Get a Money Buddy!

It's often easier and much more fund to do things with a friend, especially if we need support in any given area. Weight Watcher's success, for example, is due in large part to the camaraderie and support of the weekly group meetings. Exercise experts have long encouraged us to find walking buddies to make sure we exercise when we're not in the mood. The same could be true for money management.

It’s easy to slip into bad (read: expensive) habits when you’re the only one monitoring your finances. Rather than feel you have to face your finances alone, get a money buddy. A money buddy is someone you trust and who has similar financial goals. There are investment groups that exist all over the country. The American Association of Individual Investors was created in 1978 to provide education and support to investors.

But, in this article, I’m talking about a more personal and intimate relationship. Many people, even with the software available today, struggle with keeping track of their spending, but more importantly, fail to plan adequately for future expenses.

Whenever I work with a client on the Mindful Cash Flow (discussed in a previous article) we often spend several weeks, sometimes months, cleaning up newly found mistakes in Quicken, finding out when each bill is due, and determining the right amount to allocate to those less-frequent and hard-to- budget for expenses like home repair.

With a money buddy, you could each review your weekly spending against the amounts you have budgeted, but even more importantly, you could plan more effectively. Who knows what you might learn?

Two clients who started with me on their Mindful Cash Flow graduated to the point of working independently and coming back to me for only a tune-up occasionally. They were friends and decided to work together to keep their skills sharp.

You can work with your money buddy to research various costs to make sure you’re getting the best price available.

One woman realized that her friend was paying less than half the amount she was paying for her liability umbrella policy even though the friend’s home was more expensive. Discrepancies often occur among various insurance companies but these two women used the same company. A call to her agent alerted her to the fact that she was in fact paying double on her umbrella policy because her car insurance was with another carrier. So she checked to see which company could provide the lower rates on the total package of car, homeowner’s and liability coverage. She could compare the companies item by item which resulted in a simple change and a savings of several hundred dollars.

While she might have checked rates periodically, seeing her friend’s small payment propelled her into action immediately. She knew what she was looking for and came out ahead.

We all know we should review insurance rates periodically but few of us do it. The same is true for cable and phone companies. There are often special incentives offered when you sign with a phone company but those incentives end at a specific time. Unless you remember to check on that date, you may end up paying higher rates than necessary. A money buddy can help by sharing such tasks.

To make a money-buddy relationship work, take the following steps:

1. Decide on the scope of your work together. You might just want to begin by sharing research on insurance and phone rates and then graduate to sharing more personal details.
2. Eventually, agree to sit down with your money buddy and share your budgets and goals.
3. Plan regular meetings (perhaps once a week initially then monthly as your habits get stronger) to check in and see if you’re both still on course, reviewing what you spent the week before and the snags you may have encountered.
4. During your meetings, spend most of your time planning your spending for the upcoming week. Need new shoes or planning a special day out? Tell your friend in advance what you’re going to buy and the amount you plan to spend. Knowing you’ll be reporting to her will help you resist the temptation to spend more than you planned.

Also, consider putting aside a dollar or two for each week you’ve stayed within your budget. Pretty soon, you and your friend can reward yourselves with a small treat, like dinner or a massage.

Having a money buddy can help you stay on track with your spending so that you feel satisfied. You’re working so hard for your money. Make sure your money is working for you.

Please send me your comments and insight: [email protected]

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Opinions expressed by the author are not necessarily those of WITI.