Season 1, Episode 2
Brass Tacks: How We Manage Our Money
“How do you actually manage your money?” is a question we get asked a lot, so this consider this episode us getting down to brass tacks! In it we reveal how we account for our money individually and what our system looks like as a couple. And maybe even more importantly, we talk about the impact this system has had on our relationship. We also share what we’ve learned from navigating money in past relationships, old stories we had to stop telling ourselves, and the number one emotion we’re both trying to avoid in ours.
We also give you hard-earned tips for undertaking a new money system, recommendations to couples who share expenses and, of course, our favorite personal finance apps and tools.
We review our favorites in this podcast bonus: Lindsey + Colin’s Money Tool Review 2019.
QUESTIONS WE ASK EACH OTHER:
What is our monthly system? When do we talk about money? How did we come up with our system?
What works well about it functionally? Relationally?
How did we manage money in past relationships?
What would we recommend to couples who share expenses and responsibility?
Are there any hard-earned tips for people undertaking a new system?
What are our favorite personal finance apps and tools?
Hosts & Guests
EPISODE 2 TRANSCRIPT
Lindsey: Hello here we are. We are coming to you from our tiny house in Sarasota, Florida where we have spent the last month in bliss town. No that’s not true. We’ve been working a lot but every day when we’re done with work we go out and we walk on the beach waves, watch the sunset, and eat dinner when most people around here eat dinner — at 5:00 PM.
Colin: I know, are we early-to-bedders because we’re in Florida?
Lindsey: I don’t think so. We are so excited to share this episode because we are going brass tacks, we are going to talk to you about how we specifically manage our money, what systems we used and have developed over the years with the pros and cons to that system and how we actually keep up with it, and how we create an environment for success. This stuff is hard and you have to be consistent about it and there’s lots of roles to play, and also what apps and tools do we specifically use in our relationship to manage money? Alright Col, how would you describe our monthly system?
Colin: Okay. So we originally came up with this system because we agreed very early on we wanted to split things 50/50. You and I do not have a joint account. We have individual accounts where we collect our own incomes and we pay our own expenses. But as a couple we have a variety of shared expenses. So this is our way of achieving both those goals. As we know, we’re managing our own businesses and then at the end of each month we are settling up with each other so that if I buy groceries and there are things on there that we are obviously both going to eat, then I’m going to bill you for half. So we have this arrangement where at the end of the month we will go through all of our expenses, and we’ll categorize them. So we’re also more ready for next year’s tax return and we will flag and share all expenses that we have that also go to the other person. A lot of people do joint accounts. We’re not saying one is right or wrong or in favor of one or the other. This is just what we do and that’s worked really well for us so far. We talk about it at the end of each month and we settle up and that really allows us to reset and move on to the next month without carrying that last month with us. We also schedule time throughout the year where we talk about big goals, trips we want to take, maybe changing our insurance if we can find a better deal, big purchases, dreaming about the future, and how are our investments doing? So that’s how we do it.
Lindsey: And what’s great about that is we actually created a free download to help people create their own annual calendar and we gave specific examples of what our annual calendar looks like so that tool will help you put that into action for yourself.
Colin: Okay, so now that I have laid out our system, it’s very important, Lindsey, that I ask you what works well about it. This is actually a two part question, because I want know what works well about it functionally and what works well about it relationally. Because we know it’s not just about the numbers adding up. There’s also a relationship component. So let’s start with functional. What works about our system functionally?
Lindsey: Well I think that, you know, ultimately it creates accountability that we are actually both paying attention to the money stuff. something that’s been interesting, a lot of people have been telling me about how they are the financial resource person in their households – doing all the financial work. And I feel like this system for us has really made us both show up in this way. And learn about money. So that’s number one. I think it keeps it from piling up and it’s a monthly reset like you talked about. I think it helps us really see where we’re spending our money. You know, like this month we are just looking and thinking, “Wow, we’ve spent way more on groceries. Like why is that? Are we okay with that? You know, um, do we have really great taste in cheese this month? I don’t know. And I think also having our own separate systems, meaning separate accounts allows us to decide like where do we individually want to keep our money and you know, and be able to collect interest. And we also don’t have to ask permission to spend money and you know, see, that’s another thing that has come up I think for other couples is this idea of having to ask permission and feeling tension around that. For sure. So in our system we do not have to do that.
Colin: And tension is really an example of a relational problem, right? And so that’s why we want to reduce as much tension as we can. So again, looking at our system, what works well about it relationally?
Lindsey: Yeah, I think that it absolutely prevents resentment. And I think that it requires trust. So it’s something that you and I both work on constantly. You know, like I know you’re not sneaking in purchases that you’ve made and I didn’t have a part of for our shared expenses, just like if I’m at Lowe’s and I’m like, oh, you know, like I want, I’m going like crazy with succulent shopping and Colin could give a crap about succulents. I’m not going to ding you for that. Like if that was something that I cared about.
Colin: We’re grownups, we can buy stuff we want and then the other person doesn’t get charged for it. Yeah, I totally agree.
Lindsey: Yeah. Also, so early on we established a monthly penalty fee. Yeah. And this has been a great one. Um, I think more so for you because you were struggling with keeping up with accounting at the end of the month. And so for Colin, well for both of us, it’s a $50 penalty fee if our expenses aren’t in the spreadsheet by, you know, the 30th or the 31st of the month. This sense of loss aversion for both of us has really motivated us to keep up with it. And it also gives us a structure to talk about larger life goals. And I think relationally that’s the whole reason why we’re even doing this money stuff right, is to actually live our life. And this structure allows us to talk about things that we want to do.
Colin: Yeah. And if I may add, I think by doing it monthly we keep the monster from getting too big and so we’re not carrying this burden that if we’re going to talk about money, we have to talk about the last six months of frustrations and questions. This way we keep it small and manageable. That frees us up to talk about the big stuff. What you just said so well, the stuff that we actually really are excited about.
Lindsey: So talking about the six month monster, I talked about things that worked with our system. What in your opinion, Colin do you think doesn’t work about our system?
Colin: Good question. A couple of things come to mind. The first is something I learned about myself which is that when I am accessing the money part of my brain, the excel spreadsheet part of my brain, which is how we do this conversation, I’m thinking in math mode. I’m solving a problem and my voice will go flat and something you have pointed out to me that I was not even aware was happening was that my flat voice made me sound like I was angry or tense with you when the reality was I’m not excited to be balancing a budget. It’s not fun for me, but as your partner, that’s an area where I need to work and keep growing because this is not a quarterly fiscal review with the board. I have to be able to modulate in a way where I’m not making you feel like I’m angry about something. I wasn’t even aware that I was doing it and I’ve really appreciated you pointing it out and I’ve definitely had to work at it. I think another area where we maybe have some challenges come up is once you get into a system, you’re entrenched and it can be hard to pivot. So every now and again we’ll come up with an idea, well, here’s somebody else’s model and think, o oh, maybe we could just start over or whatever. And it’s like you’re stuck in your model, not that you are stuck. I just think that it’s easier to stick with what you’re doing and not pivot away to something new. And we are very much of the opinion that there are great ideas out there and we want to be learning from them. So I think that’s an area for sure. Do you have anything to add that doesn’t work well?
Lindsey: No, I think you nailed it.
Colin: Oh cool. Okay. This is my favorite subject to ask you about that or talk about how do you get good learning about how to do well in a relationship, make a relationship healthy? It usually comes from previous unhealthy relationships. All the lessons that you learned, the hard way that you weren’t able to kind of change, but now you can with this new person. So I guess that would be a question for you and then I’m happy to go too — what did you do in past relationships around money and can you give us a little snapshot of that?
Lindsey: Sure. You know, I dated someone who just point blank bought all the fun stuff. They paid for dinners out, they paid for trips, rounds of beers, you know, like they were the fun person. I bought all the home stuff like toilet paper. And what ended up happening is that along the way I adopted this story that I’m not fun because I wasn’t paying for the fun stuff even though I was absolutely paying for other stuff. And so, you know, I think in that system, we just didn’t talk about it. Like we didn’t have these conversations. And I mean, I’m sure there was some resentment and that’s something that I absolutely didn’t want to bring into our relationship. And who wants to carry around a story that they’re not fun?
Colin: Oh my gosh. Yeah. And I remember when you told me that, I was like, you’re the most fun person I know. And I guess I’m supposed to say that, but I do also really believe that. And it to me was really a testament to the power of this idea of a money story that you drew this conclusion privately because we don’t talk about money you never get to share with other people. So they can go, “oh no, no, no, those are not connected.” I know that you didn’t buy fun stuff that doesn’t make you and not fun person.
Lindsey: Sure. And it’s not fun to not have toilet paper.
Colin: Right. That’s Super Fun. You’re so right. I have to just say, I laugh because now we have a system where we will split expenses later and so sometimes one of us will offer a gift or pick up someone’s drink or something. And there’s kind of this moment of like one of us is getting the public credit. But we know privately they we are both actually paying for that later on. Public credit can be super confusing and distracting.
Lindsey: So what about you Colin? Is there a past relationship that this makes you think of?
Colin: Yeah, for sure. Because we didn’t really talk about money at all, something that I can recall happening is that she was kind of taking the burden of a shared expense in a way that was no longer healthy. A lot of this was part of her personality. She’s a giver. Often people like this are generous to a fault and they don’t want to bother people with like sort of saying “this isn’t equal.” And I was totally unaware. This is, you know, something that I’m not proud of, but I didn’t know that I was not meeting her halfway with this particular recurring expense. And what ended up happening was we did not talk about it for a long time and then it blew up into an argument. And I thought that that was really sad at the time. Now, I understand we had another option, the way you and I communicate, we could kind of work through this in advance and we didn’t have that working for us in the past. So by choosing not to talk about it, we ended up kind of in a situation that didn’t feel fair for either of us and we both felt hurt and judged and I wish it had gone differently, but it was a great lesson.
Lindsey: Wow. That’s interesting.
Colin: Well, speaking of other couples and other relationships, question for you, what do you think we should recommend a couples who are listening and who share expenses and share financial responsibility? What recommendations do you have Lins?
Lindsey: Don’t talk about it. Just build up resentment and there you go. I think you absolutely need to talk about money. Um, I and sort through the roles. You know, again, going back to that the financial work of a relationship that should absolutely be a shared thing. And maybe it’s not 50/50 shared, but there are different roles that you can play and y figure out when you want to talk about it and how do you make sure that you’re keeping a productive energy around these kinds of conversations. I absolutely recommend creating a budget together. Let the budget be the thing that you’re mad at instead of each other. You know, let that be in charge of your money. And I think that structure, when you have the thing, it’s almost like safety and objects like go to the budget, you created this together, let’s go check, check the line items. You know? And that absolutely worked really well for us. I remember when we were talking about trip planning for example, and deciding, you know, what numbers are we going to be spending on trip planning? And then I always got to go back and say, Lindsey, you get to spend x amount of money on travel. And that really helped me because I’m a saver and so I’m going to see where I can get deals at the sacrifice of my own enjoyment, you know? And then I would absolutely recommend anybody to check out Kristin Wong’s articles. She’s a freelance writer. She wrote Get Money: Life the Life You Want, Not Just the Life You Can Afford. And she just writes really great articles for couples navigating money conversations, including a ton of how-tos. And we’ll definitely post a few of our favorite articles in the show notes. And a great way to break up the money conversation is to look at financial Past, Present, and Future. So if you think about the Past: how you are raised, any debts you have, stories you carry, you talked about money stories, think about the Present: your present income and expenses, how you manage your money and then the Future: where you want to go and what you want to do, because those things are going to take money. And I think if you thought about a beginning conversation structured like that, you’re, you’re not going to run out of things to talk about.
Colin: Yeah. It’s so important to start with a real motivation and to have a greater why that you’re attaching to these habits. You know, I know as a speaker, that’s one of the pieces that I always try to recommend is “have a greater why.” Save a picture of it on the background of your phone so you see it on a regular basis. It’s a way to avoid impulse buys. It’s a way to remind yourself what’s really important. I’ll give you another one that I think is super helpful as people apply these ideas that you’re talking about, Lindsey, is to always ask “what is the human element?” One of the great core concepts and kind of jokes built into economics is that it is, they are models that are built for rational creatures and humans are not rational creatures. We all set goals that we then do nothing to achieve and then we go, why did this happen? So I really want you to notice that and avoid that. If that comes up for you as an example of this, there’s new research that has come out that shows that Fitbits actually increased the stress that people felt about working out and also it actually made people work out less because they created a negative association with working out. I’m not saying it doesn’t work for a lot of people. I think that it does, but what’s really core to any kind of behavioral change is to set really small goals and to be kind to yourself no matter what the results are. Always ask, “What is the human element? Yes, this is great advice. How will I not do this and then when that happens, how am I going to be kind to myself and try it again rather than just give up and feel frustrated?”
Lindsey: I love that Colin and I know we addressed a bit of that when we wrote that post, How To Set The Mood for Money Date Night. And it is a date night. I love making it human because again, it’s like humanizing money.
Colin: Totally and like what is a real date if not getting a little bit vulnerable, you know? It’s not all the performance. At some point you got to show up as you really are and I think what a great thing your partner can help you with, you can help your partner by doing for yourself is just by bringing that element of kindness into this process. That’s relational. In terms of functional, maybe I’ll just close with some of the tools that we use. I personally use www.mint.com which allows me to track all my purchases. I find that very helpful. I do have to go in every month and review because it’s a system. It’s not going to get it. All right, so I use Mint not only to track share expenses with you, but also to flag things for my tax return at the end of the year. So I have a whole category system that basically sets me up so that come tax time it’s a much more manageable process. It used to be hell on earth, as you remember. And I’ve slowly gotten better at it. And then we use Google Drive to share our expenses. So basically just some form of shared spreadsheet. So you, you know, pretty, straightforward.
Lindsey: And I use a spreadsheet personally for my own business and I’m pretty old school that way.
Colin: And a lot of people do that. And so there is no tool that’s going to fit every person’s needs, finding something that you’ll actually do on a regular basis. Uh, I know that Lindsey is amazing at deal-finding and so she will share some tools in a bonus Tool Review Guide and this is going to be part of our beta course. So we’re going to be creating some exclusive content for couples to go through so that they can actually turn this thing around and really be successful in reaching their goals, getting to know each other better and moving the direction of what they really want. So we’re obviously super excited about that. Lindsey, do you want to tell us anything else about the beta course?
Lindsey: Yeah, this is a way to create instant accountability. We begin on May 1st, it’s a six week course, so we go into June and every week we will have a Facebook Live Private Group Coaching Session with Colin and I, and we only have 10 spots. And the application due date is April 19th.
Colin: Yeah. So definitely check that out. And also checkout the show notes because we’re going to give you some links to some tools and some great articles that we recommend that you read. We hope that this gets you excited to really build a system that works for you. And so with that, I would say go be awesome. Thanks so much for listening.
Lindsey: Thanks everyone.
Kick Start Your Money Date Night is a 6 week course to help couples create (and stick to) a system for managing their money together.
Having the ability to travel and building a budget to go on these adventures has been at the top of Colin Ryan and Lindsey Lathrop’s list ever since they got together in 2012. Listen in to hear how they do it.
Colin Ryan and Lindsey Lathrop answer the question “How do you actually manage your money?” and help you think about how to create your own system in your relationship.