Balancing your life (Part 2): Spending

This is the second post in our series on balance, so if you missed our previous post on balance, check it out at: Balancing your life part one work. This week’s post is all about balancing your spending.

AJ: Some people say “you have to spend money to make money” and while that certainly doesn’t apply to all aspects of personal spending, there is a grain of very relevant truth there.

Balance investing vs. spending
KJ: The typical trade-off most of us try to balance is the difference of ‘should I spend money now’ or ‘should I set it aside for later,’ but sometimes, it’s a matter of ‘should I spend it now FOR my future.’ What I mean by this is that at any given time in our lives, we should look at where our dollars are best spent, and not all that infrequently, your dollars might be best suited for spending by investing in yourself while other times your dollars might be best used by spending them on projects (DIY or contracted out) around the house. It’s important to look at where your next dollars are best spent, but keep in mind that the answer won’t always be the same. Sometimes, your best opportunities might be to invest in the markets (ex. for retirement), other times it might be to invest in yourself through further education or job skills to get a higher paying job/raise/promotion, and other times it might be appropriate to spend those dollars in home improvement projects. When thinking about how to invest or spend your dollars, try to imagine the costs and potential benefits each path might take. At this stage in your life, it could be an all-or-nothing scenario or it could be a scenario where you can do parts of many goals at once (retirement, education, mental well-being with more functional living space, etc). Just keep in mind some of those non-monetary benefits when planning for your future and balancing where your dollars should be spent (or invested).

Balance spending to make your life more enjoyable
AJ: I know SO many working couples who are extremely frugal in exchange for having a full-time cleaning service for their home. Ultimately, the reward of not having to spend their time at home cleaning up after themselves and their kids on an ongoing basis is worth more to them than a few nice dinners out or a weekend getaway. I personally think that a lawn service in Texas in the middle of July is a very worthwhile expense! Sometimes the overall good that an expense can bring your life far outweighs the actual financial implication. You can’t realistically afford to always choose the easier path, but every now and then it’s good for the soul. We each have things we don’t want to do (or maybe dread is a better word), so consider the possibility of hiring the work out and what that could mean for your overall mental well-being and if it could spill over into better spent family time or more productive work time.

Balance spending to invest in your (non-career related) future
AJ: This is fairly straightforward for us at this point in our lives. In order for us to continue to build our lives together, purchases like a larger home and more fuel-efficient vehicles make sense. We might not truly end up making money off the home and we certainly won’t end up making money off the vehicle in the long-term but for our current lives to run more efficiently, there are things we need to spend on to pave the way for our future together. If making a cross-country move will result in happier lives for your family further down the road but will cost in the short-term, find a way to make the situation work in exchange for the better life you desire.

Balance spending just to spend
AJ: I was previously one who had a tendency to spend for the sake of being able to. While we had an agreed upon shopping budget that I (almost) always stayed within, I without question did not need the majority of what I was purchasing. I would buy new clothes because I was feeling fat or because it was on sale – and it was typically something I didn’t really love. I know many people do this with their kids in the form of purchasing things they think will make their kids happy whether they need them or not just because they’re able to.

Whether your ultimate savings goal is to build up a hefty nest egg for retirement, to pay for your children’s college education or just to have a security blanket in case of emergency it isn’t absolutely out of the question that we may all fall on unfortunate times and might not be able to spend like we once comfortably could. My New Years Resolution of eliminating all shopping (excluding things for our home and personal care that are absolutely necessary) has been incredibly challenging. I’m still thinking about a vest I wanted to buy while on vacation that I walked away from. I can literally picture the multitude of outfit combinations I could create with it right now! However, not spending that on something I really can live without will ultimately make some expense I absolutely need to take care of slightly less painful (like new tires, a new fence, or something else super not fun but necessary) which is the trade-off we have grown to appreciate in our house. Identifying areas in which you are spending without real need or want will help you when a time arrises wherein you need to “trim the fat” so to speak. Without knowing where you are spending a little, unexpected burden of life may feel far more crushing than it should be. Prepare for the need to be flexible.

    How do you balance your spending?
    If you had to identify one area where you could “trim the fat” in your spending, where would it be from?
    Tell us about how you make it all work.

Again, if you missed our previous post on balance, check it out here: Balancing your life part one work.

Balancing your life part two spending is copyrighted by TheSimpleMoneyBlog.com without consent to republish.

Some of the links in the post above may be affiliate links. This means if you click on the link and purchase the item, we will receive an affiliate commission. We feel strongly about only recommending products or services we use personally and/or believe will add value to you, our readers. Read more about our commitment to providing quality product recommendations.

Four ways to reduce your banking fees

KJ: We’re all looking for ways to save money on any unnecessary expenses or fees that can be avoided, and what’s more frustrating than a banking fee? Whether it’s a regular monthly fee or one-off fees that add up, you can find lots of savings by paying close attention to the rules your bank has for each type of account. There are lots of ways to cut these costs, and online banking is one of them. Depending on your needs, you may consider an account like Capital One, ING (now Capital One 360), or Ally, as they tend to be internet-based with both competitive interest rates and low fees. If you prefer your local brick and mortar, then consider the following items when reviewing how your current bank may have features that could help you reduce those pesky fees:

Go paperless
Whether it’s your local bank, international bank, HSA, 401(k), IRA, brokerage account, or mortgage, most have incentives to reduce paper statements. You can often get a discount on transactions, monthly fees, and other items just by going digital. And what to do if you no longer receive those nice monthly statements via snail mail? I have a USB drive that I use once per month to go download my statements and keep a copy. “My Passport” 1TB External Hard Drive is my personal favorite, but more budget friendly products with much smaller storage like SanDisk 32 GB USB Flash Drive will also do the trick. You never know when you will need to reference the statement and it helps keep them centrally located. You don’t necessarily have to download all statements each month (especially since some do quarterly), so try setting yourself a reminder to periodically go into your accounts online and get the statements.

Search for no monthly fee checking accounts
Now-a-days, there are options to not only avoid monthly checking fees, but you can even find accounts with interest-bearing features for their checking account. Many of the banks and institutions that offer those products are online-only banks. However, the way that we have managed around this is to:

    Select a bank that offers ATM fee reimbursements (so you can access an ATM anywhere regardless if it is a member ATM or not)
    Find a bank that has an app (iphone, Droid, iPad, etc.) that allows you to deposit checks electronically, so you don’t have to go to a branch location.
    Pair it up with a free checking account at another institution that is close to your home or office where you can deposit cash as needed.

The bank that I have found that fits this criteria is Charles Schwab, but I know Fidelity has a similar checking account option too. For more information on available accounts and fees, go to www.bankrate.com. Be wary of any introductory offers that would soon expire!

Do the math
As I’ve reiterated in posts before, do the math, do the math, do the math. Some banks waive the fee if you have a minimum deposit held with them. Depending on your particular situation and banking needs, calculate what you could be earning in interest each year to have that cash parked elsewhere in a savings, CD, or investment account and compare it to the ‘savings’ you have each month for the fee. Might be time to move banks!

Pay attention
Banking in particular is one part of your life that you should pay close attention. So many products and services can have hidden fee after hidden fee that it is very important to read closely when you’re looking to switch banks as well as read the letters they send you about potential changes to your terms and conditions. Only you can look out for your own interests!

    What do you do to avoid those pesky fees?
    Tell us about your struggles (or triumphs!) with bank fees.

Four ways to reduce your banking fees is copyrighted by TheSimpleMoneyBlog.com without consent to republish.

Some of the links in the post above may be affiliate links. This means if you click on the link and purchase the item, we will receive an affiliate commission. We feel strongly about only recommending products or services we use personally and/or believe will add value to you, our readers. Read more about our commitment to providing quality product recommendations.

Balancing Your Life (Part 1): Work

KJ: Finding balance in your life is one of the toughest challenges I think we all face in balancing family, friends, obligations, working out, work, money, time, and all scare resources, so we thought we would write a series about balancing your life. It’s never perfect, but maintaining awareness of the balance you seek is half the battle. This week we will focus on finding the right balance in work.

AJ: I love the phrase “work hard, play harder” because ultimately it’s what we all aspire to do. I don’t know that we’re shining examples of having perfected this balance, but we certainly try. Early on in our relationship we both became workaholics and committed to each other that we wouldn’t be the couple who stayed at the office until 8 every night. Instead, we both choose to get up earlier, work through lunch, and most days both make it home by 6 so we can spend our evenings however we choose. There’s a lot that ultimately goes into your work/life balance, so as you make career moves, consider the following:

Salary & Benefits
AJ & KJ: Having the salary you want is great. Ensuring that the benefits package that goes along with that salary is just as great is sometimes not quite as strong a consideration for some. The cost of benefits vs. the value of benefits can be a tough balance. People often take quality benefits (401k match, medical insurance, coverage for your spouse, etc) for granted and don’t really focus on them unless the cost of benefits increases or coverage decreases. Consider the larger picture when you take into account what you actually “make” before leaping at a higher top-line number in exchange for lower quality benefits across the board. Unless you work for a large company, you often have few (more expensive) options for health insurance or retirement savings or 401k match programs. As such, when you start to add up the HSA, 401(k) match, employer paid health insurance, commuter benefits, benefits for public transportation, or expensable mileage.

AJ: For some people the commute alone is the difference between the perfect job and their nightmare realized. I have a 10-15 minute commute, while Kirby has a 30-45 minute commute. I love having a shorter commute because it allows me flexibility in the evenings to take care of things like errands and grocery shopping before Kirby even makes it home. Kirby doesn’t mind his commute as much because he carpools and loves his company but also loves where we live, so for him, the commute is worth it. If you’re spending 2 hours a day in the car you really have to consider if the job you love is adding to your quality of life or detracting from it. It’s really a personal preference.
KJ: Sometimes a long commute can actually be a benefit. For me, I get to carpool, so every other week I get to catch up on e-mails, read, and if possible, even work on the blog! While it means very little down time throughout the day, it allows me to get the work done I need to while preventing me from having to stay in the office until 6 every day. Not to mention, there are definitely some great added bonuses of having reduced toll costs, gasoline budget, and ultimately ware and tear on my car.

AJ: For most of the people I know, flexibility in their position is almost as important as salary. Being able to leave early for your grandmother’s birthday dinner or taking a long lunch to pick a friend up at the airport may not seem like significant benefits in a job, but to many people having flexibility equates to happiness and a feeling of being more free, which is really significant.

Over and above expectations
AJ: Some jobs require multiple working dinners, as networking and socializing are as important in some industries as the work itself. Having to be away from home in the evenings can be an absolute deal breaker for some, while for others it is a nice break from everyday life. Consider things like required happy hours, dinners and above all else, travel. It doesn’t seem like much to ask for travel 15% of the time, that’s still roughly 37 days of travel a year or an average close to one day per week, which isn’t at all insignificant if you’re a homebody.
KJ: We’re both homebodies, but if you do enjoy frequent work travel, there can be some great benefits of expensing trips, mileage, and meals, so you can earn rewards on your credit card toward future trips or cash savings (as is the case with our cash rewards credit card we use).

Bringing it all together
AJ: I once heard someone I like and respect say that you should identify the three most important things to you about a career (salary, flexibility, development opportunities, for example) and if at least two of those things are going well, you stay put. If the three most important things about your career aren’t going well, it’s probably time to start looking for a new opportunity. As you consider what means the most to you in your career, I encourage you to take on a system similar to the two out of three line of thinking. You might find comfort in it when you have a rough week at work but can stop to check off that the things that first drew you to the position are still valid, I know it has helped me when the going has gotten tough.
KJ: No job is perfect in all regards. Maybe you have to work more than you like, don’t have the flexibility you want, things aren’t as stable in the organization, your pay isn’t quite what you want, your benefits aren’t quite what you want (or are nonexistent), or the stress is more than you prefer. With the almost infinite possibility of combinations, do what Angela said and similar to buying a house, make a list of your must haves.

    How do you maintain balance?
    What causes you to feel out of balance?
    Tell us about your top three priorities in your job.

Balancing your life part one work is copyrighted by TheSimpleMoneyBlog.com without consent to republish.

Some of the links in the post above may be affiliate links. This means if you click on the link and purchase the item, we will receive an affiliate commission. We feel strongly about only recommending products or services we use personally and/or believe will add value to you, our readers. Read more about our commitment to providing quality product recommendations.

His, hers, and ours

20130818-223302.jpgAJ: We’ve mentioned this before but Kirby and I were very young when we started dating (18 and 19, actually), so we had the luxury of being completely broke together. We both had savings accounts that we began as children, both maintained part-time jobs at various points, and both had our own cars, but aside from that, we didn’t own diddly. We lived together for almost four years prior to marrying and maintained separate checking and savings accounts, splitting bills “evenly” based on our salaries. Kirby made more than I did right out of college but never let me feel like he was contributing more. The odds of a couple making the exact same amount of money and having exactly even expenses is beyond unreasonable. When I bought clothes or gifts for my family, they came out of my account, Kirby did the same and it worked beautifully. As our wedding date approached Kirby broached the subject of merging finances for all the standard reasons but ultimately the one that sold me was – it just makes sense.

But what if it doesn’t make sense? What if you’re not 18, have assets worth mentioning, and know that your partners’ views on money don’t at all align with your own?

I feel strongly that regardless of what you choose to do – merge or remain independent – that so long as you are honest about your spending with your partner and you communicate regularly about your independent and financial situations you will be just fine. A few recommendations on where to start looking for the right solution for you and your family:

One bucket

    AJ: Put all of your money into one big pot, agree to budgets by category and commit to staying within budget. Caveat: this requires that you all show each other complete respect when one person decides they want to spend money outside of the agreed upon budgets. I.e. just because one person thinks you NEED drapes does not mean the other person will agree that you NEED drapes in the same month that they NEED a lawnmower. For example. So be flexible. Buy one this month and one the next month without implying that one is more important or necessary than the other. Remember, you’re partners.
    KJ: For many couples, this is the best way to get on the same page about what they make and what they spend. The main drawback to this approach though is that you can often lose the ability to ‘surprise’ the other spouse with a nice gift. As such, you can lose some spontaneity or can encourage extreme creativity. Angela recently surprised me with a watch for Valentine’s Day using cash she had stored over several months to avoid me seeing any charges on the credit card. I was surprised and Angela loved that she pulled it off.

Completely separate

    AJ: Keep your money 100% separate. Yours, mine, no in between. You pay for dinner on Thursday, I pay for dinner on Friday. We each agree to have a salad, an entree and one drink at a similarly priced restaurant of our choosing. (Can you tell this option doesn’t really float my boat?) The problem I see with keeping everything completely separate is that you physically share space and stuff. You’re not roommates paying equal parts of the rent or a couple who is dating that can rely on whoever did the inviting to pay. This requires serious tracking and a dedication to holding each other accountable. If this works for you, please, please, please tell us how you’re doing it. I would love to know more.
    KJ: While some couples may be able to make this work, I have not seen too many instances where this is the preferred method. The main positive of this method is that it allows for independent goals (I want to save for that flat screen TV and Angela wants to save for the updated flooring) and secrecy in planning surprise gifts or gatherings, however, it often leads to secrecy and trust issues as one spouse is bound to spend more (and it may not be the one who makes the most).

Somewhere in between

    AJ: Find a middle ground like we did right out of college. If you make $30,000 a year and your partner makes $20,000 a year, you pay 60% of the bills out of your account ($30,000 divided by your combined income of $50,000), and your partner pays 40% of the bills. OR agree that one person pays for the bills and daycare while the other pays the mortgage and grocery bills. I’m personally fond of this solution because we had good success with this system. I think it allows for a certain level of freedom while still trusting the other to handle their equal share of the responsibilities.
    KJ: Having some independence as a couple is important, and this can be a way to find that middle ground. You identify your common goals, income, and expenses, and you allocate those scarce resources in an equitable manner..fair isn’t always equal though! Some couples keep a joint account and then each have their own separate account. As long as the foundation of having separate accounts isn’t to hide expenses or income, then this may be the happy medium you were looking for.

AJ: Regardless of which method you choose, you have to be prepared to compromise. When your washing machine dies unexpectedly, you have to agree to find the money to fix or replace it from somewhere and it can’t always be one person who is compromising while the other blissfully spends away your slush fund. Be the keeper of your own destiny: track what you spend, track what you save, and be prepared enough to know that you can’t prepare for everything.

When two people have very different money styles, sometimes this is the only way to have harmony and let each person retain some independence and autonomy.

KJ: The topic of finances can be very difficult to discuss with others. Most people would be more open to talk about their sex lives, the struggles with their ‘lost teenager,’ or the neighborhood gossip about so-and-so who did such-and-such. With the number one cause of divorce being money problems, it’s all the more important that when it comes down to it, working through your finances is something that should be done as a couple, regardless of how separate or together your assets are.

Sure, there are valid legal and planning reasons you may wish to keep some assets separate from others – maybe you inherited some money from a parent or grandparent that you would prefer to pass along to your children first – but that doesn’t mean you have to communicate any less about your assets. It’s when you work together that you find a cohesive approach that can work for the two of you, and my experience has been that those interested in saving for a goal and bettering their financial lives (so they can improve their personal lives too to live the life they want to live) do so by merging their finances. When you’ve come to the relationship with more than some Ikea furniture, please consider discussing with a licensed advisor the tax, legal, and planning implications of merging your finances.

    What do you and your significant other do with your finances?
    Are they separate, combined, or a mix of options?
    Tell us why you chose that method.

His Hers and Ours is copyrighted by TheSimpleMoneyBlog.com without consent to republish.

Some of the links in the post above may be affiliate links. This means if you click on the link and purchase the item, we will receive an affiliate commission. We feel strongly about only recommending products or services we use personally and/or believe will add value to you, our readers. Read more about our commitment to providing quality product recommendations.

What money means to us

AJ: Money means a lot of things to me, but mostly it means that Kirby and I will, at some point, be able to live exactly the lives we have planned for. There are some days where I find myself anxious about some unexpected expense where I feel like screaming “we work too hard to be stressed about money!” I think that most people feel that way on a regular basis, but we have invested just about as much time as we have money in ensuring that we’re planning to the absolute best of our abilities.

To me, living on less and spending less means being able to help family and friends in need, donating to causes that we truly believe in, and celebrating how overwhelmingly blessed I am to be married to Kirby by showing my appreciation in unexpected ways. I hope that it continues to mean that in case something unexpected happens, we’re covered. We will still have a warm place to sleep at night, will still have full bellies, and will still be able to house an army of small, furry animals.

As we make larger, more significant financial decisions I am increasingly aware of what money means to other people which is very interesting to me. There’s a colorful expression that I love and use regularly that generally says “everyone has an opinion” but with a little more flare. We all pull from our own experiences and build on them as we consider what matters most, and I’m thankful that we have been able to lay a strong foundation that will ultimately allow us to make selfish choices just for ourselves – whatever we may decide we want to do in 50 years.

KJ: To me, money means having the freedom to choose the things you want and to live your life the way you want to. Whether we spend it today or we accumulate it to spend tomorrow, it’s simply an exchange to be able to get that tv, nice meal out, or car you’ve always wanted. Of course, you can’t have it all and money is a scarce resource, so we must make choices on how we would like to spend our money. Maybe you want to save up for years and years to buy that super nice car you’ve always dreamed of or maybe your preference is to spend it more regularly on some nice meals and vacations – to each his own. It’s how we decide to spend our dollars that helps refine our goals and objectives to recognize what’s really important to us in how we want to live our lives.

I have always been a saver. I had piggy banks when I was younger, and I even had a ‘young investors’ account to set some money aside from my income at my dad’s office. Delaying instant gratification and instead saving money has been an important part of how I prioritize and perceive money, but saving money to just set it aside indefinitely isn’t my goal either. I do intend to spend it at a later date – or hopefully get to a point where I can spend the income earned on the savings and leave the principal untouched. Sometimes that later date will become ‘now,’ and we will see ourselves spending that hard saved money by purchasing a new home or going on a trip of a lifetime.

    How do you think about money?
    What does money mean to you?
    Share with us your experiences.

What money means to us is copyrighted by TheSimpleMoneyBlog.com without consent to republish.

Some of the links in the post above may be affiliate links. This means if you click on the link and purchase the item, we will receive an affiliate commission. We feel strongly about only recommending products or services we use personally and/or believe will add value to you, our readers. Read more about our commitment to providing quality product recommendations.