Reader Question: Financial Transparency for Couples, Part 3
Posted on December 13, 2006 by Her and tagged relationship, transparency
This post is part of our week-long series on Creating Financial Transparency for Couples.
3. There are two different spending styles at odds.
Jay says that his wife perceives his attention to her finances as evidence that she is a spendthrift. My guess is that she probably has good reason. It sounds as though Jay may be a saver while his wife is a spender. When these are the roles you play, you are pulling in opposite directions. The key is to drop the script entirely and start rehearsing a new performance: financial responsibility. For us, this required two strategies:
David Bach, author of Smart Couples Finish Rich, advocates creating a Value-Based Plan. Jay and his wife should develop a list of mutual values (check out ours here), then prioritize their spending to match their values. If they both value good health, then neither can argue with spending a large sum on a gym membership. A value-based plan will allow them to simultaneously spend AND save toward their goals.
Our other strategy was to create a primary joint account (for all shared expenses) and two personal allowance accounts. We agreed on a fair allowance, and do not check each other’s allowance account statements. This gives us privacy and freedom to splurge on small items. For the joint account, we set boundaries. Neither of us can spend that money on something that solely benefits one of us without consulting the other first. I think this dual system might work well for Jay and his wife too.
Other posts in this series:
1. There are two different methods of documentation being used. (Monday)
2. There are unclear privacy boundaries. (Tuesday)
4. No dedicated time exists for talking about finances. (Thursday)
5. There’s no unified financial plan (Friday)
Comments/Trackbacks
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Megan | Dec 28, 2006
I agree, Wealthy Geek. Couples need to agree on financial goals before deciding if they need joint accounts or whatever.
I also hope this:
"they both value good health, then neither can argue with spending a large sum on a gym membership"
is a joke of some sort. So, if you both want good health, it's ok to plunk down quite a bit of money for a fancy-pants gym membership? How does *that* save money?
Please note, Her was using that as an example for their particular situation. They did not write in to ask about how they could save money, but how they may be able to align their spending and saving.
Also, we believe that saving money isn't the be all end all of our lives. Having a health club membership offers benefits other than financial, and is well worth it if actually used.
Megan | Dec 28, 2006
I don't deny that having a health club membership one actually uses is one of those personal investment things - you're out money, but hopefully you improve your lifestyle by using it regularly. But I think it's the use of "large sum" that just kills me. I value my health, and my husband values his - but that still doesn't mean we should spend hundreds, if not thousands, on yearly gym memberships for the two of us.
And my mistake for thinking this would be advice regarding saving money - I guess the title "Make Love, Not Debt" is misleading!
Wealthy Geek | Dec 13, 2006
A joint account makes a lot of sense but it’s important not to put the cart ahead of the horse. Before couples can decide on what constitutes a ‘fair allowance’ for their individual discretionary spending, they really need a big-picture goal for the funds going into that joint account.
After all, everything from rent or mortgage payments to emergency funds will probably be coming out of that joint account, and the allowance amount will probably need a lot of negotiating, especially if one person in the couple makes significantly more money than the other. What happens, for example, if one person thinks the couple should be beefing up their mortgage payments or funneling more money into a particular investment?
The other problem is that ‘discretionary spending’ is a bit of a grey area anyway, and gets greyer still when couples try to micromanage their finances. For instance, which of you pays for the dinner out to celebrate your anniversary? Do you pay for it out of the joint account, or go Dutch, or what? More to the point, is it really worth it, financially, to micromanage your romance to this degree?
Thoughts anyone?
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