Common Cents #5

 Common Cents Issue #5

As I talk to people, it becomes clear that our views about money and the way we utilize our resources can be the most common source of strife in relationships, especially marriage.  Surveys show couples that argue about finances at least once a week are thirty times more likely to get divorced than those who don’t argue over money. High levels of debt and failure to communicate about money issues are the leading causes of stress and anxiety in family relationships.

It appears, though, that lack of money is not the cause of divorce as much as the failure to communicate about how the money we have will be spent. The old joke, which isn’t very funny, is about the guy who is afraid that when he dies, his wife will sell his stuff for what he told her he paid for it. Fill in the blank for your “stuff”, whether it is guitars, cameras, boats, or guns.

I know of men who complain about the hundred dollars a month their wives spend on shoes, and then try to sneak in a $1,000 shotgun without her knowing it.

To begin to resolve this major source of conflict, there must be an understanding of how much it actually costs to pay the monthly costs of a family’s basic needs. This can only be arrived at by communication of what those financial commitments truly are.  Then, allotting a certain amount of discretionary money to each person for them to spend as they wish should be considered. There must be a clear understanding of how much money is spent on things like housing, food, transportation, insurance, and retirement savings. Then, one can discuss how much can be spent on travel, eating out, or “toys.”

One way my wife and I have found to accomplish this is to have regular “business meetings.” A business meeting indicates that it is not a time filled with high drama or emotions, but rather is just look at the numbers and how they add up.  We discuss what has happened since we last met and we plan what we expect to do until the next business meeting is held.

We have an Annual Meeting on January 1 of each year. We plan for an all-day meeting, but a few hours are often all we need. We look at what we had planned for the previous year and talk about our successes and what was not able to be accomplished.  We talk about the next year’s vacation plans, investments, and when we would like to make major purchases like a new car or a home remodel project. Some of these things are planned years in advance; others don’t need so much lead time. It is at our annual meeting where we realign our priorities and make overall long-range decisions. Buying a new house, changing jobs, or starting a new business would all be topics for the annual meeting discussions. Most of the best decisions we have made have taken place in this manner.

We also have quarterly meetings which are shorter and involve seeing how we are doing on the annual plan. We look at our quarterly income and net worth statement to see if we are on track or see if we should make any adjustments to our spending plan. Sometimes we have to make major changes to the annual plan. This year, for example, the worldwide pandemic drastically changed our plans. Mainly we just pushed some things planned for 2020 into 2021. No big deal, no panic, we just lost a year on some travel plans and will adjust other items as needed.

We have monthly meetings which are shorter yet, ten or fifteen minutes, to discuss things like unexpected expenses or to generally check in. If one of us is planning to buy some new clothes or some other item is needed, we talk about it at the monthly meeting so there are no surprises the next month. I might say something like, “I need some new running shoes, should I wait until next month, or is this month OK?” The discussion would be about what other expenses are coming up that are more urgent. This is primarily to manage cash flow.

The point is that the business meetings are not emotional. They are matter of fact, this is where we are, this is what we need to do to get where we want to go.

We haven’t always done things this way. The years when we had no idea where we were financially or which way we were going were so uncomfortable to us that we have adopted this strategy and it has worked well for us. We have learned that business meetings and frank talk about money are essential to a long and happy relationship.  It gives us both ownership of our financial life and a strong partnership in this area of our life has led to trust and confidence that our plans will be accomplished.

Jim Mathis