We all have areas of our budget and spending habits that we could use some discipline in. When Eric and Anna went through their planning process and looked at their spending tab, they were surprised to see some of the leakage in their budget. Something Eric noticed early on in their marriage is how each of them had different feelings on spending. No one is right or wrong, they just value things differently.

“Me Money”

Providing each partner with a set amount of what they like to call “me money” can do wonders to alleviate any fighting or disagreements about money. Dan never wanted Isla to have to feel like she needed his permission, nor did he want to have to seek her permission. So whether that was Dan buying an expensive bottle of bourbon or Isla buying an expensive purse or a nice pair of shoes, it was helpful to have that “me money”.

Big Expenses Without Taking a Loan

As children get older, they only get more expensive. Funding their education is a priority for Eric and Anna, who was also starting her doctorate program. The couple wanted to fund that without taking on loans. Together, they found some areas, both individually and as a family, that they needed to focus on. In doing so, they noticed their biggest ticket item was food. While they could cut back on eating out, they know that being more intentional in their grocery bill was the biggest opportunity for savings. They decided to plan their meals and start a weekly click list instead of eating out or going to Kroger multiple times a week. Eric also had to cut back on his Costco trips. Buying in bulk does not always save you money if half of it goes to waste.

I Don’t See the Bills, Are They Still There?

Isla and Dan both worked at a bank. However, once they were married, Dan took on the role of paying the bills. The psychology of using a credit card versus using money has proven that it just doesn’t always seem real when you swipe a card. And when you never see a bill, it’s easy to lose track of the budget, no matter how much money you have. Isla and Dan made a decision together to have Isla see and pay the bills; not just the credit cards but also their property taxes and mortgages. Isla, being more of the spender, gained a better understanding of where they stood. Dan being more of the saver didn’t really need that shield of protection. Ever since the dynamic changed, it helped both of them become better stewards of their financial future.

Budget Exercise

The point of this budget exercise is not to take a rigid approach to spending. In the end, it’s all about balance. When you work hard, you should be able to enjoy the fruits of your labor. However, unchecked overspending in uncertain areas can limit the options you have later in life. 

That’s why both couples made a commitment as a family to prioritize their long-term goals like funding kids’ education and retirement flexibility over current lifestyle spending.

We recommend everyone to go through this exercise and find their balance. At Wealth Dimensions, we are a judgment-free zone when it comes to spending. We simply provide the tools and help guide you through it as part of our planning process. Please reach out to any of our advisors if this resonated with you and you want to hear more about our services.

For informational purposes only. Not intended as investment advice or a recommendation of any particular security or strategy. Past performance is not indicative of future results. Information prepared from third-party sources is believed to be reliable though its accuracy is not guaranteed. Opinions expressed in this commentary reflect subjective judgments of the author based on conditions at the time of writing and are subject to change without notice. For more information about Wealth Dimensions, including our Form ADV Part 2A Brochure, please visit https://adviserinfo.sec.gov or contact us at 513-554-6000. Please be advised that this material is not intended as legal or tax advice. Accordingly, any tax information provided in this material is not intended and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer.