How We’re Working On Becoming Better With Money (First Friday Financial)

How We’re Working On Becoming Better With Money

A first Friday Financial post

How_Working_on_Becoming_Better_With_MoneyWe aren’t as good as we would maybe like to be.  Well, maybe I’m not as good as I would maybe like to be.  I’m not the most disciplined person in the world and I leave my husband to the task of taking care of the finances.  He enjoys it so why not let him handle that aspect so it’s one less thing on my ever-filling plate?

Though leaving him to have that task definitely works for us, I do need to take a little more effort to understanding what is going on in our bank accounts.  So, my husband and I sit down at least once a month to make sure we are on the same page with how we spend and save the money we are earning.

Budgeting

Sounds like a d’oh captain obvious topic, right?  Well how DO you budget?  Do you use the envelope system?  That’s probably a highly advised system that isn’t so easy in this paperless world.

For us?  We have allocated certain amounts of money to the necessities and to various categories of savings.  We also have different credit cards that we use for certain things.  For instance, we have a Capital One credit card for gas and auto expenses, a credit card from our credit union for groceries, and an American Express that earns us Delta SkyMiles for the high bills like mortgage, utilities, etc.

We then try to stick to as close to our budget for the categories as possible.  In addition to groceries, bills, etc, we have monthly budgets for eating out at restaurants, pet supplies, donations, baby supplies, and entertainment.

Bonus tip: building multiple lines of credit and paying them off monthly really helps a credit score, which is important for buying items that might require a loan, like a car or a house, as well as opening bank accounts.

Savings

Anything outside of the necessities like food and the mortgage, we talk about together and try our best to plan ahead.  We have a few different savings accounts, including one for travel, one for investments, one for education, an emergency fund, etc.  All of these are deemed “discretionary” and are optional to contribute to monthly.  Therefore, should we be in a pinch financially (eg, one of us loses our job) we would stop allocating money to these accounts, but as long as we can afford to send money to these accounts we are better investing in our future and our daughter’s future.

Before we started the “discretionary” accounts, we made sure to have the recommended 3-6 months saved up to cover the mandatory bare minimum in case of a loss of income.  We still contribute to that fund, but now we are working on other the discretionary funds, like saving for the aforementioned with our daughter’s education and traveling.

Bonus tip: The key to deciding how to save is having an honest conversation with your spouse about what is the most important to you in your lifetime.  Want a big house?  To travel the world?  Retire early?  To us, travel is more important than retiring early (not that that wouldn’t be nice) so we make that a priority.

Keep Track of Expenses

Re-evaluating your spending is crucial to staying successful.  My husband probably does this daily and updates me on a need-to-know basis (he knows me so well) but we definitely sit down at least once a month to do a thorough job evaluating how we did that month and to try to plan ahead for the next month as much as possible.

Bonus tip: Mint.com and it’s mobile app helps us keep track of what we’re spending and where we’re spending it, if we’re in the green or red, if our financial patterns are in line with our goals and budgets, and a whole bunch of other really helpful stuff and my husband just swears by it.

Me?  I like the visuals: the pie graphs, the colors, and categorizing the purchases so that the bar charts readjust when I deem a purchase “kid supplies” instead of “groceries.”

Hire A Planner

We have a financial planner that helps us with investments (stocks, mutual funds, etc), but also helps us with long-term goals like saving for our daughter’s education and retirement.  Fortunately, we do not have any debt, but I know if we did a planner might be especially advantageous.  Regardless, we aren’t know-it-alls with finances, even though my husband does seem very well-informed and I do genuinely have an interest.  Having someone whose job it is to help us with our future is incredibly helpful because we want to make sure we can retire nicely and our kids will be okay.

Bonus tip:

Give Yourselves an Allowance

Starting in January of this year, my husband and I started giving ourselves what we call our own personal no questions asked pocket money.  We each have a certain amount that we allocate monthly to each other for the “allowance” or the “pocket money.”  This is so that we can save for personal items that we want to buy, like updating our wardrobe.

I think this has been great for us because I don’t think we liked having to “consult” with the other about the things we didn’t need but definitely really wanted and whether we were “allowed” to get it.  Plus we didn’t have a “budget” for it so it started getting difficult to track.

There’s been a few times where he’s asked if he could buy something and, though I very rarely say no, I completely didn’t understand why in the world that was important for him to buy.  For him?  He doesn’t understand my strong love of Kate Spade purses.  But, hey, it’s my pocket money and I can do what I want.  I also bought him a pretty sweet birthday gift this year with my pocket money so I don’t care what he thinks!

Like I said about his birthday present, I saved a portion of my pocket money to buy him an iPad mini.  Birthday, Christmas, and “just because” gifts to each other comes from our pocket money, but family and friend gifts are budgeted separately.

How do you save, budget, and spend?
We’re always adjusting as necessary and looking for great tips!
Share below if you have any!

FUTURE FIRST FRIDAY FINANCIALS

What topics would you like to see covered?  I have some ideas about writing a post on how and what we decided to save for our daughter’s education, maybe having my husband go over the resources he uses for financial planning and investments, but I’m happy to try to cover other ideas and I’m always happy to have guest posts on the subject of money and finances.