Budgeting can feel like such a ball and chain. Why is it such a pain point for so many of us?

This is the first article in a mini-series on Family Budgeting. Today we make a case for WHY you need to budget.

Usually, every relationship has a spender and a saver. Caleb is our spender, and I am our saver/budgeter! It has taken us a while to negotiate that. For example, we both want a retirement fund. However, Caleb wants to create that wealth by generating revenue, and I want to create that wealth by saving. There’s a big difference there! One that has caused a bit of friction in our relationship…

Caleb and I also get stressed about different things. He stresses most about making an income and always wants more than he has. I get stressed about balancing our budget. Believe me, we’re still figuring this out as we go.

We’ve learned a lot along our fifteen years of marriage that is really helpful for us, and we want to see also what the research has to say so that you can really be together on this part of your marriage as well.

In 2000, Kerkmann conducted a study of young married couples that were students with modest financial resources. He found that “financial management behaviors (defined as budgeting expenses against income) and the perception of how well finances were managed were both significantly related to satisfaction with their marriages.

Financial problems (mismatch between financial resources and demands), as well as the perceived magnitude of financial problems, showed a statistically significant correlation with how satisfied the chief financial manager was with his/her marriage.”

As a result of regression analysis, Kerkmann found that 13-15% of marital satisfaction was explained by the perceived quality of financial management and financial problems.[i]

It is interesting to note that perception is more important than reality. You have to believe you’re doing a good job. It is not you compared to others, it is just you that needs to be satisfied with how your finances are handled.

I questioned the fact that it was ok to have debt as long as both spouses were ok with it, so Caleb explained that all the research was saying was if the perception of the couple is that they were managing their debt well, they would be more satisfied. BUT, we need to look at more research to get the big picture.

Here is some background information about the debt that Dew assembled in 2008:

  • the average American household has consumer debt equal to 20% of their yearly income
  • recently married couples typically have high levels of debt and take on debt as they establish their new household (go out and buy a bunch of stuff using debt)
  • debt generally predicts increases in marital conflict and that newlyweds rated debt as their second-highest marital concern.

Dew wanted to find out how a change in debt predicted a change in marital satisfaction for newlyweds. He found that as couples assumed debt, they were more likely to:

  1. spend less time together
  2. argue more about their finances, and
  3. feel that their marriage was unfair.

He points out that all of these findings suggest that consumer debt (debt incurred on the purchase of consumable goods/goods that do not appreciate[ii]) may inhibit recently married couple’s attempts to form a new family unit.[iii]

Right at the point, you’re trying to create this new happy, blissful experience, you go buy a bunch of things you think you need in order to support that happiness but you actually end up sabotaging the whole thing.

So, even if you’re both good with the debt you’re incurring, and believe it’s OK, there are other factors undermining the happiness you’re aiming for.

Later on, Dew looked at the relationship between debt and divorce.

There’s a bit of a conundrum here as materialism is negatively associated with marital satisfaction. However, the more assets a couple has the less likely they are to divorce. To sum it up: more materialism = less satisfaction with your marriage; more assets = more likely to stay married.

Dew took all of the debt represented in his survey and used a log-based 10 algorithm[iv] to rank it. He found that for every unit increase (for example going from 7.5 on the debt scale to 7.6) there was a 7 – 8% increase in the likelihood of divorce. There was a clear conclusion that the more debt participants had, the higher their hazard of divorce. In contrast, the more assets a couple had, the less the likelihood of divorce.

There was an interesting side note here: income had no association with divorce in his study. Making more or less money was not significant. What IS significant is what families do with their income. The families that created more consumer debt had more financial disagreements and a much higher likelihood of divorce.

So, going back to our title, Why You Need To Budget.

The choices you make about how you spend money have a real impact on your marital satisfaction. The marketing world tells us that if we buy things we’ll be happier, but the reality is the buying of things does not create happiness. In fact, when it creates debt, it begins to have this escalating and profound detrimental impact on happiness.

This really resonates with the cautionary Proverb that says the “borrow is the slave of the lender” (Proverbs 22:7). We really need to be careful about what we give power to in our lives. Taking on consumer debt is giving power to someone else.

The Bible is very cautious about borrowing or loaning money, and it clearly speaks against defaulting on loans. We need to consider our spiritual values as we draft up our family budgets.

We all love things. What we need to caution against is going into debt for the things that we would enjoy. You know: cars, campers, clothes, ATV’s, iPhones, gizmos, gadgets, toys for big boys, etc.

I think we would all be very quick to admit that our love for our spouse is more important than our love of things. However, very few of us live congruently with this belief.

When you create a budget and stick to it, you’re setting a boundary around the marketing world, your own desire to keep up with the Joneses, and your innate desire for more: all in favour of protecting your marriage.

It was Will Smith who seems to get credit for thewell-knownn quote,

“Too many spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.”

We want you to take this topic seriously because if you’re going to build a marriage that you love today and will treasure for a lifetime, financial management is going to be a critical component.

Stay tuned for more detailed Family Budgeting help as we know this is important to you!

Finance Series

This is Part 1 of 5. Make sure you view the rest of the series:

[i] Barbara Kerkmann et al., “Financial Management, Financial Problems and Marital Satisfaction Among Recently Married University Students,” Journal of Financial Counseling and Planning 11, no. 2 (2000).

[ii] “Consumer Debt,” Wikipedia, the Free Encyclopedia, January 20, 2015, http://en.wikipedia.org/w/index.php?title=Consumer_debt&oldid=643444131.

[iii] Jeffrey Dew, “Debt Change and Marital Satisfaction Change in Recently Married Couples*,” Family Relations 57, no. 1 (January 1, 2008): 60–71, doi:10.1111/j.1741-3729.2007.00483.x.

[iv] “Logarithm,” Wikipedia, the Free Encyclopedia, May 3, 2015, http://en.wikipedia.org/w/index.php?title=Logarithm&oldid=660567948.