As we get ready to celebrate the end of another year, it's common to take stock of our relationships, our health and our finances. Are we where we want to be in each of these important personal areas?
Most people understand that if their financial situation isn't on track, their personal lives can suffer. Money problems often lead to disagreements or fighting with the ones we love, which can damage relationships, cause stress and affect our health. Constant squabbles over money can be the root of a vicious cycle, causing our personal lives to be out of balance.
I work with a number of married couples and others in long-term relationships. Even though most of my clients have plenty of money, from time to time they argue over their finances. "I think we are spending too much money" is the most common complaint I hear. Clients I've worked with for a long time tend to know how much they are spending, but may still feel it's excessive. But when I meet with new clients and ask how much they spend each month, a sheepish look often comes across their faces. The most common response is "we don't really know."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
As you take stock this holiday season and realize differences over spending might spill over into your personal life, consider diving deeper into this issue. Rather than simply making a New Year's resolution to better manage your money, I have three recommendations for 2017 that I have shared with clients to help improve communication and results around their spending habits:
Start the New Year By Tracking Your Spending
Make a list of your expenses. How much are your monthly fixed expenses—those needed to run your household—such as the mortgage and car payments, utilities, food, insurance and taxes? Next, list discretionary or variable expenses. These items include dining out, vacations and entertainment, as well as gifts. Compiling a complete list of expenses will create an important set of facts, especially if you and your spouse's or partner's spending goals are not aligned.
Anyone can track their spending by using software programs such as Quicken or online tools such as Mint.com. Or simply review your monthly bank statements to gather this data. Because most people don't spend the same amount each month—for example, life insurance premiums and vacations may be quarterly or semi-annual expenses—I suggest tracking your expenses for at least three to six months. Don't forget to add in annual expenses such as property taxes, which can be amortized on a monthly basis.
Set Up a Personal Schedule to Discuss Your Finances
Rather than randomly discussing finances when the mood strikes you, develop a schedule. One idea is to set up time quarterly or at least twice a year. During these discussions, evaluate the progress you've made and decide how to refine your spending plan. Putting this discussion on the calendar sets clear expectations for both people and allows a couple to have a calm, less stressful discussion. To make it even more productive, each person should do their homework in advance.
Respect Your Partner's Point of View
Finally, keep in mind we all have unique backgrounds that can shape how we view money, even after years of marriage. I grew up in a small farming town, and the joke was we had more cows than people in our community. We only had one traffic light that just blinked yellow the entire time. Families were considered "well off" if they had a steady job, such as a teacher or office clerk, and the family did not have to worry about their next paycheck.
On the other hand, my husband grew up three hours away in upstate New York, in a town that was dominated by a Fortune 500 company's headquarters. White-collar jobs were plentiful, and most people owned stock in this company, which propelled 401(k) plan values and big bonuses. People that were "well off" were easy to see by the size of their house or the year of their luxury car.
Due to these different upbringings, my husband and I have different views of living for today versus saving for a rainy day. I tend to plan for the unexpected, though my husband prefers to live in the moment. It's not that either of us is right, but each of us needs to understand why we differ and respect those views.
Working together to understand and adjust spending habits will help improve your finances and should lead to a better personal relationship.
I compare improving finances to losing weight. It's a waste of time to weigh yourself on the bathroom scale each morning if you are not dieting or exercising more. If you have financial disagreements or problems, it doesn't make sense to take stock and measure your financial progress if you aren't willing to change any of your financial habits. By regularly monitoring your finances and communicating with your partner, your overall relationship will be better for it.
Lisa Brown is a partner and wealth adviser at Brightworth, an Atlanta wealth management firm. She specializes in investment management, executive compensation, retirement transition and estate planning.
-
RMD Deadline April 1: Five Tax Strategies to Manage Your 2025 IncomeTaxable Income The April 1, 2025, deadline for required minimum distributions (RMDs) is fast approaching for retirees who turned 73 in 2024.
-
Rising AI Demand Stokes Undersea InvestmentsThe Kiplinger Letter As demand soars for AI, there’s a need to transport huge amounts of data across oceans. Tech giants have big plans for new submarine cables, including the longest ever.
-
What Can a Donor-Advised Fund Do for You? (A Lot)DAFs and private foundations go about helping charities (and those who donate) in different ways. Each comes with its own benefits and restrictions to navigate.
-
Is Chasing the American Dream Ruining Your Financial Life?Too many people focus on visible affluence as a marker of success. Here's how to avoid succumbing to the pressure and driving yourself into debt.
-
Charitable Contributions: Five Frequently Asked QuestionsMake the most of your good intentions by understanding the ins and outs of charitable giving. A good starting point is knowing what's deductible and what isn't.
-
Can You Be Fired for Going to Work When You're Contagious?What's an employer to do when an employee shows up at the office with a cold or the flu and spreads germs to co-workers?
-
Are You a High Earner But Still Broke? Five Fixes for ThatIf you're a HENRY (a higher earner, not rich yet) but feel like you still live paycheck to paycheck, there are steps you can take to get control of your financial future.
-
Five Things That Are Spiking Your Insurance PremiumIt's a drag, but just as your expenses keep rising, so does the cost of doing business as an insurance company. That means higher premiums.
-
How Savvy Is Your Financial Adviser? Three Ways to Find OutDon't be afraid to ask your adviser if they're keeping up with industry developments and their own training. How else can you know they're giving good advice?
-
Beware of TV/Billboard Personal Injury Law Firms: Here's WhyIf you or someone you know is tempted to hire a so-called settlement mill to handle a personal injury case, here are some reasons to reconsider.
