My honey is not in charge of the money (big surprise, right?). He has a vague idea about our income and expenditures, but I wouldn’t say that he has a firm grasp of our finances. As a matter of fact, when chatting with his co-workers, he takes great pleasure in being able to state that he hasn’t looked at his LES (civ-speak: paystub) in years. As much as I enjoy calling most of the shots on our finances, my honey is taking a huge gamble by not staying aware of the behind-the-scenes money magic. Are you or your spouse taking that same risk?
Talking Money With Your Honey
According to Divorce.com, Financial difficulty is the top cause of divorce, followed second by communication issues. So, not talking and not talking about money are two things I’m pretty sure you don’t want to have going on in your relationship. If you add on the stress that comes from being a military family, the impact of poor communication and financial disagreement are even greater. As a military spouse, you have got to be on the same sheet of music so that your financial plans are seamless even in the face of deployment, TDY, short tour, or whatever the military throws your way.
Whether you’re from Venus and your spouse is from Mars, you have to get the talking going. The big problem for most of us is deciding where or when to start.
When to Talk About Money With Your Honey
Let’s start with the when. Timing can be everything when it comes to uncomfortable topics. If money is one of your hot button issues, then I suggest you plan ahead. Any counselor, marital or financial, will tell you that it is much better to provide a time and place to discuss an issue than to blindside your spouse by launching into a confrontation. You can start your conversation by saying:
“Hey, Hon, when you get a chance, I would like to learn/share more about our finances. Can we sit down on date and time to do this?”
Make sure you pick a time when both of you can provide ample time and attention to dedicate to the conversation. Whether you are the one learning or sharing information about your finances, you might find that you have much more to discuss than you can accomplish in one conversation and that’s great! Anything that leads to an increase in communication is a good thing in your relationship.
Here’s the hard part. Part of sharing this information with your spouse or learning this information from your spouse might churn up a bit of emotion and the desire to point a finger here or point a finger there. Opening up this conversation is all about figuring out what is going on RIGHT NOW. Not what happened in the past, or who went all shopping ninja last. It’s about the here and now and establishing a foundation for continued communication as you move forward TOGETHER.
Conversation 1: Take Your Financial Snapshot
One of the best ways to get an idea of what is going on in your finances is to take a financial snapshot of your current spending and savings habits. Part of creating this clear picture requires you to do a quick study of your financial details in the following areas:
- Cash flow
- Outstanding debts
- Legal documents
Determine Your Cash flow
When analyzing your cash flow, you want to start by examining your current income in terms of net income (a.k.a. take home pay). From there, you can pull your expenses for the last three months to get an idea of your spending patterns over an extended period of time. Make sure you pull your expenses from your bank statements including both debit and credit card transactions (if you make monthly purchases regularly on your credit card). Take an average of all monthly spending over those three months. You can break your spending into the following categories:
- Housing Expenses
- Auto/Transportation Expenses
- Food/Cleaning/Paper Supply Expenses
- Miscellaneous Expenses
- Debt Repayment and Charitable Giving
- Savings & Investments
Once you get an average spending amount for each of these categories, see how they stack up against our recommended spending guidelines by dividing each expense category by your total net income and multiplying by 100 to determine your spending percentages (you can download a copy by clicking here):
|Housing CostsRent+ utilities and insuranceORMortgage(s) + taxes, insurance, utilities, HOA, repairs||
|Auto/Transportation Costs Car/Truck payment(s) + insurance, gasoline, oil changes, repairs, inspections, registration||
|Grocery, Food, Cleaning & Household Costs Groceries, snacks, sodas, work lunches, school lunches, eating out, take out, cleaning products, paper and plastic supplies||
The three expenses above should not be greater than 65% of net your income. If housing is 40%, then the percentages of food and auto together should not be greater than 25%
|SavingsMake this a habit, even if you can’t save the full amount each month||
|Debt & Charitable Contributions Credit card payments, personal loans, student loans, tithes, donations||
|MiscellaneousPhone, Internet, cable/satellite, prescriptions, doctor, dentist, co-pays, glasses, contact lens, child care, clothing, shoes, haircuts, nails, gifts, hobbies, deductibles, entertainment, pet expenses, alcohol, et cetera.||
This exercise is great to do as a couple to get a firm grip on your spending. Regardless of who the money guru is, it is extremely important to give yourself a financial check up from time to time. If neither of you is the financial guru, and you’re both spending blindly, that means your money is in charge of you and this exercise will be extremely eye opening for both of you.
Summarize Your Savings and Investments
The next step you want to take is to ensure that you are aware of all summary information regarding your savings. Gather the interest rates and current rates of return, account balances, and current monthly contributions.
Summarize Your Debts and Loans
You’re basically going to gather the same information you did for your savings and investments. Gather the APRs, balances, minimum monthly payments (as set by the creditor, not what you choose to pay), and your current monthly repayment based on the amount you actually pay each month if it is different from the minimum payment.
Summarize Your Insurance Coverage
Look over all of your current insurances for your home, car, medical and dental coverage, life, and any other insurances you might carry. Provide a summary that looks at your coverages, limits, deductibles, premiums, and terms (duration of coverage).
Examine Your Legal Documents
Ensure that all of your Powers of Attorney, Wills, Living Wills, Trusts, and any other legal documents are up to date. You should check your legal documents on annual basis to ensure that they are current and relevant to your current living situation.
Prepare a Money-Honey-Do List
Once you and your spouse survey your personal finances, you will more than likely realize that you probably got some ‘splaining to do! Just kidding. More than likely you are going to identify parts of your personal finance that require a bit of homework. Grab a sheet of paper and jot down things that came to your attention during the conversation and create a course of action to take to correct any issues you might have come across. You might realize that you’re overspending on your miscellaneous expenses or that your powers of attorney need updating. You might realize that you’re doing a fabulous job and its time to start saving for that vacation you always wanted to take. Regardless of what you find, realize that everybody’s finances are a work in progress.
Either way, you’ve opened up the door to communicating about money. By understanding how you spend, you can start doing some deep thinking about why you spend the way you do and whether or not it is in alignment with your values as an individual, couple, or family. Of course, this leads us to our next money-honey post and the topic for the next conversation with your honey: Setting Money Goals.
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