By Michael and Julie Kastler | Budgeting Money Tips

If you are recently married or a long-time married couple, you’ve probably experienced the significant role that managing money can have in a marriage.  One person is probably a spender and the other a saver, one is diligent on planning a budget and the other is not, one wants to remain debt free and the other is out buying the next biggest toy on credit.  Sound familiar?

Personal finance and money matters are one of the highest causes for divorce.  Diverging on your money plans can yield to a divergence in your relationship.

Here are a few money lessons to help you and your spouse get on the same page, develop joint goals and  a strategy to meet those goals:

Money Lessons for Married Couples, Tip #1:

Set Your Goals, Together

The biggest mistake that married couples can make is to having a different set of goals – his and hers.  Even if both are income earners, life goals and financial goals should be worked on together as one unit.  For example, if a goal is for her education, it should be a common goal for the both of you.  Likewise, a new big-boy toy for him should be a common goal for both of you.

By establishing goals together you are forcing yourselves to communicate and also take responsibility for each other’s goals.  After all isn’t that one of the reasons you got married in the first place, to reach goals together?

Make a list of your goals on a piece of paper or find a good budgeting worksheet system that is goals-based.  By writing down your goals you are setting yourself up for no surprises to each other and maximizing your chances of meeting those goals.

Common goals is the number one money lessons goal!

Money Lessons for Married Couples, Tip #2:

Prioritize, Needs vs. Wants

Now that you have a common list of goals, prioritize them.  Start with the items you absolutely need.  For example, if you have a baby on the way, there are certain things that you will need.  Lump those together as ‘baby items’ and make sure those are at the top of your list.  Another example might be a newer car if your current one is on its’ last leg.  These are legitimate needs.

An example of a want would be an iPad 2 – it’s a nice item to have, but it certainly is not a necessity.  Another example is going out to restaurants, a luxury that one can do without that many of us treat as a need. If you are short on cash, I would recommend making eating out a want and set it as a goal that you save for, instead of a need.

As companies diminish their retirement plans for employees, saving for retirement is another area that many people need to set as a need.  As a long-term goal with many years to save, the amount of money applied from your available monthly income could be very small (see my blog on compound interest and Tip #4 for more detail).

If you have non-mortgage debt, I would recommend adding “Pay-Off Debt” as a critical money lessons need…

Money Lessons for Married Couples, Tip #3:

Pay-Off Debt and Remain Debt-Free

If you have read any of my articles, blogs, or viewed my website, you know how I feel about getting your debt paid off!  Of the main money lessons Dave Ramsey so eloquently demonstrates, debt is a shackle around your entire body, literally stopping you from reaching your goals and living to your full potential.

By paying off your debt, you could potentially free-up hundreds of dollars per month that can now be applied to your above stated goals.  By being debt free, you’ll now be able to pay cash for those goals!  Imagine taking a nice vacation and coming home to no bills for the trip!  My new bride and I are writing this blog on our way home from our honeymoon and I can’t even describe the joy we have by paying the entire trip in cash!

If you’re a numbers person, then you’ll appreciate the long-term mathematics of debt avoidance.  Add up all the current interest payments you currently pay and multiply that out over your lifetime.  How big is that number?  How many of your goals could be realized if you avoid those debt payments?

Being debt free leads you to the next money lessons step…

Money Lessons for Married Couples, Tip #4:

Build wealth

Once you’ve mastered how to set goals, prioritize, and pay-off debt, you’ll be well on your strategic path to building wealth and realizing your long-term goals such as retirement or your children’s college education.

By living well below your income level and remaining debt free, you will have substantial money left over at the end of the month to sock away for the long term.  When you consider the time value of money and the greatest financial wonder:  compound interest, you can easily accumulate a significant nest egg.  Here are some examples:

• Saving $100 per month for 20 years at 8% interest will yield $58,902
• Increasing that saving to $200 per month for 20 years would yield $117,804
• Extending the time to 40 years, you would accumulate $698,201

No matter what your income level is the key money lessons are to find ways to live well below that income level and SAVE!

Money Lessons for Married Couples, Tip #5:

Find a Budgeting Worksheet that is Goals-Based

It’s really easy to get off track.  Life happens and we get busy with work, family, friends, and get taken into many other directions.  To make sure you don’t get off your financial track, write everything down:

• Your Goals
• Assets and Debt
• Income
• Monthly Budget
• Cash Flow Analysis
• Your Plan to Pay-Off Debt
• Your Plan to Fund your Goals

The simplest way to write these out is to find a goals-based budgeting worksheet that allows you to plan, record and track all the above.   You’ll find it convenient that the budgeting worksheet will do the math for you and once set-up, you’ll only need about 30-minutes per month to stay on track.

A really excellent budgeting worksheet should GUIDE you through the entire process.   Search for a high quality budgeting worksheet that is easy to use, inexpensive, and provides all the worksheets necessary to meet your family’s goals.

Money Lessons for Married Couples, Tip #6:

Communicate Regularly and Make it a Family Affair

Marriage is the ideal accountability partner.  You’re both working towards the same goals – and they’re written down!  All that you need to do now is have a periodic review and make sure you’re on track.  Review your goals about once per month and make any adjustments necessary as you meet goals and add new ones.

If you’re using budgeting worksheets, update them together every month, especially if there are any significant changes such as income.  By working together, reviewing your plans, and being accountable to each other, it won’t be long before you have a well-orchestrated financial and life plan to strive for.

Also, if you have children, this is a good opportunity to show them some financial responsibility.  Have regular discussions about your budget (you don’t have to give details) and how mom and dad are saving for their goals.  Consider putting your kids on a “Kid’s Reward Program” so that they can begin to save for their goals too!

Money Lessons: Your Next Step

Implement these Money Lessons!

Any time of the year is a great time to take inventory of your current financial position.  Check out the Personal Finance books on the market.  If you want an inexpensive and cookbook-style approach, try our personal finance book and corresponding budgeting worksheets.  At our blog site, you’ll find a whole host of articles that will help you get started.   If you need one-on-one coaching, we can help you with that too.  It will be well worth the investment of your time.

Michael T Kastler is a Budgeting Coach, author of a personal finance book, “Get a GRASP on Your Budget and Your Cash” and multiple budgeting worksheets. His budgeting money tips blog that helps individuals become debt free meet financial goals can be found at http://www.budgetingmoneytips.com

Copyright 2011  Kastler Consulting Group, LLC  |  All rights reserved

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Show Me Some Love… and Money Will Follow

How to Agree on Your Finances

Money is known to be one of the major causes of tension in a relationship.  So this Valentine’s Day, try something new.   Follow a few simple guidelines that can help you keep the fireworks in the relationship  from exploding out of control.

1.  Understand your Motivations and Goals

Traditionally individuals and couples will earn an income and automatically adjust their lifestyles to that income level.  It’s nice to have the finer things in life such as home, new cars, vacations, etc.  Very little thought, however, goes into motivations or values.  It’s an important first step to understand what’s most important to you (your values) and from there you can set some specific financial goals.

Spending some time alone AND together and WRITING out your individual motivators (or values) and goals can be enlightening.  Give it a try separately at first and then compare with your spouse or significant other.  You’ll be well on your path to understanding each other better and set up for fruitful communications.

Once you’ve agreed on some goals, be realistic about the amount and timeframes.  For example, if a goal is to buy your first home, calculate how long it will take you to save for a 30% down payment.  Anything less than 30% down in this real estate market is very risky should you need to sell in the next few years.

2.  Understand Your Current Financial Situation

Take some time to organize your records:  Assets, Liabilities, and Income (ALI).  Make a page for each ALI and list all the items in that group.  For example, for the Assets group you would list home, cars, savings accounts, investments, and other major property items.

On the debt page, list all debts such as mortgage, car payments, outstanding credit card balances, student loans, etc.  Do the same for all your sources of Income such as wages, alimony, child support, rental income, investments, etc.

Writing this all down will help you gain a big picture understanding your current situation.  Once that is understood, you can work as a team to figure out how to achieve those financial goals you listed in step 1.

Remember, your financial information is your ALI !

3.  Work Together as a Team

Work out your monthly budget as a team.  Each of you will have a different value system or set of motivators that cause you to place emphasis on certain budget categories.  Learn to work with each other and compromise where you disagree.  Set up pre-set spending limits by budget category so that you are living within your means.  When you disagree, you have your values and financial goals as your foundation.  Keep coming back to revisit those.  Make sure your spending plan supports those!

To help resolve conflicts, put in terms of “Needs vs Wants.”  Once you think in those terms, many of your “wants” may need to be eliminated in order to achieve one of your financial goals.  Remember, you based those on your life motivators or values, so those are much more important than some of your daily “wants,” i.e. a daily Starbucks budget category!

Set aside 30 minutes per month to work out your differences.  Communicating your concerns lovingly and working through to the benefit of “one team” will help you maintain your financial goals and keep those fireworks going too!

4.  Start Where You Are

Even if your financial picture looks grim, do not despair.  Even if you are 50+, do not give up hope.  You will probably live into your 80’s or 90’s, so there’s a lot of time to recover from past financial mistakes or just simply a late start.  There’s a great book by Chris Gardner called “Start Where You Are.”  If you need any inspiration at all, this book is a must read.  Chris was a homeless single father of a small child and made a tremendous comeback to build a successful business.  The book is full of inspiring techniques that will help you get started, no matter what your current situation is.

My advice is to start your financial plan within 24 hours of reading this.  Studies show that a new thought, idea, or writing (such as this blog) should be implemented within 24 hours or the new thought, idea, or writing will NOT happen.  So start planning now.  Talk to your spouse or significant other today and encourage each other to take some ACTION.  If you need help, see my website for some budgeting tools or one-on-one coaching to help you get started.  It’s extremely inexpensive.  http://PersonalEconomicCoachingLive.com

5.  It’s All About the LOVE!

Working together on your financial plan and making progress toward your life goals will bring harmony to your relationship.  There’s nothing more comforting than knowing you are a blessing to someone else.  When you put yourself on a mission to LOVE, you will be pleasantly surprised how good it will make YOU feel too!

As you work through your financial plan together and you start reaching those life goals, stretch yourself out – spread the LOVE even farther.  What can you do to give back to the community, to your church, to your value system?  When you start to think in terms of others and what life impact you can have on them, your own troubles start to disappear.

Give it a try…spread some LOVE today and make it a habit every day!  You will be more than blessed in return.

Michael T Kastler is a Budgeting Coach and author of a personal finance book, “Get a GRASP on Your Budget and Your Cash” and multiple budgeting worksheets. His budgeting money tips blog helps individuals become debt free and can be found at Budgeting Money Tips.

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