It takes a frugal spouse to make a frugal home

Photo: Russell Lee

Something of an exaggeration, of course—a one-person household can be very frugal. But there's an underlying truth: A household is only as frugal as its least-frugal member.

This is one of the clear messages from the Millionaire Next Door. People who answer "yes" to the question, "Is your spouse more frugal than you are?" are enormously more likely to be millionaires than other people.

That controlling spending is more important for becoming rich than having a high income is not news. When a rich person insists on haggling over a small sum or on correcting a small error in a bill, ordinary people may say, "I'm surprised someone like you would concern yourself over such a small sum." The rich person's response, though, is simply, "How do you think someone like me got to be someone like me?"

Contrariwise, a non-frugal spouse not only can wreck a household's finances—he or she will almost certainly do so, usually without even meaning to.

Structural solutions

I've heard a hundred variations on attempts to produce a structural solution.

In the old days it was common for the husband to control the income stream and pay the wife an allowance with which she was to cover the groceries and other household expenses. This sort of structure could work very well if both spouses were frugal—the frugal wife would economize enough to save some money out of the allowance, producing a nest egg that was separate from the husband's—but failed badly if the husband wasn't frugal, leaving the household with no savings except the wife's pin money.

In more modern times, structural solutions tend to be build around separate accounts—yours, mine, and (possibly) ours, with a clear understanding of how income goes into the various accounts and which bills are to be paid out of which account. These can work well for people who have a common vision for the household's future—but then anything can work well for people with a common vision.

Many households have just a single pool of money—all income flows into it, all expenses are paid out of it. This can work fine, too.

In fact, in the US at least, all these solutions all amount to the same thing as far as the law is concerned. With some very limited exceptions (mainly having to do with inherited wealth), either spouse is able to incur debts that obligate the entire household. As a practical matter, you have to pay your spouse's credit card bills pretty much without regard to any agreement to the contrary between the two of you. (The only reason the "husband controls everything" scheme ever worked was that creditors were unwilling to extend credit to a wife unless her husband co-signed.)  Because of this, structural solutions are only effective to the extent that both spouses use them to restrain themselves—they are of no use at all for restraining a spouse against his or her will.

The structure of the problem

There are, I think, three general categories of non-frugal spousal behavior.

The first has to do with impulse control. Here's where structural solutions can help. If the situation is that you can agree on a budget, but that one (or both) of you tend to spend money on passing fancies, then a structural solution that puts an obstacle in the path of spending money can provide the time to reconsider and make choices that don't blow the budget. In particular, structural measures can act as a sort of "tripwire" to detect when one spouse has succumbed to poor impulse control, giving the couple a chance to make the necessary adjustments before the household's finances are put at serious risk.

The second has to do with having a shared vision of the goals of the household. Having a shared vision does not necessarily mean having the same goals. If your big goal is taking a fabulous trip to Paris and your spouse's goal is owning a classic Alfa Romeo, that's still a shared vision—as long as you both acknowledge the other's goal. In fact, frugality can advance both goals. The problem comes when one spouse rejects or dismisses the other's goals. There is no structural solution to that problem. If one of you thinks that saving money to send the kids to college is important and the other would rather have a higher standard of living, there simply isn't a structural solution—the less-frugal spouse wins (or rather loses—along with everyone else in the household).

The third, and most fundamental, is simply having a different understanding of how the world works with regard to finances. Some people (I dare say most people who read Wise Bread) view saving—spending less than you earn—as the fundamental choice that enables all the financial successes of the household. Other people, though, don't. (There are many different understandings of how the world works. Some people discount the future heavily—the "live for today" folks. Other people just assume things will work out—the "the gods will provide" folks. Still others are just thoughtless and selfish—the "instant gratification" folks. None of these are invalid—they're just different. But the difference is one that pretty much excludes any hope of financial success, except through simple good fortune.)

So, how can you fix this? What can you do if you have a spouse who does not share your inclination to frugality?

To begin with, figure out where the disconnect is. Does your spouse believe that spending less than you earn is the foundation of financial success? Do you have a common vision of your major goals? If the answer to both these questions is yes, then there's a pretty straightforward path to success based on structural solutions. Simply produce a budget that allocates enough money to the less-frugal spouse's priorities while leaving an adequate surplus for saving and investing. If necessary, set up a system of accounts that make it easy to pay for things in line with the budget and difficult to pay for things that aren't in the budget.

If the answer to the first question is yes but the answer to the second question is no, then the next step is to negotiate that common understanding. I'm no expert in such matters, but I'd start by identifying a very small number of must-haves—an emergency fund, retirement savings, college savings for the kids—and then negotiating a division of the surplus between your goals and your spouse's goals. Some people allocate a certain amount of money that each spouse can spend without consulting the other. Others agree to make joint decisions about major purchases.

If the answer to the first question is no, it may be very difficult to come to an arrangement that works—unless the less-frugal spouse is willing to cede control over the household finances to the other. And this last, I think, is the crux of the matter.

All these issues are as much about power and control as they are about anything else. I have seen spouses sabotage their household finances simply to thwart the will of the other partner—as a concrete expression of the fact that they wield a full measure of the spending capability.

Structure of people

Everybody has their own natural level of frugality and there's not much you can do to change someone else's nature. (Changing your own is tough enough.) Exhortations, appeals to logic (or to dreams for the future), and leading by example all have their place, but only go so far. There is a great deal of room for negotiation when it comes to the household's common goals—but only a little room for negotiation when it comes to notions of how finances work.

One's understanding of the world is learned young.  It's learned by watching the early morning cartoons, by listening to songs about hard times, by seeing your friend's parents prosper and move on (or fail to), and by listening to what your parents have to say about their neighbors—both those who prosper and those who don't.  It can also learned by watching and listening to your spouse—but only so fast, because the things learned young carry a weight that's hard to move. 

If your spouse doesn't (or you don't) understand that spending less than you earn is the basis for everything else—comfort, prosperity, security, success—then you'll only achieve those things through plain blind luck.  Those people can spot their peers at the lottery ticket counter in the convenience store.

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Guest's picture

If necessary, set up a system of accounts that make it easy to pay for things in line with the budget and difficult to pay for things that aren't in the budget.

Could you give some examples of how to do that?

Thank you.

Philip Brewer's picture

@ J.:

Well, what I was thinking about was arranging so that savings got taken out of the paycheck automatically, so that just enough money went into the checking account to pay bills (which would also be set up paid automatically).  Enough money to cover budgeted cash expenses would go into an account where cash could be withdrawn (or accessed with a debit card).

The point would be to arrange things so that any over-spending had implications that required affirmative steps to enable it--money would have to be transfered from savings before it could be spent.

It doesn't keep you from spending it, but it does keep you from imagining that you're not blowing the budget when you actually are.

Guest's picture

I like this.

Living in the UK, married couples are treated much more as separate individuals than they are seem to be in the US - in particular you aren't responsible for your spouse's debt unless it's a joint account.

Also, it used to be common in working class northern families for the matriarch to control the money, giving only the excess from his wage packet back to her husband. Still that's only a reversal of the husband controlling.

I'm happily single at the moment, and I reckon that being sensible about money and realising that you must spend less than you earn is probably one of the more important things about a future partner.

Philip Brewer's picture

It turns out to be complicated in the US, in large part because the rules vary from state to state.

In most states, I think one spouse could borrow money without obligating the other spouse--but if the borrower didn't pay, the creditor could come after any joint property, such as joint bank accounts.  (And, even if the bank account has only one name on it, if any money earned by the other spouse is deposited into it, that can turn the whole thing into joint property anyway.)

If you know there is going to be a problem, it is possible to set up household accounts so as to keep property separate.  Spouses in occupations that put them at high risk of being sued sometimes do that--put key assets entirely in their spouse's name--so that they're not subject to being seized by a creditor.  Very wealthy people, especially people with family wealth that they want to keep in the family, do that too. It's easy to do wrong, though.  Plus, judges don't like it when people try to skirt around the rules and may arbitrarily decide that something was a common asset despite that.  (The rules about assets acquired during marriage are complicated enough that judges end up having quite a bit of discretion.)

Guest's picture

As unromantic as it sounds, our shared views on money are one of the factors that attracted my husband and I. We're both of the same mind that money isn't everything, but is a pretty handy escape route. I can testify to the fact that having shared goals is a key to making it work when yours and mine become "ours."

Guest's picture

i always love your posts, but this is one of your best (in my opinion, of course). My husband and I are so compatible--we are both frugal; we have the same values in almost everything; we have the same political views, and even share a profession. I feel so lucky. I can only imagine how hard it would be to negotiate differences.

Guest's picture

I am frugal, my husband not so much. It is very frustrating to scrimp and save only to have him buy extras! It is hard to get mad at him when usually the extra items are intended as gifts for me. He complains that I have beaten all the romance out of our marriage because instead of oohing and aahhing over all the flowers and chocolates and the like, my first question was how much did this cost!

We did institute a budget, and now with his allowance he does pretty well, not perfect, but much much better!

Guest's picture

Excellent post!

You're right with this post-- my wife and I are on the same page and it allows us to make great strides in savings.

On the other hand my ex-wife always worked against my attempts to save-- I guess that's why she is an X!

I describe our house as the Frugal Homestead and the ex's house as Spendthrift Manor . . .

Spendthrift Manor and Frugal Homestead