Dual-income families arguably have a harder time prioritizing their cash-flow simply because two separate sets of priorities are in play when it comes to where the money goes.
Maybe you’ve heard Stephen Covey’s story about filling a jar with rocks (I changed it to golf balls because I like golf), stones and sand. If you put the sand in first, you can’t fit all the stones and none of the golf balls. If you reverse the order, everything fits.
The story typically applies to important tasks that need to get done for more productivity (I do endorse this method for this purpose!).
I read this a few years ago and immediately recognized the “big things first” mentality in my own personal finances. Take care of the big decisions (savings, house cost, car) and the rest kind of takes care of itself. For example, we bought a house for a lot less than the bank told us we could have, so we now have more money to spend on other golf balls and stones.
Let’s apply this to cash flow. Housing/rent is typically one of those important expenses, so there is the first golf ball. Food, but not necessarily restaurants, is another golf ball.
The next few golf balls are going to largely depend on what’s important to you. Travel is one of our golf balls, especially since we have family living in other states.
I hope turning your income into wealth (savings) is also one of your golf balls.
If you follow this progression of prioritizing, you will eventually “run out of money” to spend each month. That’s okay, because you are funding the things that are most important. Better to not have enough to <insert something you spend money on but don’t really care about> than not have enough to save.
Many people who aren’t making as much progress as they want will fill their monthly spending with sand, the things they like to have but are not important.
Can we also apply this idea to our time? This may even be harder for dual-income households because the first golf ball takes up so much space.
Most people will agree that work is important and somewhat scheduled. That’s one golf ball.
Most would also agree that another golf ball is family and friends. I used to play a lot of golf, and still play whenever I can. But I also have two little boys who I love spending time with. Golf is now a “stone” instead of a golf ball, so it fits in when it does.
I used to read a ton of non-work books. Now I only read 6-10 a year. I guess it turns out those types of books were actually sand (don’t worry, I don’t watch much TV either), even though it is highly enjoyable to me.
Better to not have time for something enjoyable than to not have time for something important to you.
To summarize, you can spend your money and your time or look back over the last month and wonder where it went. You have a limited amount of each and you can’t fit everything in the jar without prioritizing your golf balls first, your stones second, and letting your sand fill in any extra space.
Time to take action. Define your 3-5 (shoot for at least 15% into retirement accounts) golf balls and make sure those are being funded. Now move on to your stones and repeat until your income is spoken for.
I hope this helps.