Family & Finances

Talking about finances is not always a comfortable family topic. It’s caused many arguments and data released by TD Ameritrade in 2018 showed that 41% of Gen Xers and 29% of Boomers say they ended their marriage due to disagreements about money.

We do annual checks on our vehicles to ensure that it is roadworthy and annual checks on our health. Annual financial checks should be equally important.

So this week, I’m putting my ‘Accountant hat’ on. I hope that by the end of this Blog, if money is currently a ‘sore spot’ in your home that you would be encouraged to make a start in improving this area. You don't need to be an accountant or an expert in numbers to make simple financial changes.

Before you switch off and think that it’s easy for our family and your situation is different. We’ve lived on dual income but on single income many times in the last 10 years. We relocated to a new country six years ago. We didn’t have work lined up, just some savings & a dream. So it’s taken discipline, agreement and commitment to get to this stage and to continue daily to get to where we want to be.

Never too late to start afresh

You may feel that it’s too late for your household and you are at your wits end. To this I would say, it all starts with a decision. It’s never too late to start afresh and to look at a current situation through a new lens. You may not be able to influence your spouse's attitude but you are able to change what's within your control.

Realistically speaking, the discussion about money should have taken place before marriage. Just like the topics of the number of children to have, where to live, setting expectations etc.

Practically speaking though, this may not have happened before or immediately after you were together. In our home, whilst we spoke about money matters when the need arose and did not make major financial decisions without consultation, we only started setting aside time to discuss money matters around 7 years ago.

We review our finances twice a year, in June and December. During this time we discuss the current state of affairs, ‘interrogate’ our bank statement in the previous 6 months and look forward. We discuss spending habits & focus on where we can improve in the coming months/years. More on that later.

If you have never had a discussion about money, it’s never too late to start today. Set aside time to do it with no distractions. Even if it starts with 30min slots over a week if it cannot be done in one sitting, it will be time well spent. Take time individually to think about what you would like to discuss. This will keep you focused and help to make the discussion productive and meaningful.

One thing that helped us be successful in reviewing and making decisions in this area was to remove all emotion from the discussions. Treat it as you would a professional meeting. When your spouse brings up something that you are not happy about (and they will!)…don’t interrupt, listen to another perspective, take a step back. If you find your temper is rising, you don’t have to respond immediately. Take time to think about what was said and respond. Don’t take what they are saying personally. Equally important is the manner in which the words are spoken – don’t attack, give specific examples, say it with love.

Change your thinking, change your life

My belief is that once you are married, it’s not ‘his money’ or ‘her money’. Rather it’s ‘our money’. Irrespective of who brings the money in or the amount. Having this mindset has made the difference in our home and has helped shape our financial decisions. We are in this together. The one who earns the higher income may not do so all the time. Or one of us may lose our job at some point or may need to stay at home for a time. It's important to support one another in both the good and not so good times.

We may have picked up some bad habits about money from our upbringing that we may need to unlearn. It’s good to take some time to think about our current thoughts on finances and where it stems from. Any negative teachings can be unlearnt.

Let’s get real

In almost every home you find that one person is the spender and the other isn’t. Uhm uhm, in our home, guess which one I am?

Now if you are the saver, it probably drives you banana’s looking at the spender bring in all those bags saying 'we saved so much on all the bargains I got today'! Sound familiar?

Bank account

Initially 100% of our salary was transferred to a joint account which was used for all purchases without consultation. This was not working as the spender kept spending whilst the saver...We agreed to keep 20% as personal income in individual accounts and transfer 80% to a joint account. This has worked well for us.

The 80% was to be used for all household expenses. To avoid any confusion (or future arguments!) we qualified what ‘household’ expenses were. If we used the joint account for anything that did not qualify as a household expense, we first discussed the purchase and agreed beforehand. If we didn’t consult beforehand, the person who purchased it transferred the cost to the joint account.

Our first IHFM

I remember the days when I lived alone and money was tight. I had a little book that I wrote down everything I spent on daily. Every Saturday I would tally up the amounts, review the spending and make adjustments the next week. And I did not go to this length when single just because I was an accountant. No, I did it because I had financial goals and monthly expenses. I had to balance the books and not rely on anyone to bail me out. If I was doing that on one income, why should I think that things should be different now that I am married?

Let me share our first IHFM (In Home Finance Meeting) – it all starts with a good acronynm! It was not easy looking at our bank statement line by line. But when you present the facts (the numbers don’t lie!), it is a good wake up call.

We exported our bank statements in excel, added a category for common purchases and reviewed it. We did this before the meeting so it was easier to review on the day. One of you would need to take responsibility to export the data and add the category. Or you can take it in turns every 6 months - whatever works. We picked apart the transactions whilst remaining civil! We also listed down all our costs and spoke about how we could influence it categorizing further into variable v fixed expenses.

Things we could change

Grocery & food purchases. We didn’t just review but seriously reviewed (!) what we bought looking at cheaper options wherever possible. Eg. Shop brands are cheaper than other brands. We discussed what we would compromise on and what we wouldn’t. Eg. With nappies we wouldn’t compromise on huggies brand. Rather than shop in the higher end supermarket chain, we trialled other stores and found comparable products. We are not big on dining out and are not excessive on take-outs but we still reviewed this area. Instead of fast food, I trialled purchasing a whole cooked chicken from the supermarket which provides two meals instead of one. My son loves nuggets so instead of McDonalds, it’s store or home-made nuggets which he equally loves & is a cheaper alternative.

I still haven’t confirmed who the spender in our home is but one of the things that the said spender did voluntarily was to go cold turkey and not do the grocery shopping for a while. Now said spender ensures that they have eaten before shopping (it’s true you do buy more on a hungry tummy), makes a list and is present whilst shopping. Being present whilst shopping has helped in impulsive buying by not getting carried away by the music and reduced products.

Another key thing that has helped reduce our grocery bill is reducing the number of times we frequent the shopping centre.

Immediate and essential needs v wants. We listed down all improvements we wanted to do within the home and what could wait. For those that couldn’t wait, we planned the time-frame and cost. My husband loves gardening and one of the improvements was to have a garden in our backyard. That way we have fresh vegetables and also save in the long run on vegetable costs. Since having the vege patch, we have enjoyed carrots, spinach, spring onion, capsicum, corn, pumpkin, egg plant, yam, potatoes, tomatoes.

Travel (Pre-COVID). We do not compromise on this as R&R is considered important. However, we increased local instead of overseas trips which we equally enjoy. Overseas trips were planned well in advance ensuring better deals and cheaper options. Reality is you don't need expensive trips to have fun & enjoy life. A simple picnic in the backyard, bbq, water balloon 'fight' with friends and family have been enjoyable moments.

Insurance (car, home). Even though this was a fixed cost, we still compare prices annually and do not auto continue. With health insurance, it’s not as simple to change but we did review the ancillary cover and removed areas such as massage as we used it so infrequently. This reduced the monthly cover.

Credit card. We have this but made the decision not to use it unless there's an emergency. If we cannot afford what we want, we save for it. If you do use credit cards, be disciplined in the repayments. Be deliberate in what you use it for.

Future months/years

After interrogating the expenses & matching against income, we agreed on the amount left over, how to increase this and to which area of the home it will go to.

Mortgage. We have an offset account and looked at ways to increase the amount thereby reducing the monthly interest. Instead of having specific savings for a rainy day we chose to keep this within the offset account. We reviewed our current mortgage rate looking at the best option during this time. It took a few conversations before we agreed on the best option and for the length of time.

Investments. We looked at investment opportunities and if either was not comfortable, we either parked the idea for another six months or compromised with the amount invested.

Other streams of income. We looked at areas where we could earn another stream of income. Some worked some didn’t. Don’t be afraid to try new things, to fail and to try again. Even if it is a hobby, start....you never know where it could lead. I share more in this Blog post 'What's in your hand?'.

Seeds

Everything you do today is a seed you are not only planting in your life but in the life of your children. So the time you take to change your financial situation positively will not only have an impact on your life but will also teach your children valuable lessons and life skills.

Along this journey to financial freedom take your children along. Teach them lessons on the value of money. The mantra in our home is ‘we all work and help one another no matter the age’. Children are never too young to learn about everything, including money and how it is earned.

Support and Help

We have all made at least one financial blunder. Forgive yourself. Forgive your spouse.

Save in the fatter months so it will not be as difficult in the leaner months.

During this time of COVID-19, some have had to look at alternative sources of income outside of their primary career due to job shortages. You may not be working in the job you want to right now or earning what you used to, but know that your contribution is important and makes a difference. Remind yourself that unemployment is not permanent. You are more than your job. This too shall pass. Yes, the road is bumpy right now but it won't be like this forever.

If you are struggling financially the following links may be useful:

Australia : corona virus financial help

UK: corona virus support

US: corona virus related financial assistance

If you are struggling with an addiction, please seek professional help.

In Australia : Gambling support

In UK : Gambling support

In USA : Gambling support

If you are still not sure where to start or numbers scare you, do get in touch.

Please like and share this post. I’m sure there’s at least one person in your circle that will be encouraged.

Your fellow Rookie Parent,

Sash

I am a Chartered Accountant, Author and Blogger. Home is Australia with my husband and 4 year old son.

I believe that in sharing we grow.  And that's how this website and blog was born focusing on children and parents.

It sure does take a village to raise a family and build a home.

It's so easy to forget 'you' on this journey. This website's here to remind you not to!