Advertisement
Financial Planning

Taking Stock of Your Finances to End 2016

Regular financial check-ups with your partner can help ensure you have a happy relationship all year round.

As we get ready to celebrate the end of another year, it's common to take stock of our relationships, our health and our finances. Are we where we want to be in each of these important personal areas?

Most people understand that if their financial situation isn't on track, their personal lives can suffer. Money problems often lead to disagreements or fighting with the ones we love, which can damage relationships, cause stress and affect our health. Constant squabbles over money can be the root of a vicious cycle, causing our personal lives to be out of balance.

Advertisement - Article continues below

I work with a number of married couples and others in long-term relationships. Even though most of my clients have plenty of money, from time to time they argue over their finances. "I think we are spending too much money" is the most common complaint I hear. Clients I've worked with for a long time tend to know how much they are spending, but may still feel it's excessive. But when I meet with new clients and ask how much they spend each month, a sheepish look often comes across their faces. The most common response is "we don't really know."

As you take stock this holiday season and realize differences over spending might spill over into your personal life, consider diving deeper into this issue. Rather than simply making a New Year's resolution to better manage your money, I have three recommendations for 2017 that I have shared with clients to help improve communication and results around their spending habits:

Start the New Year By Tracking Your Spending

Make a list of your expenses. How much are your monthly fixed expenses—those needed to run your household—such as the mortgage and car payments, utilities, food, insurance and taxes? Next, list discretionary or variable expenses. These items include dining out, vacations and entertainment, as well as gifts. Compiling a complete list of expenses will create an important set of facts, especially if you and your spouse's or partner's spending goals are not aligned.

Advertisement - Article continues below
Advertisement
Advertisement - Article continues below

Anyone can track their spending by using software programs such as Quicken or online tools such as Mint.com. Or simply review your monthly bank statements to gather this data. Because most people don't spend the same amount each month—for example, life insurance premiums and vacations may be quarterly or semi-annual expenses—I suggest tracking your expenses for at least three to six months. Don't forget to add in annual expenses such as property taxes, which can be amortized on a monthly basis.

Set Up a Personal Schedule to Discuss Your Finances

Rather than randomly discussing finances when the mood strikes you, develop a schedule. One idea is to set up time quarterly or at least twice a year. During these discussions, evaluate the progress you've made and decide how to refine your spending plan. Putting this discussion on the calendar sets clear expectations for both people and allows a couple to have a calm, less stressful discussion. To make it even more productive, each person should do their homework in advance.

Respect Your Partner's Point of View

Finally, keep in mind we all have unique backgrounds that can shape how we view money, even after years of marriage. I grew up in a small farming town, and the joke was we had more cows than people in our community. We only had one traffic light that just blinked yellow the entire time. Families were considered "well off" if they had a steady job, such as a teacher or office clerk, and the family did not have to worry about their next paycheck.

Advertisement - Article continues below

On the other hand, my husband grew up three hours away in upstate New York, in a town that was dominated by a Fortune 500 company's headquarters. White-collar jobs were plentiful, and most people owned stock in this company, which propelled 401(k) plan values and big bonuses. People that were "well off" were easy to see by the size of their house or the year of their luxury car.

Advertisement
Advertisement - Article continues below

Due to these different upbringings, my husband and I have different views of living for today versus saving for a rainy day. I tend to plan for the unexpected, though my husband prefers to live in the moment. It's not that either of us is right, but each of us needs to understand why we differ and respect those views.

Working together to understand and adjust spending habits will help improve your finances and should lead to a better personal relationship.

I compare improving finances to losing weight. It's a waste of time to weigh yourself on the bathroom scale each morning if you are not dieting or exercising more. If you have financial disagreements or problems, it doesn't make sense to take stock and measure your financial progress if you aren't willing to change any of your financial habits. By regularly monitoring your finances and communicating with your partner, your overall relationship will be better for it.

Lisa Brown is a partner and wealth adviser at Brightworth, an Atlanta wealth management firm. She specializes in investment management, executive compensation, retirement transition and estate planning.

Advertisement

About the Author

Lisa Brown, CFP®, CIMA®

Partner and Wealth Advisor, Brightworth

Lisa Brown, CFP®, CIMA®, is author of "Girl Talk, Money Talk, The Smart Girl's Guide to Money After College." She is the Chief Strategy Officer for corporate professionals and executives at wealth management firm Brightworth in Atlanta. Advising busy corporate executives on their finances for nearly 20 years has been her passion inside the office. Outside the office she's an avid runner and supporter of charitable causes focused on homeless children and their families.

Advertisement

Most Popular

11 Dividend-Paying Stocks You Should Think Twice About
dividend stocks

11 Dividend-Paying Stocks You Should Think Twice About

Dividend-paying stocks often can be a store of safety, but 2020 has been difficult on income equities. These 11 picks look like shaky plays despite th…
September 21, 2020
How To Buy a Roth IRA When You Make Too Much To Qualify For One
Roth IRAs

How To Buy a Roth IRA When You Make Too Much To Qualify For One

With their tax-free growth and tax-free withdrawals, Roth IRAs are a great deal — if you qualify. If you don’t, well, there’s still a way to get into …
September 23, 2020
Medicare Basics: 11 Things You Need to Know
Medicare

Medicare Basics: 11 Things You Need to Know

There's Medicare Part A, Part B, Part D, medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare --…
September 16, 2020

Recommended

When Is Amazon Prime Day 2020?
spending

When Is Amazon Prime Day 2020?

Circumstances beyond its control have forced Amazon to move its annual Christmas-in-July Amazon Prime Day blowout sale in 2020 to ... later. Is Oct. …
September 22, 2020
18 Things You Can't Return to Amazon
Smart Buying

18 Things You Can't Return to Amazon

Before tossing these items into your virtual shopping cart, be sure to read Amazon's return policy first.
September 17, 2020
No Summer Vacation This Year? What to Do with the Money You’ve Saved
spending

No Summer Vacation This Year? What to Do with the Money You’ve Saved

Maybe that trip to Hawaii you dreamed about didn’t happen, but look at the bright side: You have a nice little windfall to plan for.
September 2, 2020
The Five Top Consumer Complaints
Smart Buying

The Five Top Consumer Complaints

Here are the top five complaints from a survey of state and local agencies from 19 states.
August 27, 2020