Personal Finances for Families

Personal Finances Series – Relationship Edition

TLDR

Create a successful family budget by:

• Planning with your partner from the start (reduces money arguments by 40%)

• Having open, judgment-free money talks that align your priorities, goals, and habits

• Using zero-based budgeting with weekly check-ins

• Making gradual changes together

• Setting clear boundaries for extended family money matters

• Seeking professional financial help through coaches if needed

Bringing in Reality

The big reality miss that’s skipped over in personal finances is considering your better half i.e. your partner!

Couples using zero-based budgeting report a 40% decrease in money-related arguments after implementing the system for 3 months.

We’ve seen so many people get derailed and frustrated because they set everything up for their perfect budget to get on track, but their partner doesn’t follow through with the plan. Establishing a budget without your partners involvement, buy in, and consideration is a recipe for disaster. The reality is your lives are intertwined, and your behaviours will have consequences on one another. A budget has to be a team effort. Not only do you need alignment on your plans but you are likely going to have to support each other in the behavioural changes along the journey. Bringing in your partner to the planning stages allows you to discuss concerns and adjust expectatons, in order to actively support and work together to progress your personal finances.

With that as a base, ask yourselves: is your budget realistic for you and your partner? If you eat out everyday but only assigned yourself a $100 “Eat Out” bucket in your budget because you plan to change, then you’re setting yourself up for a rough time. Is it doable? 100% yes. Will it add a major stress point to your lives that you will have a jump course on navigating? Also, yes. Sometimes, you have the space in life to go through that, and if so – take it and pray Murphy’s Law doesn’t pounce. If not, then you need to make sure your realistic about the behavioural adjustments you’re expecting your family to make, and how difficult they can be. As a team, you have to put the work into understanding where your pitfalls are and then make the adjustments necessary with consderation towards what you’re capable of doing (and don’t be afraid to adjust along the way.) It took us about 1 year to drop our eat out budget from $1000 to $0. That entailed a switch of mostly eating out to going 95% homemade meals, and covering the occasional eat out (1-2x a month) with our “fun money” bucket. We had to help each other significantly through solving this problem, as we both had different behavioural roots that spurred our eating out. (Check out this article on Why is Personal Finance Dependent Upon Your Behavior? to learn more).

Start with Money Talks

I’ve hopefully convinced you to involve your partner into your financial planning. Now you may ask - How do you ease into this with your family or partner? First let’s set the stage. We all know this can be a stressful topic, and it requires everyone’s full attention. Set an hour aside, maybe over coffee on the weekend or after dinner sometime, to get the conversation started. Make a rule for yourself and your family, this conversation you’re about to embark on must be judgement free, call each other out to make sure it stay’s that way, and step away from the conversation if it doesn’t. Solve whatever problem blows up before returning where you left off.

Next you may want to make sure your understanding of money is the same.

• Ask about what your partner knows/understands about money, and how their family handled money growing up.

• Think about asking questions around how they currently feel about money - are they comfortable with where you’re at currently?

• Is there anything that keeps them up at night in regards to money?

• What would make them feel completely financially secure?

You’ve gotten to a point where your understanding of finances is on the same level. Let’s focus next on whether your priorities for money are the same. You can ask questions like:

• What financial success looks like to each of you

• What’s more important to you: saving for the future or enjoying life now?

• How do each of you feel about carrying debt? (and is debt or savings more important?)

• What’s each of your approaches to credit cards? Do credit scores matter to you?

Lastly, it’s important to discuss your goals, short and long term. Are you working towards the same thing or are you out of step? With each question consider: How can you support each other to achieve this, and what small habits need to change?

• What’s one financial goal we want to reach this year? Are there any major purchases or life experiences we need to plan for?

• Whats our retirement plan? (Don’t worry if you cant tackle this topic yet)

• Where do we want to be financially in 5 years?

Financial Discovery

Get started with a budget - we recommend a zero based budget. Gather all your numbers - use your previous months bank statements to fill in what your expenses have been to keep yourselves honest. (Check out my blog Creating Your First Financial Budget for a breakdown of how to get this started). This first step will probably take the longest for you, you’ll want to give yourselves at least an hour or two to work through it. If you get frustrated, keep in mind - it’s a one time setup. Your check in’s after this should go much quicker, especially as you gain momentum and experience.

As your setting up your budget, a few considerations may come to play - I should note a major recommendation we have at this point. I want to preface my next statement with saying, by no means do we mean to force this upon you, it’s just what we’ve found works best with the least amount of resistance in the process.

So here it is: If you’re a married couple, we recommend having all your accounts be joint.

• Marriage means trust and partnership, and if that’s not the case with your money then you need to take a pause and assess what the implications mean for your relationship. This also get’s rid of questions like who’s paying what bill, and how much can you spend without letting the other person know (zero based budgetting makes this impossible as well). It’s all under one house: a partnership that works to improve the lives of the whole family. Everyone is knowledgeable about where money is being spent to achieve the goals you agreed on, and you share the decision making load irregardless of who makes what.

• As I prefaced, some may not agree with this recommendation and we don’t play around with forceful behaviors - it’s up to you to walk your own path, this is just what we’ve seen work best.

Now back to the process, once you’ve tracked down all your expenses, and have your first budget template, you get to see the hard truth about what your families spending looks like. This is where I’ll remind you - keep it judgement free and blame free - focus on solutions together, not past mistakes. It helps to use “we” instead of “you” in these conversations, but keep it genuine.

A few questions you can explore together:

• Which expenses brought you each the most joy?

• Are there any purchases we regret?

• Where do we think we might be overspending?

• Seeing the numbers - what would be each of your ideal splits between needs, wants, giving, and savings?

You’ve worked out the numbers, and now’s the time to decide how you’re going to stay on track. We recommend reviewing your budget weekly. Yes, weekly! Once you get rolling with this, it should be a 10-15 minute review while you allocate all your transactions, but we’ll be honest. Those first few months may go longer, and there will be some pain points with pitfalls that require your time and attention. Keep in mind, reviewing weekly means you have time to course correct in a month to help keep things on track. Here’s some questions to navigate those reviews:

• What went well?

• What challenges came up?

• Were there any unexpected expenses (and do we need to create or increase a budget for that?)

Celebrate the wins that come up, especially if your partner was able to overcome a challenge you know they have struggled with. If a challenge did come up, remember to take it as a learning lesson, for both yourself and your partner, not a failure. Discuss it in detail, what came up, how it made them feel, how/if you can help. Remember this whole journey is a marathon not a sprint. Big changes take time, so focus on one change at a time and take baby steps if necessary.

Family Money Interference

This is a pretty major topic in itself, but we know of so many people that have the family pitfall so I wanted to cover it briefly. Family interference can come up in many ways - it can look like:

These are tough problems, we’ve found it best to set boundaries around each topic.

• IF you decide you’re able to without harming yourselves - Create a budget for family support. This should be based on how much you are both willing and able to provide, not what their desired or needed amount is.

• In terms of family lending - we don’t recommend it. More often then not, we’ve seen it completely destroy relationships within the family. If however you feel guided to do so, make sure to create a secondary family lending bucket with an agreed upon (with your spouse) amount to offer. If you’ve completed your budget template, then you know exactly what you have available to offer both as a monthly support or in lending. Though its family, make sure everything is noted on paper with signatures, including expectations for the repayment of the loan.

• Maintain a united front. Families can be our safe space, which opens the door for us to relieve ourselves of our stresses through complaining. If you and your husband agreed on a boundary to set with your family, it’s best not to turn around and make one of you out to be the bad guy. We’ve found that a way to avoid this pitfall, is to explain our financial journey and budgeting goals to our families (if a situation comes up). It’s been a good way to have overly involved members back off a bit, especially as you get to share exciting results. They may say “well you were affording it before, how come all of a sudden you can’t anymore?” Having a budget template and all the conversations that came along with creating it, will provide you the insight to answer this question without hesitation, with honesty and absolute genuineness.

• Know when to throw the towel in. We’ve had our fair share of experience with family members who, for whatever reason, just can’t see the harmful impact they have on you. We don’t make this suggestion lightly, however there may come a time or situation that you and your partner need to discuss whether it’s time to cut off a family member. Discuss what that means, what it will look like, and potential blow outs it will have among other family members. Sometimes there won’t be a right answer to avoid pain and suffering in the short term, but long term will put your family in a much stronger and healthier position.

Financial Coach

We get that making these changes can be a tough journey on your own, and sometimes even more so with getting someone else on board. We believe it’s 100% doable, as it’s a journey we went on ourselves. In the beginning, I was 100% NOT on board, even though we were slowly drowning in credt card bills. My husband had to work really hard across a decent amount of time to get me on the same page and working together. I had every excuse to make sure my head stayed stuck in the sand - “everyone has debt, everyone has credit card bills, don’t let it stress you! What are we supposed to do about it anyway?”

I share this with you to say, if you have a partner that’s dragging their feet on this or flat out refusing like I did - don’t lose hope. You are going to have to spend some extra time and effort getting into the weeds of their emotional resistance, and I guarantee it will be a major benefit for your relationship to do so. Once I got on board and we truly started to drive at our goals, the empowerment and relief I felt was amazing. I no longer felt guilty spending money, I got to help friends and family which felt great, and best of all I got to see our debt almost vanish.

If you find that you’re needing help along the way, keep in mind - needing help doesn’t hurt and isn’t shameful – looking back, we would have saved ourselves a lot of pain and potentially could have seen results sooner had we had the guidance of someone experienced. A financial coach can be that voice that helps guide you in first creating and organizing your budget to your personal needs, walking through it with you to provide insight from the perspective of an experienced expert, and then working with you to identify pitfalls and goals you want to work towards. With a partner involved, a financial coach can also be that voice of reason that helps guide you through some tougher conversations and give you some hard truths.

A financial coach is there to help encourage you and provide direction through pitfalls and slip ups, and keep you accountable to the goals your family has set. When we started Peaceful Mindful Pocket, a zero-based budgetting app, we wanted to make sure everyone had a strong base with which to start their personal financial journey. We decided to offer all our app subscribers a free first coaching session, with myself or my awesome husband, to help guide you through that first leap. Check out PeacefulMindfuPocket for our app that comes with a free coaching (coming soon), or hit me up directly through Calendly for a free consultation on our coaching services. Click: Rima Consultation to see how I can help!

I hope this blog provided you and your family value and somewhere to start your financial journey. Please feel free to ask any questions or share concerns in the comments below!