This week I will bring you a series of posts about the dreaded topic of household finances. I have always been the CFO (Chief Financial Officer) of our household. Even before we were married, I was the kind of girl that saved, budgeted everything, and kept a balanced checkbook. And then it happened, LW was born. When my son arrived, I was walking around like a crazy rabbit. Luckily, my dear husband flew in with his cape and took over the finances. Motherhood, working full-time, and household management proved to be entirely too much. Fast forward four years later, it’s time for me to resume my role. The difference is that this time it will be a joint effort. We now have a co-manager model to handle our finances.
By now you have probably figured out hat I may not be an impulse shopper, but I am certainly an impulse thinker. Late one night (as ideas usually come to me), I decided in order to adopt a true co-manager model, we (of course) needed a Household Financial Manual which was simply a binder divided into 4 sections (Goals, Budget, Debt, Notes) with dividers:
Every December, we write down personal and financial goals. I typed our overall yearly goals and monthly checkpoints to reach their targets and placed them in the binder. I have found the secret to goal setting success for me is the target piece. You can create goals all day long, but it is the target checkpoints that truly holds you accountable. I’ve included an example,(don’t forget-I have an educational background):
In this section, I also added notes from financial gurus (Dave Ramsey’s Seven Baby Steps) that I follow or money tips I’ve found along the way that will help us reach our goals.
Creating a budget for our family was going to be the death of me. I was too done. It was not an easy task tracking every single dollar going in and every single dollar going out. I have used every template known to exist and even created my own. I finally found a budget template that works for our family. When creating your budget be honest and be exact. A budget truly creates a blueprint for your household finances. Every business has a budget and departments are forbidden from going over budget. The same should hold true to your household. There are several different free forms you can use on the internet, I’m just sharing forms I’ve created or found the most useful.
Credit cards, car loans, student loans, mortgages….it is all debt and it all has to be paid. The ideal situation is to be totally debt free at least from revolving credit. For us, the most effective way to pay down debt is using the debt snowball method. Using this method , extra cash is used to paying debts with the smallest balance or highest interest based on your preference. As each debt is paid in full, the money used to pay that debt is applied to additional payments on the next smallest debt or account with the next highest interest rate and so on. We prefer to pay the debts with the smallest balance first. It just gives us a sense of accomplishment. There are also several debt snowball templates that range from simple to detailed.
In this section, I simply inserted a stack of paper and I use this section to take notes.
Now, I’m not even going to begin to document our mistakes, I do not have nearly enough time for that. I will be honest, it took us a few months to get it right. But, the process is well worth it and my husband and I are on the same page (most of the time).
I am no financial expert, I am just sharing my family’s experiences.