The One Secret About Budgeting You Probably
Don't Know, That Will Make You Happy Forever

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Most of us know that money problems account for a great many marital arguments, and that the majority of these money problems get pretty much resolved when partners design a reasonable budget together and then live by it.

What most people don't know, apparently, is how to live by the budget they design.

To live by a budget you have to develop some financial self-control, self-discipline and maturity about money matters. Both of you. Living by a budget is hard work. You have to be financially mature - reasonable, prudent, controlled and responsible. Just like everything else, you have to grow up about money if you want your relationship to work long term.

But that's not the secret I'm talking about.

The one secret that leads to happiness forever is a mathematical formula based on psychological realities. This one simple formula, applied to any budget you worked on together, potentiates happiness, catalyzes it in practical terms and keeps on doing it, forever. It's one step that you keep taking, and as you keep taking it, it gives you happiness, for as long as you take it!

Here's the secret, expressed in two steps, both of which are essential:

1. Divide your discretionary income into three piles; "ours," "yours" and "mine."

2. Always decide how to spend "ours" together, and "yours" and "mine" apart.

Explanation: "Discretionary income" means the money that you have to play with after all the bills are paid and commitments kept. Each couple decides what constitutes a bill that is required to be paid and what other commitments are to be kept before declaring the remaining income "discretionary."

The secret is simple: Put all your play-with money into three piles, not one or two. One pile you always decide on together, two piles you never decide on together. This strategy dramatically reduces conflict and inevitably enhances happiness.

Here's how it works, in practical steps:

1. Design your budget so that you both agree on an amount that is "discretionary." That amount is probably going to be absolute, not a percentage, for most people with relatively predictable incomes.
   
   (Before we go further, let it be stated for the record that Step 1 might be a big hurdle for many couples. If you can't design a budget together, you need a third party to help. If you can't discover any money that's yours to play with, you're living beyond your means, and you won't ever be able to afford the happiness that being able to play with money provides. Therefore, you should reduce your expenses or increase your income, so that you can get some play money. The kind of happiness that comes from money comes from the discretionary kind.)

2. Take the discretionary amount and decide how much of it you want to make "ours." Let's say, a third. If you've got $300 per month discretionary income, you've now declared that $100 of it must be spent by agreement between the both of you.

3. Out of the remaining discretionary amount, decide how much is "yours" and how much is "mine." Most couples would probably divide this into equal amounts, but there are some circumstances that might affect that decision. One partner may have an expense account that provides for meals or entertainment, or one partner may have much less time available for individual pursuits, so gets proportionately more of the funds to make things feel fairer. Whatever the proportions, they must feel fair to both partners. Following our simple example, let's say that the "yours" and "mine" accounts are funded equally.

4. When either partner spends out of the "yours" or "mine" accounts, the other partner has nothing but encouragement. If he wants to buy a hundred dollars worth of bubble gum, she applauds it. If she wants to buy a five dollar specialty drink at Starbucks, he delights in her doing it twenty times a month. You agree with each other that these accounts are for investing in delight, and you want each other to feel nothing but delight in every purchase. So no criticism, no snide remarks, no snarky looks or jokes made at the other's expense. Nothing but encouragement, so the delight is unallayed, pure and complete.

5. Purchases out of the "ours" account are conjointly decided. You both agree on how that play money is invested, always. (No borrowing out of the "ours" when "yours" or "mine" gets emptied out before the end of the month.) It's for investing in the "us" of the relationship, so it might pay for date nights or for sitters for the kids. Or it might be accumulated for the big-screen TV, or a vacation for the couple. But it's always invested and spent together.

What happens to most couples who don't know the secret is that they go to extremes.

One extreme is to consider all discretionary income "ours," and then they try to make any spending a joint effort. That strategy is bound to create more conflict than is necessary in a relationship. You already have enough things to fight about, you don't need to add to that list whether to eat in or go out for dinner on a weekday night. The euphoric stage of early romance can set up an unreasonable expectation of eternal agreement and easy accommodation. Wait till you've been together for five years or so, and you won't find agreeing quite so simple a strategy.

The other extreme is to consider all discretionary income "yours" or "mine," without funding any "ours." That strategy makes all play spending either good for you or good for me, but never good for “us.” An “ours” account recognizes the psychological reality that the relationship is an entity in itself, and it requires nurturing. Some things are good for both of us together – vacations, date nights, training workshops. They deserve to be funded, and funding them out of “ours” makes it feel like it’s not a sacrifice of “my” indulgences. Not funding an “ours” account means that the relationship won’t get supported, only the individuals who are in it. That might be OK for a while, but in the long run, the relationship needs to have resources devoted to it, or it will starve.

Using the secret of the three play-with funds, you get to have your indulgence, your partner gets to have theirs, and the two of you get to have some pleasures that are jointly funded, without guilt, competition or resentment. Every month you get to relish your happinesses, your partner's happinesses and the happinesses you share together! A hot-fudge sundae of triple delights, ice cream, chocolate sauce, and a cherry on top!

Big Tip: Make space in your budget for three play-with funds, one for "us", one for "you" and one for "me." Agree on the percentages of discretionary income allocated to each, then decide together on the spending of "ours" and apart on the other two.

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