Not everyone is a budgeting fan. I don’t love to budget, but I know it works. Unless you are naturally frugal – which I’m not – budgeting is likely the only way you can really see where your money is going and keep your spending in track. I even go as far as to call it a spending plan, as calling it a budget implies something negative. And I do LOVE spending.
When Ryan and I got married in 2007, I was a raging spender. RAGING. I spent too much money on crap I didn’t need. And as I looked around at all the excess, I realized that none of it mattered. Neither Ryan nor I wanted to work forever. We didn’t want to be a slave to stuff.
Ryan is and has always been a spendthrift. Months go by where he will buy NOTHING. (Dear God, how does he do it?) But from the beginning, we were open about our money and spending. We still talk about money a lot. We adjust our spending plan often. We make mistakes and learn from them. (Okay. Mostly I make mistakes and learn from them.)
And there is a benefit to doing this.
In six years, Ryan and I have managed to purchase two homes and three rental investment properties. (Full disclosure: All properties were purchased with loans and the three remaining loans should be paid off in the next four years.) We’ve managed to stay otherwise debt free, paying off any credit card balances in-full each month. We’ve managed to sock away about half of our combined incomes each year. And we’ve managed to pay for all renovations and improvements in cash.
I’m not sharing this to brag or be holier-than-thou. There’s no trick or a formula. I’m just sharing it because Ryan and I have/had average-paying jobs in our area and lead wonderful lives with many indulgences and luxuries. So, if we can do it, anyone can.
Here are a few ways we keep our finances in order as a couple.
Get on the same page about money.
It’s hard to be willing to give up anything if you don’t have any goals. Ryan and I have a clear idea of where we want to be in five years. And we talk about it often. The land is a huge part of that goal. So are the rental properties. And it all centers on providing a great life for this little man. All of this makes it a little easier to pass up the little things now to get us on the road toward the bigger picture.
Be open and honest with each other about spending.
There is one thing I hear a lot among women that makes me cringe. It’s the idea of “hiding” purchases or “sneaking” shopping bags into the house to keep husbands in the dark.
Ugh. Ick. I feel dirty just typing it.
It’s mostly said as a joke, but it doesn’t matter to me for this point. I truly believe that hiding or sneaking about anything is a bad decision in a marriage. And I think we’ve all heard that money is a top reason for divorce. (Scary.) So, hiding and sneaking with money – dangerous.
But here’s the thing – there have definitely been times I’ve bought something that I want to hide. And that tells me that it’s more important to tell Ryan.
Why?
- Because it was a bad purchase and I know it deep down. (Like that expensive vacuum I bought on impulse last week. I ended up returning it.)
- Or because it is indicating something that needs discussed between the two of us. (Like feeling like I it’s time to finally buy a new pair of jeans and Ryan won’t understand. So, that tells me that Ryan and I need to talk about my want for a pair of jeans before it turns into bitterness between us.)
Be involved and take advantage of each other’s strengths.
Another important part of keeping our spending in order is to both be engaged in the process. It’s really easy to just let your partner do it all. (I’ve been there.) But in our relationship, it’s much better when we are both be involved.
I keep track of the spending (because I do most of it) and Ryan keeps track of the cash flow and net worth (because he’s the big picture guy). I make phone calls and get quotes for home and auto insurance to make sure we’re getting the best deal (because I don’t hate talking to people as much as Ryan does). And Ryan researches the best ways to manage our stock portfolio (because, seriously, I’m not doing that).
What this means is that we play to our strengths. And we also let one another do it our own way. I started using Mint.com to track spending and budgets this year and LOVE it. I categorize spending on my phone throughout the month and it’s always up-to-date. Ryan uses a spreadsheet that gets updated manually every month with our account balances for cash flow and net worth. It doesn’t matter how it gets done, but it matters that it gets done.
This also means that we are both closely involved in our financial planning. A few times a month, Ryan will say to me, “How’s our spending look?” And I’ll give him a run-down. And then I’ll ask Ryan, “What does our net worth look like?” And he’ll tell me. We both care about what the other is doing, but we also let each other do it our own way.
“Give up” on mass consumption.
This is a hard one for me. But, in order to meet our goals, we have to prioritize what matters. And honestly, most things don’t matter. And this means we are not getting ALL OF THE THINGS.
One of my goals for 2014 is to fight the norm.
- The norm – when we expect that our first house be brand-soaking new with granite countertops and thirteen walk-in closets.
- The norm – when we expect that we have earned the right to buy whatever we want whenever we want. Whether we can afford it or not.
I’m trying hard to fight this urge to buy and get and take. (That doesn’t mean I don’t want a new pair of jeans every once in a while. I just bought some after someone busted the crotch out of her favorite pair. Ugh. But those jeans were in the budget, thank you very much.) And we’ve also been talking a lot lately about how to make sure that Henry understands this, too. (I really love this article about raising entitled kids at We are That Family.)
Think outside the box.
Finally, I think that finances take creative thinking. It’s not all number crunching. There are a lot of unique ways to save and grow your assets – and it’s more than just kicking the latte habit.
The entire reason we purchased our first home was to save money. The house was hideous and horrible and ugly and scary. But it was DIRT CHEAP. Putting cheap into perspective – it was about the price of a new car. And people thought we were CRAYzeeeee.
But what’s really crazy? Buying a house that the bank told us we could afford? Or buying a house that we could seriously afford? When that house left us in a position to be able to afford to buy multiple other houses. All at less than the cost of a move-in-ready number.
In my opinion, that’s thinking outside of the box. And there’s something beautiful about escaping from the box.
What’s your best tip for managing your finances?
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This is what makes me so sad, because we are splitting our income in half when we move and while we have a good chunk in savings, it’s nowhere near what my salary was….and almost all the houses in the area we need to buy are over 225k. And the dumps, well I simply won’t have any money to fix them up or time to do it with Ashford hanging around all day. I really feel completely like a slave to money, and I don’t want anything fancy…just enough space to not go nuts at home. I can’t think creatively about this stuff, I only know how to live well the way we’ve been doing it. BLAH
Love this post! I am definitely the tightwad in my relationship, and I couldn’t agree more with everything you say. In fact, it makes me want to revisit our goals!
Thanks for the encouragement!
Really great post! It makes me sick when I hear about sneaky purchases. My dad always sneaky buys things, and doesn’t tell my mom… but he tells me, then I feel awful haha. But with me and Aaron, I’m the budget Nazi. Before we were married, he was a big spender. But he has really gotten financially smart over the past few years, and knows more than I do now about ways to save money and cut costs. And I am SO grateful for that! Because of that, I’m able to stay home with the wee babe.
This is all such great advice Kim! Budgeting/communication with one’s spouse is the key to spending wisely and having less arguments about where money is being spent. We have a budget and discuss all of our purchases, except things like clothes and fun things. We each get a certain amount of money each month for “fun money” so I just save my fun money until I can go shopping. 🙂
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Love the honesty and advice in this post! Go Kim and Ryan!
Our first house in Chicago made us miserable (holy taxes!). We got our priorities straight when we bought #2. Buying a cheap house and putting love and money in it over time has made us so much happier than our shiny and new house ever did.
I think we could all use a Ryan post on stock portfolios!
Great advice. I’m naturally frugal, and my husband is a natural spender. Being open with each other about our habits, purchases and future goals is ESSENTIAL. (That applies to pretty much everything in marriage for that matter.) I also recommend talking to a financial advisor, even if you don’t have much money. They can help you set up a simple will, purchase the right life insurance, plan for your goals and keep you accountable. Also, maximize your 401k matching plan if your employer offers one! It’s FREE MONEY!
This is great advice. We are big believers in working with experts, so I think your thoughts are right-on. Ryan’s also union, so we get lots of free perks like free legal services. We’ve been putting off meeting with an attorney to set up our will. Need to get one that.
This is a great series. Thanks for posting it – because honestly, it is hard to talk about in real life or in the blog world. I think that this is a series I’ll save because it is so helpful! And your encouragement about living outside the box is great – it’s always good to be reminded that other people (who are beautiful and great and normal) don’t BUY ALL OF THE THINGS. So, thanks.
Thank you for the kind words. Money is a touchy subject. If we were all a little more open about having discussions about it, I think we’d be better off.
sounds like you all really have it together! it’s nice to see other couples the same age we are who are making finances a priority and understand that debt is no good! keep on sharing it!
I don’t know about having it together, but we’re definitely on the road. Thanks for the comment!
You are incredibly lucky to live in a place with such cheap housing options!!! House the price of a car?!?! Wow! Here is S. Cali housing prices are completely ridiculous. I also own several rental properties (but ours are in Portland, OR where our money goes further).
Good tips. One big way we save money is having no car payments. Our “new” car is 12 years old, and our 2nd car is 22! (I guess that would be covered under give up on mass consumption, ha!) The other thing is to make lots of small decisions, that when combined, add up to major savings. I track our budget in an Excel spreadsheet, so I can see changes up or down to various categories each month to see where we can make adjustments.
I’m sure it’s a different story on the coasts, but I also have to believe that there are houses that are more affordable than others. And I’d also argue that wages are likely higher. But, I do agree that the housing costs can be a big difference.
I’m impressed that you are able to keep up with expenses in an Excel document. I used to track it that was and I was always dreading the process. I like Mint.com a lot better.
I am totally with you on sharing everything about finances and not sneaking purchases. You inspire me to be even more frugal 🙂
Hurray!
You guys are just way awesome 😉 I kind of stink at budgeting, but we are both cheap so we aren’t doing too bad
I think that budgeting it only important for those of us who are over-spenders. If you are naturally frugal, I am sure it’s not as big of an issue.
Wow, what a great financial plan. Y’all have accomplished so much already. The point I agree with most is getting off of the consumer merry-go-round.
Less stuff=simpler life=quality time.
Totally agree. And I love the way you put it – it is a merry-go-round. Only not so merry.
Wow, I loved everything about this post! It was very encouraging to read. Justin and I always go round and round about the budget and how to save more money. I am a recovering shopaholic. But for real. I was never the hide my shopping bags type, but I was a shop til I drop then ask husband where all our money goes type. Since we have lived in MA I have gotten stuff in order and have put an end to my over spending. But you’re right, fighting the norm is HARD. This post has left me so encouraged! Thanks Kim!! Xo
You are so sweet. Thank you for the kind words. I was a shopoholic, too. And I still struggle with it. So, I try to keep myself away from the temptation.
Great advice, lady! You guys are an inspiration! And that family photo is just about the cutest!
Thank you, friend!
I absolutely love this series and your thoughts on money. There is so much value in living outside the norm and making money choices that reflect our long term goals. I love that you guys are living it out.
It’s not always easy to live outside the norm, but it’s worth it.
Very wise for your tender years. Great couple financial advise!!
Thank you, Donna!