Marital Finance 101 (Part 1).

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Wifey’s & Gentlemen,

Welcome to summer! Has anyone else been experiencing a heat wave in their area? I don’t know if I’ve had occasion to say this in previous posts, but for those of you who know me well, you know I am NOT a fan of heat.

Honestly, the summer is my least favorite season, and while I love a good tropical vacation (shout out to Bali) and/or trip to the beach, my mood gets drastically worse the hotter it gets. These past two weeks, my city has seen temperatures in the 100s… and we are NOT happy about it (yeah, I’m speaking for everyone here because I assume no one is okay with the ungodly weather conditions we’re experiencing and if you are, we probably can’t be friends; fight me)!

For all of my bitching, there are some good things that go on during the summer months; bbqs, ice cold beer and white wine spritzers, sun dresses, baseball games, vacations, picnics and reunions, refreshing iced coffees, brunches, justified trips to your favorite ice cream shop, and more time to spend with kids/loved ones!

See? I am not a total monster, I swear! I can find the silver lining to the miserable summer heat. HOWEVER, this does not change the fact that from Mid-June to October, approx. 80% of the time, you can catch me inside, sitting pretty under my central AC. This is also why, from Mid-June to October, our PG&E bill often goes up by 1000%.

Funny enough, I actually got an email reminder about the upcoming electric bill that is due in July and I winced a little. Full disclosure, I straight up refuse to be uncomfortable in my house. My husband is a good sport about it (& he doesn’t like the heat either tbh) but I know there are times when he’d be fine with turning the air off for a little while (in the name of energy conservation) & I completely understand the sentiment! Although we are both fortunate enough to be able to afford/accommodate these consistent increases to our bills, no one wants to go from paying $50/month to $500 for 1/3 of the year. We generally try to stick to a budget as the cost of living only seems to get higher (especially if you live in the bay area, ugh)!

So, this week, in the spirit of high electric bills and a recent order I just placed for about $200 worth of M.A.C makeup (I actually think I might have a problem…seriously, guys, send help…), I thought we’d finally spend some time talking about creating and sticking to a budget with your partner or spouse!

Soooo exciting, right? But, just go with me on it, okay?

Before I get into it, please note that these tips are what has been helpful to me and my hubby. I am not an expert, I am not rich (yet), I am not debt free (yet), and I am still spending WAY too much money on make up! Financial freedom is a journey (shout out to my mama) and I am always looking for new tips and tricks that will make the road a little less rocky. So, if you’re just getting started with sharing financial responsibility with a partner, maybe this will be a good place to start?

Here’s what I know so far…

Tip #1 Make a list of all of your expenses: I honestly don’t know how anyone can create a viable budget without this step. Sure, it’s tedious and annoying (& kind of depressing at times) but you you need to know what you’re already spending. Sit down with your partner and figure out how much you REALLY spend each month on various items and necessities. This includes things like: groceries, utility bills, memberships (Netflix, Hulu, Wine Club, Gym – yes, in that order; shout out to my messed-up priorities), gas/public transportation, toiletries, rent/mortgage payments, car notes, and even a budget for how much you’re going to spend having fun (brunch, movies, day trips, shopping, etc).

Once you have established this list, review it with your partner and find anything that you might want to cut. Are you really going to the gym enough to need that fancy membership? Do you really need subscriptions to Hulu & Netflix when you already have digital cable with HBO? (I do! But maybe you don’t?) Once you’ve got a preliminary idea of what you need vs what you might be ready to let go of, you can move on to tip #2.

Side note: when itemizing expenses, always round up as much as you can; if your rent is $1625, call it $1700.  Cable bill $167? Call it an even $200. This typically ends up being super helpful to you in the long run and it’s easier to do the math later when you need to calculate input vs output.

Tip #2 Determine your net household income: this one should be pretty easy. All you need to do is check out your pay stubs and determine how much each of you brings home in a typical month (depending on how you’re paid, you might get more money during some months than others, but go with what is most normal). For example; I get paid on a bi-weekly basis. There are some weeks where I get 3 paychecks (yasss) but for the most part, I know that every month I am bring home “x” amount of dollars. My husband gets paid once per month. He also has moments where he gets extra cash, but for the most part, he can rely upon the same amount to be deposited into his checking account monthly. In a spread sheet (yes, you’re an adult now my loves, it’s time to learn to use basic functions in excel), mark down your individual incomes and your net total (I will include an example at the end of part 2).

Once you have determined your income, go through and get a total of all your monthly expenses. Are your monthly expenses equal to or more than your monthly household income? If yes, revisit step one and try to find a few things you might be able to get rid of entirely or make some cutbacks to things like food, toiletries, and misc./fun expenses. Be reasonable with yourself and your partner and work hard to compromise to avoid huge arguments (remember, one of the leading causes of divorce is money).

Once you are at a place where your monthly expenses are less than your monthly income, you are in a good spot!

I’d suggest that you aim to have no less than $250 ‘overage’ dollars to work with by the end of step 2. This means that after you pay for all of your listed expenses, you’ll have $250 leftover that you don’t know what to do with. 

Tip #3 Pay YO’SELF:  Yeah, it’s kind like ‘treat yo’self’, only way less amusing. Based off of the data you collected in tips 1 & 2, you should now have a clear picture of how much “extra” money you have to play with each month. For a long time, I thought that this “extra” money was money to burn. I’d buy myself all sorts of things! But once you get serious about a budget plan, you’ll realize that this is extra dough is actually what makes sticking to a budget so hard! We must work to start seeing the extra money as a tool for change instead of a free pass to buy extra crap.

So, let’s say you and your boo-thang have discovered that every month, you have an extra $750 that isn’t accounted for in your expenses (this is a high number, I know, but it’s easy to work with).

Before you even think of all the fun things you can do with an extra $750; first, determine how much is going to you. Some experts have said you should be paying yourself at least 10% of your income. If money is tight or your overage is really really low, this might not be the best option, but do whatever you can! The idea is to go as high as possible without being unrealistic. This is the money that will go into your savings account.

Yes, wifeys, you must save.

Since your expenses in tip#1 should have already included a monthly stipend for “fun”, the money that you pay yourself is literally what is going to you and your partner for safe keeping.

A strong savings account is the BEST idea, especially for a couple. Like most of us, if you’re living paycheck to paycheck, you would probably take a huge hit if one of you loses your job! What if someone gets into an accident and ends up with crazy medical bills or car repair fees? What if there is a funeral you’d like to attend across the country? What if one of you has been asked to be a part of a big wedding or you end up with an unplanned baby? Having a savings account means you aren’t completely sunk when the unexpected comes up. A failure to plan is a plan for failure. Never forget that!

Moreover, having a savings account is good for when you actually have a huge purchase you’d like to save up for (new car, new house, new baby). If our hypothetical overage was $750, let’s say we’re going to commit to putting $250 of it in our savings account each month (bro…that’s 3k each year! & if you save and remember to use the savings ONLY for emergencies, in 5 years, you’ll have $15k).

Tip #4 Check on and stay on top of your credit: No, I don’t just mean paying credit card bills on time (but yes, do that as well). It kind of sucks, but you and your partner really need to sign up for a service like Credit Karma or FreeCreditReport.com and get all the knowledge you can about where you stand in terms of debts and scores.

From there, make a list of all of your debts in order from the smallest amount to the largest (I got this tip from Dave Ramsey & it’s genius). This helps to create a visual of your goals and allows you to monitor your progress over time!

Okay, now remember that $500 we had leftover each month after paying out all out of expenses and putting $250 into savings? Well guess what?! Now, you need to decide how much of this money is going toward paying off debt! I know, I know. Bummer, right? You might already be making monthly payments on your credit cards or maybe you’ve already begun the hell of repaying student loans. However, as great author Dave Ramsey says, you need to use as much of this overage as possible to attack each debt 1 by 1.

Try not to let it feel daunting! You might, realistically, have a LOT of debt. Some of us are carrying student loans over 300k. Some of us have real problems with credit cards & overspending. Some of us have both!  Start small and work your way up. Paying off some debt is better than just letting it sit there and taunt you! Plus, if you’re dedicated, you can pay many items off really quickly by committing to your budget and refusing to overspend on things you don’t need. Let’s say we’re going to be the MOST responsible couple we can and use $400 of our overage on debt payments. Gahh! That’s hard! I know; I know what $400 can get me & I don’t like the sacrifice any more than you do! But I promise, the sense of relief you’ll feel seeing that credit score rise and the debts fall will be worth the sacrifice! 

Tip #5 Communicate: Every couple is different. I say this so much that I almost don’t want to say anymore (but I will, we know this).  When my husband and I did our pre-marital counseling, our therapist told us that we needed to completely merge all of our finances together and not hold any separate accounts outside of a personal credit card or two. We both understood where she was coming from, but we just weren’t okay with that idea. We love each other to death, but we also love our independence. Instead, we worked out our own system where we each have a joint checking account, personal checking accounts, and personal savings accounts.

  • The joint account is where 90% of our expenses come from. All of the major purchases (rent, food, bills) come out of this account and we each have a specific amount that we agree to deposit per paycheck.
  • Our personal checking accounts are where our paychecks are directly deposited. It is also where we pay for things we need/want but don’t exactly share. For example, I use a clothing rental service that cost around $70 per month and my husband has a subscription to WWE Network that cost about $10. We pay for these on our own, since I know he isn’t going to be borrowing a dress anytime soon (& I don’t really watch a lot of wrestling).
  • Our savings accounts are separate, but I think it’s a good idea to save together if you can. We’re just lazy and haven’t gotten around to it yet. However, we regularly check in on where we are with our savings and we trust each other to stay on top of it (or be honest when we can’t).

This style works well for us right now, but we are fine with the fact that it can and likely will change over time. Talk to your partner about what would make them most comfortable and work out a system that benefits the both of you. Getting in the habit of communication now will come in handy elsewhere when it’s time to make major decisions about bigger purchases . It is also helpful for when you have a disagreement about money (and trust me, you will).

Wifeys, no one ever said budgeting and managing money was going to be easy. If anyone is feeling anxious or overwhelmed after reading this, you’re in good company. As hard as it is for us to admit, most of us don’t have a plan to get out of debt quickly and start really saving for the things we want most and building wealth.

I, for one, have student loans that haunt my nightly dreams. Believe me, I understand the struggle. But I also believe that it is 100% possible for two people with good jobs and dedication to come together and begin to take control. Eventually, those debts will get paid and then, who knows what’s possible?! It’s all about baby steps.

Come back next week where I’ll offer my final 5 tips on budgeting with your partner (they are less boring and obvious, I promise).

Until next time,

Carry on Wifeys!

Love,

Mrs. Renai

🙂 ❤

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