You save. He spends. Who’s right?!
Sunday, December 7th, 2008My husband and I could not inhabit opposite ends of the spending and saving spectrum. I’m a compulsive saver. I put away more than 20 percent of my income in 401-Ks, IRAs, 529s, stocks, and other investments.
Yeah, I know. It borders on neurotic, and that’s a kind assessment of my personality.
My husband's utopia
My husband? He’d like to take a week long ski trip this winter, go to Belgium this spring, buy a new dishwasher, and get furniture for our living room, among other things. He thinks money grows on trees.
How can a compulsive saver make peace with a spender? I’ve offered my own advice on this topic. See How Not to Fight About Money. Today Bradley A. Johnson, a financial expert who blogs about investing at Investing First Steps offers his take.
In many relationships, one partner is a spender, and one is a saver. Conflict between the two generally flares up around the holidays (you just spent how much on gifts?!), especially during recession (even though I might lose my job?!)
Can you get through the holidays without a crisis? Yes, but you must remember that you differ in how you define comfort. One of you finds comfort through physical goods and immediate gratification; the other finds comfort through adding lots of stuffing to a financial cushion.
Neither one of you is necessarily wrong. On one hand, neither one of you wants to end up penniless at age 65. On the other hand, if you both save and never spend, you could miss out on unique and exciting life experiences. Relationships are built on compromise. You need to find a way to spend on things and save some too—so you both are comfortable in the moment—as well as long term.
If you are a saver
Everyone (even your spendthrift partner) agrees that it’s a good idea to eliminate consumer debt, invest in your retirement and your family’s future, and keep a solid financial cushion for emergencies like…say…a recession.
How do you get your partner on your side? You don’t, because I’m willing to bet you don’t always practice what you preach. If you were a pure saver, you would live in the cheapest apartment available, take only public transportation, never eat out at restaurants or buy electronic equipment, and so on. You probably spend money for certain immediate comforts, and your justifications aren’t necessarily any more sound than your partner’s.
What to do:
* Work with your partner to find ways to merge efficacy with comfort. Your role as the saver will make your purchases seem more important and worthwhile. After all you don’t want to buy something very often. When you do, it must be important, right? Not necessarily. Make sure that your status as the responsible saver doesn’t turn into a license to decide what’s worth buying without input from your partner.
* Question whether something has a legitimate benefit before you lobby against spending for it.
If you are a spender
If you’ve been watching your 401-K plummet in value, you might think something along the lines of, “Why did we blow all of that money in the stock market. We’d at least HAVE something if we had spent it on something tangible.” That thinking is flawed, though. Whatever you would have bought would have likely also reduced in value—eventually to nothing. Your 401-K will eventually grow in value again. That furniture will eventually end up at a thrift shop. More important, whether you blow it with a bad investment or blow it with an expensive toy that you eventually no longer care about, you’ve still blown it.
Every financial guru you’ve seen on TV (and whose book you promptly ran out to buy…ahem…) has told you that you’ve got to pay off your credit cards and get yourself some savings already, but do you have to wait until retirement to spend a single dollar? No, you don’t.
What to do:
- Work with your partner to determine what purchases actually benefit both of you, along with your bottom line.
- See if spending (e.g. a well-earned vacation) can be used as a reward for saving.
- Build into your budget—and stick to—a modest “miscellaneous” fund. Knowing that you have a category for impulse purchases in your budget means there are no surprises when the bank statements come through the mail slot.
- Participate in your partner’s investment decisions. Even if you leave the final decision to your partner, you are still making a decision to let your partner handle it. That means there’s no finger pointing if the market turns against you, or your house doesn’t turn out to be the moneymaker you expected.
It’s all about compromise. Determine the most important purchases for each of you, and build a modest budget that satisfies everyone. It is important to remember, however, that the savings plan has more long-term benefits and should be given precedence. At the same time it should not be a mask for tyranny by the saver to be the ultimate arbiter as to which comforts are and aren’t worthwhile.
Loading ...Are you a frustrated spender who thinks Bradley just doesn’t understand? Are you a saver who thinks your partner will never save a dime? Leave a comment or question for Bradley, and he will respond.
Tomorrow: 15 gifts your man will love–and they cost almost nothing.
Wednesday: A man who won the lottery tells us what we all want to know: is money the key to happiness. And he’s giving away a free MacBook Pro. Gotta love that.
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