Anybody who lives with another person needs to be holding regular household meetings to express concerns – the importance grows exponentially as the level of relationship between roommates increases. Simple college roommates need to get together – both with literal room-mates and with those who merely share the floor of a building – to discuss policies on parties, kitchen use, cleaning, showers, and guests, as well as plenty of other things. Spouses need to get together to discuss all that and much more, including raising children, work hours, and, as I will focus on today, finances.

I know “finance” is a dirty word, but it is also a necessary evil. An unfortunate but true fact: the number one cause of stress on relationships tends to be financial struggle and differences of opinion on goals with finances.

As an example, my husband and I are two very different people. We share a sense of humor, we share certain fears and insecurities, and we have goals that align well. That said, how we actually go about planning and achieving goals completely differs. What is important to me is not always important to him, and vice versa. Being two different people, we have to have occasional discussions about where we were, where we are, and where we want to be, in order to stay sane, focused, and communicative.

I encourage everybody to hold a monthly financial meeting with your spouse, partner, boyfriend, girlfriend, roommate, hetero life mate, or whatever. If you have children who are responsible and mature enough to care and not share your woes with the world, then they should also be active participants.

The agenda

Every serious discussion needs an agenda. This does not have to be a formal meeting – in fact, it is preferable if you do not use any form of label on it, as those come with connotations – but it does need to be entered into with both parties prepared to discuss certain topics. Our meetings, for example, address the following:

• Spending analysis. This is where we both go over our accounts (via Mint.com) and look at where we spent money over the month. It usually involves looking at charts and graphs and can get boring to describe to other people, but is an important part of our discussion.
• Questions and concerns. We talk about where we spent money unnecessarily and where we feel the other person can afford to cut out spending, and certain habits that may lead to detriment. I buy way too much belly-dance-related stuff and tend to apply for a lot of credit cards on a whim, while he tends to spend a lot of money on jewelry-making-accessories.
• Goals. Perhaps the most fun! We discuss where we were, where we are, and where we hope to be in the short- and long-term future, as far as financially, and why we want to be there. We want to be able to support our daughter, he is getting close to retirement (about 20 years) and I have a while to go (and therefore can take more risk), and we are looking at buying a house within the next few years.
• Plans. Similar to concerns, this is anything we plan to do over the next month that will cost extra money. It is things like “I need an oil change” or “I have to buy textbooks” that make this time miserable, so we note it and move on quickly.

There are other things to be discussed, but this is where the majority of our time goes. An average meeting lasts about 30 minutes (which is a low price to pay for a month’s worth of sanity and peace), but many can end up shorter.

Some general guidelines:

• Always tell your spouse you appreciate him or her. This will save you a lot of stressed outbursts.
• Never bring up issues from the past that have been resolved (I’m terrible about this).
• Always be honest and open.
• Never launch a personal attack in order to “strike back” at a comment about your own habits.

Because money tends to be stressful and, honestly, mystifying to discuss, these meetings are important to schedule, but also important not to overdo. Do not discuss finances in depth every day if your partner is uncomfortable with it. Do not stress yourself out over the meeting.

Why it works

The single most important factor behind a meeting’s success is that it gets both parties thinking about finances. Far too many people go through life with financial things happening to them, rather than with themselves getting the ball rolling. College and retirement savings do not happen on their own – they require research and dedication.

An additional benefit of these discussions is that it reduces impulsive spending for many people. A latte every morning is a lot more difficult to explain to your partner at the end of the month than it is to justify to yourself at the moment.

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1. I do not eat out as much.
2. I use coupons.
3. I look for free stuff.
4. I invest every penny I save.
5. I do not drive.
6. I try to only make money from home.
7. I have expanded my interests and possible careers to more than just writing.
8. I have worked on my employability skills faithfully.
9. I have lived at home, or with roommates, the entire time.
10. I have cut back on smoking (and am working on quitting).
11. I seek free forms of therapy, like hobbies and writing, rather than always staying on medications and seeing a therapist weekly.
12. I have tried to create passive income as much as possible.
13. I am more productive, but more stressed.
14. I have made more friends who would prefer to stay home.
15. I cook a lot more.
16. I do not buy name brands unless I have a coupon.
17. I have begun exercising more to work off the extra weight I have put on from the stress.
18. I have begun meditating.
19. I am happier.
20. I am healthier.
21. I am better financially.

I have learned many things about being frugal, both from necessity and from desire to master a new skill. We rarely do things outside of the home because things inside are just as enjoyable and are much cheaper to do. I find myself spending more time talking with family and less time getting into trouble.

I hope some of these are relateable. What have you done since the recession, either directly or indirectly?

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My favorite part?

• Take the amount you would have used for a down payment and put it into an index fund or other investment vehicle depending on your risk tolerance.
• If your mortgage payment would be greater than your rent, take the difference and invest that, too.

If you’re looking for a good summary of the rent vs. buy debate, or if you just want a pretty good personal finance read, check out the full article.

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I think my best personal investment was buying the domain name for this blog, and the time I’ve put into researching and writing about the various topics I’ve covered. The last few months, I’ve learned a lot, especially about myself, and I feel like I have a cheap form of therapy and education right here. I don’t mind that this blog has not yet taken off; I’m just happy I get to meet all of you interesting folks who comment here.

What has been your best personal investment? Did you spend time, money, or something else?

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By budgeting, people normally mean balancing spending so that there is as much or more money coming in than leaving. For this kind of budget, however, we are going to use a familiar denomination: percentages.

Take a moment now to write down any financial outcomes sought. They may include placing a substantial down-payment on a home, funding a semester of college for either oneself or a child, or saving up enough money to retire one year early.

Next, we will assign a value to each ending. My personal long-term savings goals are for my own and my partner’s retirement, buying my first home (with some furniture), and having a child (diapers are expensive, after all). My short-term savings goals are for an emergency fund of $1,000, a new pot and pan set, and a KitchenAid.

Anybody versed in personal finance knows about Dave Ramsey’s snowball method of debt repayment. We will use a similar method to gain momentum in meeting savings goals. Short-term goals will receive a hefty priority – say, 50% for me. The short-term goals are broken up as follows:

• Emergency fund – 50%
• New pots and pans – 30%
• KitchenAid – 20%

That means 25% of my total savings will be dedicated to building an emergency fund.

Long-term goals are broken down similarly:

• First home purchase – 80%
• My retirement – 5%
• Pete’s retirement – 10% (His retirement age is closer than mine)
• Children – 5%

The exact amounts may need to be tweaked if I decide something in particular is more important.

As for keeping track of everything, you may choose to go the difficult route and open up separate savings accounts for each individual budget, or you may choose the easy (and easy to screw up, if you’re not careful) method of using an Excel spreadsheet. I, personally, use the latter choice.

How do you budget your savings? Do you just have one account that you contribute to because you feel you should?

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The Simple Dollar is always a great place to look for realistic advice for saving money and using it wisely. If you want a good read, check it out.

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This does not mean, however, that I encourage all to go out and sign up for credit cards. College students, low-income families, and newly hired, entry-level workers often fall into the pitfalls of 0% APRs with the promises of fortune. This article contains guidelines for making the decision as to whether or not you are ready to take on a credit card. I think it will be useful for both those with no credit experience and those who are looking to take on a second or third (or more) credit card.

Can you get it?

The first thing you need to know is whether or not you will actually get the credit card for which you are applying. Sometimes, having a low income, little experience, many inquiries on your credit report, or being young will negatively affect your application and result in rejection. Before wasting an inquiry on a card, decide if you have good odds of getting it. I was rejected from a Shell card recently, and this was disappointing and lowered my score for nothing.

What kind of card is it?

Is this a cash back or rewards card? An introductory 0% purchase APR card? A balance transfer card? How are you going to use it? Depending, but especially if this is a card with a low introductory rate, consider how much you are going to be racking up in debt. 2011 will come quickly.

Is the card good?

A good card is defined with the following qualities: No monthly, annual, or otherwise “membership” fee*, few asterisks in the explanation, low interest rate (below 20%), good grace period for payments, and a free rewards program. Examples are Chase’s Amazon.com Visa, which is my personal credit card.

* The exception is for prepaid cards, which almost always have a fee. These are for people who cannot get a regular credit card, but still want to build their credit.

If you get into trouble with your credit card, who will be paying for it? What is your contingency plan, should you become unemployed or disabled? Are you buying things on credit, or are you planning to pay off the card at the end of every month?

A guideline: If you can’t afford it now, you can’t afford it later. Trust me.

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While not necessarily and inherently accurate, it can be used in a variety of situations to some degree of truth and honesty. One such situation is that of a very important sector in personal finance: saving money.

If 80% of your savings will come from 20% of what you do to save, then it is important to identify the 20% and do more of it, while discontinuing ineffective areas.

Where I spend the most time to save money is through coupons. Locating, clipping, organizing, and coordinating with sales clocks in at about four or five hours per week. I could do it in less, but I have a sort of obsession with it at this point.

I am not currently employed, but I do have better things to do, so I value my time at about four dollars per hour. This means I am spending $20 per week in time to save money through coupons. I do not save $20 per week through coupons, so this is a futile effort. I should cut down on time spent until I create an equilibrium, but I consider it a form of amusement as it relaxes me.

We also save money by living with my parents, where we pay $275 per month in rent and utilities. This is a flat rate, so there are no savings to be found here.

Monthly cellphone bills, our gym membership, and our Netflix subscription are another thing. We could theoretically give each of these places a call and ask them to lower our monthly fees. This could save us, say, 25%, which is $50 per month. This is more than I save with coupons with a lot less of an investment.

Similarly, I could ask for a lower interest rate on my credit cards and threaten to change banks, but I do not currently carry a balance, so this would be pointless.

Where are you spending 20% of your time to create 80% of the results? Where are you spending time that you probably should not? Do you use coupons? Do you consider them money-saving form of entertainment?

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