This post brought to you by BMO Harris Bank N.A. Member FDIC. All opinions are 100% mine.
Psst: I was asked to write sponsored posts connected to the BMO Harris Bank Scavenger Hunt Sweepstakes. I’ve written a post each week for five weeks about my own experiences with finances around specific life stages. (For more, check out my first four posts about saving with a baby, saving with a new job, saving with a fix-me-up house and saving in college.)
Managing your finances
Not everyone is a budgeting fan. I don’t love to budget, but I know it works. Unless you are naturally frugal – which I’m not – budgeting is likely the only way you can really see where your money is going and keep your spending in track. I even go as far as to call it a spending plan, as calling it a budget implies something negative. And I do LOVE spending.
When Ryan and I got married in 2007, I was a raging spender. RAGING. I spent too much money on crap I didn’t need. And as I looked around at all the excess, I realized that none of it mattered. Neither Ryan nor I wanted to work forever. We didn’t want to be a slave to stuff.
Ryan is and has always been a spendthrift. Months go by where he will buy NOTHING. (Dear God, how does he do it?) But from the beginning, we were open about our money and spending. We still talk about money a lot. We adjust our spending plan often. We make mistakes and learn from them. (Okay. Mostly I make mistakes and learn from them.)
And there is a benefit to doing this.
In six years, Ryan and I have managed to purchase two homes and three rental investment properties. (Full disclosure: All properties were purchased with loans and the three remaining loans should be paid off in the next four years.) We’ve managed to stay otherwise debt free, paying off any credit card balances in-full each month. We’ve managed to sock away about half of our combined incomes each year. And we’ve managed to pay for all renovations and improvements in cash.
I’m not sharing this to brag or be holier-than-thou. There’s no trick or a formula. I’m just sharing it because Ryan and I have/had average-paying jobs in our area and lead wonderful lives with many indulgences and luxuries. So, if we can do it, anyone can.
Here are a few ways we keep our finances in order as a couple.
Get on the same page about money.
It’s hard to be willing to give up anything if you don’t have any goals. Ryan and I have a clear idea of where we want to be in five years. And we talk about it often. The land is a huge part of that goal. So are the rental properties. And it all centers on providing a great life for this little man. All of this makes it a little easier to pass up the little things now to get us on the road toward the bigger picture.
Be open and honest with each other about spending.
There is one thing I hear a lot among women that makes me cringe. It’s the idea of “hiding” purchases or “sneaking” shopping bags into the house to keep husbands in the dark.
Ugh. Ick. I feel dirty just typing it.
It’s mostly said as a joke, but it doesn’t matter to me for this point. I truly believe that hiding or sneaking about anything is a bad decision in a marriage. And I think we’ve all heard that money is a top reason for divorce. (Scary.) So, hiding and sneaking with money – dangerous.
But here’s the thing – there have definitely been times I’ve bought something that I want to hide. And that tells me that it’s more important to tell Ryan.
- Because it was a bad purchase and I know it deep down. (Like that expensive vacuum I bought on impulse last week. I ended up returning it.)
- Or because it is indicating something that needs discussed between the two of us. (Like feeling like I it’s time to finally buy a new pair of jeans and Ryan won’t understand. So, that tells me that Ryan and I need to talk about my want for a pair of jeans before it turns into bitterness between us.)
Be involved and take advantage of each other’s strengths.
Another important part of keeping our spending in order is to both be engaged in the process. It’s really easy to just let your partner do it all. (I’ve been there.) But in our relationship, it’s much better when we are both be involved.
I keep track of the spending (because I do most of it) and Ryan keeps track of the cash flow and net worth (because he’s the big picture guy). I make phone calls and get quotes for home and auto insurance to make sure we’re getting the best deal (because I don’t hate talking to people as much as Ryan does). And Ryan researches the best ways to manage our stock portfolio (because, seriously, I’m not doing that).
What this means is that we play to our strengths. And we also let one another do it our own way. I started using Mint.com to track spending and budgets this year and LOVE it. I categorize spending on my phone throughout the month and it’s always up-to-date. Ryan uses a spreadsheet that gets updated manually every month with our account balances for cash flow and net worth. It doesn’t matter how it gets done, but it matters that it gets done.
This also means that we are both closely involved in our financial planning. A few times a month, Ryan will say to me, “How’s our spending look?” And I’ll give him a run-down. And then I’ll ask Ryan, “What does our net worth look like?” And he’ll tell me. We both care about what the other is doing, but we also let each other do it our own way.
“Give up” on mass consumption.
This is a hard one for me. But, in order to meet our goals, we have to prioritize what matters. And honestly, most things don’t matter. And this means we are not getting ALL OF THE THINGS.
One of my goals for 2014 is to fight the norm.
- The norm – when we expect that our first house be brand-soaking new with granite countertops and thirteen walk-in closets.
- The norm – when we expect that we have earned the right to buy whatever we want whenever we want. Whether we can afford it or not.
I’m trying hard to fight this urge to buy and get and take. (That doesn’t mean I don’t want a new pair of jeans every once in a while. I just bought some after someone busted the crotch out of her favorite pair. Ugh. But those jeans were in the budget, thank you very much.) And we’ve also been talking a lot lately about how to make sure that Henry understands this, too. (I really love this article about raising entitled kids at We are That Family.)
Think outside the box.
Finally, I think that finances take creative thinking. It’s not all number crunching. There are a lot of unique ways to save and grow your assets – and it’s more than just kicking the latte habit.
The entire reason we purchased our first home was to save money. The house was hideous and horrible and ugly and scary. But it was DIRT CHEAP. Putting cheap into perspective – it was about the price of a new car. And people thought we were CRAYzeeeee.
But what’s really crazy? Buying a house that the bank told us we could afford? Or buying a house that we could seriously afford? When that house left us in a position to be able to afford to buy multiple other houses. All at less than the cost of a move-in-ready number.
In my opinion, that’s thinking outside of the box. And there’s something beautiful about escaping from the box.
About the BMO Harris Bank Scavenger Hunt Sweepstakes
The BMO Harris Bank Scavenger Hunt Sweepstakes is a five-week long interactive game experience. The game takes you through a town-like environment, highlighting key milestones in the journey of life. This week, you’re in a gas station (where many of us want to save money). Here’s what it looks like:
By participating this week (through March 24 at 11:59:59), you can also collect tokens for a chance to win $2,000. (Winner will be drawn on March 27.) Find more finance tips on Facebook.
What’s your best tip for managing your finances?