Years ago, I met my wife. She IS a saver. I WAS normal with a small amount of debt, no savings and no plan. When she saw my finances, she was horrified! This is the evolution of a spender to a saver. The main difference was how we thought about money. As we have grown together, the mental aspect of the budget has become even more clear. I had seen money as a thing that just sort of appears and disappears without much thought. She sees money as a source of SECURITY. She views the small savings as a choice of having FINANCIAL DISCIPLINE. In the end, those everyday savings add up to accumulated wealth and financial control.
Just sort of appears and disappears
I have worked for years earning a reasonable income. I signed up for credit cards for the free T-shirt or miniature foam football. My first car loan was from a salesman that introduced himself as Big Ed (no alarms sounded). That loan was 24.9% interest because 25% was the absolute limit in the state. Late fees for rent or the water bill or telephone bill was no big deal.
To say the least, I was naive. It did not matter because I was earning a reasonable income. I had no idea where my money went at the end of each month.
Money as a source of security
My wife also had worked for years and earned a reasonable income. She would pay attention to the prices of daily purchases. She would negotiate car purchases very aggressively. She would save a considerable portion of her paycheck. She also reduced the amount of unnecessary stuff. She negotiates every bill.
She has control of the daily interactions with money. She knows where every dollar comes from and where it goes.
There are some key differences in how we both viewed our finances.
- Active versus Passive engagement: Active engagement provides a way to address a specific concern within the budget. Passive engagement allows money to happen to you rather than happening to your money.
- Understanding the purpose: This is a personal decision. Is the savings for an upcoming event? Is the savings for a potential emergency? Why and what are you saving for?
- Understanding the priorities: Again, this is a personal decision. How much should be spent on food, clothing, entertainment or transportation? How much of the food budget should be spent in the grocery store and in restaurants?
- Negotiating: Everything is negotiable! Interestingly, many salespeople prefer working with my wife than with me. She is a hard negotiator, but they seem to enjoy the challenge.
Control is Key
Taking control is the key difference. For years I thought I was in control of my finances because the creditors were not calling. The reality was that I was maintaining a cycle of poor financial discipline. By reviewing my finances, my wife helped adjust the way I looked at money. This adjustment was very difficult in the beginning. She provided a means of control that I had been missing. Controlling the daily expenses helped control the weekly, monthly and annual expenses as well.
The initial transition was difficult. I wanted to spend money when and how I wanted. The rules that she had were confining and really hampered my daily activities. As the method behind the rules became more understandable, they provide more freedom to spend on things that matter. Understanding the purpose of our finances helped to make decisions with those dollars.
After I understood the purpose, the decisions became more personal and more lasting. The decisions we have made with those saved dollars is education and retirement. The horizon for both needs is several years out but getting that started is necessary now. We were able to figure out how our daily choices fit into the larger picture.