Do you ever wake up at the end of the month and
wonder where all the money went? Perhaps this is something you ask your
spouse. Many couples are baffled because they honestly believe
they do not spend that much. Sure, a little bit goes here and a little bit goes
there, but that can’t possibly all add up to the family paycheck - or does it?
Getting a grip on how money flows through your life can help you start setting
priorities for where and when you want the money to move.
There are three different types of expenses in life.
Fixed Expenses - Most
of us feel like so many of our expenses are fixed, and we could not lower them
or reduce them if we wanted to. But the reality is that most of our
"fixed" expenses are actually semi-fixed, which I explain below. A
fixed expense is the amount of money you need to sustain basic life: putting a
roof over your head, food in your belly, and clothes on your back. While it is
not desirable to live at the minimum, it does take a basic level of income to
sustain life, and depending on where you live in the world, that number varies.
Semi-Fixed
Expenses - This is where our socioeconomic level really starts to fool us into
thinking that our costs are fixed. Whatever part of town we live in starts to
dictate our standard of living. This happens in part because we are social
creatures, and while we pride ourselves on individuality, we often end up
reflecting the values of the community around us. At whatever socioeconomic
level you live, there is an implied minimum standard of living. When you take
time to recognize how that standard is at work in your life, then you can start
to make decisions about how you want to spend your money.
For example, when you move into a new neighborhood,
you will intuitively be aware of the types of cars people drive, yard
maintenance they keep, birthday parties they have for their kids, vacations
they take, restaurants where they eat, career choices they make and the list
goes on. All of this information informs at a subconscious level the decisions
each family makes with their money. (Think of the old adage “keeping up with
the Joneses.”)
Variable Expenses - This
category reflects the differences in how each family allocates money toward
their semi-fixed expenses. Some families love going out to eat together, while
others value private school or want to win Garden of the Month. Ultimately,
variable expenses represent the individual choices of families regarding how
they want to live out their life.
As a couple, one of the most important things you
can do to help advance your financial life together is to make intentional time
for discussing family values. As a family better understands what it really
values, they will start to make more intentional decisions about where the
money goes.
Here are three questions to ask your spouse to
clarify family values.
1. Which semi-fixed expenses do you feel are
getting too much of our family’s money (vacations, home upgrades, vehicles,
etc.) and why?
2. What is one area of our life that is not getting
the financial attention it needs (bills, debt, retirement, etc.)?
3. When we look back on our lives, what do we want
to be able to say we did with our lives?
Feel free to give me a call to talk more at 980-275-1627.
Ed Coambs
Edited by Reena Arora of Arora Media, connect on Facebook
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