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(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.)
13 Comments, Comment or Ping
Deb
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.”
Aug 20th, 2008
Kevin
@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.
Aug 20th, 2008
vilna bashi
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!
Aug 20th, 2008
Ashley @ Wide Open Wallet
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!
Aug 20th, 2008
Ricky
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?
Aug 20th, 2008
Kevin
@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.
Aug 20th, 2008
Scott @ The Passive Dad
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!
Aug 20th, 2008
Sam
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/
Aug 21st, 2008
Kevin
@Scott and Sam: Thanks!
You’re right… the more communication the better in my opinion.
Aug 21st, 2008
LivingAlmostLarge
Teachers have to spend a lot on supplies!
Aug 27th, 2008
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