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Family Management 101: The Finances Department February 21, 2009

Posted by Tonya in : Family Management , trackback

As I was sitting down to write this my cousin called.  “Guess What?”  she asked me excitedly, not waiting for me to reply, “I got BLING” she replied giggling.  I had to laugh at her use of slang.  In honor of her and her husband’s upcoming tenth wedding anniversary she had decided that she wanted a “big diamond”.

She described the ring to me, “A princess-cut 1 carat diamond” she paused “‘nique” she finished again falling into the giggles.  We talked of what it would actually cost to buy a ring with a real diamond in it (anywhere from a couple thousand dollars up to five thousand.)  I told her that there is just too much practicality in me to ever buy a ring that expensive.

“Five thousand dollars!  That is a family trip or new furniture.” I told her.  We both agreed that “Diamond” (pause) “‘nique” was the way to go.  Especially, since with the advances of technology really make it hard to determine between synthetic and natural stones.  Besides, what is really important?  That you have two months’ salary on your finger or that you have a truly beautiful ring that symbolizes a priceless sentiment? Of course putting the current economy into perspective…I would think a “real” diamond rings are low on the priority list.

As family managers the stress of finances looms over us.  Money is a hot button topic, people fight over it and marriages have ended over issues related to money.  In my experience of my first marriage, my ex-husband made very poor choices when it came to the way that money was spent.  Because of this I was the one in charge of paying bills and managing our family budget.  I had failed at my attempts to make him understand the importance of not overspending and the evils of credit.  Though our marriage had much deeper conflicts that ultimately lead to our divorce, the way we fought about money definitely was a factor.  A couple months after we separated I sat down to evaluate my bills.  After paying all my bills for the month on just my salary I had more money left over than I usually did with mine and his salary combined.

As much as I felt stressed in my first marriage it pales in comparison to how I started to worry about money after becoming a mother.  Now there is the future to consider as well as just budgeting to meet the financial needs of growing children such as braces, medical bills, school cost, the cost of extra activities, not to mention sitters and transportation costs.

The Finances department is enormous all by itself, which why it is important to get control of it as soon as possible.  It is never too late to develop good communications about finances with your partner.  Ideally, there should be a discussion about handling bills before hand  about who is going to handle finances, budgeting, setting up savings, etc, but it doesn’t always happen that way.  The best way to avoid arguments about money is to talk about it before it becomes a problem.

Setting a budget is equally important; it will help to control spending when you know exactly what you have to spend.  Another important step is to track your expenditures this can be done in a simple ledger or using finance software.  I know for years I tracked my ex-husband and mine spending habit with Microsoft Money.  I was able to look at reports and find out where we were spending money and where we needed to pull in the reins a bit.  The best way to know where you can save money is to know where it is all going.

Along with budgeting your money and tracking expenditures it is important that you are a good consumer.  For example, with de-regulation there is not multiple options for utilities such as phone, cable, gas, and electric.  Bargain shop; know what each in your area is offering.  Take advantage of promotions that offer price freezing for a certain period of time; this will help you with budgeting as well.  Wait for the items you need to go on sale, the internet can also help you find the best deals on what you want. You can save money by clipping and using coupons on items that frequently use.

Avoid using credit when possible, in my current relationship we avoid using credit at all costs.  We rather put away money every week for a future purchase than have to pay additional interest.  Believe me that saving all that interest can really add up.  Credit cards and buying on time will cost you more money and keep you in debt longer.

Don’t forget to put a little away for a rainy day.  Put something aside into a savings account, even if it is a low amount.   If you put $20 away in a savings account every week for a year you will have over $1000 in the account over time that can grow into a nice chunk of money.

When it comes to money the best tool you can have is knowledge. The more time you take in educating yourself and your family on the best way to get the most “bang for your buck” along with keeping debt and the use of credit under control, will put your family in a good financial position!

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