Let Me Clarify

How often do you have financial related conversations with your family? Once a month? Once a year? Ever? Financial related struggles are very common in America, leading to stress, anxiety, and very often, divorce. So, how can we reverse this trend, or at least do better as a society? Here are three essential actions, in my opinion, that families can take to help make financial conversations less stressful.

1. Set a date at the end of each month to write down your expected income for the next month. For example, spouse A gets paid every other week and spouse B gets paid on the 1^st and the 15^th. Write each of those dates down and tally up the income. Next, use a budgeting method. For a simple to use and easy to track method, I am going to highlight the 50-30-20 strategy. From the income number you added up, earmark 50% towards your monthly needs, 30% toward your monthly wants, and 20% toward some type of savings or debt payment plan. It’s so much easier to put your expenses in these categories when you plan from the beginning versus having no plan at all. If you can’t quite fit each category into one or more of those percentage buckets right away, that’s fine. At least you have a starting point and a goal that you and your family are heading toward together.
2. Don’t try to make up for years of financial mistakes in one night. When you start to have budgeting and finance conversations with your spouse or partner, explain to them both trials and triumphs you’ve experienced when it comes to money. It will help them better understand your thought process around how you spend, how you save, and your overall relationship with money. If you express these types of thoughts, you can hold each other accountable – in a positive way – to hopefully not fall back into any traps. One conversation, once a month, for the next twelve months. Give it a shot and when 2024 rolls around, you will have a much clearer understanding of your family’s financial situation. Having this understanding will create a less stressful household.
3. Lastly, have some fun. Don’t turn your monthly cash flow conversation into a daily “the budget doesn’t allow for that” conversation. Budgeting doesn’t mean you can’t go out to eat or go on vacation or buy clothes. You can do those things, just make sure it doesn’t derail you in other areas. Dave Ramsey is very famous for making sure you only sit on your couch until you’re fully debt-free. If that’s your style, go ahead. For the rest of us, we can eat out once a week instead of twice and take our 7-day vacations down to 5 days.

Will this short blog piece save any marriages? I’m not sure. What it will hopefully do is have you and your family begin a conversation about money. It’s tough, but it gets easier. Be open, be honest, and have fun with it.