Monday, June 9, 2014

Discussing the Budget

I think one of the things I dislike most about the end of each month is reconciling last months purchases and adjusting our budget for the following month. Each month, I feel like an auditor sitting down in front of the bank account and our spreadsheet to ensure that all of the purchases made are accounted for in the budget spreadsheet.

Then comes the uncomfortable conversation if we went over budget and how to adjust next month's budget to account for upcoming expenditures.

Finances are like an emotional roller coaster, with both positive and negative emotions that dictate how you react to your partner and your mindset going into the next months budget.

You can be excited about the additional payment toward a student loan, but also unhappy that it wasn't more.

You can be excited about all of your great memories from the previous month, and also frustrated that you didn't plan ahead.

When planning out our monthly budget here are a few lessons I've learned to set the stage for a rational  and productive conversation:

1. Set-up a time to discuss finances, if it takes Nick and I over 30 minutes we lose concentration, so I try to keep these conversations brief and to the point.

2. Money invokes emotion, so I try to remember to be sensitive in how we talk about money. Being sure to approach all decisions as a team and talk through our options. Learning to talk about finances has truly changed how Nick and I communicate as a couple in general.

3. Don't beat yourself up for the decisions you've already made. The money was spent- Move On! What can we do differently to avoid going "over budget" on a line item next month? Being proactive in our conversations rather then regretful helps to keep the mood positive.

4. Don't leave money on the table. Nick and I were trying to have our "extra" money go toward additional student loan payments, rather then setting an exact amount to pay off each month. This lead to month two and three having lower payments. When looking at our income IN versus expenses OUT, we've worked to make them zero out. We plan on putting every dollar somewhere- including extra payments or savings. Giving our money a purpose.

5. Smile and Laugh. It is hard to do a budget each month and discuss ways to cut costs when you feel like you're already living on a tight budget. So find ways to put fun in your budget. Account for extra gas to go on a long hike or an impromptu BBQ with friends.

These 5 tips have worked well for us, but maybe you approach talking about finances differently. As long as you're talking about finances you've already jumped one hurdle :)

What helpful tips can you offer others about discussing financial decisions? 

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