Mark and I are very similar when it comes to money. I would venture to say that before we met I was perhaps a little more financially minded. I had focused on retirement savings, had less debt, etc. However, by no means was Mark completely upside down.
One thing that certainly affected our financial habits was that we both traveled extensively for work.
I traveled across the US and Mark traveled internationally. When we traveled, we were on expense reports and we both got into some habits because of this. First, when we went out to eat, we never thought about what the meal would cost, we ordered what we wanted. The side salad is a $2 upcharge, no problem.
Second, I became a bit of a “hotel snob.” My work paid for brand name hotels, such as Marriott or Hilton. When I got stuck in lower category Marriott’s or Hilton’s, it felt like a major downgrade and set the tone for the week. So, when we travel, I like to stay in nicer hotels.
Finally, while traveling someone else is paying for a lot of your living costs, so I had extra discretionary money that wasn’t being spent on needs.
Putting our finances to the test
Because of a work opportunity for Mark, we moved to Los Angeles. That was when we first moved in together and decided to combine our finances. Our expenses went up significantly going from a Kansas City market to the Los Angeles market.
We were still renting and we stayed within the parameters of personal finance; however, I had to pay for a bus to work every day, instead of walking around the corner, and Mark had a long commute for which he had to pay gas. Our insurance premiums went up, even though we lived in a pretty safe part of the city.
We were also traveling less (for the most part), and we were doing more things on the weekends because we were like tourists living in the city. We wanted to see it all. We were also traveling back to the Midwest frequently for events for family and friends that were so important to us.
Our life had become expensive. Every month we looked at each other and said, “How did we spend it all?!” We would walk through how we had spent money and agreed neither of us was doing something the other one didn’t know about, etc. However, all of our decisions added up. Notice I said “our,” because they were not my decisions or Mark’s decisions. We were both involved.
I realized quickly that part of the problem was that we were afraid to tell each other “no” or “not today.” Neither of us wanted to be the bad guy.
Mark and I both worked hard and we both made decent money. So, if he wanted a nice pair of shoes to wear to work, I felt like who was I to tell him no to that. If we went out to dinner, we ordered a bottle of wine by the wine we were interested in (within a certain reason!) not the cheapest or second to cheapest on the menu. Because that was a nice Friday night treat.
So over our first few years, we tried different things to try to reign things in. We tried listing out our financial priorities at the beginning of the month and then holding each other to that. Inevitably something came up and we still weren’t within our discretionary spending goals.
We tried only spending on “necessities” and then at the end of the month prioritizing what we wanted to spend the leftover money on. Wants somehow became needs in that trial. These things were not working for us.
Our approach to budgeting together
So, what has been working for us, for the most part, for the last few years is this: We have our joint account from which we pay needs (mortgage, insurance, student loan payments, daycare, groceries, etc.). Then we each have our own “slush fund” from which we can spend the money however we choose.
If Mark wanted to start collecting something he has never shown interest in, I might jab him that a date night would be a better use of the money. In practice I can’t judge him for how he’s spending his slush fund because he has no say in how I spend mine.
How it works is that on payday we transfer an amount that we decided should be sufficient and feels like a large number to us. This number, though, is not so much that we could buy everything we wanted each month, nor does it threaten our ability to reach our other goals.
How we define needs vs. wants
From our slush funds, we buy gifts, we take each other on date nights, and we buy our own clothes, pay for haircuts, going out to eat for lunch at work, and things of the sort.
While you might think clothes and haircuts are necessities, we decided that the way we spend on them they are “wants.” I have more than enough clothes in my closet for most occasions, so any clothes I am buying are truly “wants.” When I go to get a haircut, I’m not just going in for a trim, I’m choosing to have my hair colored, etc. That is not a need, that in my opinion is a want.
Mark’s work shoes are not a need, as he could buy less expensive shoes that may not be quite as comfortable but still look nice, so his shoes are a “want.” It is not a need to eat out for lunch, we typically have plenty of leftovers that we could nourish ourselves for lunch each day with items to take from home. So, going out to lunch at work is a “want.”
That is the framework that we set.
Take everything in stride
Let’s be clear, in the last few years that we have done this, there have been a couple of times where we have had to hold each other accountable and remind ourselves of the framework that we set.
We sometimes need to remind ourselves that our main account is for our needs, not our wants.
This is not the perfect way to manage anything, but it’s what seems to be working for us for now, so that is why I want to share this option. If at some point we look at it and this isn’t working like the first things we tried, we will need to come up with another idea.
Life is a continuum, and life changes with different stages. We need to be open to the possibility that what is working today may not work in the future.
MPowered Affirmations
- I won’t be afraid to try different financial techniques.
- I will realistically think about my needs versus my wants.
