Family finances can be like crab grass. It’s not a problem if you keep them under control but if you don’t, they can get become a serious problem.
The biggest issue that can derail family finances is if you and your partner can’t agree on essential issues such as budgeting and saving. What this generally leads to is endless arguments over money. Do you both work? If so, do you keep a lot of your finances separate? Do you have a problem deciding how to spend your money? These are all problems that must be addressed.
The key to marital bliss
In most cases, sensible money management is the key to marital bliss and to happiness in your relationship. Money and how it’s used can cause marital discord and lead to name-calling, mistrust, dishonesty and ultimately to divorce.
Do you both understand finances?
Some family money management problems are caused because one or both of you don’t understand finances. As a result, you tend to make poor decisions. However, many of them come as the result of relationship problems and poor personal behavior, including:
• Addictive behavior
• Too much materialism
• Being preoccupied with social image
• Impulse buying
• Using money to try to control others
It’s linked to our emotions
It’s unfortunate but true that money tends to be linked to our emotions. People sometimes spend money to control other family members such as their wife or partner. In other cases, they spend money to relieve guilty feelings by buying gifts. Or one of the two partners may have gone on a spending spree in an effort to overcome loneliness or sadness.
Factors that affect financial security
There’s been a fair amount of research done into family finances, which has identified these factors that affect financial security.
• Emotional intimacy
• Love and trust
• Mutual respect
To put it another way, if you’re having issues over family finances, here are the factors that are probably causing them.
• Controlling and manipulating others
• Roles that are ill-defined
• Being selfish
• Disrespecting the other person’s needs
• Poor communication
What you should do
If you want to eliminate the problems you’re experiencing over money and family finances, there are definitely some things you should do. For example, you should work on learning to communicate more effectively. You should work to understand your partner’s feelings about money and how it matters to him or her. You should not use money to try to control your partner or spouse and the both of you should learn to trust each other and to keep the other person’s best interests in mind.
To change your behavior
Experts in family finances say that if you want to make financial changes in your relationship, you should:
• Use a written budget to manage your money
• Define each of your financial responsibilities and roles
• Make purchases that are suitable given your income level.
• Give family members some allowance to spend how they choose without being accountable to anyone.
• Make a list that separates your wants from your basic needs
• Keep expenses constant even when your income increases.
As you may have noticed the first item on this list is to manage your money with a written budget. In fact, most experts will tell you that this is absolutely critical to eliminating problems over family finances. A budget is not just a way to cut costs, it is a way to negotiate an agreement as to how you will spend and save your money. You and your partner or spouse should track your spending for at least a month, then sit down and divide it into categories. Don’t rely on your memory when it comes to tracking spending. The both of you could use pens and notepads or get one of the many expense-tracking apps available for use on smartphones. The important thing is to track your spending and make sure you include every expense. This is where some trust is required – trusting your significant other that she or he is being honest about their spending.
The next thing you’ll need to do is divide up your spending into logical categories such as housing, transportation, food, entertainment and so on. Once you’ve done this you can begin a dialogue about how you will spend your money in the future. For example, when you see how much your family is spending on entertainment, you could decide to cut that in half and put the other half into your savings account. Of course, it’s critical that the both of you agree on this. You should also consider how you will pay off debts and what debt relief program you will use to solve it. Putting a budget together for a family requires some good negotiating skills. You and your partner might disagree as to how much you should be spending on food but you will need to negotiate a reasonable compromise.
The critical thing
The really critical thing about a budget is for both people to buy into it. If one of you agrees to something just for the sake of agreement your budget is bound to fail. You both must be open and honest about your needs and feelings and must be committed to making that budget work. For example, if one of you wants to book a one week vacation on St. Thomas and the other would rather put the money into savings, you might compromise by putting some money into savings and going to Yellowstone instead of St. Thomas. However, you both must be satisfied with the compromise or at least willing to do what’s necessary to make it work.
What the experts say
If you’d like to learn more about managing family finances successfully, here’s a video that could help.