Today we welcome guest blogger Betsy from Betsy’s Photography as she discusses Family and Financial Literacy. Managing personal finances as a family is do-able and she shares with us 10 tips to get us on the right track.
For the month of April, we will be bringing you daily posts centered on our personal finances – saving, making and managing our money.
While financial responsibility is important whether you’re single or married, it can be difficult when you are managing personal finances as a family. There’s the added complication of having two adults who have learned financial responsibility in different ways. And it can make things really interesting when it comes to managing your family’s personal finances. To put it simply, you and your spouse may not have the same vision of what it means to “save for a rainy day.”
I’m not pretending to have all the answers, but let me share some tips I’ve learned since getting married… and since adding kids to the mix. Because, let’s face it. As complicated as marital finances can be, once you add kids, it’s a whole new ball game.
When It’s Not Just You…
1. Communication is Key. Failure to communicate can cause a lot of unnecessary complications, especially when it comes to money. You need to be on the same page with your spouse about what’s acceptable. You can’t just make assumptions that your spouse will share your thought process. Some things that we’ve learned to talk about include what’s an acceptable dollar point for autonomous decisions, and what needs to be discussed with and approved as a couple. You’ll also want to communicate your spending/saving goals with each other. Finally, one a day-to-day operational basis, you’ll need to make sure you know who’s in charge of what. Are you paying the utility bills, or is your spouse? Who gets the groceries? By discussing these things and setting up a plan, you can avoid missed or duplicate payments, and keep your household running smoothly.
2. Have Goals. What are your goals as a couple for the next 5 years, 10 years? Do you want to buy a home? Move to a bigger home? Start having kids? Travel someplace international? There is no right or wrong goal, it just matters that you share your dreams and desires with each other. You can’t plan if you don’t know what your goals as a couple are. You don’t have to stick to these goals if your life situation changes, but having something to work towards — together — will help you in your goal of financial responsibility as a couple.
3. Prepare for the Unexpected. There’s give and take when it comes to a relationship. You will both need to be flexible. But, beyond that, life doesn’t play out according to plan. At some point, you will have unforeseen (necessary) expenses — and you need to have enough saved away that you can deal with these unexpected problems. This past winter we got a lot of snow, our furnace went out, and we had to pay for a repairman to come out. Fortunately it was an easy fix; I know of friends who had frozen pipes and sump pumps that stopped working. Sometimes you will have to adjust your budget in order to cover unexpected but necessary costs.
4. Don’t Hide Your Spending. Spending in secret is a big no no. You need to be honest with your spouse or loved one about any spending issues. There is no hiding it, and your guilt will just make you feel worse, maybe want to spend more. Bottom line? Your spouse deserves to know if you’ve gone overboard. It’s always better to share bad news now than to hide it and share worse news later.
5. Auto-pay and schedule bills. Don’t get stuck with late fees that are easily avoidable. We set up auto-pay for our utilities, mortgage, and other “fixed” expenses. For our credit card statement and other variable expenses, I use online bill scheduling to set up the payment as soon as I get the notification the statement is available. You can keep the money in my account as long as possible, but it’s good to be able to “set it and forget it.”
6. Keep a spending log. Don’t know where your money goes? Maybe it’s time to record every dime and dollar you spend. The little things really do add up. You could save big by eliminating stops at the coffee shop, bringing lunch from home instead of getting fast food, or learning to trim your boys’ hair rather than taking them to the barber.
7. Stay Home instead of going out. Instead of going out to eat, stay home; you will save a ton of money by eating in. Learn to use a crockpot, make simple home cooked meals. Your family will love it, and you will love how it helps your finances. Along these same lines, instead of going out with friends, plan a night in. Think about inviting friends over for a potluck instead of going out to eat. Or maybe instead of going to the coffee shop to meet your girlfriends, invite them over for a home brewed cup. Birthday parties for kids don’t have to be elaborate and expensive. You can have plenty of fun at your home, or a nearby park. Keep it simple and focus on fellowship.
8. Barter your skills. Do you have a skill that your friends are jealous of? Maybe you can help them out, and they can help you. We know friends who have traded landscaping for handyman work. Maybe you could help someone by altering their clothing in exchange for something you needed.
9. Sell your old stuff. How many things in your closet do you actually wear? How many kitchen gadgets do you need? We have a one year rule – if we haven’t used it in a year’s time, we get rid of it (we usually donate it and take the tax deduction). Some specialty items get a five year grace period (i.e. scuba gear). But if you don’t use it regularly, chances are you don’t need it. What’s collecting dust around your home that you could bear parting with in exchange for some extra money?
10. Be content with less. Sometimes you just have to be content with less. No matter how much you make, or how much more stuff you have, you’ll always want more. We have friends who make less than us with more kids…and friends who make more than us who can’t understand how we can afford kids. It’s all relative, what you are willing to accept as the norm. You can make it work — but you may have to be willing to redefine what you are willing to live with (or without).
Find Ways to Save Money
What can you do to save money? There are lots of things. Many of them fall in line with being eco-friendly (see my post on wasteful packaging and being eco-friendly).
- Food – Buy groceries in bulk, grow your own vegetables, get a deep freeze for food on sale. We started making yogurt, kefir, crackers, granola, chocolate, and other goodies. It’s a fun kitchen activity for my toddler, and it saves us money compared to buying these items. Did you know you can make your own broth from a chicken carcass very easily? That’s another way to save.
- Utilities – Turn down the thermostat and wear a sweater. Yes, we like to be warm, but a few degrees really make a difference in your heating bill. Along those same lines, turn off lights when you are not in a room, and turn off appliances that you’re not actively using. Avoid phantom power loss by unplugging electronics that use electricity even when “off.”
- Plan ahead – Run the dishwasher when full instead of half empty, do full loads of laundry, use dryer balls and start line-drying clothes. If you need to draft out a schedule to help make sure you can plan ahead, then by all means, do it!
- Share with friends – Instead of going out and buying new clothes, why not do a seasonal clothing swap with some of your friends, or see who has kids that will be outgrowing their clothes when you’ll be needing new ones? There are also many freecycle groups that consist of people looking to share their things with someone who will appreciate them. We’ve gotten some nice kid toys, clothes, and other items from freecycle.
- Buy off-brand – Let’s face it, name isn’t everything. Utility, function …those are important. Do you really need to spend twice as much on something because it is a specific brand name? I’m talking about clothes here, but also about food and other things. Function is key, and you pay extra for the brand name. We’ve found that store brands of some food items are even better than the brand names we were used to.
Once You add Kids to the Mix…
Hopefully you had the foresight to discuss financial obligations relating to kids before jumping into parenthood. But, if not, now is the best time to start. Sure, there’s the day-to-day costs of having kids, hospital stays for birth, and all those things. But you need to take their future into account as well. What kind of education do you expect to give them? Are the public schools any good? Will you have to choose between private school or homeschooling? And what about college? Some parents plan to pay for college tuition, reasoning that it is a gift to be able to be properly educated; others choose to let their kids fend for themselves once they reach college with the thought that the education will be properly valued and studied for if the kid has to cover the cost. These are all things you’ll want to discuss as a couple so that you can be on the same page as parents.
So far as newborns and babies go, some big ways to save money, if you can swing it, are to cloth diaper and to breastfeed. Formula and disposable diapers are insanely expensive. And, as they get older, you have the option of skipping baby mush (er, food) and going right to table food. That will save you money too.
Childcare is another big expense for parents. If you’re fortunate enough to have the option for one parent to stay at home, it usually is very beneficial. I know several moms who decided not to return to work because the daycare was going to cost them almost as much as they would make in a given day. You have to consider the cost of childcare when looking at working. I also know some single moms who have to work. They have no choice. So, how do they work around this huge cost of childcare? Well, there are several options – bartering childcare with another mom in a similar situation for several days a week might be useful. Sometimes jobs will have stipulations built in for childcare, such as a few local daycares I know of – the employees get a great deal when they bring their kids there. If you have family in town, you could always see if grandma or grandpa might be interested in having a special day with their grandkid once a week, or once a month. Granted, you’d still have to cover daycare the other days, but every dollar counts. I even know of some family friendly stores near me that have a back room where young children of employees can play during open hours — those lucky moms and dads get to bring their kids to work with them!
There are many ways to reduce expenditures, sometimes it just requires thinking creatively. Above all, it’s important to never be afraid to ask for help. You have to realize when you’re getting in over your head and be willing to go get help before you dig a deeper hole for yourself. We enjoyed watching David Ramsey’s now defunct TV show about learning financial responsibility (he has a radio show still). You might look into his article, The Seven Baby Steps: Begin Your Journey To Financial Peace.
What about the future generations? As parents, we’ve been taken aback by the widely prevalent “I deserve that” attitude in today’s youth. Even though our oldest is only a toddler, we’ve been intentional about cultivating a grateful attitude about things and money. Rather than allowing an “i want that” attitude we’ve tried to help him think, “how can I help others.” How? Well, we regularly make trips to donate things we no longer need, deliver meals to families with new babies, and talk about the value of money. Last Christmas, he astounded me with his willingness to give (read The Power of Giving).
Resources For Teaching Kids About Money
- The Love Jar: Teaching Kids to Give and Serve
- How to Teach Your Kids Financial Responsibility
- Teach Your Children Well: Raising Financially Responsible Kids
- Teach Your Teens Financial Responsibility
- This Father’s Day, Teach Your Kids Financial Responsibility
- Money Factory – See How Money Is Created
- Teaching Your Children Financial Responsibility
What About You?
Do you have any tips to share about managing finances when it’s more than just you? Or maybe how to help your kids understand the importance of being fiscally responsible? I’d love to hear your thoughts.
I am a photographer, mom, and artist. I’d love for you to visit my blog, BPhotoArt.com, where I share photos and reflect on creating family memories (including what I’m learning as a parent to a toddler).