How to budget with an overspending spouse
It’s Christmas time and we all know that means PRESENTS! Who doesn’t like a gift wrapped up in beautiful shiny gold wrapping with a big green bow? Christmas is a time of giving and spending! Does your spouse or partner LOOOVE to spend money on gifts at Christmas and maybe go a little bit overboard on the spending? Or, maybe they tend to splurge and overspend often, even when it is not the holiday season. Does Amazon deliver to your house every single day to the point that the Amazon driver has your route on autopilot?
Overspending and your budget
Setting a clear, defined budget for your household is critical for keeping expenses in check. But what if your spouse is a big spender? Believe it or not, “shopping addiction” is real, and it’s no joke. When certain behaviors, including shopping, trigger the same neural pathways often affected by narcotics, the behavior can become compulsive. People have even become addicted to online shopping. The formal medical name for this condition is “oniomania.”
Check out our other recent blog on Money Psychology that poses the question, “Which money psychology do you struggle with most?”
However, we should not assume all big spenders have mental illnesses. Some people just aren’t good with money, or have poor impulse control, making rash purchases.
Either way, living with an overspending spouse can be incredibly frustrating, especially if you are more conscientious with spending and trying hard to be more frugal or stay on budget. So, what can you do when your partner keeps blowing your budget?
Is your spouse or partner being honest with you?
Honesty is critical when it comes to managing your money. However, you’d be surprised how many people hide their spending habits from their partners. According to a study from CreditCards.com, nearly 20% of consumers have hidden purchases of $500 or more from their significant other. In addition, almost 7.2 million people are hiding a bank account or a secret credit card.
While most people aren’t being sneaky with their finances, it’s still quite common for couples to butt heads over money decisions. Some people are more frugal and are concerned with long-term savings. Others take a “devil may care” approach, having no problem with reckless spending. No wonder money problems are one of the leading causes of divorce. Check out our blog on Marriage and Money which talks about the major financial issues that could cause marital disputes if left unaddressed including debt, dual incomes, unexpected financial burdens, and loss of job or income.
What do you do when you’re financially responsible, but your partner keeps spending all of your money? Not only is this a financial problem that will potentially leave you vulnerable to credit card debt and low savings, but it’s a relationship dilemma. Whether it is causing strain now or not, you both need to have some hard conversations about money. This is probably going to be a touchy conversation, but one that you must have especially if you want to plan for your future.
Here are some suggestions for working together to rein in a habit of overspending.
Have Regular Money Meetings
If you and your partner share finances together, you need to be having regular conversations about money. Talking about your finances may be uncomfortable, but ignoring the problem will not resolve the underlying issues. Money scares people. It’s no wonder 47% of couples name financial disagreements as a primary cause of relationship stress.
Without these conversations, the overspending may go unnoticed by one or both of you. Set a monthly date to talk seriously about your income, budget, and other financial concerns. While no two people share the exact same philosophy about money, talking through these issues may provide you both with new insight.
Set Aside “Fun” Money
Create a checking account specifically dedicated to “fun money,” which can be spent on anything. When it runs out, it runs out, at least until the next paycheck. This account can allow for spending sprees without risking the budget. You can also have whatever you want, but sometimes you need to wait for it or delay when you get to enjoy it.
Avoid Financial Power Struggles
In a healthy relationship, both parties are equal partners. However, if one spouse is overspending and damaging the shared finances, the other spouse may need to establish some spending restrictions. This can leave the overspender feeling resentful. If the relational strain from financial discussions reaches unhealthy levels, you may want to find a counselor or someone who can help you as you navigate your feelings around the financial strain in your relationship.
Don’t Hesitate To Seek Help
Shopping addictions are a real phenomenon. When buying things becomes a compulsion, the person may have less control over their behavior than they think they do. While not a frequent addiction, it does happen and should be taken seriously. If your significant other has a shopping addiction, cognitive behavioral therapy or other approaches may be viable avenues for help.
Learning To Work Together
If you do have a partner who spends too much and saves too little, it’s time to have a conversation. Talk through the consequences of the behavior and work toward a solution both parties can support. Even if professional help becomes necessary, the investment is worth the reward.
While navigating money decisions together isn’t easy, it’s critical for maintaining a healthy and financially sound relationship. The work begins now.
Meet with a financial advisor
When it comes to financial planning and investing for your future, it is great to have a mediator who can help you create a plan together. Sometimes, just having an expert to help you reach a compromise that works best for both of you can make all the difference. Financial advisors often feel like life coaches and counselors, because when they help couples create healthy money habits and goals, then the couple can begin to flourish in other areas of their life because they have reduced their level of stress and animosity toward one another. You can then begin retirement and legacy planning. At Goodwin Investment Advisory, we like to help you with your entire financial picture–including helping you reach your financial goals. We not only have wealth management advisors that help you invest for your retirement and assist with tax, estate, and legacy planning, but we also have an hourly rate advisor who can help you get out of debt, create a budget, and begin saving and investing. If you want to schedule a call with one of our consultants we would be more than happy to hear your story and see how we can help guide you.