Two signs you need to improve your financial culture
Household finances have always been a topic hard to talk about. That is why learning to master your family budgeting is so important.
Could a bad financial situation ruin your marriage? Well, it definitely won’t make it easier and many times – yes, it could.
Is good money managing going to save your marriage? It depends on the situation but many times – yes, it may actually save it.
Let’s talk about the reasons you need to be present with your family money.
- It gives you the full picture of what happens with your money as a family.
- It unites you to work in the name of a goal that benefits both of you.
- Gives you a different life perspective – you will find a whole new world out there.
- Learning from your mistakes will open your eyes and teach you that financial planning is crucial for your better future.
- You will feel a new type of closeness, even if you are together for more than a decade.
- Saving money will make you proud of each other. As a result, your self-esteem will grow bigger, and that causes the disease called “happiness”.
If you like this article subscribe to our website so you can be notified of the publishing of my book about family budgeting. My experience in working in banks for ten years thought me a lot about money (mainly what not to do with them…), and I can’t wait to share them with you. The book will be out before the end of March (2018) and will include money hacks, saving tips, budget planners with instructions on how to use them and much more. Happy reading!
How to start family budgeting
If you don’t have any experience in money tracking or setting a budget up, it may feel overwhelming at the beginning. But I have a surprise for you:
It sounds so scary because of the terminology. Actually, it’s very simple.
Start with a goal
Why do you need home budgeting?
What is your first and most important goal?
It could be paying off a mortgage, saving for education, a trip to a place you’ve always wanted to visit, move to a different city or country, start a business. Whatever it is. Write it somewhere you can see it every day. That will help you keep the focus on what you need to do to get where you want to be.
Have a talk
I know that you may wish to get straight to the point but in “family budgeting” the keyword is “family”. You are both in this. If you don’t have experience or you’re used to spending money like there’s no tomorrow, the support of the other is essential.
Both you and your spouse should motivate and encourage each other. Things may get messy at some point. I talk about the moments when he may want a new PC Game, and you really need those high pink hills you saw the other day. In those moments you need the love of your life to bring you down to earth and stick the list with the goal in your face.
You cannot track money you don’t see
You want to know where your money goes. That is why you should keep track of your spending for a month or two. After that, you can go to developing a financial plan for your family budget.
If you want to speed a little bit the process, open your bank accounts’ statements and go through the last two months. See if you can find out where your majority of the money goes.
That will be the moment of truth.
Most families believe that they don’t overspend and know exactly what happens with their money. Yet, when they look at the statement for the last month, it takes just a few minutes to realise that’s not even close to reality.
In my experience, I saw this so many times that it stopped surprising me at some point.
If you want to shake someone and bring him down to earth – show them their bank account statement!
Two signs you need to improve your financial culture
- In some weird and supernatural way, you always seem to spend more than you make.
- You’ve done your math (twice… at least), and still have no idea where your money goes.
I can hear your thoughts:
“Ok, so this is the salary, these are the credit cards, the groceries (I think), and the insurances. Oh, that’s the dinner on Saturday… this is… it’s… What the f***k are these £136.85 for? And those £99.99?! Unbelievable!”
Please, let me know if your thoughts are different – it would be like seeing very rear new species
So now what?!
Ok, so you’ve got the bank statement, you have the pen and the paper, you’ve got the shocked and confused face. Now what?!
Chose a template
You need to decide if you will use paper or digital device.
- Apps – There are many useful apps you can install on your phone to keep track of your money. Just have a look at your App Store.
- Excel – A popular way is to create your own Excel Table. The best thing about it is that you decide what to put as more important and less important columns.
- Digital Planners – The web is full of templates for household budgeting you can download and customise according to your needs.
- You can use a big agenda and make it more personal – as an example, you could put a family photo of you and your spouse since your last vacation – happy and full of life. That will help you visualise your goals and stay motivated. Plus, it makes the “family budgeting” more “family” – rich.
- Get a readymade paper Planner if you feel unsure how to set up your own.
I think that most people get scared of planning and family budgeting because of the complicated planners out there. The average person doesn’t really know how to use all the 296 cells on the budget planners, and that’s more than normal. I cannot find their purpose either. That’s why I like me & my BIG ideas, Happy Planner (the photo has a link to it). The first thing you notice is the clean design – nothing is too much and has everything you need. On top of that, it has these cute motivational quotes I think are the inspirational push you may need when opening it.
After all, it doesn’t matter which type of financial planning you chose. The real deal is what you write in it and how you use that information in your life.
Separate the incomings and the outgoings
Even though it’s always easy to track the incomings, you want to write them down too. Sometimes they may vary and the record will help you in future planning.
The outgoings you could separate in a few columns. I like to name each category in a different but personalised way:
- Household outgoings – the mortgage (or rent), the monthly utility bills, home and car insurances, transportation. These outgoings tend to stay almost the same every month, so it’s effortless to track them.
- Ready-Steady-Go outgoings – that category includes every amount of money that you want to get rid of – loans, credit cards, student’s loans, the money you borrowed from friends, etc.
- “Keep us alive” outgoings – groceries, money spent on your health, even health insurances.
- “Keep us happy” outgoings – in that category you want to put TV service (yes, the TV exist to keep you happy not alive or awake!), phone bills, Internet, Netflix, clothes – everything you can survive without but anyway you won’t give them up.
- “Sweet Temptation” outgoings – don’t get too excited over that one. It includes everything that doesn’t answer to the other criteria – movie-money, dinners out, going to the pub/bar after work, a pack of doughnuts in the lunch break, etc.
Add more categories if you have more monthly expenses. After that name them in a way that suits the idea, and add them to your planner.
Family Budgeting is not only writing down incomings and outgoings
Although writing everything down is a rule Number 1 – it is not enough.
Now you need a plan on what to do with everything you’ve just found out about your money and where they go.
Here are some tips on how to improve your money situation in the family.
See what’s unnecessary and cut it off. If you have Cable TV but spend most of your time on Netflix, you may be paying for something you don’t need. That could be a fitness membership, phone plans you never fully use or something else. Cut it off as you don’t really need it. Now, this is what I call mastering the family budgeting.
Pay off the debts as fast as you can. Start with the money you owe to friends and other family members. After that proceed with the credit cards and leave the loans and mortgage for the end. Use the money you just saved from the previous tip and invest them in your future financial freedom.
Save. Save as much as you can. Open a saving account and deposit every month. Even if it’s something small. Consistency will develop the habit of saving. As time goes by the amount will grow. As well as your smile.
Stay away from everything that led you to the position you’re in right now. Clearly, if you need a “save my money and life” plan, something about your money habits is wrong. The whole process I just described will help you find it out. Once you identify it – kill it! Change your habits and your life will change after that.
Family Budgeting “Stay Focused” plan
Your primary focus should stay on a few things:
- Your goal – the thing you want to achieve, buy, the place you want to visit, the business you want to start – it’s your motivation, so never allow yourself to forget it.
- Start small – your first month should encourage you not the opposite. Setting up goals too high will lower your self-esteem and eventually discourage you. So start with something small but still challenging so you can taste the win at the end of the month.
- Celebrate the wins – Celebrate that small win. You finally saved something? Celebrate! (not with the money you saved, of course!) Did you pay a debt off? Celebrate! That will boost your motivation and will encourage you to keep up the excellent work.
- Discipline – the other name of “stay focused”. Discipline is more than necessary every time you want to overspend, every time you want to add to the household service you may not need, every time you see a cake you know it will ruin your health and teeth, but you want it.
Question: I am curious about your goals and what your reason to reach out to family budgeting is. So let me know about it in the comments below, I would love to get inspired by you.