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According to a study by Gallup, over two-thirds of Americans don’t make a personal budget. Through our work with over a thousand clients, we’ve seen this first hand. Often, with couples, there may be one who wants to budget and one who does not. Usually, as a result, no budget is made. You might find yourself in the same situation. Your partner does not want to budget and you do, leaving you wondering what to do. Most likely, they don’t want to make a budget because they think they don’t need to. They might even have a compelling case. You’ve paid off the house. Your kids are self-sufficient. You’re at the top of your career, have significant ability to save, and your bank balance is not something you check daily. So why, they might argue, should you make a budget?
If you find yourself at a loss in how to talk about making a budget, here are a few angles you might consider discussing with your partner.
Budgets have an image problem. We hear the word budget and any number of associations might come to mind, such as cheap, restrictive, or time-consuming. Understandably, none of those connotations are perhaps appealing to your partner. So why make a budget? Budgets give priority to the things that matter most. It creates clarity on your household’s cash inflows and outflows so you can know how to plan and create goals effectively. Viewing a budget as a goal enabler, rather than a time-wasting and restrictive undertaking, may help reframe the concept of budgeting.
If that doesn’t work, try this...
Some of the most financially successful people in America use budgets. According to the authors of The Millionaire Next Door, Thomas Stanley and William Danko, the majority of everyday millionaires in the USA make personal budgets. They track their expenses on an annual and monthly basis to ensure they will achieve their objectives. Stanley and Danko write, “Operating a household without a budget is akin to operating a business without a plan, without goals, and without direction.” Stanley and Danko found in their research that those who craft a financial plan which is revisited often are much more likely to achieve and sustain financial success.
If your partner doesn't like the idea of a budget because it feels too restrictive, point out how the presence of a budget can help increase your spending confidence. For some the costs of retirement can cause significant worry. A recent study by Allianz discovered that 63% of people fear running out of money during retirement more than death. So how does a budget fit into this? Retirement can change a lot of your spending habits and each situation requires planning to ensure you are on track. Making a budget and getting in the habit now of revisiting it regularly can help give your partner confidence that the money you spend is not jeopardizing your future.
Maybe you’re in the opposite situation. You’re retired but your partner is too frugal to be able to enjoy themselves in retirement. First of all, take some comfort that you’re not alone. In a recent study, BlackRock found that a large amount of retirees still have 80% of their pre-retirement savings after nearly 20 years of retirement. These retirees have done a great job saving and have plenty to make it through retirement, but still are fearful that they will run out of money. If that’s your situation, discuss with your partner how a budget can provide that sense of security their looking for and give you freedom to enjoy your retirement fully.
So, you’ve finally convinced your partner to give budgeting a try. Congratulations. As a next step, visit our Resource Center where we’ve developed a template to help you get started.
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