Sara Colley / October 8, 2016

Primary Wage Earner

If you are a single person, you needn’t worry about asking anyone else to contribute to your budget plan. However, you may want input from outside experts to help you create a realistic one. Talk to your financial planner if you have one, of course, or accountant. If you don’t have one of these, consider getting one. A good fee-based financial planner can provide valuable guidance in this process.

Barring that, find a close personal friend or family member whose judgement you trust – someone who will not only help you create a successful plan, but who will hold your feet to the fire to help you stick to the budget. Oftentimes the best person is someone who also needs to clean up their own financial mess. You can make a game of it, racing to reach your goals.

Spouse
If you have a spouse and children, however, you face an entirely different calculus. It’s not only your money coming and going. Without the enthusiastic cooperation of your family – and especially your spouse – success is not likely.

So, let’s start with your spouse or partner. Sit down for a family discussion and come to an agreement that you need a budget. That sounds easy, but usually it is not. While some folks simply cannot live with a huge amount of debt hanging over their heads, others don’t stress out about it at all. If you have credit, that’s what it’s for, right?

One of you may believe that it’s critical to pay off your mortgage before you retire; the other may not. One might believe that owning your own home is important and desirable, while the other might prefer the freedom of continuing to rent. One might believe that it’s good to support your grown kids financially however you can, while the other may believe it’s time for them (and good for them) to stand on their own. As hard as it may be, you want to get to the foundational principles that you believe, find out where you don’t agree, and come to a compromise.

At this point in the discussion, you don’t want to get bogged down in who spent what that got you into this mess, or what has to be cut back, or who has to do the cutting. You want to dig down deep to find out what you believe in, where you differ, and which principles are truly important so you can let go of the others.

This might be one of the hardest discussions you’ll ever have as a couple. The vast majority of fights between couples are about one of two subjects. We can help you with money; you’re on your own with the other one.

It is important that you state your beliefs carefully, clearly and without rancor, but it is equally important that you listen to your partner’s concerns. If your partner repeats the same thing again and again, it is a sign that you haven’t successfully demonstrated that you’ve heard them. Back up, ask them to state clearly and concisely what they meant, repeat back to them what you think they said, and repeat until your partner acknowledges that they feel heard.

This may feel super cumbersome, but it is the surest way to get to a point where you both have a good understanding of what is and is not important for both you and your spouse. Until you get there, there is no point in diving into the nitty gritty details of what has to be cut back.

Here is an interesting exercise that might help. Write down basic principles that are important to both of you on sticky notes. You can write them as principles or as priorities. An example of a principle would be “Families should own their own home,” or “large credit card balances are too stressful.” An example of a priority would be “We want to retire as young as possible,” or “We want to pay for our children’s college education.”

Make it a brainstorming session, and write down everything you can think of. When you’ve exhausted your ideas, pick one sticky note out – the one principle or priority you both agree on and which you both think is highly important – and stick it on the wall as high up as possible. Then pick out a second one, and put it on the wall immediately below the first.

Continue in this manner until you have agreed on your top ten principles or priorities. Make a note of the rest of your priorities by all means, but concentrating and achieving any more than 10 is too difficult, and is likely to create chaos when it comes time to creating your actual budget.

Write the ten principles down, in large font, print it out and tape it to the wall. You have now agreed with your spouse (didn’t think you could, did you?) on the principles that are most important to you as a couple regarding your financial life.
Children
It may seem silly to ask your five-year-old to sit in on a family meeting to talk about budgets, but people are much more likely to be cooperative if they are included in the process. This includes five-year-olds.

If you tell your children you are cutting back on presents this year without involving them in the process, they are likely to feel resentful and become angry. Of course, you are the parent and you can let that go, but that kind of mood in the house makes everything harder.

On the other hand, if you explain that everyone will receive smaller gifts this year because you’ve decided that it is important to the family to give them the best education you can afford, you’ve now planted crucially important seeds in their heads that will pay off big dividends later on. They learn that it’s better to save for something you want rather than wait until you need it and then finance it, and they adopt the value that college is important – a good investment.

Children learn their values from you – from what you say, what you do, and even what you think. (Yes, they know.) And being part of the process (at the end of it, of course) will make them feel included and valued.

While it would be silly to ask them how much you should save every month for retirement, it wouldn’t be silly at all to let them know they have to choose, say, between a bicycle or a trip to Disneyland for their birthday. (OK, that would be one expensive bicycle, but you get the point.) In fact, merely understanding why and being asked for their input will teach them an incredibly valuable lesson they cannot get any other way, and it will teach them to start thinking consciously about money. That will benefit them greatly when they are adults.
Extended Family
Don’t forget your extended family. Mom and Dad, siblings, aunts and uncles – all might be very interested in what you are trying to do, and can help support you in your efforts. They will understand when you bring a bottle of Opus One to Thanksgiving dinner instead of the Chateau Rothschild that they normally expect. Ha ha! OK, for my budget it’s Two-Buck Chuck, but I assume you have better taste than I do.

But back to family. Involve your parents or a sibling especially if they have shown themselves to be particularly adept at managing their personal finances. They may have some tips and advice for you that would be very helpful.

The exception would be if they are not supportive, or if they are so critical that it would be unhelpful for them to know about it. Family dynamics are very personal, so only you can judge whether this is right for you.
Friends
Finally, don’t forget your friends. While they may not be contributing directly to your income, they probably do have an impact on your spending if you are like most of us. After all, you like to spend time with your friends, and that often involves spending money that (maybe) you should no longer be spending.

Get your friends that you spend time with on board. Instead of going out for dinner and drinks, cook at home and share a nice bottle of wine. (Or Two-Buck Chuck – you do get used to it.)
Instead of going to the movies, invite your friends over for a movie at home.

You get the idea. Your friends may have to get used to the “new you,” but they will and they will adapt. You will NOT lose friends over the fact that you have decided to become more financially responsible.

Now that your team is on board…

Think of this team as being your board of directors. They are all supporting you in your quest, they all have advice to contribute, and most of them can, in some way, contribute to your efforts. Be strong and firm in your budgeting decisions once you’ve made them. Let the people who support your efforts support you, and those who don’t want to (“Oh, come on, you can afford an inexpensive dinner out!”) will eventually come around.

Now the real work begins. It’s time to start creating your budget.

Sara Colley, Staff Writer
Financial Help Desk