a few categories to review for spending cuts.
1. Look at your cable bill
The TV/Internet category was set at $100.
Oftentimes, this is $100 being paid to Comcast or Time Warner.
Reducing the cost of your TV/Internet may be possible with a simple phone call. Cable companies are often willing to lower your bill if you simply ask for a price reduction.
If you can’t convince your cable company to reduce your bill, think about what you can cut.
Do you really need 200 channels? Can you live without HD for awhile? Are you paying for extra cable receivers you may not be using?
If you have a cable bill of $100 per month, make it your goal to cut your cable bill to $60. Reducing your cable bill by $40 may not be possible, but $40 available for other uses is always worth a shot.
2. Think about cutting the cord
On the other hand, think about cutting cable entirely.
There are entire communities dedicated to cord cutting. Read about what other people have done to reduce their dependency on Comcast.
My wife and I have been living without cable for two years. Buy a HDTV Antenna and see what channels you can get in your area.
Most of the time, you can get all of your local channels in HD over the air.
3. Save on your heating bill
Once you’ve considered reducing your cable bill, consider your utility bills.
There are a handful of things you can do to reduce your utility bills. As a general rule, lower your thermostat in the winter.Save 10% a year by turning your heat down at night. Click To Tweet
Energy.gov says “you can save as much as 10% a year on heating and cooling by simply turning your thermostat back 7-10 degrees for 8 hours a day.” You’ll likely want a programmable thermostat to achieve this, but you get the point.
4. Spend less on groceries
Next, look at your groceries.
However, for this category, I encourage you to think about it differently. Food can be an investment. Food is an investment in you and your family’s health.
Cheaper food isn’t always better food. Eating crap food for years can likely lead to health problems later in life.
With that being said, there are ways to reduce your grocery spending. You may want to cut higher end foods like seafood, steak, etc.
Experiment with your diet and optimize for routine. While it’s important to eat a variety of foods, settling into a routine allows you to buy in bulk.
Train your eye to look away from the total price and instead at the price per ounce. If it makes financial sense to buy 20 cans of tuna instead of 5, do it.
Also, look around your neighborhood for grocery shopping options. Discount grocery stores like Aldi, WinCo, and Trader Joe’s are popping up.
You can rely on these places for goods like milk, eggs, and canned goods. It’s up to you how much you want to buy there. The best way to find out is to try a test run.
Step #4: Make it a routine
After you’ve worked together to cut any overspending, make it a date.
This is when talking about money and spending habits becomes commonplace. Instead of fighting about money, be open and honest.
Admit your failures and congratulate your success.
By doing this, you’ll be training each other.
Financial issues will become a thing of the past.
By following your priorities and your budget, decisions become less emotional. You and your spouse will have memorized your priorities and be thinking about your budget around every corner.Have budgeting dates with your spouse to strengthen your relationship Click To Tweet
As a couple, your goal should be two months. Commit to regular money planning dates for 66 days.
After you and your spouse grind through two months of following your priorities and sticking to your budget, you’ll be set for the future. Talking about money will be easy if you regularly talk about money and follow the framework you’ve worked hard to setup.
Step #5: Congratulate your spouse
You’ve made it! You and your spouse have made it a habit to talk about money and spending. Now what?
You’ve worked together for two months and you’re no longer at risk of divorce because of money issues. You no longer have to search Google for “My spouse is spending all my money.”
Since you’ve worked hard to make money talk commonplace for two months, you’ll continue to do so for the years to come.
You’ll start to wonder why other couples seem to always fight about money. You’ll wonder why you didn’t make this a habit sooner.
Healthy couples compliment each other. Use your renewed financial health to congratulate each other. You worked through your money problems as a team and now you’re better off for the future.Healthy couples compliment each other. Click To Tweet
After following these steps, my wife and I are much happier when it comes to money.
Both of us spend money on things that matter to us. We’ve given ourselves a savings cushion. We’ve saved for a vacation without worrying that we’re spending too much.
- On a piece of paper, write down your 3 top priorities in your life.
- Using your top priorities, start a budget.
- With your budget, meet your 1st priority, then your 2nd, then your 3rd.
- Cut your spending to meet your priorities. Your cable bill and heating costs are easy targets.
- Make it a routine. Sit down with your spouse for a budgeting date every week. You’ll become closer as a couple.
- When you successfully budget for two months, congratulate each other. Complimenting your spouse can make you stronger as a couple.
Do you and your spouse fight about money? As a couple, have you worked together to better manage your money? Let us know in the comments below.