The Perils of Mental Segregation
About six years ago, one of my close friends asked me for some high-level financial advice. As they explained the structure of their household finances, the wife said, "His income is used to pay the bills, and my income is used for travel and fun stuff."
This is the world's biggest red flag in my book. Whenever we start attributing specific purposes to specific income streams, we've set ourselves up to fail (both financially and relationally). No, his income isn't used to pay the bills. No, her income isn't used for travel and fun. Their collective income is used to pay the bills, travel, and do fun things.
Now, you might say that I'm parsing words here, but please track with me for a second. What happens if he loses his job or takes a meaningful pay cut? The weight of keeping the household afloat rests solely on his shoulders. Conversely, what if she loses her job or takes a meaningful pay cut? The weight of the family's financial enjoyment rests solely on her shoulders.
There's one more factor at play. What if she one day desires to stay at home with her kids? They both brushed off that notion, definitively stating that it would never happen. Can you guess where this story is going? Recently, she decided that she has a deep desire to stay at home with their young children. Unfortunately, they never recalibrated their perspective on income allocation, and they are in a bind.
If she quits her job, all wants will be wiped from their budget. Why? "His income is used to pay the bills, and my income is used for travel and fun stuff." They've maintained that mindset up to the present, and it's biting them hard. At some point in the journey, it also transcends from a mindset to an actual reality. If they believe his income is used to pay for the bills (which they have), then they will structure their basic needs to run all the way up to his income. Therefore, there's little margin remaining to absorb the wants if her income decreases.
Tension. Fighting. Tears. Broken dreams. Talks of the D-word. They are in such a tough spot right now, all for something that could have been righted years ago. They specifically asked if I would write about this so "at least some good might come from it." Request granted.
Where do they go from here? In my mind, they have two paths:
She gives up her dream and calling. This option sucks.
They completely recalibrate their view of income. From now on, all there is is money in and money out. "Our income, our expenses." Then, they must make some major sacrifices to free up cashflow on their basic needs (to allow at least a marginal level of wants). This option sucks, too, but they will one day look back and thank their younger selves for doing it.
Please heed their cautionary tale. Any time you find yourself thinking something along the lines of "this income will be used for _____," you're barking up the wrong tree. Instead, add that income to the pot, then make a holistic decision for the entire pot that's best for the family.
____
Did someone forward you this post? We're glad you're here! If you'd like to subscribe to The Daily Meaning to receive these posts directly in your inbox (for free!), just CLICK THIS LINK. It only takes 10 seconds.