Introduction: Talking About Money is Hard and You’re Not Alone

The Moment I Realized It Was Time for a Change

One lazy, sunny afternoon, Allison came home from a successful shopping trip. She trudged up three flights of stairs to our two-bedroom apartment; our first home as a married couple. I was on the couch watching TV when I heard Allison’s key enter and turn the lock, followed by the slam of our door pushed open with a little too much oomph.

I heard Allison chirp, “Oops, sorry.”

I leaned over to get a better look, and there–in both of Allison’s hands–were four, giant shopping bags from Target.

My face contorted into a puzzled look, and I thought, “What the hell did she buy this time?”

THERE! That was the moment that I realized it was time for a change.

When we first got married, Allison and I were doing everything separately with money. She had her own bank accounts, and I had mine. I had my own credit card, and Allison didn’t have any. We made sure the bills got paid by one of us, but beyond that, we did what we wanted.

After that pivotal moment, my mind started racing:

  • So, if the bills are getting paid, who cares what either of us buys with our own money?
  • Why should I be concerned about what’s in those shopping bags?
  • Don’t I trust my wife?
  • What if I came home with a bunch of stuff?
  • Do I trust myself?
  • How do I know our spending isn’t putting us into a hole?

That last question was an “ah-ha!” moment. I couldn’t easily answer, “Are we okay?” There was no plan, no goals, and no accountability for us as individuals or as a couple. We were working, saving for retirement, paying the bills, and spending the rest.

  • What would happen if we wanted to save for a vacation or buy another vehicle?
  • Could we afford it?
  • How would we know?

We were living life and money was just…happening.

From that point on, I set out on a mission to learn about personal finance, get us on some sort of plan, and start talking about money together.

No longer was it going to be her money and my money. It was time to make it our money.

Two Different Issues: Fighting About Money Vs. Never Talking About Money

For those of you itching for more drama to soak up, you can put away your popcorn. Allison and I don’t really ever fight about anything.

In fact, the more I talk with couples about their money issues, the more I find they’re already a great team. They agree on a lot of stuff and have loving, trusting relationships. But for some reason, money is still hard to talk about.

The couples I talk with don’t have trouble talking about the small stuff; it’s the big stuff.

  • Deciding whether or not to sign up for Spotify is easier than talking about going to grad school.
  • Picking out a new comforter is simple compared to talking about moving to a new state.
  • Combining two apartments worth of furniture is preferable to discussing how much student debt you have left.

If you’re like most couples, you’ve tried to talk about this stuff. One of you brings up an important topic, you talk about it a little, and then you hit a wall. No decisions get made. No plans are made. No concrete goals or numbers get set.

I am here to help you change that. I want you and your spouse to feel as comfortable talking about money as you are about the new season of Stranger Things. Check out Chapter 1 to find out more about what you’ll learn in this guide and how it will change your life.

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Who is Dan?

I’ve been married to my wonderful, amazing, and beautiful wife since 2011. After having been a licensed financial advisor for two years, I left the industry in 2013 to help run my family’s business and start my own business as a financial coach. Somehow, I also found time to teach a few college finance classes. Allison and I don’t have kids yet, but we live in Florida with our adopted doberman, Dolce.

Dan Hinz

Table of Contents

Introduction: Talking About Money is Hard and You’re Not Alone

Chapter 1: How This Guide Will Change Your Life

Chapter 2: Why You Love Each Other but Money is Still an Uncomfortable Topic

Chapter 3: How to Productively Talk About Money

Chapter 4: How to Make a Financial Plan That’s Fair to Both of You

Chapter 5: How to Take Your Plan and Make It a Reality, Step-by-Step

Chapter 6: The Top 10 Budgeting Roadblocks I’ve Helped My Clients Overcome

Chapter 7: Who Does What and When to Do It

Chapter 8: Other Questions You Might Have and a Bunch You Haven’t Thought Of Yet

Chapter 9: Word-for-Word Script to Start Your Next Money Conversation


 

Chapter 1: How This Guide Will Change Your Life

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Dealing With Money is a Skill to Be Learned, Not an Answer to Be Googled

As a kid, I fell in love with the making-of videos for the Star Wars prequels (Knowing how they brought Jar-Jar Binks to life is fun. Figuring out why? Not so much.). I got to see how the movies were made starting from the idea to the script, storyboards, costumes, filming, directing, sound design…everything! And these videos taught me a very early lesson.

Every worthwhile project–whether it’s a movie, song, painting, or business–is produced using a process of trying a couple of ideas, finding out what works (and what doesn’t), and making the good ideas better. This is known as an iterative process because it takes a few rounds of trying and tweaking to make something awesome.

For example, one of the behind-the-scenes videos showed the director, George Lucas, visiting the art department. He was being shown drawings and sketches of the newest villain, Darth Maul. As he went around the room, Lucas would put sticky notes on drawings he liked and the ones he didn’t. He then went on to explain what he particularly liked about his favorites. With that new sense of direction, the art department came up with a new batch of drawings based on Lucas’s notes and comments.

It’s like a band having a jam session or a comedian trying new jokes for the first time. Some stuff is awesome and other stuff isn’t, and you expand on the stuff that works to make it better.

Great artists like Leonardo da Vinci don’t just take a blank canvas and produce a masterpiece right off the bat. They sketch ideas in notebooks, try new things, and experiment. The artists take the sketches they like and create a rough draft on the canvas (known back then as a cartoon). Only then do they start actually painting the picture.

When it comes to you and your spouse talking about money, this guide will teach you a process you can use for the rest of your life. Just like George Lucas uses a process to create blockbusters and Leonardo da Vinci uses a process to create astounding paintings, you and your spouse can use this guide as a process to create productive, meaningful conversations about money.

There is a catch. Not every one of Lucas’s movies was a blockbuster. Not every one of Leonardo’s paintings were masterpieces. Using a process takes practice, and using this guide to help you is no different.

With time, you and your spouse will learn the skill of talking about money without fighting, and you’ll learn how to make faster, better decisions. I’ll teach you to fish, but it’s up to you to get outside and throw your line in the water.

The best news about learning this process is that you can use it forever–no matter what life throws at you. The goals you pick by the end of this guide (more on that in Chapter 4) will be great for today, but they won’t be your goals forever.

  • Need to buy a new car? Use this guide.
  • Want to go back to school? Use this guide.
  • Need to start saving more for retirement? Use this guide.

Is my process the only way for you and your spouse to talk about money? Of course not. But it will get you started!

Throughout this guide, I’ll help the two of you talk about and manage money together. I also want what’s best for you, and I know that not every piece of advice will work perfectly for every couple. All I ask is that you try my way at least once. Keep the habits that work for you and change the ones that don’t.

If you go to Google and search for “guide to money for newlyweds” and “how to talk about money with your spouse”, all you’ll find are short articles with “10 tips” here and “7 tips” there.

This guide? It’s an entire system! And it’s yours for free.

Read it. Try it. Make it your own.

Who This Guide Will Help (and Who It Won’t)

This guide is awesome, but I know it’s not for everyone. Here’s a list of people this guide will help and a list of people that can stop reading now.

This guide will help you if…

  • …you want to get on the same page about money with your spouse.
  • …there’s something major or expensive you want to talk about with your spouse.
  • …you’re newlyweds that are a great team but don’t talk about money a lot.
  • …you’re an engaged couple and want to get a jump-start on your family’s finances.
  • …you’re a married couple that are ready to hit the “reset button” with money.
  • …you’re a couple living together but marriage isn’t “in the cards” for you.
  • …you’re willing to put time and energy into learning and practicing my advice.

This guide WON’T help you if…

  • …you and your spouse constantly fight.
  • …you don’t trust your spouse with anything.
  • …you’re looking for ways to hide money from your spouse.
  • …you think reading this guide once will solve everything right away.
  • …you’re looking for advice on investing, insurance, or Bitcoin.

How to Use This Guide for the Rest of Your Life

Have you ever started to play one of your old video games and realized you forgot which buttons do what? So you had to look up the controls or go through the tutorial again? That’s about how you’ll feel a week, a month, or a year from now.  

Some of the advice and knowledge in this guide will stick with you as you learn to talk about and manage your money together. But this guide is over 20,000 words! There’s no way you’ll remember everything the first time through.

Here are the specific times I suggest you read (or skim) through this guide again. Be sure to set some calendar notifications!

  • One week from today. If your attention span is like mine, I put stuff down and forget to pick it back up.
  • One month from today. You’ll see later in the guide that it takes at least three months to feel confident with the process I teach. This one-month reminder will help you through the early bumps and roadblocks.
  • Three months from today. By this point, you’ll be doing great with the process, but because of the enormous amount of advice, there will be amazing notes that will fall through the cracks. Like playing through that old video game, you’ll rediscover awesome stuff you completely forgot about.
  • Six months from today. One last time just to make sure you checked all the boxes.

Beyond six months from today, keep this guide close by for any random questions that come up. Or have a copy to share with friends and family that could find it useful.


Chapter 2: Why You Love Each Other but Money is Still an Uncomfortable Topic

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We promise to love and cherish each other at the wedding, but does mean we have to share everything?

Everyone Wants to Feel Some Independence, Even When We’re Married

Over centuries, the idea of what marriage is, what it means, and the customs that accompany it have evolved. Couples these days get married later in life. According to Census.gov, the median age of a first marriage in 2016 for the U.S. is 29.9 for men and 27.9 for women. It stands to reason that most couples live an independent life before choosing someone to combine their lives with.

Being independent is awesome! Walking around the apartment in whatever the hell you want, watching what you want on Netflix, and leaving dirty dishes everywhere.

Getting married (or just moving in together) changes a lot.

  • How do you combine two apartments worth of furniture?
  • Who sleeps on what side of the bed?
  • Who gets more upset when laundry is left in the washing machine?

The finer details of your personalities start to come out. For example, I have a terrible habit of leaving dirty dishes right next to the sink. It drives Allison crazy that I can’t simply open the dishwasher and put in my one plate and one fork. On the flip side, Allison will leave laundry in the washing machine all day until the moment before we go to bed and then start the dryer.

It happens to all of us. We all have these quirks, pet peeves, and habits that take some getting used to. Handling money is no different.

When you were on your own, having a spending plan was near useless. You knew if the bills got paid and how much money was left in your bank account. Why write it down when you had everything memorized? Managing your money your way worked great!

Well, marriage brings out the finer quirks with money, too. You may be worried that if you tell your spouse there’s an extra $50 in the bank, it’ll be gone before you finish the sentence. Or you might be worried of the opposite: never having any fun!

It’s normal to want to be yourself. Handling money your own way worked great and combining those habits can feel daunting (or outright boring). At some point, every couple worries about how to combine their financial personalities and habits.

The biggest concerns I’ve come across are:

  • Do we have to make every decision together?
  • If I want something for myself, why can’t I just buy it when I want?
  • Do we need to combine all of our bank accounts?

I’ll answer those questions and a lot more throughout the guide.

In the end, the #1 piece of advice I give to couples is to make sure you keep at least some independence. Have some money every month that you get to spend without your spouse having any say over what you buy (and vice versa)…even if it’s just a little bit. In Chapter 5, I’ll dive into the details of how to do that.

Why It Feels Like a Leap of Faith to Go From “My Money” to “Our Money”

Keeping some form of independence while married is the biggest issue for most couples, but there are other concerns that make money an uncomfortable topic.

Issue #1: What if one of us makes a lot more money than the other?

The easy answer here is that you’ve agreed to marry each other and become one family so it shouldn’t matter who makes what as long as “the family” is bringing in enough money to happy and healthy. It all goes into one pot, and everyone benefits.

However, I can understand if that answer is a tough pill for you to swallow.

  • Will I resent my spouse for spending all the money I make?
  • Will my spouse resent me for not working or contributing?
  • Is it really fair to share everything when my work brings home so much more money?

Something to notice about the bullet points above is the language. These types of questions contain singular pronouns: I, me, my, mine, his, hers, etc. The moment you flip those singular pronouns to be plural, everything changes.

  • Will we resent us for spending all the money we make?
  • Will we resent us for not working or contributing?
  • Is it really fair to share everything when our work brings home so much more money?

Now those questions seem silly.

When you change your language surrounding money, you will change how you think and what decisions you make. The first steps to these changes are in Chapter 4.

Issue #2: Do we really need to have joint bank accounts?

When Allison and I were dating, one of my sisters gave us a book called, 10 Great Dates Before You Say ‘I Do’, and it helped us talk through major life topics before we got married. One of the chapters was about money (of course), and we decided that we would keep separate accounts and have one joint account for the major stuff.

Flash forward to “The Target Incident,” and none of that had happened. We were still living together with separate bank accounts.

Flash forward again to today, and everything we have is in joint accounts. So, what’s the right answer?

Honestly, it doesn’t matter. The way you setup your accounts is just logistics.

  • If life is easier to have completely separate accounts, that’s fine!
  • If you want to have everything in joint accounts, awesome!
  • If you end up somewhere in the middle, fantastic!

The key to your success will be in how you communicate with each other about money and what you want to do with it. Technology has advanced enough that apps can track your money no matter what bank account it’s in, so the argument of joint vs. separate bank accounts has become a moot point.

The reason Allison and I opened joint accounts was to make life easier. When we moved from our apartment to our first house, I knew a guy that just opened a new branch of his bank, and it was close to us. The new accounts were more for convenience that anything else.

Issue #3: How do we split our bills to be fair?

The easy answer (again) is that it doesn’t matter who pays the bills once you switch from “my money” to “our money.” All the paychecks go into one pot (so to speak), and all the bills get paid from that pot. As I mentioned earlier, this transition can feel new and uncomfortable.

If you’re not quite ready to flip that switch to everything being “our money”, the fairest way to split your bills is by your share of the total income. If you make the same amount of money (or nearly the same), a 50/50 split works great.

If one of you makes double the other, then split the bills 2:1. For example, if you make $3,000/mo and your spouse makes $1,500/mo, then you pay ⅔ of every bill and your spouse pays ⅓.

Issue #4: What if I’m worried about a future divorce?

My favorite quote from Jerry Seinfeld is, “If you got a t-shirt with bloodstains all over it, maybe laundry isn’t your biggest problem right now.”

If you’re reading this guide and worried about a divorce–now or in the future–maybe talking about money isn’t your biggest problem right now.

I am woefully underqualified to be a marriage counselor, so you’re on your own with that one.

Spender or Saver? Why Financial Personality Types Don’t Matter as Much as You Think

Let’s start this section with a game. I’ll give you a few situations, and I want you to label me as a “spender” or a “saver”. Ready…Go!

Situation #1: Nearly all the coffee I drink I make at home. Am I a spender or a saver?

Situation #2: Nearly all the coffee I drink I make at home, and I only buy Starbucks. Am I a spender or a saver?

Situation #3: Nearly all the coffee I drink I make at home, and I only buy Starbucks. I usually buy the giant bags of Starbucks at Sam’s Club. Am I a spender or a saver?

Honestly, I have no idea what the right answers are. I’ve struggled for years to define myself as a saver or a spender. I love pinching pennies on the coffee I like, but I’m constantly overspending my amount of fun money. In some parts of life, I’m frugal. In other parts of life, I’m freewheelin’. So I gave up trying to put myself in a specific category.

When Personality Types are Too Simple

Defining myself as a saver or spender isn’t worth the time, and I realized that trying to define my wife as a spender or saver was a waste of time as well. Allison is the type of person that will shell out $70 for a Tempur-Pedic pillow, but her favorite days of the year are February 15th, November 1st, and December 26th. (As you surely know, those days are when the holiday candy goes on sale!)

It is detrimental to try and take a broad topic (money) and define who we are–or who our spouses are–with so few categories (spender or saver). However, I believe that trying to understand ourselves is a good use of time.

When Personality Types are Too Complicated

My favorite set of personality types come from the Myers-Briggs Type Indicator. There are other decent personality tests and quizzes in the world, but what I like about the Myers-Briggs personality types is the amount of nuance to the system.

After you’ve taken a Myers-Briggs test, you are measured on four different spectrums:

  • Introvert (I) vs Extrovert (E)
  • Intuitive (N) vs Sensing (S)
  • Thinking (T) vs Feeling (F)
  • Judging (J) vs Perceiving (P)

Depending on how you score, you are one of sixteen different personality types:

  • INTJ
  • INTP
  • INFJ
  • INFP
  • ESFJ
  • ESFP

And even then, your score is a percentage of how far away from the middle you are. For example, I am an INTJ which makes me lean towards Introverted, Intuitive, Thinking, and Judging. Digging deeper, I lean 25% Introverted, 34% Intuitive, 19% Thinking, and 31% Judging.

Using my introversion as an example, I like to be quiet and alone to recharge my energy (extroverts like to be around other people to recharge their energy). However, because I’m only 25% from the middle, I’m not extremely introverted. Being social can help me relax and recharge, but I usually prefer to be in a quiet environment.

However, studying and understanding everything that goes with the Myers-Briggs system is a challenge. It’s complicated and takes a lot of time to understand the whole system and how it relates to every facet of your life. That’s why I really enjoyed this next set of personality types.

When Personality Types are Juuuuuuuust Right

Gretchen Rubin is one of my favorite authors, and she wrote a wonderful book called, The Four Tendencies. In it, Rubin dives into how everyone can be divided into four tendencies depending on how we respond to inner and outer expectations.

  1. “Upholders” are likely to meet outer and inner expectations.
  2. “Obligers” are likely to meet outer expectations and resist inner expectations.
  3. “Questioners” are likely to resist outer expectations and resist inner expectations.
  4. “Rebels” are likely to resist outer and inner expectations.

Rubin also gives each of these tendencies a motto:

  • Upholders – “Discipline is my freedom.”
  • Obligers – “You can count on me, and I’m counting on you to count on me.”
  • Questioners – “I’ll comply–if you convince me why.”
  • Rebels – “You can’t make me, and neither can I.”

Wow! Talk about being able to better understand yourself and your spouse. I am a Questioner leaning towards Upholder, and my wife is an Obliger leaning towards Upholder. (Click here to take The Four Tendencies quiz for yourself.)

With this in mind, Allison now knows that it’s much easier to get me to do something if she ties a request to one of my core beliefs. For example, saying to me, “Please put your dishes away because I have friends coming over and I don’t want to be embarrassed,” gets me off the couch a lot faster than simply, “Please put your dishes away.”

I also know that if I want Allison to do something, all I need to do is ask (because she’s an Obliger), but I also know that it might not be at the top of her to-do list (because she’s also an Upholder and may have more important things to do).

I had the pleasure of seeing Gretchen Rubin give a talk about The Four Tendencies while in Chicago at Ramit Sethi’s Forefront 2017. I learned that when you understand the tendencies of those around you–your spouse, boss, co-workers, employees, family, etc.–it is much easier to work with them to achieve your goals. This knowledge also helps  you work better with yourself.

Exercise habit not sticking? Read The Four Tendencies and one of Rubin’s other books, Better Than Before.

What I love most about Rubin’s tendencies is that she’s only trying to define the world on a narrow spectrum–how we react to inner and outer expectations. Her model is a compromise between being too complicated (Myers-Briggs) and too simple (Spenders vs. Savers).

What Matters is Knowing What Each of You Values

Have you ever heard that a piece of art is priceless? Sounds like bullshit, right? What about the Leonardo da Vinci that last sold for $450 million?

There is a subtle but important difference between the price and value of something. Price is an objective number that we use to help define the subjective value.

For example, I believe that my collection of Star Wars figures is worth a lot (value), so I put them up for sale on eBay as a set for $100 (price). However, everyone on eBay thinks my figures are a dime a dozen (value), so the whole set sells for $30 (price).

Additionally, we all try to maximize the value we get out of everything. By buying Starbucks beans in bulk and making coffee at home, I try to drink as much good coffee as I can as cheaply as possible. We all strive to get the most benefit for the least cost.

To me, a Tempur-Pedic pillow is a waste of money because I don’t need a fancy pillow to get a great night’s sleep. I am a deep sleeper, and I don’t have any neck or back problems. On the other hand, my wife is a light sleeper, and having a pillow guaranteed to be comfortable at any moment is valuable. (Don’t tell Allison, but I’ll admit it. She has a really nice pillow.)

Friction in marriage (at least when it comes to money) occurs when our values aren’t exactly the same.

  • Why do we need fifty pillows on the bed?
  • You only have two hands. How many shotguns do you really need?
  • Didn’t you just buy a new purse last year?
  • Why can’t we just throw out all your t-shirts from college?

When certain purchases grind on you, keep in mind that those feelings stem from the difference in the value you perceive compared to your spouse. When you feel that a purchase wasn’t valuable, there’s a feeling of loss, and you’ll believe the money could have been better spent somewhere else.

One key to financial happiness with your spouse is understanding how each of you values things differently. If you take the time to dig deeper with each other on your values–rather than just labeling each other as a spender or saver–you’ll improve your finances and your marriage.

Later in Chapter 4, I’ll teach you how to define common goals so that most of your money is used on what you both value, and I’ll also show you how to have separate spending money for the fun stuff.

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Chapter 3: How to Productively Talk About Money

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As I’ve coached couples on how to talk together about money, I’ve noticed that most conversations follow a similar pattern:

  • A major topic surrounding money gets brought up.
  • The conversation dances around the edges of the problem.
  • No one really knows what to do next.
  • The conversation hits a wall.
  • Someone changes the subject.

I’ve also noticed that since couples want each other to be happy, these discussions don’t really turn into fights. But it’s frustrating when these talks keep happening and no decisions get made.

To help you out, I’ve outlined five principles that will help you get on the right track the next time you want to talk with your spouse about money.

Principle #1: Remember What Each of You Finds Valuable

It feels terrible when someone isn’t listening to you. You tell them exactly what the problem is, but for some reason they completely ignore what came out of your mouth and assume they know what your problem really is.

Engineers and tech people can be like this, and I used to be one of them. But then I read a book that made me a better person.

In college, I read The Seven Habits of Highly Effective People by Stephen R. Covey, and to this day, my favorite is the fifth habit, “Seek first to understand, then to be understood.” I added the emphasis.

Ingraining this habit into my personality has helped me be more sympathetic towards others, especially my wife. When it comes to money conversations, first understanding what your spouse values goes a long way.

For example, my wife loves playing party games whenever she has friends over. The pile of boxes in our closet continues to grow above and beyond our collection of Pictionary, Scattergories, Guesstures, and Cranium. I would much prefer to buy strategic games like Settlers of Catan, Pandemic, and Ticket to Ride, but I know that Allison values the fun and camaraderie that is built playing party games.

Before approaching each other with a money topic, take time to recall what your spouse values about the subject. Doing so helps you prepare for the questions or concerns you’re about to face.

Now, you may not know what your spouse values about every topic. In that case, approach your spouse with an idea without a plan. Test the waters and have them ask you questions. Answer what you can but don’t feel pressured to respond to every question with an answer. Instead, just say, “I don’t know, but I’ll find out.”

You might still not have a plan or a decision, but you will have learned more about what your spouse values. That’s still a productive conversation. Use that knowledge for future money talks.

Principle #2: Strive to Create Plans that Respect Both Sets of Your Values

You can’t always get what you want. Finding win-win solutions is awesome (the fourth habit, btw), but sometimes you have to compromise.

As you work your way through the next chapter of this guide, you and your spouse will create a list of goals. You’ll find it’s going to be hard–if not impossible–to tackle every goal at the same time. Some goals are going to be at the bottom of the list, but it’s important that those goals stay on the list.

I was coaching this one couple, and the husband loved karting (the real-deal go-kart racing). As you can imagine, karting is an expensive hobby. One of the wife’s goals was to go back to school and get her master’s degree. If you winced just reading that sentence, you had the correct reaction. In the back of my mind, I was gearing up to referee a fight between these two.

As they worked through my process of setting goals (see next chapter), the couple wrote down every goal they could think of and listed what was most important to them as a couple. As the husband read the list, he saw what they wanted compared to what they could afford. His hobby was low enough on the list, he volunteered to give up karting…for now.

Karting is still something the husband loves, and going back to the sport is still on the couple’s list of goals. It just happens to be lower on the list…for now.

As you talk with each other about money, don’t shoot down each other’s dreams. Respect what you value as individuals while working together as a couple. This helps avoid putting either of you into a defensive mood, and it keeps your conversations productive.

(If you’re concerned about one of your goals always being at the bottom of the list, see Chapter 8.)

Principle #3: Keep the Big Picture in Mind

If you go back to the beginning of this guide and read the story of “The Target Incident” again, you’ll notice that one of my major concerns was not knowing how our shopping habits were affecting the big picture. Allison and I would certainly notice a giant gash in our bank account, but we could have easily run into trouble with a thousand little cuts.

I was more worried about the occasional $10, $20, or $50 purchases adding up to something larger. On its own, buying more pillows or candles doesn’t bother me. In hindsight, I realize that I didn’t want to allow ourselves to develop a habit of ignorant spending.

If you don’t understand how those smaller purchases affect your big picture, they can start to eat at you. Like the steady drip of a leaky faucet, the little things eventually drive you crazy. The best way to avoid fighting about these silly, little things is to make sure the important stuff is taken care of first.

When you want to talk with your spouse about money, take time to think about how the topic will affect your common goals. It feels great to go to your spouse and say, “I’m going to buy a new video game tomorrow. I’ll use my Fun Money, so it won’t affect our bills this month.” A reasonable person isn’t going to have a problem with that.

Having common goals to fight for will help you avoid fighting each other, and your money conversations will become much more productive.

Principle #4: Use a System to Track Your Progress…and Pay the Bills…and Have Fun

Successful people aren’t obsessed with goals, we’re obsessed with systems and processes. We get addicted to the daily grind, and the only reason we set goals is to check whether or not the process is working.

If we hit our goals, the process is working. If not, it’s time to fix something.

You must track your progress toward your goals. It’s how you prove to yourselves that the way you’re handling money is going the way you both want. As a by-product, your system will also track if your bills got paid and whether you’re having too much fun. (Eating out is a usual suspect.)

The most simple system I can think of to track your money has only two components:

  1. A way to track your goal progress.
  2. Comparing your savings or checking account each month.

For example, if your goal is to get out of debt, you can (1) watch how much you owe go down and (2) make sure you have more in your bank account compared to the month before. This means you’re keeping up with your goal and you’re living within your means. It can be that simple!

This guide will teach you how to set up your own system in Chapter 5.

Principle #5: Not Every Conversation Needs to End with Making a Decision

Having a productive conversation doesn’t mean some sort of decision has to be made. Having a conversation to throw around ideas and come up with questions can be as productive as making decisions.

Too often, teams at a company come together for a meeting without an agenda. Some people get upset if no decision gets made, and some people get upset when there’s not enough time to flesh out ideas. To keep everyone sane, it’s best to decide what the goal of the meeting is and share that goal with everyone before the meeting starts so you’re all on the same page

As for you and your spouse, decide whether you want your money conversation to be for ideas or for decisions before you get too far.

  • “Honey, I have an idea I wanted to bounce off of you.”
  • “Dear, we can’t think of any more questions, so let’s make a decision.”

It’s also okay if you don’t make a decision during a “decision conversation”. I know that sounds odd, but sometimes a major question or concern comes up that neither of you considered before. If you need to stop and find out some more answers before continuing, that is still a productive conversation.

Kim Scott shares the same advice in her wonderful book, Radical Candor: How to Be a Kick-Ass Boss without Losing Your Humanity.

Using These Principles in Your Next Money Conversation

The next time you want to sit down with your spouse to talk about money, remember to:

  1. Remember what each of you finds valuable.
  2. Strive to create a plan that respects both sets of values.
  3. Keep the big picture in mind so you don’t torpedo your goals.
  4. Use your system of tracking money to help make faster decisions.
  5. Not every conversation needs to end in making a decision.

Chapter 4: How to Make a Financial Plan That’s Fair to Both of You

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There are some key lessons we’ve learned so far in this guide:

  1. Dealing with money together is a skill to learn and practice.
  2. Knowing what each of you values is key to productive money conversations.
  3. Having a process in place to regularly track and talk about money will make everything more comfortable.

This chapter dives into the nuts and bolts of exactly how to start talking about your values and building your process in order to practice the skill of dealing with money. By the end of this chapter, you will create a financial plan–a list of goals–that is fair to both of you.

Before You Get Started

I strongly urge you to read this entire chapter before starting on the process. You’ll see that some of the steps are done individually and other steps are done as a couple.

Work on these steps at your own pace. Some of the instructions have time limits to help you stay focused but others are open-ended. For example, the sixth step is finding out how much your goals cost, and finding those answers could take a while depending on how much research or work you want to put into finding an answer.

Finally, don’t worry about being perfect. Focus on working through all of the steps at least once, and use your plan with the rest of the guide. This chapter is one you can revisit over time, and you’ll be more confident each time you work through the steps.

The 8 Steps to Your Financial Plan as a Couple

Step 1: Make a Wish List of Your Financial Goals

(Do this on your own.)

Set a timer for five minutes and write down as many financial goals as you can. And what do I mean by financial goals? Basically, anything you want to do with money.

Your goals could be

  • Long-term or short-term
  • Expensive or cheap
  • Important or trivial
  • Specific or general

Examples are

  • Saving for retirement
  • Paying off debt
  • Replacing furniture
  • Saving for a vacation
  • Giving more to charity
  • Increasing your income
  • Buying a house
  • Getting a new car
  • Taking dance lessons
  • Buying a new TV
  • Signing up for Hulu and Netflix at the same time
  • etc.

Write everything down that’s on your mind today, and don’t try to look too far in the future. Trying to decide today what vacation you want when you’ll be 60 years old is too much. Focus on what you want or are worried about today.

Step 2: Pick Your Top Five Goals

(Do this on your own.)

Set a timer for one minute and from your list in Step 1, pick the top five goals that are the most important to you. You don’t have much time to work on this, so use your gut instinct. But don’t delete anything! You need your whole list for the next step.

Keep in mind, you need to pick the five goals that are the most important to you. Not what your spouse thinks, what your parents think, or what society might say. And don’t rank your goals by short-term or long-term. A goal like “save for retirement” is long-term and a goal like “replace the refrigerator” is short-term, but they can both be important.

If you’re struggling to decide on your top five, I have three suggestions:

  1. Ask yourself, “Which goal bothers me the most?” or “Which goal do I want the most?”
  2. You could organize your list by Eisenhower’s Urgent-Important Matrix: 
    1. Important & Urgent
    2. Important & Not Urgent
    3. Not Important & Urgent
    4. Not Important & Not Urgent
  3. Flip a coin and move on. You can always change your mind later.

Step 3: Share Your Lists with Each Other

(Do this together.)

Schedule thirty minutes for the two of you to compare lists. This is the step where you will learn more about what your spouse values.

During this meeting, take turns and share with your spouse:

  1. What goals are on your full list.
  2. Why these goals are on your list.
  3. Why you believe the top five goals are more important than the rest.

When you aren’t sharing, you should be listening very closely.

  • What is your spouse’s body language saying about their goals?
  • Which goals make their eyes light up?
  • Which goals make their voice quiver?
  • Are there any goals on their list because they’ve seen friends or family make mistakes?

You don’t have to write down any notes, but pay attention to how much your spouse cares about each of their goals.

Step 4: Create a Top Ten List as a Couple

(Do this together.)

Schedule at least thirty minutes to create a combined list. This step can be done immediately after Step 3 or it can be done another time.

Your mission for this step is to combine your individual “Top 5” lists and create a family “Top 10” list. If you have the same goals (or they’re very similar), combine them into one goal.

The goal here is to make sure your top goals and your spouse’s top goals are on a combined list, so you don’t have to have a list of ten goals to move on to the next step. You might end up with a “Top 8” or “Top 6” list, and that’s okay.

All of your individual goals make it onto the combined list, but there can’t be any ties. You have to pick what goals are first, second, third, and so on.

This is where the listening you did earlier will come in handy. Your top goal as an individual might be the most important to you, but is it the most important to you as a couple? As a family?

What if we’re stuck deciding between two goals?

Flip a coin and move on. The list you’re creating right now will not be the same list a month, a year, or a decade from now. As life goes on, you’ll finish some goals (like buying a new refrigerator) while working on others (like saving for retirement). The list will need to be updated over time. Businesses like to call this a “living document” because it never stops growing or changing.

Your combined list is not meant to force you into completing one goal before moving on to the next. The list you create together is meant to get the two of you on the same page on how you think about money.

Step 5: Set Deadlines for Your Goals (Even If They Never End)

(Do this together.)

NOTE: Pick one goal and complete Steps 5, 6, and 7. Repeat with as many goals as you like.

It’s been said by smart people (including Robert Herjavec and Harvey Mackay) that, “A dream is just a goal without a deadline.”

For this step, pick a goal and decide on a deadline. When do you want to accomplish this goal? When you want to have your goal done and paid?

In the case of long-term goals like saving for retirement or paying off debt, the deadline might be far away, and that’s okay.

In the case of a goal that doesn’t end, it’s best to either pick a deadline of when you want to start this goal or be more specific with the goal. Some examples are:

  • If your goal is to “go on a vacation every year,” pick when you would like the next vacation to be.
  • If you want to “join a gym,” pick when you want to get started.
  • If your goal is something more abstract like “make an impact,” it’s best to be more specific.
    • What is the first step of this goal that you can put a deadline on?
    • Do you want to learn how to start a foundation or a not-for-profit company?
    • Do you want to volunteer more? How much more? When do you want to start?

If you’re finding it too difficult to pick a deadline right now, just guess. You can always change it later.

Step 6: Find Out What Your Goals Will Cost

(Can be done together or separately.)

NOTE: Pick one goal and complete Steps 5, 6, and 7. Repeat with as many goals as you like.

This step will get a bit tricky, but it’s extremely important. The mission for this step is to calculate a monthly amount of money that your goal will cost. This knowledge helps you make better decisions and figure out how to afford your goals.

Here are a couple of common scenarios you might run into:

  1. Saving for retirement. If you want to find a monthly number, I highly suggest this free online calculator: http://www.calcxml.com/calculators/retirement-calculator. It’s one of my favorites because the calculator includes inflation. It’s not the most advanced retirement calculator I’ve ever seen, but it’s good enough to get started.
  2. Getting out of debt. Again, here’s a free online calculator that can tell you how much to pay per month to get out of debt: http://www.calcxml.com/calculators/restructuring-debt. It can help you with a debt snowball plan or debt avalanche plan. Don’t know what those are? Check out my article explaining the difference.
  3. Getting a loan (including credit cards). Depending on the goal, you might borrow money or use a credit card. In order to calculate your monthly loan payment, the same site I’ve been suggesting, CalcXML.com, has more free calculators for student loans, car loans, mortgages, and more. If you’re not sure what interest rate you might get on a loan, Credit Karma makes it easy to shop around: https://www.creditkarma.com/.
  4. Saving up for something. If you want to save up cash for a goal (like a vacation, a down payment, an emergency fund, a new toy, a special occasion, etc.), figure out the total amount of what your goal costs. Take that big number and divide it by how many months are left between now and your deadline from Step 5. For example, Allison and I save up each month into a Christmas fund to buy gifts at the end of the year, so we take our total amount (say $500) and we start saving $46/mo for 11 months (because Black Friday is in November) starting in January.
  5. Ongoing goals or hobbies. If you want to make sure there’s room in the your life for an on-going hobby or goal, decide on how much you want to spend each month. This could include gym memberships, monthly fees, annual dues, or an average amount you might spend.

Step 7: Discuss How You Want to Pay for Your Goals

(Do this together.)

NOTE: Pick one goal and complete Steps 5, 6, and 7. Repeat with as many goals as you like.

There’s really only two ways to pay for things, cash or debt. You either have the money now or you need to borrow it.

The decisions you make on this step depend on you as a couple. Some couples abhor going into debt. Others take on way too much debt without realizing it. And if you’re like most people, you’re somewhere in between.

Examples:

  • My wife and I use credit cards for everything we can, but we hate paying interest. When we pay off the credit cards each month, we don’t carry a balance and we get rewards for the stuff we were going to buy anyway.
  • When we bought Allison’s last car, we had half the money we needed in cash, so we got a car loan for the rest.

As a couple, it’s important that you talk about what you are comfortable with. You don’t have to set your decision in stone, but be sure to talk about how you might like to go about paying for this goal.

Do you want to pay with cash, debt, or a combination?

Step 8: Declare the Plan as “Good Enough for Now”

(Do this together.)

You’ve made your first financial plan! It’s not perfect, but it’s good enough to move on to the next chapter.

Celebrate with a high-five, some ice cream, or something a bit more…personal. 😉

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Chapter 5: How to Take Your Plan and Make It a Reality, Step-by-Step

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In the last chapter, you learned how to work with your spouse to create “the big picture” for you as a couple. The goal of this chapter is to set up your system of tracking money to make sure you are hitting your goals.

Yes, This Chapter is About Budgeting, But It’s Not as Bad as You Think

Before this chapter, I purposely avoided using any form of the word “budget”. Most everyone cringes at the word, and I thought seriously about using a different phrase like “spending plan” or inventing a weird phrase like “daily disbursements”. But doing that is like trying to rename flossing.

I never really flossed until a couple of years ago. I was at my semi-annual dentist appointment, and the dental hygienist mentioned that my gums weren’t looking good. She said I needed to floss more regularly or I’m at risk at getting gum disease. You know, the same thing you hear every six months when you go to the dentist.

As I was paying for my appointment, I started to think about gum disease.

  • What is gum disease?
  • What does it look like?
  • How do you get rid of it?

When I got home, I did an image search on Google for gum disease and–you guessed it–that was a terrible idea. Nasty images of rotting gums and exposed roots made me gag.

But you know what? I started flossing.

Seeing those disgusting pictures was the motivation I needed to start flossing my teeth on a (more) regular basis. I didn’t need to trick myself into flossing by calling it “gum cleaning” or “string therapy”. I needed a more compelling reason than someone saying “because you’re supposed to.” Or as Simon Sinek would say, “You need to start with ‘why’.”

The previous chapter, How to Make a Financial Plan That’s Fair to Both of You, was to get you and your spouse motivated. Imagining what you want–whether it’s to avoid being poor in retirement or going on a dream vacation–adds fuel to your fire. Avoiding gum disease (and the very expensive problems that come with it) is my motivation for flossing, and your financial goals are your motivation for budgeting.

I’ll admit it; budgeting can be a real pain in the ass, sometimes. You can’t plan ahead for everything, and you’ll make mistakes along the way. But that shouldn’t stop you from practicing and getting better.

If you remember from Chapter 3, I mentioned how successful people aren’t obsessed with goals, we’re obsessed with systems and processes. Budgeting is the process you use with money that helps you achieve your goals.

  • Don’t budget just because I tell you to.
  • Don’t budget just because it’s a good idea.
  • Start budgeting because–like going to the gym or flossing every day–it’s the process that keeps you focused on your goals and what’s important to you.

Now, if you’re still not sold on starting to budget, read Chapter 6, and come back to this point. There are ten major roadblocks I’ve helped my clients get over when it comes to budgeting, and right now may be the best time for you to read about those.

Otherwise, keep going!

Decisions are Easier When Every Dollar Has a Job

I like to say that the first step of getting out of a hole is to stop digging. When you track your money using a budget (or whatever you want to call it), it gets easier to tell whether or not you–as a couple–are digging deeper. You will know if you are living within your means.

My favorite form of budgeting is called zero-based budgeting, and Investopedia defines the process as “a method of budgeting in which all expenses must be justified for each new period.” For large companies, this can be a giant headache, but for just the two of you, it’s much easier.

The process of zero-based budgeting can be boiled down to three major points:

  1. Your income for the month is what you get to play with.
  2. Every dollar has a job to do: spending, saving, giving, investing, etc.
  3. The budget isn’t done until your income equals your expenses.

This form of budgeting is my favorite because it creates an intuitive barrier around your decisions, helping you focus and make faster, better decisions. By limiting you on how much you can spend each month, zero-based budgeting encourages creative solutions and constructs a zero-sum game to help you prioritize your spending.

As humans, we want infinite choices, and we often think that constraints on choice are bad. However, you start running into what behavioral economists call choice overload. This occurs when you have so many choices, you end up choosing nothing at all.

Have you ever spent a long time searching for something to watch on Netflix and then just go do something else? Yeah, that’s choice overload. The psychologist, Barry Schwartz, talks about it in more detail in his book, The Paradox of Choice, and in his TED Talk with the same name.

When trying to solve a problem, it’s good to have barriers and constraints. Setting a deadline puts pressure on our schedule, and it can stop us from succumbing to analysis paralysis.

Encouraging Creative Solutions

For example, there are only twenty-four hours in the day. Once we spend eight hours sleeping and eight hours working, we’ve only got eight hours left for everything else. We like to spend that time as efficiently as possible, and Cal Newport’s book, Deep Work: Rules for Focused Success in a Distracted World, has some amazing suggestions on how to do just that. Having only twenty-four hours in the day helps us manage and prioritize our time.

As another example, did you ever see the movie, Apollo 13? During the mission, there was a problem filtering CO2 on the lunar module. The scene that I’ll never forget was when the engineers at NASA rush into a conference room and dump a bunch of junk on the table. The lead engineer says, “We gotta find a way to make this [he holds up a plastic box] fit into the hole for this [holding up a cylinder] using nothing but but that [pointing to all the stuff on the table].” In order to properly filter the CO2 and keep the astronauts alive, the engineers could only use the materials they were given. The solution was to literally make a square peg fit in a round hole.

As a final example, budgeting constraints in other industries can encourage creativity. Robert Rodriguez was on Tim Ferriss’s podcast, The Tim Ferriss Show, and the director talked about how he was able to make an amazing movie, El Mariachi, with only $7,000. (The same story is chronicled in his book, Rebel without a Crew.) Rodriguez had to figure out how to tell a compelling story with a strict financial constraint. He didn’t use the excuses of “not enough money” or “not enough time” stop him from creating a successful project.

Zero-Sum Game to Help Prioritize

Zero-based budgeting also helps you make better decisions by creating a zero-sum game in which saying “yes” to something means saying “no” to something else.

A lot of times, this decision is easy. If you say “no” to paying rent and “yes” to a mortgage payment that is cheaper, you have extra money each month to say “yes” to something else.

The hard part is when you want to say “yes” to a lot of little things. A new t-shirt here, an extra margarita there, and a candy bar while waiting to check out at the store. When you track your spending in a budget, all of that adds up. That money is gone, so it gets harder to say “yes” to other things the rest of the month.

This idea also helps you and your spouse stay accountable with your Fun Money. If one of you overspends your Fun Money, you’re affecting the whole family and your common goals. It’s no longer simply, “I get to spend my money how I want.” Your thinking shifts to “I get to spend my money how I want as long as it doesn’t affect our other goals.”

Zero-based budgeting puts a constraint on your money, focuses you on your goals, and helps you find creative solutions.

First, a Little Bit of Practice

Before you and your spouse get deep into the weeds of budgeting, there’s an important exercise you should do first.

As you track your money, you’ll need to decide how to categorize where your money comes from and where it goes. That doesn’t sound like it should be hard, but the process of labeling transactions can get contentious.

Some things are easy to categorize:

  • Eggs are labeled as “Food”
  • The mortgage payment goes in “Mortgage”
  • Birthday presents go in “Gifts”

But what about:

  • Batteries?
  • Coffee mugs?
  • Picture frames?

Now, reading this to yourself, it might be easy to decide how all these items might be categorized. But how would your spouse label them? Yeah, now you see the problem, and that’s why you should practice just a little bit first.

Step 1: Decide which category each of the following items should be.

(Do this separately.)

Below is a list of ten random items. Take five minutes and decide which category you would like each of these items to go into. If you would like suggestions, here is a list of default categories from the budgeting app, Mint: https://www.mint.com/mint-categories

  1. Batteries
  2. Garden hose
  3. Toothpaste
  4. Paper towels
  5. Plastic silverware for a party
  6. A TV for a guest bedroom
  7. A laptop
  8. A drink at Starbucks for you
  9. A candy bar from a convenience store
  10. Alcohol to share at a party

Step 2: Decide as a couple where each of these items should go.

(Do this together.)

Take your list and compare it with your spouse. If you already agree on what category an item should belong to, awesome! Move on to the next item.

If you disagree, talk about the context. For example, was the candy bar for you or for someone else? Is the laptop for personal use or a business?

If you still disagree, here are some options to decide what to do next:

  1. If neither of you feels strongly one way or the other, just flip a coin.
  2. If one of you feels strongly and the other doesn’t mind, go with the more passionate spouse’s category. This type of decision is too small to spend much time on.
  3. If you still can’t come to an agreement right now, label it as “Miscellaneous”. It’s a really good idea to have a catch-all category in your budget for stuff like this. You can still track all of your money without causing a fight.

Step-by-Step Instructions: How to Create Your First Joint Budget Without Hating Each Other

Now the rubber is going to meet the road. This section will walk you through creating your first budget together.

Whatever today is, I want you to focus on creating a budget for next month. Whatever has happened so far this month is done. Let’s start planning ahead.

Step 1: Start with a paper/spreadsheet budget before using an app.

(Do this together.)

It’s best to learn how to budget on paper or with a spreadsheet before moving everything into an app. That way you’re not trying to learn how to budget and use a new app at the same time. You’ll also see in Steps 4-7 that I teach budgeting a little differently than most other people.

If you already have a spreadsheet or paper version of a budget, go ahead and use that. Otherwise, you can click here to download a blank budget to work with.

Step 2: (OPTIONAL) Change or rename any categories that you would like.

(Do this together.)

Based on the “categorizing” exercise in the previous section, run through the budget from Step 1 and rename, change, or delete any categories you would like.

Step 3: Write down your income for next month.

(Do this together.)

At the top of the budget, write down how much money you think the two of you will bring in for next month. For now, don’t worry about where the money is coming from. Treat all income as coming into one big pot.

Step 4: Label all the categories as a Fixed Expense, Educated Guess, or Big Ticket Item.

(Do this together.)

This is probably new to you, so let me quickly explain.

When it comes to your budget, your expenses will only be one of three types:

  1. Fixed Expenses: You know exactly how much this will cost and when it’s due. Examples include debt payments, rent, or subscriptions like Netflix.
  2. Educated Guesses: These are budget categories that you know you’ll use each month, but you don’t know exactly how much you’ll spend. You just gotta guess. Examples include groceries, gas for the car, the electric bill, clothing, or fun money.
  3. Big Ticket Items: These are budget items that take more than one month to save up for. Examples include an emergency fund, a vacation, retirement, a Christmas fund, or one of your goals. Another example is if you pay an insurance premium every 6 months, you can set aside a little money each month instead of having a big bill twice a year.

Now that you know about the three types of expenses, go through your budget and label each category as “FE” for Fixed Expense, “EG” for Educated Guess, or “BTI” for Big Ticket Item.

Step 5: Fill in the numbers for Fixed Expenses.

(Do this together.)

We’ll start with the easy stuff. Go through your budget and fill how much all the Fixed Expenses will cost. Remember, this is for next month.

Step 6: Fill in the numbers for Educated Guesses.

(Do this together.)

Go through your budget and put in numbers for all the Educated Guesses.

Honestly, this step could be a bit tough. If you have no idea how much you usually spend on something as a couple–like restaurants or fuel–you really only have two options.

  1. Go through any old information you might have. Receipts, bank statements, old budgets, etc. Anything that might help you figure out a good guess.
  2. Just guess and move on.

I wish I could give you more help, but the amount that is best for you completely depends on how you live. I once had a realtor tell me that she and her husband spent over $1,000 a month eating out at restaurants. Just the two of them!

So, there is no “normal” number. Do your best to guess, and you’ll get better over time.

Step 7: Put in the numbers for your Big Ticket Items.

(Do this together.)

The numbers you calculated in Chapter 4 will come in handy for this step. The monthly number you need for your goals will go here, but don’t neglect the other categories you labeled as Big Ticket Items.

Step 8: *CRUCIAL* Make sure you have Fun Money for each other.

(Do this together.)

Make sure your budget has a Fun Money category for each of you. This is the money that you get to spend without your spouse having any say or control over. You both agree on the amounts for each other, but what happens to that money is completely up to you.

The amounts don’t have to be the same, either. Allison and I started with $50 each, then Allison’s went up to $75 a month for a while, and then we raised mine to $75 a month, too. The amount depends on your situation.

Try something out and see how it goes.

Step 9: Make sure you have Date Money.

(Do this together.)

Don’t forget to have some fun with each other! Having a Date Money category means you don’t have to fight over who is paying for what. The money is for you as a couple to spend on having fun together.

Step 10: Make sure you have some money in a miscellaneous fund.

(Do this together.)

As we’ve discussed already, there’s no reason to have a budget category for everything under the sun. Make sure your budget has some sort of miscellaneous category, and give it some money to cover those random things when they come up.

Step 11: Add up all your expenses and compare them to your income.

(Do this together.)

Go through all your expenses and add them all up. Compare that number to your income. Are you planning to dig the hole deeper next month or not?

Step 12: Balance the budget.

(Do this together.)

Balancing your budget could be tough the first time you do it. Don’t feel pressure to finish this step in one sitting. If you need to take a day or two to research some numbers or think of some solutions, that’s okay.

Once you compare your income to your expenses, there are three outcomes:

  1. Your expenses equal your income. Awesome! Budget is balanced. Budget is approved. Move on to Step 13.
  2. Your expenses are less than your income. Great! Go back and decide where you want that extra money to go. If it’s a lot, I suggest using the extra money to accomplish your goals faster. If it’s just a little extra, throw it into “Miscellaneous” and be done.
  3. Your expenses are more than your income. Look through your budget and decide what to cut back on. The categories you labeled as Educated Guesses are a good place to start.

Step 13: (OPTIONAL) Put the budget into an app.

(Decide to do this step together or have one person do it.)

If you plan to use an app to help you track your money and it allows you to make a budget, go ahead and update the app.

Step 14: Celebrate!

(Do this together.)

Congratulations on finishing your budget! Go celebrate!


Chapter 6: The Top 10 Budgeting Roadblocks I’ve Helped My Clients Overcome

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It never feels good to get stuck in the middle of a project.

  • One time, when I installed a ceiling fan in my house, I flipped the lightswitch and…nothing happened.
  • One day while I was writing this guide, Google Docs quit working.
  • A while back, I ordered a new part to fix my oven, and after I took everything apart, I found out the part didn’t fit.

These things happen. We hit bumps in the road that make us stop everything we’re doing or send us off track a little. The same will happen to you as you learn to work together and budget your money, so here are the major sticking points I help my clients overcome.

#1) Finding Out the Truth About Ourselves is Uncomfortable But Necessary

An overweight person doesn’t need to get on a scale to know they’re overweight. But weighing ourselves tells us whether the diet and exercise we’re doing is working or not.

Someone who struggles with money doesn’t need to start budgeting to know they’re struggling with money. But tracking our money tells us whether the plan is working or not.

I wake up every morning and weigh myself, and there are days, it’s hard to step on that scale and see the truth. After a vacation or skipping a workout, it hurts to admit I wasn’t on my best behavior, and the truth comes out with those little glowing numbers on the scale.

If we don’t know the truth, how will we know we’ve made good decisions? Owning up to my mistakes helps me learn how my choices affect my body and motivates me to do better.

It’s can also be hard to start tracking your money and see the truth.

  • How much do we really spend eating out?
  • Will my spouse get mad seeing how much I spent this weekend?
  • Why look when I already know it’s bad?

The truth is sobering, but you need to see it in order to take control. If you want to be better with money, finding out exactly what is happening and seeing the whole picture is the best way to move forward.

#2) Decision Fatigue is Real. Here’s How to Avoid It.

Our energy is not infinite, and we make bad decisions when we’re tired.

As make decisions throughout the day, we do a lot thinking about pros, cons, costs, and benefits. Asking questions and making decisions requires thinking, and the brain needs energy to do all that thinking (which we usually get from glucose). As we make more and more decisions, we burn our energy and become fatigued. As we get more tired, making decisions becomes more difficult, and we start to feel decision fatigue.

You’re somehow tired even though you’ve been sitting at a desk all day.

Long sessions of decision making cause this decision fatigue. We get tired, irritable, impatient, or “hangry“. Just from thinking and making decisions!

When it comes to tracking money or putting together a budget, couples that fail are often trying to make too many decisions with not enough energy. We do ourselves a disservice if we save the budgeting process or tracking decisions for the end of a long work day or we try to cram everything into a drawn-out budget meeting.

In the beginning, this process of tracking and budgeting money will take time and energy. To help you avoid decision fatigue:

  • Don’t try to do everything in one sitting. It’s okay to take breaks and rest your brain.
  • Set a timer and do as much work as you can and save the rest for later.
  • If you can, make budgeting decisions in the morning while you have a lot of energy.
  • Make sure both of you have energy before having some sort of money talk or budgeting meeting.

Making tons of decisions can make you tired. To be successful, be sure to pace yourself and take breaks.

#3) How to Avoid Making the Budget Waaaaaaaaaayyyyyyyyyyy Too Complicated

I’m 100% guilty of this. When Allison and I first started to track our money, I put waaayyyy too many categories in our budget.

On the plus side, it was easy to categorize everything. Toothpaste went into Toiletries. Windex went into Cleaning Supplies.

On the down side, trying to decide how much money should go in the budget for all those categories took waaayyy too much time. It made our process waaayyy too complicated.

Eventually, we combined or deleted a bunch of categories. For example, we now have a Toiletries/Cleaning category. If we buy anything to use in the bathroom or to clean any part of the house, it goes in the Toiletries/Cleaning category.

Another example is for our dog. If we spend any money to take care of Dolce, it goes under the Veterinarian category. No matter if we buy meds, food, toys, or go to a vet appointment.

WARNING: However, you can go too far with this idea of combining categories and make the budget too simple.

One couple I was coaching put a Wal-Mart category in their budget and planned to spend $1,000 a month. That might seem like a lot, but they bought everything at Wal-Mart. The superstore was where they bought their food, cleaning supplies, toiletries, clothing, and more.

But I warned them against having this category because it may end up being too general. If they overspend their budget, it gets much harder to figure out what went wrong. Did they spend too much on groceries?

  • …or clothes?
  • …or cleaning supplies?
  • …or medications?
  • …or sporting goods?
  • …or electronics?
  • …or dog food?

Having such a broad category makes tracking your spending easy, but it can make fixing problems hard. In order to answer what went wrong, they would have to go through every Wal-Mart receipt and figure out how much they spent on food, clothes, cleaning supplies, etc. If they categorized all their spending in more detailed categories, it would be easier to spot problems and fix them.

The right budget for you needs to be simple enough that you don’t waste too much time on it, but it also needs to have enough detail to help you solve problems when they come up. A budget that is too complicated leads to too many fights. A budget that is too simple leads to not enough information to make good decisions (and more work and more fights).

My advice? Keep the budget simple when you start out, and make it more detailed as you need. This way is faster than making it too detailed and consolidating later. It takes about three months of practice to find the right balance for you and your spouse.

#4) The Reason for a Purchase Determines How it Gets Categorized

When you buy something, odds are that it could be categorized in different places. For example, buying an Xbox could be categorized as Gifts, Electronics, or Fun Money.

  • Did you buy it for someone else?
  • For both of you?
  • Just for you?

As you work on tracking your money, it’s okay for an item to fit in different categories. It happens a lot, so don’t worry about it too much. Just pick a category and move on. You can always change your mind later.

#5) Don’t Forget! Money Moves in Three Ways, Not Just “In” and “Out”

I’ve had multiple people tell me they quit using a budgeting app because they didn’t know how to handle credit card payments. They’ll say something like, “Well, I spend money buying groceries, so that shows up on my budget. But when I pay off my credit card, more money comes out of my budget. The app double-dips, so I just gave up.”

The solution? Money doesn’t just come in and out. There is a third option. It could just be moving from one bank account to another.

Put simply, the money is transferring.

As you start budgeting and tracking your money, it’s okay to label some of your transactions as transfers. Doing so doesn’t affect your budget. A transfer isn’t coming in or going out, so you don’t need to track it as some sort of income or expense.

Here’s an example of buying coffee with a credit card and tracking it in your budget:

  1. Buy a cup of coffee for $5 using a credit card.
  2. Label that transaction as an expense in your budget (like Fun Money or Coffee Shops).
  3. When it comes time, pay off your credit card like you normally do.
  4. Label the credit card payment as a transfer (like Credit Card Payment or Transfer).

Using this method, you can continue to buy stuff, track your spending, pay off your credit card, and not go insane.

Another example is moving money from your savings account to your checking account. If you’re using a budgeting app, it will see two transactions; money leaving the savings account and money coming into your checking account. If you label both of those transactions as transfers, it doesn’t affect your budget because you and your spouse didn’t really make money or spend money. It just moved.

#6) There Is No Such Thing as a Perfect Budget

I know this one seems obvious, but it needs to be said. You will never be able to create a perfect budget. It’s not going to happen.

In fact, Allison and I have never had a month go exactly according to our budget, but that doesn’t mean we’ve failed.

As you start to look ahead and plan, keep in mind that you’re trying to accurately predict the future. To do so perfectly is impossible, but you can get good enough to still succeed.

I guarantee you’ll never have a perfect budget, and that’s okay.

#7) Have a Plan Done Before the Next Month Starts

Making decisions ahead of time is always a great idea:

  • Deciding what you’ll order before walking into a restaurant helps you stick to your diet.
  • Knowing what you’re doing before you get to the gym helps stop you from being lazy and train harder.
  • Having a list before walking into the grocery store helps you avoid impulse shopping.
  • Creating a to-do list before you fall asleep makes tomorrow more productive.

Every month is a chance to hit the reset button, so always have your budget done and approved before the next month starts. Doing so gives you a plan for success.

#8) Budgets Help You Make Better and Faster Decisions

It might seem like budgeting and tracking money is a lot of work just to make a few decisions, but all the work and preparation helps you make better decisions, faster.

Think about quarterbacks in the NFL. Every time a quarterback calls a passing play, he’ll usually have seven options after snapping the ball:

  1. Throw to the primary receiver.
  2. If he’s not open, there’s a second receiver…
  3. …and a third receiver…
  4. …and a fourth receiver…
  5. …or he can toss the ball over to the running back…
  6. …or he can run the ball himself…
  7. …or he can throw the ball away.

Knowing which option is best depends on each situation, but that doesn’t stop the team from having a plan in the first place. Quarterbacks practice to get used to making these snap decisions. Otherwise, it would be complete chaos.

The same strategy holds true for budgeting. You’ll put a plan in place and hope for the best. When something happens that messes with your plan, you’ll need to choose a different option quickly. Having a budget already in place helps you quickly figure out what options you have and which ones you don’t, and that makes you faster at making better decisions.

#9) It’s Okay to Change the Budget Whenever You Want…as Long as You Both Agree

The budget is not set in stone.

Let me repeat that. The budget is not set in stone!

You’re adults. It’s your budget. It’s your plan for success. There’s only two of you, so you can change your mind whenever you want, as long as you both agree to the changes.

As a couple, you are the tiny board of directors for your family, so deciding on changes shouldn’t take much time or effort. Allison and I tweak our budgets all the time, and it’s usually less than a five minute conversation.

#10) It Takes Three Months to Get Used to Budgeting

My rule of thumb: it takes three months to get used to budgeting.

  • The first budget is a lot of work to put together, but you learn a lot.
  • The second budget is ten times easier because you’re just tweaking the first, and you learn a few more lessons.
  • The third budget gets adjusted a little more, and there are far fewer surprises.

By the time you get to your fourth budget, the process will feel normal. Too many couples give up before they get to that fourth round.

Finally, Don’t Be Afraid to Ask for Help.

There’s no need to reinvent the wheel, and if you get stuck on something, you aren’t the first couple on Earth to have that problem. Be sure to ask for help before giving up.

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Chapter 7: Who Does What and When to Do It

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At this point, you might be thinking, “How are we going to split all this work to be fair to each other?” I’m sure you don’t want to take advantage of your spouse, but you also don’t want your spouse taking advantage of you.

When starting a new habit like budgeting, you may be afraid of getting stuck with doing all the work while your spouse nods their head and tunes out.

This chapter will help you avoid that.

What to Do Each Month and Who’s In Charge of What

Would you like a checklist of everything that needs to be done each month when it comes to budgeting? Well, good news everyone! You’ve come to the right place.

Here is a list of tasks I suggest you start out with. As you read this chapter, I’ll dive deeper into the details of who does what and when each task should be done.

  • Categorize your spending and your income (both of you)
  • Hold a mid-month budget review meeting (together)
  • Edit this month’s budget based on mid-month review (one of you)
  • Hold an end-of-month budget review (together)
  • Create next month’s budget (one of you)
  • Edit next month’s budget (together)
  • Approve next month’s budget (together)
  • Update app/spreadsheet with next month’s numbers (one of you)

But first, a quick story.

Passion vs. Patience

Years ago, I was “the financial coach” of a local morning radio show, The Miguel Show with Holly & Mandy. We were holding a contest where it was my job to coach two families each week for a month and see which one could save the most money or pay off the most debt.

Both families were gung-ho in the beginning, but one couple–let’s call them Chris and Amy–were falling behind.

Amy was more passionate about the contest. She really wanted to get organized with money, so she volunteered to do the budgeting and do most of the work. Chris was kind and supportive, and he was willing to help out in any way he could. Chris was definitely on board but Amy was in charge.

Every time we met, I was a bit more surprised by how little work they had completed. The tasks I told them to do either didn’t get done or were half-done. Amy would say she was too busy or tired after she got home from work. They also had two kids, a two- and four-year-old, so being tired and busy was understandable.

Then one night, while I was waiting for Chris and Amy to finish putting the kids to bed, I looked around and noticed Chris’s desk. It was immaculate! Everything was neat and organized. I also saw a World of Warcraft book next to some spiral-bound notebooks.

If you’ve never played World of Warcraft, the only thing you need to know is that it’s a complicated video game and working in teams with other players is important. Taking notes, planning ahead, and coordinating with your team are extremely useful skills to have when playing World of Warcraft. 

Chris was a planner. He was an organizer. He was detail-oriented.

In hindsight, who should have been in charge of doing most of the budgeting work? Definitely Chris. He was organized, good with technology, and had the patience for details.

If you are passionate about managing your money better, that doesn’t mean you are best suited to do all the work. If you hate being detail-oriented or you have no patience for numbers or technology, then your spouse may be the better person to be in charge of that.

The lesson here is that both of you are in charge of the budget, but one of you may be more willing, or better able, to do the grunt work. If the decisions you make during budget meetings are 50/50, it’s okay that the work is 90/10.

I’m a nerd when it comes to this stuff, so I do 90% of the work to make sure our budget and finances are up to date. I coached another couple where the wife came to me asking for help, but once the husband got started, he dove in and was doing everything and enjoyed it (which made the wife very happy).

As Jim Collins writes in Good to Great, when you’re driving the bus, you want to find the right person for the right seat. Keep that in mind as you decide who will do what tasks going forward.

How Often to Categorize Your Transactions (Hint: Every Day is Too Much)

In order to track your money, your system (whether it’s an app or a spreadsheet) needs to be updated on a regular basis. Most money apps can link to your bank accounts and automatically add transactions. However, you still need to label those transactions so that they fit within your budget categories.

For example: If you spend $100 at Wal-Mart, your bank (as well as your budgeting app) will only know three things:

  1. Where you spent the money (Wal-Mart)
  2. How much you spent ($100)
  3. What day you bought stuff (December 13)

That’s it! Your bank won’t know what specifically you bought.

  • Was all $100 for food?
  • Did you buy any clothing? How much?
  • Did you get a prescription filled?
  • Did you buy a snack while checking out?

If the entire $100 fits into one category, then that’ll be easy for you to categorize. But if you’re like most people, you bought a variety of stuff. That $100 purchase needs to be split into different categories. All budgeting apps can let you split transactions into different categories, so don’t worry about having to do multiple checkouts or trying to categorize an entire shopping trip as one category.

Labeling all this stuff might sound boring, nit-picky, and dull. Well, sometimes it is. But like warming up before a workout, it’s what needs to be done to make you successful.

I don’t suggest categorizing your transactions every day. Instead, set aside time every couple of days or once a week. For example, you (or your spouse) could make sure everything is up-to-date while you do laundry on Sunday.

I’m a nerd with this stuff, so I usually update our transactions every day. But when I have a business trip or a vacation, I’ll let things slide for a couple days. No big deal.

Who does all the categorizing? Both of you could do it. I categorize what I buy using the my receipts, and Allison categorizes what she buys with the receipts she has.

If you want to come up with a system where one of you gets all the receipts and categorizes everything, that is okay, but it’s not necessary. I’m not a fan of this method because then one of you has to constantly be hunting down receipts, and it’s usually faster if the both of you get used to categorizing your own spending on a regular basis.

Start Out with Mid-Month Budget Reviews (and How to Know When You Can Stop)

When you’re starting out, I strongly suggest doing mid-month budget reviews. You’re going to make mistakes and forget to add things to the budget. Plus, life will throw you curveballs. Rather than waiting until the end of the month to fix everything take a day around the middle of the month and check in on everything.

WARNING! These mid-month reviews are one of those moments where many couples fail. They set a budget, something goes wrong, and they feel like failures.

Oh, stop it. You’re fine. It takes practice, even for me and Allison.

In order to avoid giving up, remember that the budget is as flexible as Play-Doh. If the budget needs to change, change the damn budget!

Step 1: Catch up on categorizing transactions.

(Do this together.)

Before looking at the budget, make sure all of your information is up-to-date by making sure all your transactions are categorized.

If you have some transactions that haven’t shown up in your bank account or on an app (e.g., you filled up the car with gas today, but it isn’t showing up on Mint yet), don’t worry about them. Your goal is to be as up-to-date as possible, and the transactions will show up when they show up.

Step 2: Review the current budget.

(Do this together.)

Consider this step to be a bunch of “yes or no” questions, so don’t fix or change anything yet (that’s Step 4). Right now, just gather information.

  1. The first step is to look through all your Fixed Expenses. Have the bills that were due been paid? Did any of them change? Is there anything that looks weird or out of place?
  2. Look through all your Big Ticket Items next. Is everything going according to plan? Did something change that you need to be aware of? Is there anything that looks weird or out of place?
  3. Now look through your Educated Guesses. Since this is a mid-month review, are these items at 50%? Over half? Under half? Do you see any trouble brewing?

Step 3: Write down everything you noticed.

(One of you can do this.)

If you didn’t already, write down everything from Step 2 that needs to be fixed. Create a list of edits that need to be changed or discussed.

You should make this list for two reasons:

  1. We all love to talk in circles. To avoid this, have a list written down in order to take everything out of your head. Often times, our “list of worries” or “list of anxieties” is a lot shorter than we think.
  2. It helps you focus on what to fix. Scrolling up and down…and up and down…and up and down in an app or on a spreadsheet can be confusing (and nauseating). When you write down a list of items to fix, it helps you focus and ignore all the things you don’t need to fix.

Step 4: Decide who will re-balance the budget.

(Do this together.) 

Rather than jumping straight into re-balancing the budget, decide who is going to do the next step:

  1. If your list from Step 3 is short and easy, go ahead and balance the budget together. No big deal.
  2. If your list from Step 3 is long, it may be easier to have one of you come up with a solution to balance the budget and have your spouse edit the solution. For example, it’s easier to have one of you vacuum the living room and then the other says, “You missed a spot over here,” rather than try to vacuum the living room together.

Step 5: Re-balance the budget.

(Who does this depends on Step 4.) 

Your goal is to take your list of items to fix from Step 3 and re-balance the budget so that all the money coming in for the month has a mission and a purpose.

What if it’s really hard to balance the budget?

This could happen. If you’ve had some sort of emergency or there’s been a mistake where a lot of money has already been spent this month, here are some options:

  1. Save money or cut back on spending just for this month. Your Educated Guesses are where you’ll have the most flexibility. Since they’re guesses, they’re also usually the problem.
  2. Get a temporary, second job just for this month–a side hustle. Mow yards, shovel snow, babysit, walk dogs, deliver pizzas, etc.
  3. Cut back on a Big Ticket Item. This option isn’t fun because it means you’re taking away money from one of your goals or a major bill that is coming due soon. However, keeping a balanced budget means you aren’t digging yourself into a deeper hole.
  4. Your last resort is to be over-budget for the month and spend outside your means. This means you’ve gone further into debt for the month. I certainly don’t suggest this option, but you’re adults and “you gotta do whatcha gotta do.”

Step 6: Approve the budget.

(Do this together.) 

Once the budget is balanced and you’re both happy, throw your hands in the air and say, “Done!”

Step 7: Update the budget in your app or spreadsheet.

(Decide who will do this.)

Make sure the budget in your app or spreadsheet has been updated with the changes.

When Do You Stop Having Mid-Month Budget Meetings?

Whenever you want. In the beginning, mid-month budget reviews help you catch mistakes and help you learn, but after three or four months, you’ll probably find them to be a waste of time (because you’re so awesome!).

The mid-month budget meetings are like training wheels for a bike, and you can stop using them as soon as you’re ready.

How to Have Productive Budget Meetings Each Month

As the end of the month approaches, it will be time to wrap up your budget for the month and have a plan ready to go for the next month.

The #1 piece of advice for this process is: you don’t have to do everything in one shot. 

  • Divide the steps below into a few days if you would like.
  • Decide how much time you’ll spend on the budget before you start, and set a timer!
  • Make sure both of you have the mental energy and aren’t distracted.
  • Mornings may be a better time for these meetings than at the end of the day.

As I mentioned earlier in this guide, it takes at least three months to get used to this process, so give it time. You’ll see that the steps below are nearly identical to the mid-month budget review. (But look out for Step 6. It’s new.)

Step 1: Catch up on categorizing transactions.

(Do this together.) 

Before looking at the budget, make sure all of your information is up-to-date by making sure all your transactions are categorized.

If you have some transactions that haven’t shown up in your bank account or on an app (e.g., you filled up the car with gas today, but it isn’t showing up on Mint yet), don’t worry about them. Your goal is to be as up-to-date as possible, and the transactions will show up when they show up.

Step 2: Review the current budget.

(Do this together.) 

Consider this step to be a bunch of “yes or no” questions, so don’t fix or change anything yet (that’s Step 4). Right now, just gather information.

  1. The first step is to look through all your Fixed Expenses. Have the bills that were due been paid? Did any of them change? Is there anything that looks weird or out of place?
  2. Look through all your Big Ticket Items next. Is everything going according to plan? Did something change that you need to be aware of? Is there anything that looks weird or out of place?
  3. Now look through your Educated Guesses. Since this is a mid-month review, are these items at 50%? Over half? Under half? Do you see any trouble brewing?

Step 3: Write down everything you noticed.

(One of you can do this.) 

If you didn’t already, write down everything from Step 2 that needs to be fixed. Create a list of edits that need to be changed or discussed.

You should make this list for two reasons:

  1. We all love to talk in circles. To avoid this, have a list written down in order to take everything out of your head. Often times, our “list of worries” or “list of anxieties” is a lot shorter than we think.
  2. It helps you focus on what to fix. Scrolling up and down…and up and down…and up and down in an app or on a spreadsheet can be confusing (and nauseating). When you write down a list of items to fix, it helps you focus and ignore all the things you don’t need to fix.

Step 4: Decide who will re-balance the budget.

(Do this together.) 

The next step (Step 5) is going to be “Re-balance the budget,” but this can be done in two different ways:

  1. If your list from Step 3 is short and easy, go ahead and balance the budget together. No big deal.
  2. If your list from Step 3 is long, it may be easier to have one of you come up with a solution to balance the budget and have your spouse edit the solution. For example, it’s easier to have one of you vacuum the living room and then the other says, “You missed a spot over here,” rather than try to vacuum the living room together.

Step 5: Re-balance the budget.

(Who does this depends on Step 4.) 

Your goal is to take your list of items to fix from Step 3 and re-balance the budget so that all the money coming in for the month has a mission and a purpose.

What if it’s really hard to balance the budget?

This could happen. If you’ve had some sort of emergency or there’s been a mistake where a lot of money has already been spent this month, here are some options:

  1. Save money or cut back on spending just for this month. Your Educated Guesses are where you’ll have the most flexibility. Since they’re guesses, they’re also usually the problem.
  2. Get a temporary, second job just for this month–a side hustle. Mow yards, shovel snow, babysit, walk dogs, deliver pizzas, etc.
  3. Cut back on a Big Ticket Item. This option isn’t fun because it means you’re taking away money from one of your goals or a major bill that is coming due soon. However, keeping a balanced budget means you aren’t digging yourself into a deeper hole.
  4. Your last resort is to be over-budget for the month and spend outside your means. This means you’ve gone further into debt for the month. I certainly don’t suggest this option, but you’re adults and “you gotta do whatcha gotta do.”

Step 6: Extra steps for the end of the month.

(Same person as Step 5.) 

Because of how some apps lock the budget after the month is over, here are some extra items to think about.

  1. Make sure your income is accurate. In order to have a balanced budget, make sure your income is accurate. If you received some interest from a bank account, a bonus from work, some birthday money from Grandma, or some cash you found in a coat pocket, be sure that income is in your app or spreadsheet. This may give you some extra money to help balance your budget.
  2. Don’t worry about being perfect. The links of some banks are faster than others, and the app you might be using may have some transactions that show up in the next month. You can deal with that later. For now, balance the budget as best you can. Don’t wait for those transactions to show up.
  3. Be careful of the “Rollover” feature. Some apps let this month’s budget affect next month’s budget. For example, if you plan to spend $500 on groceries for the month but only spend $480, you start next month with $20 extra in your grocery budget. If you spend $520 this month, you start next month with $20 less in your grocery budget. Double-check your categories that are using this feature.
  4. You can change the dates on transactions. If it helps you keep your sanity, you have my permission to change the dates of transactions. You won’t be reporting anything of this stuff to the IRS. It’s okay to move one or two things if it makes life easier.

Step 7: Approve the budget.

(Do this together.) 

Once the budget is balanced and you’re both happy, throw your hands in the air and say, “Done!”

Step 8: Update the budget in your app or spreadsheet.

(Decide who will do this.)

Make sure the budget in your app or spreadsheet has been updated with the changes.

How to Handle Emergency Situations and Random Surprises

There’s no reason to wait for a mid-month or end-of-month budget meeting to fix your finances. I strongly suggest you have ad-hoc budget meetings, and they can be really easy.

In order to make these ad-hoc meetings short and efficient, try to answer these questions before talking with your spouse:

  1. What happened?
  2. What is your solution to fix the problem?
  3. How much does the solution cost?
  4. Where’s the money coming from?

For example, let’s say I’m out with the guys, and I offer to buy a round of drinks. The extra cost with tip puts me $30 over my Fun Money for the month. I could go to Allison and say, “Honey, I overspent my Fun Money (again) this month. I paid for some extra drinks, and I’m over on my Fun Money for the month by $30. I looked at the budget, and we haven’t used all our money in the Fuel category yet. Since the end of the month is Friday, how about I wait to fill up my tank and we move $20 from Fuel to my Fun Money and I’ll start next month in the hole by $10?”

Having everything organized and ready to go before you start the conversation can make it go a lot faster. However, you should be prepared for your spouse to either have questions or suggest an alternate solution.

What if the problem isn’t that easy to solve?

When emergencies happen, you’ll probably go over your budget for the month. And when I say, “over your budget,” I mean that when you combine all the categories that were under budget with all the categories that were over budget, you still can’t make your entire budget balance by the end of the month.

When this happens, keep in mind:

  • There are things you can control and things you can’t.
  • Your goal is to have a balanced budget by the end of the month, but there will be months when that won’t happen.
  • In order to make ends meet, you may need to take money out of savings or borrow.

The trouble with budgeting is that by this point–the end of the month–you’ve probably already spent the cash or charged the credit card. If you can’t balance the budget at the end of the month, there’s basically two options.

Option 1) Say, “Oh, well,” and try harder next month.

Starting a new month is a moment where you can hit the reset button. Start fresh. Renew your vigor.

An apt football analogy for this situation is punting on fourth down. You didn’t score any points, but you haven’t lost the game. Move on and come up with your next set of plans.

This is the option I suggest since you’re starting out. It’s easy and simple. This may mean that your credit card bill will be higher or that you need to set aside money in next month’s budget to refill your emergency fund.

The primary danger with this option is if you go over budget month after month…after month…after month…without noticing. I like to tell couples that the first step to getting out of a hole is to stop digging. If you choose this option, be careful of how many months you dig deeper.

Option 2) Start “in the hole” next month and make up for it.

Some apps have a “rollover” feature, and you can let some expenses affect your budget next month. If you want, you can try to make up the difference later.

For example, let’s say you had $400 in the budget for groceries this month and you spent $450. You can let that $50 of overspending rollover and only have $350 to spend on groceries next month.

This option works well if you are over budget by a small amount. Major emergencies are harder to come back from.


Chapter 8: Other Questions You Might Have and a Bunch You Haven’t Thought Of Yet

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Simply put, this is a FAQ section. Feel free to read or skip any question you would like.

  1. How can I surprise my spouse with a gift if each of us can see everything?
  2. What if I’m worried about my spouse asking me a lot of questions that I don’t have the answers to?
  3. What if one of us (or both of us) are really stubborn?
  4. What if there is something in my financial past I don’t want to bring up?
  5. What if my goals always stay at the bottom of the list?
  6. What if my spouse takes over the whole budgeting process?
  7. What if I have a business? How do we handle those finances? Do I have to share everything?
  8. What if my spouse has a spending problem? What if I have a spending problem?
  9. What if I think my spouse is hiding something from me?
  10. What if one of us is helping support a family member or friend before we start budgeting together?

How can I surprise my spouse with a gift if each of us can see everything?

It always feels nice to be surprised by your spouse. A small gift here or there makes us feel amazing. You might think you need separate accounts to hide money and surprise each other, but that’s not true. Making something a complete surprise is still possible when you budget together.

In this guide, I’ve described how you don’t have to combine your bank accounts to manage your money as a couple; technology makes this a lot easier. But even if you decide to combine all your bank accounts, it’s not hard to still surprise your spouse or do nice things. Here are some suggestions on how to do it.

  • If you can buy the gift in a store, use cash. The ATM withdrawal can be labeled as your Fun Money today and you can relabel it to the Gift category later.
  • If it’s an online purchase, try to buy from a big brand. If you buy something on Amazon or Etsy, your spouse won’t see exactly what you bought. The transaction will only say “Amazon.com” or “Etsy.com” with the date and dollar amount.
  • You could ask a friend or family member to buy the gift for you and pay them back.
  • For my birthday one year, I avoided logging in to our app for a week, so I didn’t know what store Allison bought the gift from or how much it was. (The gift was a pair of noise-cancelling headphones. It was a great surprise, and I use them every day!)

Additionally, you each still have Fun Money, and when you use your fun money on your spouse, they will love it.

But Dan, isn’t that moving us back to “my money” and “their money”? Isn’t it supposed to be “our money”?

That little slice of Fun Money you have for each other is technically owned by both of you, but it won’t feel that way. When you designate part of your budget as Fun Money for each other, it will feel like separate money even though it isn’t.

I know that sounds crazy, but it’s a well-known phenomenon in the behavioral finance world called mental accounting. The term was originally established by the Nobel-prize winning economist, Richard Thaler.

In your mind, you have your money and your spouse has theirs, so if you use your Fun Money on each other, it will feel just as wonderful as if you had completely separate bank accounts.

What if I’m worried about my spouse asking me a lot of questions that I don’t have the answers to?

This is going to happen eventually, and it’s okay to not have all the answers off the top of your head. As I mentioned in Chapter 3, Kim Scott mentions in her book, Radical Candor, that it’s good to separate brainstorming meetings from decision meetings.

The brainstorming meetings are a good time to ask “what if?” questions and discover what you do and don’t know about a problem. It’s okay to take time to find out answers and do some research before you have a meeting to make a decision.

If you’re still worried about your spouse asking questions that you don’t have answers to, here is your go-to response: “I don’t know right now, but I’ll find out.”

Write down questions you both have, do some research, and find a time to talk about it again later.

What if one of us (or both of us) are really stubborn?

If this is the case, you may have a communication issue rather than a money issue. The goal of this guide is to give you steps to find a plan that works for both of you. From the beginning, it’s all about the couple and you as a family.

Approaching a problem from the view of us and we rather than I and me is a powerful way to disarm an argument before it happens and avoid stubbornness before it appears. Your spouse should be part of the solution before you even say anything.

You’ll know there’s an issue when either of you starts using absolutes like:

  • “I never get to…”
  • “You always get to…”
  • “You do (this) every time!”
  • “You always forget to…”

Phrases like these point fingers and lay blame on your spouse. You can also see that these phrases use I, me, and you rather than us and we. Avoid them at all costs, and it will help diffuse stubbornness.

What if there is something in my financial past I don’t want to bring up?

That is something for you to decide. My goal is to make your life better from this day forward, and I hope you found that to be true in my writing and advice.

If there’s something in your financial past that helps you explain why you view money a certain way or why certain goals are important to you, go ahead and share. Otherwise, what’s done is done, and it’s in the past.

What if my goals always stay at the bottom of the list?

It depends on the goal. If you are like me and want to buy a Tesla Roadster (with a starting price of $200,000), that goal might stay at the bottom of the list for awhile. You may have common goals that are more important.

If you want something more reasonably priced and it stays toward the bottom of the list, you could still save up your Fun Money. That slice of the budget is for you to do with whatever you want.

  • Want a new video game? Use your Fun Money.
  • Want to indulge in some “retail therapy”? Use your Fun Money.
  • Want to eat out with friends? Use your Fun Money.
  • Want a new golf club? Save up your Fun Money.

As a couple, the goals you choose to pursue are up to you. If you find your spouse is too stubborn or trying to control you, this guide may not be enough. Sorry, but that is a problem outside my wheelhouse.

What if my spouse takes over the whole budgeting process?

As I mentioned in Chapter 7, it’s okay if the budgeting workload is split 90/10 as long as the decisions are 50/50. If your spouse is doing all the work and you’re not having budget meetings or you’re kept completely in the dark, you need to address that.

Lack of communication is a sure sign of a stressed relationship, and if your spouse is keeping you in the dark with your money, there is a deeper issue to work on.

I suggest confronting the issue head-on. Say to your spouse something like, “I noticed we don’t talk about our money every month anymore, and I’m concerned. I feel left out, and I want to help. What’s wrong?”

Don’t try to assume what your spouse is thinking. Don’t allow yourself to dip into the blame bucket and start saying “you do this” or “you do that”. Use the pronouns us and we as much as you can.

Ask and listen. Seek first to understand, then to be understood.

What if I have a business? How do we handle those finances? Do I have to share everything?

First, always keep your business and personal finances in separate accounts. It makes your personal budgeting and planning easier, and it makes tax time a lot faster. Beyond that, treat your business in the budget like it is a separate company from your personal life.

For example, when my business makes money and I take home income, that shows up in our family budget just like any other paycheck. If the business needs some extra money from our personal savings, that is categorized as money going out just like paying for a cable bill or saving for retirement.

For now, my business is not the top goal for me and Allison. We make sure the bills are paid, the emergency account is full, and we’re contributing to our retirement funds. Only then do we invest in my business (if it needs it). I come up with a number and bring it to the budget meeting just as if I wanted to buy a new Xbox. It’s money going out the door that needs to be discussed and budgeted.

What if my spouse has a spending problem? What if I have a spending problem?

This is a tough one. We all have things we like to spend money on, and the key to this system of working together is to make sure that your spending doesn’t cross the line.

First, if one of you is constantly overspending, don’t get mad. Get curious. You may find that the solution is that your budget is always underestimating your spending habits.

  • What are we spending money on?
  • When does it happen?
  • Are there any consequences for either of us?
  • When do we find out it’s happening?
  • Have we tried to do anything to stop it?

For example, Allison and I used to budget $80/mo for our Toiletries/Cleaning budget. One day, I noticed that we were always going over this budget but there’s usually some other category that is under budget and everything balances out. After doing some research, I realized we had set the Toiletries/Cleaning budget at $80/mo while we were living in our apartment. We never raised the budget amount after moving into our house, so I calculated the average monthly amount we had spent over the previous year and updated the budget. Done!

However, I understand your situation may be more difficult. Trying to stay within a budget is a lot like trying to stay on a diet. If you’ve ever tracked calories or macros, you know exactly how this feels.

The process of managing your money and staying within your limits is a habit and skill that needs to be developed, and like all habits, it takes work to adapt. There is an entire industry of authors and bloggers that can give you advice on how to change your habits.

My favorite methods are:

  • Use Stickk.com and put your money where your mouth is.
  • Set up some way to celebrate or have a reward when you meet your monthly budget goals.
  • When you have a budget meeting, be sure to talk about how your actions during the month affected your goals. Tie your everyday choices directly to the long-term goals.
  • Wait until you get sick and tired of being sick and tired and then change your ways. (Hey, sometimes this is the only thing that works.)

Some books about habits that I suggest are:

What if I think my spouse is hiding something from me?

Then you’re reading the wrong guide. Good luck with that one.

What if one of us is helping support a family member or friend before we start budgeting together?

If one of you wants to continue to support a friend or family member, be sure to treat it like one of your goals. Find out how much it costs each month and where the goal lands on your priority list.

You may find that supporting this person is what keeps you from reaching more important goals. Since I don’t know your exact situation, it’s hard to give solid advice, and it’s a tough spot many people are going through these days. There are many adults that are trying to support their parents and their kids at the same time, and they’re referred to as the “sandwich generation.”

The best advice I have for you is to keep tracking and budgeting your money. A small slice of control among such chaos can feel empowering.


Chapter 9: Word-for-Word Script to Start Your Next Money Conversation

Back to Table of Contents

You made it to the end! Congratulations!

You might be thinking, “Dan! I love the guide and want to get started doing everything, but how do I get my spouse on board to do this with me?”

I’m glad you asked! That’s why I created a free PDF that will help you approach your spouse about making changes without them feeling ambushed or becoming defensive.

I’ll teach you what your goal is for the conversation and exactly what to say so that you can approach your spouse and:

  • Make them feel like a teammate rather than an opponent.
  • Keep the conversation short to avoid bombarding them with information.
  • Let them make up their own mind so they buy in to your solution.

PLUS, I’ll also send you a free PDF version of this entire guide!

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The Final Note

Thank you again for reading my guide, and I can’t wait to hear how it’s helped you talk with your spouse about money!

Dan

Dan Hinz