These tips were provided by my wife, Laura Irwin, who
gleaned them from many years of homemaking and learning
from others. Homemakers face a myriad of challenges; not
the least of them is managing family finances on only one
income. This is just a short list of issues. Self education
regarding family finances is crucial for homemakers because
of reduced income, lack of retirement accounts, increased
need for self-discipline (possibly more time to shop), and
the fact that if the finances become an issue, homemakers
may have to return to work. We wish you the best and hope
that these tips are helpful.
1. Accountability - You must plan finances together with
your spouse. This way, no one gets to play the 'blame game'
when things go wrong. When both spouses work on finances on
a weekly basis, overspending by either spouse will become
apparent. You will also get the chance to congratulate each
other on your successes. You are in this together. We all
know that money is a huge cause for stress in
relationships, and working together will help prevent years
of financial stress. This may also help you both learn
self-discipline and how to live on less. Accountability
helps you not be that guy in the commercial where he says,
"How did I do it? I am in debt up to my eyeballs!"
2. Keep depositing money in your IRA - Even though you may
not be earning an income. Women are poorer in retirement
than men are because they earn less, live longer, take time
out for child rearing without contributing to retirement
accounts, and receive less in Social Security benefits
because of the time-out for child rearing. This is
statistically even more important for women in minority
groups.
3. Budgeting, Debt Reduction and Saving - Proper budgeting
and debt reduction will help you meet your goals of being
able to live on one income. Some women are naturals at
budgeting, but if you are not one of them, a budget is
simply a spending plan that helps you keep track of regular
monthly expenses and savings for planned purchases and the
future. If you have never created a budget, you may
consider using software, an Excel spreadsheet, or simply
paper and pencil. You will be spending a lot of time with
it, so use whatever makes you comfortable. Put your debt
reduction plan into your budget. For great information on
reducing your debt, see www.debtproofliving.com.
4. Fifty Dollar Limit - Or any amount you both decide on
together. This tip has saved us many unnecessary purchases
because spouses must communicate about a purchase before
spending over the limit. (This does not apply to the weekly
bills like grocery or utilities.) At times, this rule may
seem too restrictive, but we have found it to be a huge
budget saver. It also helps to get a second opinion.
Recently, my wife called me from the check out line about
purchasing an item, and I was able to remind her that we
already own one! Judge the long-term benefit of purchases.
Our children are teenagers, so we have had a chance to
learn from our mistakes and wish we had done some things
differently. One of our regrets is overspending on toys,
and watching the toys be neglected, eventually ending up in
a garage sale. Since we have begun paying for our oldest
child's college tuition, it is painful to think of how much
money we could have put into a college savings account had
we not purchased those toys. Other examples of this include
purchasing children's furniture, which will have to be
replaced as the child grows. An inexpensive bed rail can
make an adult-sized bed usable from toddler age to
adulthood.
5. Understand marital financial mindsets - What happens
when opposites attract? They get married, then begin to
fight about money! Consider the following ways people view
their finances: There are optimists, pessimists, spenders,
savers, planners, procrastinators, and any combination of
these. Perhaps his parents were well off financially and
she was raised in poverty. On the other hand, perhaps her
parents taught her sound financial principles and his
parents kept their finances a secret, or worse, he has
copied their example of bad financial habits. Open and
honest communication about both of your mindsets may help
you work through any pre-conceived views or bad financial
habits. Remember that this must be done without finger
pointing and with the goal of financial harmony. Perhaps
reading a good book together about marriage and money would
be helpful.
6. Houses and Cars - These are the biggest expenses for
most marriage partners. Ideally, if you can plan to have
your mortgage paid off before your first child goes to
college, you will feel less stressed about paying tuition.
Another great way to save money is to buy great
low-maintenance cars and drive them for a long time. There
is no freedom like driving a car that is 'paid for'. Many
experts recommend that you put the amount of your payment
into savings after you have paid the car off to save for
the next one. From personal experience, we also recommend
planning for what kind of car you will need several years
from now. In other words, do not buy a two-seater if you
plan on having children in two years. Hold off saving for
the family vehicle. Also, do not sell the minivan after
middle school because the kids are not in sports anymore.
You may need it to haul your child's belongings to college.
7. Get Organized - Buy a file cabinet for financial and
other important papers. This central location will allow
you both to understand where anything important belongs.
You can avoid many financial mistakes by keeping papers and
bills well organized.
8. Understand your Health Insurance - Health insurance
costs have risen for everyone. If you have
employer-provided health insurance, take the extra time to
understand your coverage, especially during enrollment
time. Understanding your coverage may help you save a lot
of money. Figure out which policy is best for your family.
For instance, if you have a high monthly prescription
expense you may research which plan pays the most for
prescriptions. If your medical and/or dental expenses are
very high, you may be able to deduct them (7.5) of your
adjusted gross income. Keep track of your mileage to doctor
appointments (20 cents per mile). See your tax advisor
regarding your specific situation and see irs.gov
Publication 502.
9. Set long and short-term goals together - Creating goals
together is a wonderful marital exercise. You will learn
what each partner finds most important both now and in the
future. It is amazing how current wants can be dismissed
when they are compared with a written plan.
10. Determine areas of overspending - Each month as you
both check your budgeting progress, watch for recurring
overspending in any categories. You will probably find one
or two areas that go over each month. If you are within
your overall budget, you may want to raise your budget
amount in those areas or find ways to lower your spending.
Many busy families find that eating out regularly exceeds
their budgeted amount. This one requires extra
self-discipline to plan ahead and create freezer meals that
you can fix in a matter of minutes. Tired moms will hate
this suggestion at first, but it really can save hundreds
of dollars.
11. Do not let grocery shopping be a budget buster - A
penny saved really is a penny earned when it comes to
grocery shopping. For decades, women have come up with
creative ways to save on groceries. I remember my mother
saying that any money she saved from groceries went toward
birthday and Christmas gifts. Somehow, through hard work
she was able to feed three growing boys and still have
money left over! My wife's family preserved produce from
their large garden and from local fruit growers. Others use
coupons, shop for sales at multiple stores, or plan meals
around sale items. All of these ways are wonderful - do
whatever works for you. My wife recently read a huge stack
of books from the library about saving money and discovered
one recurring theme about grocery shopping. Most books
recommended keeping a book of regular prices for each item
you usually purchase. That way you can see if it is really
a great sale price, or if they simply put it in the grocery
flyer at the regular price. If that sounds like a lot of
work to you, visit www.Thegrocerygame.com. After entering
your zip code and your local grocery store, you will be
able to access a computerized list of best deals at your
store that week. After only three weeks, we have saved
about $200, and we have begun a stockpile of groceries in
the pantry.
----------------------------------------------------
Kent E. Irwin, ChFC, CLU, CAP, co-founder and CEO of
eFinplan.com. eFinPLAN is the first and only web-based
comprehensive consumer financial planning software designed
for people who are trying to do a lot of their own
financial planning. Find out more about how do-your-self
financial planning and how to reach your goals at: =>
http://www.efinplan.com/
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