Money can bring out the worst in us, particularly when there isn’t enough of it. We often find ourselves in conflict with our partners (or even ourselves) about how it’s spent and how it’s saved, expending a lot of unnecessary energy.

The need for a working budget and savings in the bank is paramount, especially for those who are employed in the highly unpredictable entertainment industry. When your current employment has a good run, it’s oh-so tempting to spend most or all of your earnings. Or, almost as bad, you put all of your savings into market fluctuating investments. While your risk tolerance may be high, it behooves you to have cash socked away for the potential (or is it inevitable?) down periods.

Here are tips for minimizing the money conflicts, whether your cash flow is secure or not:

1) Agree on a budget. At the start of this New Year, map out how you will spend — and save — your money for 2011. Review your income outlook, likely changes, savings and spending. We give our government a hard time for not planning and sticking to a budget, but we don’t do it ourselves. Ninety percent of the families I sit down with don’t have a budget.

2) Who holds the purse strings? Understand the decision-making roles in the family. Often, there is one ultimate decision-maker in the family when it comes to the budget. There is no point ignoring the fact that someone’s in control or someone thinks they’re in control. Let that person drive the budget process, but the other person should be responsible for tracking. This may create a low level of irritation, but if you don’t give ownership and accountability to both of you, one of you won’t care.

3) There are ways to ensure that you keep yourself accountable, even when you’re single. Consider partnering with a friend or sibling to maintain checks and balances for how you spend your money.

4) Software. In vivid Technicolor, you can track income and spending via software. This encourages both partners to engage in the process. You can identify deviations in the budget and make corrections in subsequent months. You can use free Web-based, straightforward software like or more sophisticated budgeting software, like Quicken or Quickbooks.

5) Set aside 15 to 30 minutes a week to balance your checkbook and credit cards, and to make sure spending is on track for the month. If you see that entertainment or groceries went over that week, identify ways to cut back the following week.

6) You don’t have to be a slave to your budget. This isn’t prison. It’s hard to stay committed to something if there are no benefits. Be good to yourself occasionally. Give yourself permission to go off-budget from time to time on something that’s of value to the family or for yourself, e.g. a great vacation. If you’re being good year-round, you can have a reward at the end of the year.

7) Java fix or broke? Remain aware of the little things we don’t think about. Then, ask yourself if you really need it. Take the daily routine visit to Starbucks: If two people buy coffee daily, that’s $10 each day x five days per week x 52 weeks x 20 years. You’ve spent $52,000 without adjusting for inflation. Imagine the funds you might have accrued if you’d invested even a portion of this over the period.

8) Spending can be a good thing. There’s something about that physical parting of cash that can make you aware of your spending. In the Starbucks example, consider using hard cash rather than plastic for your favorite blend — frequent trips to the ATM might encourage you to consider not making it a daily affair.

9) Knowing when to invest. A good rule of thumb is to set aside three to 12 months of basic living expenses, but don’t be tempted to buy mutual funds, stocks, or even bonds with those dollars. Instead, for peace of mind, keep what you need to live on for six months (a good recommendation) in a fully liquid money market or savings account. Any extra cash beyond this reserve can be invested in other assets. When the economy tanks, it causes panic for those with all their savings invested in the affected markets. Those with liquid cash can afford to wait out the crisis. And if that good gig ends, or you are laid off, you’ll need the cash on hand for housing, food, transportation and insurances. The amount of money you set aside depends on your personal situation. A good financial adviser can help you there.

With cash set aside for the down periods and a workable budget, you’ll see the money conflicts lessen. You don’t have to cut out the rewards for good fiscal behavior; you just need to stay on top of your budget and communicate. And, that communication will go a long way to creating your own economic bliss.

Ivan Illan, CFS is director of financial planning and investments at Michel Financial Group in Los Angeles. You can e-mail him at

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