Goodbye dictatorship, hello democracy

Last week I wrote a bit about how most of us have hired a budget to be our dictator: deciding what we can and can’t do, making sure we spend as little as possible, and keeping tabs on our spending. If you haven’t already, you should definitely read it.

When Katie and I lived our life on a dictatorship budget, there was no freedom, no fun, and no progress. But for some reason I kept campaigning for a dictator to be in power.

Each time the dictatorship took over, we’d find ourselves stirring up a rebellion, and overthrowing what I had worked so hard to put in power. Worse yet, we weren’t replacing it with a benevolent leader, no, we were just going back to an anything-goes anarchy. We seemed to always flip-flop between a super-restrictive budget and a spending free-for-all. Pro tip: neither worked.

I’ve thought a lot about why we put ourselves through that. And I believe it’s because we fundamentally misunderstood what a budget was. You see, the budget isn’t meant to rule us, it’s supposed to be a strategic tool—designed to help us make and execute plans. Check out this definition:

“A budget is a quantitative expression of a plan for a defined period of time…It expresses strategic plans of [organizations] in measurable terms.” -Wikipedia

It’s just a plan to help you get what you want

As you may know, Katie and I wanted freedom from debt, so we made a plan and did our best to execute it—now we’re debt free! When dealing with a financial goal (like getting out of debt) it’s easy to see you’d need a financial plan, but what about the rest of the things we want in life?

Take us for example: Katie dreams of living in France, and I really want to try living in Costa Rica for a year. We both want nice clothes to wear, and for our kids to go to university. Katie’s also an incredible seamstress, so it’s important for her to have materials for sewing projects each month. And I’m trying to change the world of budgeting by creating a piece of software, so I need a little capital to get it started. And sadly, one day our kids will probably move away, and both of us really want to be able to visit those little stinkers wherever they end up moving to!

If we really want all that, we’re gonna need a plan! A plan that involves money. So, let’s talk about the first principle for making strategic plans—or as we often call them—budgets. Here it is: have conversations about money.

Ditching the dictator for a democracy

Unlike the budgets of our past, Katie and I now have a budget that’s much more like a democracy. Everyone has equal opportunity, voting power, and responsibility. Now the budget represents us, our desires, and our decisions. We discuss, debate, and decide what we want to purchase each month—and we do it together.

Now, if you’re anything like we were, you might be cringing at the thought of having to discuss money with your significant other each month. You’re not alone. I get it, we used to have a lot of contention over money in our house. Did you know that money fights have been found as the #1 predictor of divorce? This stuff can be hard!

“Arguments about money [are] by far the top predictor of divorce,” she said. “It’s not children, sex, in-laws or anything else. It’s money—for both men and women.” -Huffington Post

Now when you hear about something like that, your first reaction might be like ours was: “no more talking about money!” In reality though, that just made things worse—pent up feelings usually don’t help anything. And with things like divorce on the line, this is just too important to mess up.

Why is it so hard to talk about money?

So why do we avoid talking about money? What’s so hard about those conversations? And when we actually do try to talk about it, why do we often end up arguing?

From my experience, different people have different reasons. Maybe it’s because our parents taught us it was rude to ask about money. Or maybe we listened to too many money fights as a kid. It could even be that we made too much money at a young age and made some poor choices that scared us.

Regardless of what makes it hard for each of us to talk about money though, there’s one reality we all have to come to terms with: money isn’t going anywhere, so it’s time we start talking about it.

You see, money is intertwined with every area of our lives. So it’s hard to talk about money without talking about personal priorities, family goals, hopes, dreams and the minutiae of everyday life. And guess what? Sometimes we disagree on those things. But that’s why having conversations about money is so important!

When Katie and I talk about money, we’re really talking about our life. We’re not just discussing dollars and cents, we’re talking about what’s important to us, what we want for our kids, what our fears are, and what each of us dreams of doing. These are topics that are worthy of our attention and discussion. These are things that we’ve found difficult to achieve or overcome without a plan—especially without a plan that includes money.

When talking about money and making plans, there’s going to be disagreements—and that’s okay. Like this month when Katie proposed that we buy school photos for our daughter Holly—she just started kindergarten. When she brought it up, I was like: “c’mon Katie, everyone knows those things are a rip-off, and you’ve already taken better photos than what we’d be paying for”. You see I really didn’t want to get sucked into the trap of buying crappy school photos every year, so I told Katie that. She disagreed. We let it sit for a day and then the next morning I got a text from Katie:

Katie: I think we should buy school photos in kindergarten, grades 5, 8 and 12
Conor: first year, and then last years of each group of grades?
Katie: Exactly
Conor: I think I can deal with that
Conor: I’d still like to know how much it actually costs, but in theory/spirit, I’m okay with it
Katie: $32 would be the max
Conor: OK

With a bit of discussion, and some understanding from both sides, we figured out a decent solution. We worked through our differences of opinion and we made a plan together. Easy peasy.

In practice, having conversations about money means we don’t buy things without the other knowing about it in advance—even if it’s small. Neither of us has to worry if we’ll have enough money at the end of the month because we both know where every dollar is going. And we’re both making progress that’s important to us because we talk about those things, and we fund them with money.

So, whaddya say?

How about you, are you having regular conversations about money with someone you love? Are you talking about the details of your life that matter to you, and how you’re going to pay for them? Try doing it today.

Now when you first try talking about money, it can be tempting to point fingers or to place blame—just don’t. Resist complaining about your current situation, or how you wish you had more money.

Instead, talk about one thing you want to make a reality in your life. It can be anything: starting a business, paying for an education, dropping some debt, or even getting kindergarten photos. Whatever it is, tell your loved one why it matters to you. Then talk together and make a realistic plan that you’ll be able to execute.

This weekend is your chance to start having conversation about money! Start small, and you might be surprised at what it could grow into.