How to Teach budgeting to your spouse

You are enthusiastic about creating a budget and managing your money carefully. Your spouse groans at the idea. What can you do?

 

Many people find themselves in this exact predicament every day. One spouse or partner tends to be fiscally-minded, while the other pays no attention to money and scoffs at the idea of drastically cutting back.

How can the two of you reach financial harmony? Here are a few tips that might help get your spouse or partner on board with the idea of budgeting.

Set a common goal

Don’t open the conversation by saying, “Honey, I think you need to cut back on X.” A statement like this frames the idea of budgeting and saving in negative terms. This makes financial management look like a string of orders and deprivations

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Instead, open the conversation by saying, “Honey, let’s talk about some of the goals we want to accomplish within the next five to 10 years. What would we like to do?”

The two of you should have a long conversation about what your ideal life looks like together. Don’t discuss money at this point – just talk about the vision. Here are a few ideas to get you started:

Would you like to spend one month travelling through Europe together?

Would you like to buy a sailboat and spend a few months in the Caribbean?

Would you like to make a down payment on a house, or trade up from your current starter home to a nicer forever home?

Would you like to pay off your mortgage entirely, or pay cash for your next vehicle?

Would you like your child’s college funds to be $25,000 fuller?

Would you like to retire by age 55, start your own business, or create a new non-profit organisation in your community?

Discuss this myriad of goals without touching on the financial aspect. Find out what visions and goals you both share for the future.

Attach monetary values to your goals

Once you have agreed on your goals for the future, introduce the concept of money and phrase it in realistic estimations.

A 20 per cent down payment on a $200,000 home, for example, comes to $40,000. A one-month trip around Europe for two people might come to $4,000 – $10,000, depending on the level of luxury you seek.

Paying cash for your next vehicle might cost between $8,000 and $20,000, depending on what type of vehicle you want.

Retiring early might hinge upon maxing out your 401(k) every year. As of 2015 contribution limits, that comes to $18,000 per year per qualified individual.

At this point, you have numbers and you have a timeframe. Simple division can help you understand how much money you need to set aside every month in order to reach your goal.

Saving $40,000 over the next five years, for example, requires saving $8,000 per year, or $665 per month. 

If you want to save this amount for the down payment on a home, you now know how much you’ll need to set aside every month.

Talk about saving

Now that you have a specific monthly savings target, you should discuss how to find this money. Suggest cutting back on a few expenses, earning extra money on the side, or a combination of both in order to hit your monthly savings goal.