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How couples should negotiate spending cuts

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  • Couples' budget decisions should be negotiated for a win-win result
  • Wife: "It's not about him or me; it's about that bottom line"
  • Expert: Couples should track spending, find out where money is going
  • Establish ground rules: What price limit requires talking before spending
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By Michelle Goodman
Special to CNN
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(LifeWire) -- Nikki Maxwell and her husband, Bill, used to enjoy date nights, a live-in nanny and frequent splurges.

Expert says many couples aren't even aware of where their money is going.

Expert says many couples aren't even aware of where their money is going.

But in 2008, Nikki, a 39-year-old education grant writer, was laid off from her job with the state of California, and Bill, a 40-year-old freelance video game writer, was out of work for six months.

Now the Los Angeles couple only spend money on food, housing and essentials for their children, ages 8, 6 and 3. Everything from gifts to health insurance has fallen by the wayside.

"Three years ago we were shopping at Whole Foods and Trader Joe's, and in 2008 we were at the food bank," Nikki says. "We've had to make huge changes to our lifestyle. 'Cutting back' has been our mantra."

With the Bureau of Labor Statistics reporting in December that 10.3 million Americans are out of work, it's undoubtedly become the mantra of many couples -- married, cohabiting or otherwise.

But how can you negotiate which expenses to jettison without throwing a wrench in your relationship? There's an art to making financial compromises as a couple.

Budgeting is not a competitive sport

"You need to approach this like partners, not adversaries," says consumer finance expert Dayana Yochim, author of "The Motley Fool's Guide to Couples and Cash: How to Handle Money with Your Honey."

"Your goal is not to defeat the other person, not to be the winner -- unless you like sleeping on the couch."

Nikki Maxwell agrees that teamwork is key.

"In the past, when one of us wanted a book, CD, DVD, et cetera, we would have to factor in that the other person would get to buy something of equal value," she says. "Now we write down what we want to spend money on and discuss the choices for our family. It's not about him or me; it's about that bottom line."

That's not to say such negotiations come easily.

"I can see why arguments over money ruin marriages," Nikki says. "It's tough."

Her husband, Bill, says the triaging is wearying.

"For us, it ends up not being as much about the cutbacks but about spending what little money we have,'' he says. "And then you throw children into the mix who want to know why you didn't buy Popsicles this month. When you're in a mildly stressful state at best, that just kicks it over the edge.''

Maintain some autonomy

Julie Sturgeon, of Indianapolis, Indiana, has had trouble reaching any sort of agreement with her husband on cutting back. The couple, who have no children, have enjoyed plenty of extras.

"I think eating out seven nights a week is excessive," says the 46-year-old travel agent. "He says for two people, it's too much of a time-suck to fix a meal, and it's not like we can't pay the resulting credit card at the end of the month."

They've also disagreed about which hobbies to ditch, which personal grooming expenses to drop and whether to reduce their donations to charity.

"We have a lot of guilt about what we think we should do," Sturgeon says. "We're still paying our bills, so these conversations are more about mentally preparing ourselves in case that doesn't continue."

Ken Clark, a certified financial planner in Little Rock, Arkansas, says there's an easy solution to such stalemates.

Outside of your fixed living expenses, "Each person should have a little bit of money that they can spend each month without having to answer to anybody."

"However hard you work to manage that money is up to you," says Clark, who's been in private practice since 2002 and has a master's degree in counseling psychology.

"This eliminates the quibbles over who's spending more on manicures or media purchases."

Cutting back 'brought us closer'

But for some couples, trimming the budgetary fat is more of a bonding than head-butting experience.

Just ask Dave Clarke, 25, a public relations professional in Philadelphia. While he and his girlfriend of 2 ½ years don't live together, their lives are "pretty intertwined."

"We're young and don't make that much in the first place," he says.

To adapt to higher food and gas prices in 2008 and "make their money go farther," the two took stock of their spending habits as a couple.

"We nixed an annual fall weekend vacation," he says. They've also combined birthday and year-end holiday presents to each other, stopped buying pricey concert tickets and replaced dining out with cooking at home.

"It's actually brought us closer," he says. "We're both fighting the same battle and know we have each other for support to fight it together."

Cutting back 101

Regardless of whether you share bank accounts or live with your significant other, Yochim offers these suggestions for nipping financial squabbles in the bud:

• Track your spending. "A lot of couples don't even know where the money's going," she says. Free money management sites like Mint.com and QuickenOnline.com can change that.

• Establish ground rules. Determine which purchases you'll run past one another in advance -- for example, anything that costs more than $100.

• Don't split everything 50-50. If you're sharing bank accounts but one of you earns a considerably lower salary, deposit a percentage of your income into your joint account rather than the same dollar amount as your partner.

Don't sweat the small stuff. Pick five "big spending categories" to cut back on as a couple. "If you try to watch every little nickel and dime," Yochim says, "you're going to exhaust your patience and get on each other's nerves."

LifeWire provides original and syndicated content to Web publishers. Michelle Goodman is a Seattle-based freelance writer and author of "My So-Called Freelance Life: How to Survive and Thrive as a Creative Professional for Hire."

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