'Love & Money'

Many important decisions in life revolve around money, yet it's a topic that most couples hate to discuss.
But, the author of a new book, "Love & Money," says that talking about money with a spouse can improve one's financial life and relationship.

The book is written by Wall Street Journal columnist Jeff Opdyke, who stopped by The Saturday Early Show to discuss his premises further.

"Love & Money" is the offspring of a popular Wall Street Journal Sunday column -- also called "Love & Money," which Opdyke writes and reveals his financial soul, as well as that of his wife.

Opdke says communication is often overlooked in couple's financial affairs. He says money is tied to many emotional issues and the inability to talk about finance is the culprit for many divorces.

"Love & Money" is divided into five "life parts," beginning with the decision to marry and ending with retirement. Each part explores financial issues that could come to a head as a relationship progresses through each stage.

As Opdyke points out, financial issues that cause conflict -- a saver marries a spender, someone rings up lots of credit card debt, one partner wants to be a stay-at-home parent or quit their corporate job to start a small business -- arise in every marriage. He says the real problem begins not with these issues, but with the fact that couples don't talk about them effectively.

Opdyke says a couple doesn't have to be "financially compatible" in order to have a successful marriage, because nobody is financially compatible. He explains all have different ideas about what money is and how it flows through a relationship.

Instead, Opdyke eplains, compatibility grows because the partners learns to take the time to talk to one another about money, about each other's needs, wants, fears, desires, hopes, dreams and concerns.

Learning to talk about financial issues is not easy, Opdyke warns, and people are going to have to approach difficult subjects a number of times, perhaps in a number of different ways. You will learn how to deal with this eventually, he says, but a couple must not hide from these uncomfortable conversations.

It's also essential to realize that financial incompatibility may not rear its ugly head until later in a marriage -- priorities may change or problems may become more important.

If you're one of those couples who have not talked about money before, where do you start?

Opdyke suggests starting with something simple such as a spending plan -- his version of a budget. Basically, Opdyke says, take a look at your expenses for the month, see how much money you have left after paying the bills, and decide what you want to do with the leftovers. Do you want to go for a couple of nice dinners? Put the money in an IRA? Making this small decision is a good way to open discussion and begin to reveal your financial goals - and even your financial fears, according to Opdyke.

Opdyke also says that joining funds in a joint banking account is a smart financial move for all relationships.

Read an excerpt from "Love & Money":

Chapter 1

Budgets Are Like Diets: Everyone Cheats

Developing a Spending Plan
Budgets are useless.

Okay, that might be a bit hyperbolic. After all, I'm pretty sure budgets help lots of people gain control over their financial lives. I don't happen to know any of those people, because all the people I know hate
their budgets, refuse to make a budget, or insist they have no need to live by a budget. Melissa, my wife's best friend from Louisiana, won't even use the word. "Budget, to me, sounds poor," Melissa says. "I grew up not having a lot and having to shop at discount stores, and I can't get over that in my head. So I look at budget and poor in the same light."

Certainly, the two words aren't synonymous. In fact, if you adhere to a budget you're more likely to reach a point in life where you're wealthy—or at least comfortably content, not poor. If you live according to your budget, then by definition you live within your means, and if you live within your means, you're not amassing a load of debt by living the high life. You're probably much more careful with your spending, and you're probably able to set aside a few dollars that, ultimately, will give you a sense of financial
security. I believe in all of that. I even aim for it myself. So do most of the people I know. Still, none of those folks follows a budget. Or if they do, they do so thinly at best, because in reality people do not want to feel constrained by the spending restraints a budget demands. It's only human nature that you
want to feel in control of your own money; you don't want to feel your budget has control over you. Here's a conversation I had with a friend about budgeting:

Me: Hey, I'm writing about budgets and . . .

Friend: Why do you always bring up budgets? You know I hate budgets.
I don't even like when you talk about budgets. I don't follow a budget because it's my money and I should spend it like I want. You know this. So why are you asking?

That was the actual budget discussion, in its entirety.

Amy and I have had a budget for all the years we've been married—sort of. It's a very pretty budget, with heaps of numbers highlighted in more than a dozen pastel colors denoting all sorts of categories. The harsh truth, however, is that our budget is all but worthless because we've never really adhered to it. Fixed costs are not a problem, because they don't change and are easy to plan for. The real problem we face, and which many people I talk to struggle with constantly, is managing all those fungible, variable
costs in our life. The restaurant meals, the personal expenses, lunch during the week, snacks, impromptu trips to the beach or the mountains or wherever, the unexpected need to replace a tire, the seven DVDs you buy on sale to go along with the new DVD player you snapped up on an impulse while shopping for a $5 extension cord at Wal-Mart. Those are the costs that typically derail a budget.

Indeed, Amy and I were frustrated each month because we were unable to save the money our budget insisted we could if we would just live within the bounds of its variable parts. We tried to alter our budget to make it more amenable to our life. We changed the way we allot money to categories and how we allot money to one another.We tried giving each other an allowance. We've saved receipts and tracked historic spending patterns to structure our budget around what we typically buy. For several years, as you'll read in an upcoming chapter, we operated on a system of joint and individual checking accounts. In part, that was supposed to force us to more effectively live within our budget because it would limit what we each could spend on ourselves from the joint account—basically, all those personal and discretionary
purchases during the day that are the bane of budgets.

All of that was to no avail. Every month we faced the same scenario: We spent more than we wanted to, eroding what we could be saving and never really having much to show for all that we were spending.
At some point you realize that sitting down to pen a budget is the easy part. Putting your plan into practice is where the process goes awry. More often than not, you feel annoyed by the fetters of a budget, and you feel lousy about your inability to follow it when you continually overshoot your bottom line. Ultimately, you reach a moment where all you want to do is take your budget out back, bludgeon it with a bag of coins, and leave it a quivering heap of submissive numbers.

There has to be a better way.

Budgets are a big deal in the world of personal finance; they are one of the primary building blocks of financial security and financial planning. Basically, a budget is your road map from wherever you are to wherever it is you hope to go. Of course, lots of people read maps about as well as they read Sanskrit. If
you reflect back on your knowledge of Bugs Bunny cartoons, you might recall that many a time the wabbit popped up in some unexpected locale only to realize yet again that he should've taken that left at Albuquerque.

That's exactly how it is with budgets—you hang a right in Wal-Mart instead of a left, and soon enough you're spending a couple hundred dollars on that DVD player instead of checking out with just a cheap extension cord in your bag. But not taking that right is tough.

You work hard to earn a paycheck, and you'd like to spend a little on enjoying your life. Trust
me, I know. I bought my DVD player on a whim while walking around New York City one day, just because I felt like watching The Maltese Falcon (I bought the DVD, too, along with a couple other movies that looked interesting.)

One or two similar purchases and suddenly you've blown your budget for the month. That doesn't necessarily mean you're spending more than you bring in, although that is certainly one of the more extreme results.

More likely, you have the cash flow to cover your expenses, but you're just not getting ahead financially; you're not saving what your budget says you should be able to.

After so many false starts and restarts through the years, Amy and I eventually gave up following our budget with any real precision. We began using it mainly as a signpost that we were at least attempting to move in the right direction. In lamenting our seeming inability to live according to the rules of our budget, Denise, a friend of mine who is a financial counselor in northern California, suggested that the problem with our budget may be the budget itself.

"Spending is often about values. When you try to adhere to a budget, you might feel you're doing without because you value what you want to spend your money on in the first place—but your budget says you can't," she told me. "So you feel like you're being deprived by your budget. And you end up hating your budget, so you give up on following your budget. There is a better way."

Amy and I began following some advice Denise offered. We abandoned our budget completely. In doing so, we began to save more of our salaries than we had in the past, and we feel more in control of our finances. Better yet, we don't have to deny ourselves the pleasures of spending on what we really want or what we like to do as a family. Her suggestion: Replace your budget with a so-called spending plan.
In truth, a budget and a spending plan are similar. Yet they function very differently and are based on two distinct philosophies. Before I detail how a spending plan works, though, let me first explain why I think budgets don't.

Amy and I live within our means, yet we blow our budget every month. That's odd to say, but it's true.We know, because our pretty budget shows us that after paying all the fixed costs in our life and after accounting vaguely for variable costs like food and restaurants and personal spending, 20 percent of our take-home pay should still be unaccounted for.

Oddly enough, we always manage to waste precisely that 20 percent during the month. The thing is, we know that money is there, a cushion we can push into without overshooting our income. Yes, if you're thinking we have a problem with spending discipline, you're absolutely correct. We do. But we're not so different than most everyone else we know. Unless you're a Buddhist monk, you probably do not thrive on self-denial, and that's exactly what a budget demands: You must deny yourself the privileges you
know you can afford. That's not the biggest problem, though, because you should be able to
buy, within reason, what you can afford—and most people do. The biggest problem is that you go out and buy what you can afford today . . . and then you go buy what you can afford tomorrow and next week and the week after that, too. Suddenly, when the month ends, everything you could afford has consumed everything you earned.

To make a budget work, you generally have to learn to deny yourself over and over and over again every day of every month. That $3 a day you save by skipping your morning Starbucks fix will amount to nearly $800 over the course of a year, if you can just muster the discipline. In many ways budgets, like diets, are about deprivation. Sure, it doesn't have to be that way, just as diets don't have to be only grapefruit and cottage cheese. Still, "doing without" is the general mind-set, and psychology plays a huge
role in how we all deal with our money. Once you feel deprived of what you can afford—and what you want to treat yourself to—it won't be long before you chuck your budget completely to reclaim your money.

Excerpted from "Love & Money." All rights reserved. John Wiley & Sons, Inc. Used by permission.