I grew up in a family of financial analysts, certified public accountants, and tight-fisted survivors of the Depression. I worked in financial analysis myself for several years before becoming a SAHM, and there are things that I do routinely that I’ve found a lot of other women don’t. So, here are my suggestions.
1. Keep both a checking account and savings account in your name only. If you’re married, your husband should do the same, and then the two of you can have a joint checking and a joint savings account. It sounds like a lot of paperwork, and, on the front end, it is. Once the accounts are opened and the distributions determined, it is easy for life. This way, you each have your own financial history as well as one as a couple. Decide on a percentage of the family income that goes into each personal account, then put the rest in the joint accounts. You take care of your own accounts, reconciling them, adding to the savings, etc., but make them and the management of them your responsibility. Contrary to some weirdo mythology out there, this is not “preparation for divorce,” it’s an offshoot of maintaining your own identity, a safety net for emergencies, including the death of your spouse, and it’s a little something to give you a separate credit rating and emergency fund or fun fund that doesn’t detract from the family needs and finances. Speaking of which…
2. Have at least two credit cards in your name and your name only. Use them only for your personal expenses, and pay them off IN FULL every month. This helps you maintain an excellent credit rating (and each partner in a marriage does, in fact, have their own credit rating, if you check yours, you’ll find this out), and again, in case of emergency or death, you have something to draw on until everything stabilizes again.
You can also buy Christmas gifts (AND PAY THEM OFF) without having to explain either your extravagance or parsimony. It helps if every time you buy something on credit, you immediately write a check out to the credit card company and keep all the checks until the statement comes in. Total them, stick them in the envelope, write on the stub how many checks are included in big red marker and send it off. Voila! No interest or finance charges, and you don’t overspend and get yourself in hock because credit is easy – you’ve already spent the cash for those purchases out of your checking account. The credit card company couldn’t care less how many checks you send them as long as they’re all good.
3. Track family and personal cash expenses on a little spreadsheet by category on a monthly basis. It’s too easy to piss pocket money away, refresh it from the ATM, and then wind up with too little money to pay the bills at the end of the month. If you track it, over a period of months you’ll see patterns emerge – that you are spending a whole lot on prepared lunches or pantyhose or nasal spray or something, which might cause you to change your spending habits or go to the allergist. Or not, but at least you will know and be making decisions from a position of knowledge, not from ignorance or emotions.
4. Take the emotions out of financial decisions. Marriage counselors, family counselors, everyone agrees, this is the number one divisive issue for couples. More fights are about money management than anything else, and it’s really crucial to be able to approach financial issues with extreme objectivity and maturity. Even if you’re single, it’s important to be cold-eyed and hard-hearted when it comes to looking at your own finances. Sure, everyone would like to have enough money to spend without regard to a budget or plan, but even those who are wealthy enough to do so generally don’t.
Being the manager of your money instead of being at the mercy of it is an important paradigm shift. If you want to make a luxury purchase for yourself, that’s what your personal accounts are for – budgeting and money management are not about making you feel bad or inadequate, they’re for giving you the power instead of you feeling helpless in the face of debt versus wishful thinking. If you can set the example for your feckless, emotional spouse about how to deal with money matters in a matter-of-fact, non-offensive, partnership decision-making kind of way, you’ll avoid lots and lots of stress and lots and lots of nasty surprises. If your fiancé refuses to discuss finances, put the wedding date back or off; this is even more important than deciding, in a love-smitten way, what you’re going to name your four brilliant, gifted, as-yet-unborn children. No dreams, just friendly reality when it comes to money matters. People can be incredibly territorial about their earnings (and their spending!), so be advised that this will be one of those issues where you need to stand your ground unapologetically and wisely.
5. Forgive yourself for past mistakes and start fresh today. Everyone makes hasty decisions with money. It happens. Even people who you’d think would know better get in a crunch and run up their short-term debt or invest unwisely on bad advice. It’s going to happen. There are hundreds of books, seminars, church programs, and so on about how to get out of debt and create wealth, and blah-snarkety-blah. Whatever. Be it the envelope system, the debt-free-living system, the family-taxes-in-a-coffee-can system, the underlying premises are the same. Save more, spend less, analyze your spending, pay yourself first, be more conservative, less emotional, etc.
But first, forgive yourself. You won’t get anywhere by kicking yourself in the butt and weeping over the stack of bills. Sure, take a moment, give a big sigh, shake your head a couple times, then move forward. Dive into the business side of having a life, determine some patterns, decide what to do, then do it and stick to it. Open up that savings and/or checking account, and check the couch cushions for enough lost pocket change to buy a little green ledger pad to start tracking those cash expenses. Make a list, and pat yourself on the back for taking charge TODAY and henceforth. In a year, you’ll look back at the progress you’ve made and be really, really glad you did, which will reinforce your decision to continue doing so. It’s truly worth it, in real dollar terms as well as emotionally, in the long run.