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- How to Budget on a Low Income - January 27, 2020
Back at FinCon in late September of 2018, I was fortunate enough to meet Jenny and Jimmy from Living Life Loving Us. We had chatted several times via Twitter, Instagram, and blog comments, but this amazing couple truly swept me off my feet when we all met up in person! Uncoincidentally, Jenny and Jimmy were strikingly similar to my girlfriend Lauren and I, but a few years older.
After FinCon was over, we stayed in touch and decided to exchange guest posts to offer our expertise to a new audience. I wrote about the advantages of discovering FI at a young age and asked Jenny to write about how financial independence has benefited her and Jimmy’s relationship. During FinCon, I was blown away at how loving, caring, and respectful they were of each other. Not once did they argue, bicker, or so much even scowl. Who wouldn’t want to be like them?! To me, this proved that this power couple must have figured out the secrets to maintaining an undulling relationship. Now you get to find out as well. Enjoy!
Pretty excited to be writing for the legendary Cody Berman of Fly to FI. My hubby and I had the pleasure of meeting him at FinCon this year and he lives up to every story we had heard. Hardworking, creative, and an all around people person, Cody embodies a great deal of what we hope to instill on our daughter by teaching her about financial independence from an early age. He’s filled with passion and jumps at the opportunity to create lasting relationships within the FIRE community.
That passion is what got us talking and brought to all our attention the values of financial independence (FI) that we hadn’t really thought about. Of course, it’s nice to have money, to be wealthy, to reach a goal of not NEEDING to work, but that’s not what it’s all about. Financial Independence is much more than monetary, much more than a number you reach. It’s about the journey and making life changes. These life changes create habits and these habits create a lifestyle you are proud to have. It encourages positive, strong relationships, brings light to the things you value and enriches your overall life.
Over the past 3 years my husband, Jimmy, and I have embarked on this incredible journey. What began with a desperate effort to pay off our $120k in debt accrued from infertility treatments evolved into a passion for financial independence. We quickly realized that finances could be linked to every facet of our lives, including our relationship.
The journey to Financial Independence is what has kept us as much in love as the day we met.
I can honestly tell you that I am as much in love with my hubby today as I ever was. Whether it’s the way he still looks at me like I’m the prettiest thing he’s ever seen or the gentle brush on the shoulder as he walks by me at the gym just letting me know he’s thinking about me, the little things he does let me know the spark is still there.
In the beginning, all relationships are like this (or at least they should be in my opinion), but as time goes on that spark fades. The stresses in life have you pushing your relationship to the back burner and sometimes it gets forgotten back there. It’s no one’s fault usually. You’re comfortable with one another and you think that you’ll deal with the stresses now and you’ll have time to be sweet and thoughtful later. However, sometimes things get pushed too far and those stresses have you fighting with one another instead of working together.
According to a study done by the American Psychological Association, over 75% of people feel financial stress and a large majority of the people studied were hiding finances from their partner. This financial stress has been proven to be the leading cause of divorce in America.
Finances can be stressful. Living paycheck to paycheck, struggling to build your savings, and the feeling of never having enough money no matter how much you make is enough to put a strain on even the best relationship. Top that with the fact that couples can have different opinions on how money should be handled and it’s a recipe for an argument. But what if that stress didn’t have to be there? What if there was a way to lift financial stress off your shoulders and let you focus on your relationship again? There is. Financial Independence.
Talking about budgeting that first time gave me a feeling of anxiety that I truly believe I will never feel again. It was a combination of a fear of the unknown, the release of my sole handling of the finances, and the pit in my stomach from anticipating my husband’s disappointment when he realized things were worse than I had let on. That first budget meeting was brutal, and I will be the first to admit that I was not fully on board.
Financial Independence Builds Communication
Hubby’s initial approach was to come home after doing extensive research on his own and say “We’re paying off all of our debt in 24 months. We’re starting a budget.” His approach is not something I would suggest if you’re trying to get your partner on board, but his next tactic is.
He had me write down 10 things that made me happy on a regular basis, they could be anything, and he would do the same. After writing down our list of things we valued we realized that they largely weren’t monetary at all. We both enjoyed cooking dinner together, enjoying nature, a good comedy, and traveling the world. This was the beginning of the communication that changed our lives.
Don’t get me wrong. The beginning was rocky. I had to come clean with the financial balancing act I had been doing to keep us afloat during our IVF treatments, I had to expose the “hidden” credit cards, and I had to get over the idea that the budget was there to ‘keep track’ of my expenses. You have to break down all of the walls, expose all of the skeletons, and be honest with one another if you’re going to make something like this work.
Oddly enough that’s exactly what you have to do to rebuild a relationship. It was basically starting fresh. There was now nothing hidden, no secrets, and a new shared responsibility for the finances. Though we had a mess to clean up, there was already a weight lifted off of our shoulders that we had a plan and we could achieve this together!
The Communication Continues
The amazing thing about financial independence, as I said, is that it’s not all about hitting those numbers — it’s the journey that creates these positive changes.
In order to achieve financial independence, you can’t just create a budget, come up with a plan, and never make adjustments. Life throws you curve balls, your goals change, and your values change. It’s a fluid process that requires flexibility and… communication.
The communication about money should spark continued communication about your goals as a couple. That communication sparks conversations about dreams, aspirations, and values. That is what keeps your marriage alive! You’re talking, sharing and staying on the same page. You’re working together to reach your goals and when you align your goals they are so much easier to achieve.
Some nights we’ll start off with just a quick comment about the grocery budget and 2 hours later we’re creating our dream 6 month RV vacation. We enjoy talking to one another because we are on the same page, and when you’re on the same page about money it makes achieving financial independence so so easy.
Mind you there are also tough conversations you have to have. You won’t always agree on everything. One may be more of a minimalist than the other, there may be speed bumps that require serious prioritization of your funds, or you may simply have different ideas of what you should do with ‘extra’ money when it comes in.
The key is to approach your relationship like a business partnership. Keep your partner in the loop, respect their opinion, and talk your way through the problem. I think a lot of relationships get lost in pointing blame, losing respect for one another, and not listening to the other’s point of view. If you were a business, you would fail. Why would it be any different in your relationship when dealing with finances?
Financial Independence Gives You More Time Together
Another key to a good relationship is enjoying the time you spend together. Financial independence allows you the freedom to work less and live more.
I’m a nurse. My husband is a firefighter. We naturally get a good number of days together based on our career schedules alone. However, many of our peers get lured into the overtime pay or even a part-time job then become dependent on that money. They increase their lifestyles to match that extra income and never feel as though they are getting ahead. Because they are not.
We genuinely enjoy spending time together. We chose to align our values with our money. Instead of increasing our lifestyles as our incomes increase, we’ve actually prioritized our spending and spend less now than we did 3 years ago while making a significant amount more. This opens up endless opportunities.
By having such a high savings rate it allows us to never think twice if we want to take a week off together. It opens up the door to me working only 7 months out of the year and spending the rest of the time at home with my husband and our little girl. It allows my husband the option to quit his job if he is ever physically unable to do it without us wondering how we will survive financially. It just gives you options.
One of the most impactful examples I can give you is one that happened to us this last spring. Our daughter was very sick and hospitalized for over a week. She was less than a year old and we were terrified of the “what if”. All in all, it was over a 2-week ordeal and I never once left her. I held her in that hospital bed and her daddy was right there by our side. We missed days upon days of work, the threat of me losing my contract was real, and yet we never thought twice about the financial stressors that were looming over us.
We had an emergency fund in place. We lived well below our means so that we could float the bills until I found another job if need be. We had zero debt to tend with, and the confidence that as a couple we would come up with a plan to move forward after our daughter was better. Financial independence allowed us to focus 100% on our family when it was most needed. There was enough stress to contend with as a couple and placing financial stress on top of that would have turned a horrible situation into an even worse one.
Three years ago we would not have had that choice. We would have had to choose who would stay with our daughter while the other worked, I would have had to make a few shifts in order to guarantee my contract, and we would have carried those medical bills for years and years to come.
Financial independence allows you the freedom to choose time with your family over work, and that time together builds memories, bonds and, ultimately, stronger relationships.
Financial Independence Lets You Focus on Your Values
You can have anything you want, but you can’t have it all.
I see far too many of our peers trying to do it all. You have a finite amount of money and the only solution to getting more things is working more to get more money. However, at some point, even that isn’t enough. When you’re working 6 days a week to pay for the vacation home you never go to because you’re working, it seems a little pointless doesn’t it?
The idea of financial independence is simple. You need to spend less than you make. If most of us look at our budgets, there never seems to be enough to cover all the things you want — because there’s not. BUT I can promise you that there will be more than enough for what you need.
When we started this journey we were making a good amount of money, solidly middle class, but even before the IVF debt we always felt like we were playing catch up. We didn’t know where our money was going.
A good look at our bank and credit card statements showed it was being spent on crap!
Have you ever walked into Target for one thing, grabbed your Starbucks and perused the aisles, then three hours later you’re walking out in a daze wondering what you bought for $200? Yep, that’s where our money was going. A solid 50% of our spending was on things that brought us zero value. How do I know that? Because I can’t even remember what they are. They clearly had very little meaning to me.
Write it down.
When you embark on a financial journey, no matter if your goal is early retirement or to just get your self out of debt, you are forced to evaluate what’s important to you. Physically write down the things that bring you value. Do you thoroughly enjoy driving your motorcycle every weekend? Would you love to spend more time at home with your family? Do you want to see the world? Whatever you find happiness in is what YOU find happiness in. No one’s list is the same.
Once you start prioritizing your spending you realize how easy it is to cut the other things out. You gain this understanding of yourself and your partner that is too cool to describe. The you that thought you ‘needed’ so many things now realizes that those things were just that, things. They brought little to no value to your life and now you can focus your money and energy on things that do!
By coming together and realizing your common values and goals it not only makes it easy to achieve financial independence, but it makes your relationship easier too. You both know what the other wants and needs and you get excited as you can make those dreams become reality.
Our values will always be different from your values, your values will be different from your neighbors, and that’s the greatest part about financial independence. It means so many different things to so many different people and there are a thousand paths to get there. For our family, we choose time together, travel, and having flexibility with our careers as our values. That doesn’t mean we’re deprived in other areas. It simply means that we make conscious choices to get us to where we want to be. I want to spend a month in Tuscany next December. Ok let’s make that happen, but it means we drive a car we paid cash for, stick to our grocery budget like our lives depend on it, and don’t buy our daughter expensive (and useless) toys. Once again, an easy choice for OUR family. Now write down what your values and make it an easy choice for YOURS!
It amazes me how similar I find the journey to FI and couples counseling. It forces you to empty out those financial skeletons in your closet, communicate like a real partnership, and dream together. It creates more time for you to spend as a family and less stress when you realize there is far more money there than you need.
These days we’ve gone from over $120k in debt and to being featured on places like Rockstar Finance, Women Who Money and Camp FI. Why? Not because we have found some super-secret way to make a ton of money, but because we focused on what we valued and forgot about the other things. We’ve gone from working full time and occasionally relying on overtime to me being able to be off nearly 6 months out of the year with our daughter if I choose, to taking month long vacations, and realizing that I get the same (if not more) value from our 1,500 sqft home as I did from our 3,000 sqft home. It’s not just finances that are better. It’s life that’s better!