Managing Cash Flow

Wow -- I am still amazed at how complex managing personal finances gets once you get married. It's like that corporate project that gets extra headcount to speed things up, but yet everything slows down because more communication, more interlock is needed.

When it was just me, I always had a running tally on the month's cash flow in my head. I knew if I was ahead or behind for the month and what was coming so managing cash flow was easy. If there was a big expense looming I would buckle down, delaying expenses in other areas to normalize the cash flow. Worked great.

Now things are not as flexible as they were. I just can't take the month's cash flow and allocate it to a large expense or investment if I wanted to. I have to anticipate expenses and keep a much higher buffer (how was I suppose to know we had to get a fancy new comforter for the bed this week? how was she suppose to know I had to take someone last minute from work out on the town?) - it was much simpler when it was a one-man team.

However, it's not a bad thing. Being married means there are more income streams and likely a larger pie to divide up during the month than before. It just requires a more conservative plan and regular communication to make it work.

My wife and I have realized this is where we need to focus for now when we discuss finances. Rather than talking about investments, life planning, retirement funding, reviewing the 100+ account balances we have, etc we need to focus on becoming a well oiled machine when it comes to managing our cash flow. It narrows the scope, makes this whole merging finances aspect seem so much less daunting at times, and lays the ground work for the rest of our financial merger.

I mentioned earlier that I needed to improve the financial reports that are used to help my wife and I communicate about our finances. I think I have a clearer understanding of what I need to focus on at least initally in reports we use. Cash flow is king.

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Comments (11)

Holy cow, I've been married forever (okay, seven years), and we still have "discussions" about budget. I've been hearing about couples that sit down at the beginning of every month and do their budget...I'm considering that...

Posted by Brooke | January 2, 2008 1:01 PM

You have 100+ accounts? that seems like a lot.

Posted by mlathe | January 2, 2008 1:30 PM

2 Million,

Great posting! No doubt about it, the level of complexity in your finances increases a lot after you get married.

Just wanted to offer a quick thought: have you guys considered setting a formal meeting time? Maybe like a hour on Saturdays or Sunday to set priorities and troubleshoot? My wife and I talk twice a week and we find its helpful to have the time blocked out.

Posted by James | January 2, 2008 4:44 PM

100+ accounts? Wow... that's a lot. You can't simplify anywhere?

Posted by Leroy | January 2, 2008 4:47 PM

You two have done very well. I was looking over some of your net worth profiles and see you have a large portion of your assets in stocks. Do you happen to have any money in commodities or foreign currencies? It would seem that the market is drastically changing in the next few years.

Look forward to your response.

Posted by Mybudget360 | January 2, 2008 6:14 PM

2Mill, You are right on point with this...I have been married for several years now and communication is the key. I am much at fault for setting small financial goals in my head but not communicating them well. At the same time, I am almost always completely suprised by the unexpected "comforter" type purchase from my wife. Luckily I have married a great women who has similar hopes and dreams as I do when it comes to money. Just make sure the nice comforter doesn't turn into a $2,000 LCD tv without you knowing about it...Good luck to you in your first few months of marriage. Living overseas with a new wife away from home has got to be challenge.

Posted by Financialchoices | January 2, 2008 7:21 PM

James, thanks for the suggestion on the formal meeting time. I don't want to set up something formal yet, but we may need to at some point if we don't get into a natural rythm

As for 100+ accounts - yes we are working to simplify. The bulk of the accounts were mine since before we were married, and being out of the country with a 13hr time zone differen has made it more difficult to deal with account maintenance. We are begining to streamline some of our finances with joint accounts, etc.

Mybudget360 -- no investments in commodities or foreign curencies (other than my cash in China). I don't understand/appreciate the value creation with those investments. Money can be made, but I don't have an interest yet. Maybe in a couple years I'll think different.

FinancialChoices, Thanks for the comment. Let me just say living overseas newly married is full of challenges, but I think it was a smart move for us. We are being forced to rely so much on each other and I think it has really helped us strengthen our relationship.

Posted by 2million | January 2, 2008 9:29 PM

Just wait 'til you have kids

Posted by Bill | January 3, 2008 9:12 AM

Ok, so let's review what we know...

1. Before you decided to discuss money, you somehow decided it was better to start co-mingling funds.
2. Your wife strongly values financial security (my note: interesting that you ARE that security)
3. You agree that you both think TOTALLY different about money: you SAVE and INVEST and she likes to PURCHASE things that make her comfortable.

(All YOUR comments to 6/20/2007 entitled "We Are Not Going to Be A Smart Couple Finishing Rich ")

Here is the GOOD news! Eventually, the words I am writing now will fall to the wasteside (after hopefully gaining you more $ from the views you will get from angry women who read my posts) and the little numbers in the upper right hand will reveal the truth. Your entire trends will come to a screeching halt. You will at first come up with "we realized" and "we are adjusting" and "we are beginning to" and after it goes down and down and down you will start to question why a, b and c aren't working. At the end of the day those that have a natural instinct to save, fix their cars with duct tape and not spend will be wealthy and those that have to buy new bedspreads will be poor. Unless they marry the duct tape guy, in which case they can be rich for a while before becoming poor.

Posted by David | January 4, 2008 12:02 AM

Hi 2 million,

I note your response to mybudget360 that you have no investment nor any interest in investments in commodities and/or foreign currencies. Looking at your most recent NW update, I see that you have invested $25 in the ConocoPhillips DRIP. Isn't CP an oil company? Isn't oil a commodity? Do you invest in the stock of multi-national corporations including the one you work for? Don't they derive revenues in foreign currencies? Don't they source raw materials? In the case of IBM that would be mostly gray matter. I think it's smart of you to allow expert managers at Conoco, and other multinational corps to manage your commodity and currency portfolios. Many who are doing this directly are just hopping onto a bandwagon chasing returns. Your way seems way more prudent.

Best,
ETFnerd

Posted by ETFnerd | January 11, 2008 7:16 PM

ETF,

Good point -- I assumed mybudget360 was strictly referring to straight commodity investments. Some of my investments do have strong linkages to commodities such as Exxon, Conoco, etc.

Posted by 2million | January 11, 2008 10:42 PM