My Wife is Spending Too Much Money and She Knows It

by Kevin on August 20, 2008

(Photo by David Boyle)

It’s true. My wife is spending too much money and she knows it.

(Please note I don’t say that in a condescending tone! This post was read and approved of by my wonderful bride.)

How She Knows

We allocate 2% of our monthly income to individual spending for the each of us. If our total income is $3,000 then we would each get $60 to spend the next month on anything we want. (Except for the percentage, these are not accurate numbers for us.)

In the recent past she has been running into a small deficit pretty consistently every month. Let’s say at the end of the month she was $20 in the hole. We would divvy up our individual spending money, and she’d be out of the hole. At the end of the next month, she’s back to being $20 in the hole.

What’s going on here?

Hint: It’s Not Constant Overspending

To the smart readers who caught it, congrats. My bride — at least in the above example — hasn’t been over spending every single month. If she ends the previous month at negative $20, gets $60 in spending money, and ends up at negative $20… then she’s just spending what she had during the month. Somewhere in the past she spent too much money and has just spent consistently since then.

Thankfully, she isn’t digging a deeper hole in her “account” every month. She’s just treading water.

How I Found Out About It

Lest you think I pointed the finger at her in a chastising manner, I’m happy to report that was definitely not the case. We were discussing where we stood for our budget and she pointed out that she felt like she was always in the hole.

She came to me for advice. Did I have any ideas as to why she never seemed to have money left over? (As a contrast, I dip into my “spending” money only occasionally and usually have some left over to build up for next month.)

After sitting and talking for a while, we discovered a few things:

  • She’s not a spendaholic. (We knew that already.)
  • At some point in the past, she spent too much money, and spends every last dime usually.
  • If she wants to buy something for another budget category — like house decorating or for our dog — and we don’t have the money for it in the budget, she spends her own money.
  • The primary thing she was spending money on is school supplies.

That third and fourth points were the kickers. On one hand, it’s a good thing. We weren’t dipping into our budget categories for decoration/maintenance of our home or on our dog. She was footing the bill herself. For example, if she went to PetSmart and saw a toy (or we needed to replace an old destroyed one), she would just pay for it out of her own money.

My wife is just starting her second year of teaching. She doesn’t have the supplies of a 20 year veteran. She thinks at some point in the past the things she spent too much on — and went into the hole — were school supplies. She doesn’t get her school funded money until October. If you’re in the midst of planning during the summer and need supplies, you can’t wait.

Result of those two factors? She spent most of her money every month.

So? What now?

Thanks to our wonderful marriage, we were able to have this open, honest communication. I didn’t point any fingers about her spending too much. She didn’t accuse me of being a budget nazi. All is well in our household.

After talking, we have a better understanding of what she has been spending money on. We — she — is making some changes to her behavior. She understands that if we don’t have the money for something, then she probably shouldn’t be buying it. And if she does, she may end up in the hole again.

We also made an adjustment so that her school supplies come out of our miscellaneous category. Granted, we can’t empty out this account every month, but it does give her a buffer to use.

The bottom line? We’re on the same page, headed in the same financial direction. All is well. (And now I’m going to go give her a foot rub.)

{ 3 trackbacks }

Carnival of Personal Finance #167 - Highlights from the Beijing 2008 Olympics — Broke Grad Student
August 25, 2008 at 6:04 am
Slashing the Grocery Budget, Spending Too Much Money | The Smarter Wallet
August 28, 2008 at 9:50 am
Posts That Motivate and Inspire Week #3 | The Passive Dad
September 9, 2008 at 3:10 pm

{ 17 comments… read them below or add one }

Deb August 20, 2008 at 8:46 am

I disagree. Your wife has not been over-spending, that is an illusion. There is a temporary float kitty she needs that has not be budgeted for and like all women she shaves herself and her needs to take care of everything else. If she continues that mindset she will end up 55 and broke. Even married women need to create a personal net worth which I posted about in March. Budget better for the house because if she doesn’t like what she comes home to at the end of the day she can’t really care about how much money is in the bank. Life is today, too; not just at “retirement.”

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Kevin August 20, 2008 at 9:03 am

@Deb: I agree to disagree. We set our budget together including money for all the things you mention. It’s not me “shorting” her of money. We work together.

And as a note to everyone: she proofread this post and noticed the problem herself. It wasn’t me pointing out a problem to her. :)

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vilna bashi August 20, 2008 at 9:31 am

I like this post. I think a lot of families would do much better with their finances, if they spent money based on a budget and if they had honest conversations about money. Thumbs up, folks!

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Ashley @ Wide Open Wallet August 20, 2008 at 10:58 am

This sounds so much like me and my husband. I spend all of my “allowance” every month and he always has some to roll over. But I do the same as your wife. Spend my money on household things or the kids and he doesn’t. It’s frustrating!

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Ricky August 20, 2008 at 11:28 am

My wife and I apporach our “personal spending money,” or whatever you want to call it, almost the exact same way. However, I am the habitual over spender on our team. We ordinarily pay for everything on a credit card and pay the balance in full at the end of the month. You have written several times about the potential benefits of doing so and I very much agree with you. Due to my lack of self discipline and inconsistency of balancing my spending money line on our budget, I over spent more often than not. Not a lot, but I was not sticking to the budget. So I did the only thing I new that would stop the problem. My spending money is now the solitary line on our budget that operates on a 100% cash basis. When it is gone, no more spending :) I was wondering how you arrived at 2%? We basically pulled a number out of the air that seemed reasonable. It works, but is there a more scientific approach?

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Kevin August 20, 2008 at 1:37 pm

@Ashley: Yea, we find that I tend to save up for big things (new computer or car parts) and she spends consistently. It comes out the same.

@Ricky: Nothing scientific about it brother. We essentially ran the math and decided that 1% seemed just a bit too little, 3% seemed a bit too much. 2% just seemed right. Some people just do a set amount “$50 each” rather than 2%. We chose percentage so when our income fluctuates it goes with it.

For example, if we were at 2% and it would turn out to be $40… then if you were doing a flat $50 each, it might too much of your budget.

And hey, if cash budget is the thing that works for you, that can definitely work. Put it in an envelope and that’s all you get.

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Scott @ The Passive Dad August 20, 2008 at 4:32 pm

Wow! Great debate and I like that you picked a “hot potato” subject like this one. I think the most important thing to mention, is that you are communicating your financial decisions and your budget as a couple. So many couples don’t talk or have any plan.

I’m including this post on this weeks “Posts that motivate and inspire”. It’s a great topic!

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Sam August 21, 2008 at 3:57 am

Good to hear that! The key to a happy and successful marriage is having an open communication in all aspects of life: social, spiritual, financial etc.

Sam
Fix My Personal Finance
http://fixmypersonalfinance.com/

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Kevin August 21, 2008 at 8:27 pm

@Scott and Sam: Thanks! :) You’re right… the more communication the better in my opinion.

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LivingAlmostLarge August 27, 2008 at 5:57 pm

Teachers have to spend a lot on supplies!

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cold beef cake February 15, 2009 at 5:03 pm

2% of the monthly income? You lucky SOB!

My wife earns $50K per year. I earn more than double that. So already, I contribute significantly more to the pot in the first place. But, get this…. she spends about 75% of her take home pay on herself!! Mother of G-D! I can’t stop it either. We have a sit down heart-to-heart then she says “I promise I’ll just use the credit card for emergencies (gas, etc..).” IT DOESN’T MATTER… She just keeps opening up credit card accounts at different stores and I just keep paying them on her behalf but it’s killing our finances. I do love her dearly, please note. She is amazing. But why the heck does she CONSTANTLY need to buy clothes and shoes? (that is what she is buying)

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Kevin February 22, 2009 at 4:17 pm

@cold beef cake: To be flat out blunt/honest with you:

a.) I’m not qualified to tackle that issue.
b.) You need professional help. I would go to my church (if you go to one) and ask for counseling. Otherwise I would seek out some other form of counseling.
c.) Sounds like she is spending out of either habit or to make herself feel better. That will need to be addressed.

I wish I could help, but that’s serious stuff. You’ve got to be on the same page with finances in marriage. Plain and simple.

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dave July 28, 2009 at 12:28 am

I’m with cold beef cake; 2% and she sticks that well to it – oh to but dream…
after 12 yrs of marriage I would have to say the regular disregard for any attempt at a budget would be the biggest issue we’ve had, promise this promise that…. disregard it all!!! The only thing I’ve found that works is to spend it first! ok I spend it on bills & rrsp’s (autopay on payday) so it’s not as much fun but, hey short of splitting everything down the middle thats about the only thing I’ve found that works. I’m not quite ready for that divorce yet :). Showed her once the month she spent 4500 on visa (ontop of the 6000 that our combined incomes were at the time (minus regular expenses)) and she said with a straight face those are all ok expenses I”d do it again; WTF, but if I buy a 300 barbeque since it’s 30% off w/ no taxes I think I heard about that for 2 months now. if I could split the money down the middle without more strife I’d do it in a heartbeat – take her to budgeting 101, or maybe .0001 would be more accurate.

btw to the last guy – go to my church for professional budgeting help – you’re on something better than I thought money could buy, why not just pray for more money, it would be as likley.

I’m seriously thankful she’s not so bad she opens up new credit cards though, thank god for that anyways; I think for me that would be one straw too many; I’m just not willing to live my last 50 yrs on mac & cheese so my wife could by cloths she throwout everytime she changed a dress size.

I did a few thinks I think that helped over the last 12 yrs though that I think helped, I’ll share them in case they’re useful to anyone.
a) setup 2 personal accounts – auto transfer into them each pay period – we do about 250/month each – thats to cover dining out,, movies, etc more or less fun stuff – the reason was because using the shared budget we could agree on eating out, but not say a ps3 etc; and similar misc stuff for her – it gives some defined flexibility then. bought a frying pan tonight from it.
b) autopay bills – set it up once for the next x yrs with online banking – then if you’re not right ontop of bill payments before it’s spent at least vedo isn’t coming for your cable box. Add in your rrsps to that and a auto transfer to a savings account and you can spend to your last penny and still be ok each month – which is good because thats pretty much status quo around here unfortunately.
c) buy everything with your debit card & keep your credit card maximum to $1000 or less. That allows you to track all of your spending easily w/ online banking & if you suck at paying yorur visa cause hey when you do it just climbs right back up there it’s only a $30 fee / month – I should really change that to a low interest one & just accept it; but I digress.
4. Venting even if completely unproductive still feels good :).

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Richard October 30, 2009 at 9:30 am

Thanks to James Schaefer for the insightful comments, with kind attribution to the Journal’s Jonathan Clements and to Jim’s own brother, about the intriguing and powerful concept of “opportunity cost”. James’ letter appeared in Letters on October 23.

When we spend money on things we don’t need, not only do we lose that money, but we permanently deprive ourselves of what that money, better applied, could have yielded. $1 million (and maybe much, much more) is not lost by your carelessly misplacing it. It is lost $50 and $100 at a time. When you buy $10 glasses of beer, $15 glasses of wine, $50 lunches, $100 dinners, $125 ties and $500 shoes, you lose out on the future value those funds, if invested even in a poorly performing market, would have produced. Over a lifetime, the poorly performing markets will fade into nothingness and the long term results take effect. Indeed, the financial crises of the hour will one day be but a memory. The shock of realizing what you could have had will floor you and last a lifetime.

$1,000 per month invested at 8% for 35 years amounts to almost $2.3 million. Adjusting for 3% inflation, you would still have over $800,000 in today’s dollars. Take a look at your annual expenditures on things you don’t need and you’ll find the $1,000 (and maybe a lot more) a month.

Ignorance of the concept of opportunity cost can mean, after 35 years of well paid employment, having a negligible net worth at 60 and parking cars under the direction of a high school kid at 70. You can be young in this country and be without money but it’s really tough being old and in that shape and much worse to realize it needn’t have turned out that way. James’ brother advised saving “until it hurts.” What did he know that you don’t?

Richard E. Savoy

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TheBuddhaWithin October 9, 2010 at 9:08 pm

Practice non-attachment to material objects. Seek truth within and through the Lord Jesus. Give everything to your wife and be a “married monk”. You won’t be able to be angry with her for “wasting” your money on material objects, if you yourself don’t want them in the first place.

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Terry January 5, 2011 at 11:27 am

You have got to be kidding me. My wife consistently overspends by about $1,800 per month. YES, THAT’S RIGHT. She was spending roughly $21,600 annually more than what she earns. Now, we are separated and she is spending about $2,500 monthly more than what she earns… all on credit cards. She was keeping it a secret before our separation, and now I’m not even sure whether I know the full extent of it. I’m just glad I’m out of that mess.

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Joe September 12, 2012 at 3:25 pm

Please. Consistent or inconsistent spending is irrelevant. What will be assuredly consistent, assuming she hasn’t quit spending, is that she she will have have little or no money come retirement age–a concept my own wife has yet to grasp. There’s no two ways about it. You either have a budget and stick to it, or you don’t. Even if you inconsistently overspend, you consistently will be playing catch up.

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