Yesterday we addressed a ton of issues regarding Rule Two: Giving Every Dollar a Job. I purposely left one HUGE issue completely out; it deserves a day of its own.

When I was in graduate school I attended a Business Law course. One day, while sitting in class, I realized that the budgeting that happens between spouses is much like the consensus ad idem (meeting of the minds) we were discussing that very night.

I’ll take the liberty of quoting Wikipedia to help me explain consesus ad idem:

“…a term in contract law used to describe the intentions of the parties forming the contract. In particular it refers to the situation where there is a common understanding in the formation of the contract…The reasoning is that a party should not be held to a contract that they were not even aware existed.”

Basically, for a valid, enforceable contract to exist between two parties there needs to be this “meeting of the minds.” That very same thing must happen when you’re having your Budget Meeting at the beginning of the month!

It makes perfect sense that the monthly budgeting meeting can be seen as a contract between two parties: You and your spouse. Just as with contracts in business, there is usually a period of negotiation between the two parties prior to agreement. This same healthy negotiation pattern should happen when you’re budgeting with your spouse. Healthy negotiation involves honesty, compromise, and respect. If those components are not present when you’re forming multiple spending contracts with your spouse, it’s best to work that out before you get so deep into negotiations that you’re ready to tear your (or their) hair out.

We won’t get into all the differences of men and women here, but let’s just agree on the fact that there are innate differences between the two sexes. Respect and love that about your spouse. And then move on.

Honesty in negotiation means that if you agree to a spending amount, then you fully intend to live up to your side of the bargain. Guys: if you agree to spend $50 on tools for February, then you aren’t allowed to spend any more than $50 unless you can renegotiate the contract with your spouse (and this means taking the new money from some other place in the budget).

Honesty also implies that you’re up front with your spouse about your concerns. If you feel like you’re suffocating under the budget that you two have been working with for a while then you need to voice that concern!

When your spouse voices those concerns you need to be thinking about the “friendly” side of negotiations. Are you compromising if and when compromising is appropriate? Are you being respectful of your spouse’s needs and wants?

The Budget Meeting should not be a dreaded 30 minutes (you don’t really need more than 30-40 minutes for a month. As you get better at it, you’ll knock it out in ten minutes). The more you budget, the quicker you’ll recognize and anticipate what really needs to happen. Each spouse will be more realistic with their own expectations and compromising and respectful of the other’s.

Sure, on paper this Budget Meeting may sound easy, but what if your spouse just really isn’t the “financial type”? There are a few (million) of those. Some are in denial. Some are just really busy. Some are unbelievable earners and don’t want to be bothered with the other side of the equation. Most just don’t know what the heck you’re talking about when you mention a Budget Meeting – so they’re naturally, eh, petrified.

The word ‘budget’ tends to conjure fears in spouses. It has a pretty negative connotation attached to it.

You say: “Honey, I’d like to set up a budget with you.”

They hear: “Honey, I’d like to control you when it comes to money.”

You say: “Honey, we should probably budget for big expenses.”

They hear: “You’re spending too much money (but I’m not).”

You say: “Honey, let’s try and keep to our budget this month.”

They hear: “Honey, why don’t you try and keep to my budget this month?”

That’s just the way it goes. If you’re the spouse that’s on board and you’re having trouble convincing your significant other of the importance of a budget…keep trying! Spell it out in very clear and friendly terms exactly what a budget entails. It is a ‘meeting of the minds’ between you and your spouse. That means that each one of you has to agree on how many dollars you’ve allocated to each of the spending categories.

Remember back to our definition of a meeting of the minds: “a party should not be held to a contract that they were not even aware existed.” If you aren’t sitting down with your spouse and agreeing together on how much to spend where, you can’t really hold them to any type of budget per se.

I must say that if your spouse just outright refuses to sit down with you and manage the money for 30 minutes each month (you even agree to handle entering all of the transactions!), you have a deeper marriage issue than just budgeting. When you make it very clear to your spouse how absolutely important it is that you get a handle on your finances, that you actively budget together every month, and that it would mean the world to you if they would do it with you – they’d have to be a backward person to refuse. And you can tell them I said so!

A successful Budget Meeting should take place at the beginning of the month. Remember, keep it short. Make it fun. Have hot chocolate during the meeting. Go to a movie afterwards (budget for this, of course). Attach something positive to it. Just make sure you do it!

When you are successfully budgeting (”success” in budgeting does not mean you never go over your allocations) with your spouse each month, you will notice a few very positive changes in your money and your relationship. Your money matters will improve. Within your relationship you’ll feel more teamwork, respect, and camaraderie with your spouse. Your communication skills will improve greatly.

The Budget Meeting cannot be ignored. It is the most powerful tool in solving money problems in a marriage – or improving the overall money situation in your marriage.

Have your spouse read this day’s material. Talk it over with them. Spread the love!

Tomorrow we’re going to get into Purchasing Power, and the Third Rule of Cash Flow.