For Richer and Poorer

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By Sujatha Rajagopal

Wise financial management is critical to the well-being of every family. But despite your good intentions, it can still be a challenge to strike neutral ground between your idea of appropriate money management and that of your spouse.

In many families, one spouse is usually the free spender while the other is the strict saver. To avoid conflicts, the spender should still be able to fulfil an occasional whim without sabotaging all the savings while the saver should be allowed to hold a tight fist but not too tight that no one can have any fun.

The following steps can help your family get its finances in shape in a less stressful and perhaps even enjoyable way:

Get ready.
Read up as much as you can about how to manage money. Apart from a variety of free internet articles like this one, make a date with your spouse to visit the local library for money management guides.

Get set.
With the tips and inspiration you’ve gleaned, spend a weekend together to sort out all your bills, bank statements and financial paperwork. Then set aside one specific area in your home where these will be filed.

Next, set up a one-glance, computerised spreadsheet of your expenses. Remember to include planned or recurring expenses (like utility bills and kids’ tuition fees) as well as unplanned expenses (such as fixing that flat tire). A computerised spreadsheet offers unparalleled convenience to chart all of your finances from month to month. An intelligent spreadsheet can also automatically tally expenses into a grand total and tell you how much cash you should have short or extra. It can also help you to pinpoint sudden spikes in expenses. This way, you can compensate the next month for any impulsive and regrettable purchases made this month.

You don’t need to be a geek to achieve this when there are a large variety of free and customisable expense-tracking spreadsheets online (Microsoft Office users can download spreadsheet templates at http://office.microsoft.com/templates).

Go!
Now that you have a starting point, here’re some useful tips to keep money management easy year after year:

1. Plan a family budget together. Use your spreadsheet to see where all your money is going. Next, appease both the spender and the saver by deciding between the two of you, how much money you will spend, on what, and what you can start giving up to boost savings. Be sure to allocate enough funds for the important things like education, emergency medical costs and rent or home mortgage. Then cut out unnecessary expenses. Penny-pinching on gifts will help the kids appreciate money more and take birthdays or Christmas less for granted. At the same time, with the reassurance that you have enough set aside for savings, you don’t have to grudge that special holiday or dinner now and then.

2. Assign a bill payer. Assign the management of the spreadsheet and bill paying to the more organised spouse. Such a person will be better at ensuring that bills are paid on time (preventing late charges) and keeping the spreadsheet up-to-date. At each month end, print out the spreadsheet and discuss the month’s expenses together. This helps both of you to know what’s going on, make emergency financial decisions as well as feel appreciated for each other’s efforts in the matter.

3. Write down your financial goals. While the family budget aims for yearly savings, financial goals have a more long-term outlook. Discuss and come to a mutual agreement about five-year, 10-year, maybe even 20-year financial plans for your family. Consider needs like the kids’ college fees and your own medical expenses for old age. Educate yourselves about investments like stocks, bonds and mutual funds or if needed, engage the services of a professional financial planner to help you achieve your goals.

Also, don’t put off preparing your will. It’s the best way to ensure that your assets are distributed exactly as you’d like them to be when the unfortunate happens.

4. Choose financial products and services carefully. Pick up brochures from different banks and speak to their officers for a clearer idea of account requirements such as maintaining a minimum balance, banking commissions and fees. Then match this information carefully with your family’s unique financial needs. It’s usually a good idea to have two accounts — one for expenses and another for savings. Or consider accounts that allow you to transfer a specified amount of your monthly income to a fixed deposit or some other special savings account.

Similarly, balance what you need with instalments or premiums you can afford when applying for bank loans or purchasing insurance.

5. Reduce credit card debt. It is very easy to fall into that tempting trap of buy now, pay later. So be firm with each on overspending. Consider cutting up your cards or using at most one card each. Make an effort to pay off purchases in full each month instead of allowing finance charges to accumulate. Whenever possible, pay by cash or if you dislike carrying cash around, use an ATM or debit card.

6. Teach your children about money management too! The moment the kids begin asking for every toy they see, it is already a good time to begin teaching them about delayed gratification and saving for the future. You can begin simply by starting them off with a piggy bank. For older kids, consider paying them a small monetary reward for chores they usually don’t like to do. Double the reward for chores completed well ahead of time. When they work for it, they’d be less likely to want to use it all up at once!

Finally, remember that money is only a tool. Attaching too much emotional importance to it can wreak even the most close-knit of families. Keep financial security as an unwavering goal. But don’t forget to put health, happiness and family togetherness as your topmost priorities.

Useful books on money management include Dollars & Sense: A Mom’s Guide to Money Matters by Cynthia Summer and I Hate Financial Planning by Suzanne Olson.

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