Thursday, March 27, 2008

Parents University--Finances

This week's Parent's University topic is one that is a favorite of my husband--finances! Don't forget to check over at Kat's blog for other contributors and to add your two cents.

My advice on finances? USE A BUDGET! I love having a budget. When Sam and I first got married I fought tooth and nail against being "put on" a budget. I couldn't understand why it was so important to him. I thought it was the silliest thing I had ever heard of, but Sam persisted.

Now, three kids later, I am SO very happy that we had a working budget before we had kids. It has made dealing with finances so much easier. Sam and I simply do not argue about money. Ever. Everything is decided ahead of time, so except for really big purchases, we don't even question each other about where money is going.

What are the benefits of using a budget?

Confidence that your bills will be paid and you will be able to save.

Peace of mind in knowing where your money is going.

Freedom in spending money how you choose.

Fun. It's like a game in some ways!

(That probably sounds nutty, but I love to find deals! Anything I save in one area means more I can use in another area OR more that we can put in savings!)

What are some ways that you and your family handle your finances?


Heidi Jo said...

would you like to share some of the categories you use for budget?

like is there a very large "staying-at-home-raising-the-kids-paycheck" category?

i'd definitely need allowances for clothing.

The Secret Life of Kat said...

I agree. I love budgets. We have certain amount of personal money each month and I really love the freedom of being able to spend it however I want without feeling guilty that I should be doing something else with it.

I do also like the "game" aspect...

Lisa H said...

Heidi, you are funny!

With our budget, there is a clothing allowance....the challenge is to remember that it is for the entire family and not just me! :) We don't have a stay-at-home-mom paycheck sort of category, but we do each get spending money each month(like Kat mentioned in her comment). It is totally discretionary and we can each use it (or save it!) however we see fit.

We have two separate budgets for our family finances(although the money is all in one account, we just keep track on paper). One is Sam's and it includes all the monthly bills (house, cable, etc...) and also keeps track of our tithe account, our "entertainment" fund (eating out, seeing a movie, babysitters, etc...). Anything extra from Sam's budget at the end of the month goes into our savings account.

The other is mine and it includes all the household expenses (basically anything that isn't a monthly bill). On paper there is a category for different things (for example: clothing, personal items, cleaning supplies, gifts, etc...). I said "on paper" because in reality it's all coming out of the same place, so if I don't spend all my monthly clothing allowance, for example, then that money could be used toward new rugs for my kitchen. This is the part where I said it can be like a game--if I find bargains or good deals, then I build up my budget and have even more freedom in how I can spend it.

I keep my grocery money completely separate, just so I know what I'm spending on food. (If I'm shopping at a place like Walmart, where I'm buying food and other items as well, I just put the food up first and ask the cashier to give me a subtotal so I keep track.)

We put everything on a credit card and pay it off at the end of the month. (This works for us, but I don't recommend credit cards for everyone! For some it can be TOO easy to build up debt and NOT pay it off every month.) I keep a running checkbook register of my two budgets (grocery and non-grocery). So I just save up all my receipts and try to deduct weekly so I know where I'm at.

Just Mom said...

Lisa, you are an inspiration.

We put our Wally World purchases on a credit card where we can build points for airline miles or gifts. We don't bother with the airline mmiles part and instead get the $100 gift certificates for wherever we need (Land's End, Barnes & Noble, Amazon, etc.).

I never thought about itemizing the stuff. It would be interesting to see where most of that goes.

Re. clothing for myself, I only buy a few new pieces once each season. Just Son grows fast, so I need to buy his stuff throughout the year. My hubby could care less if he's in style.

Milk in the Closet said...

Great tips. It sounds like you have a budget like ours a few years ago, with different categories that we kept track of. Our problem was keeping up with all of the categories consistently. My husband had our budget on the computer with all the different categories listed and would have to spend so much time updating it. Do you have a system that works for you?

Lisa H said...

Hi, Milk in the Closet (that is a great name, by the way!)

I do have a system that works for me, but it helps that I've been working with this same budget for over eight years now. I keep two checkbook registers at my desk--one for grocery expenses and one for all things non-grocery. I have added up all of the separate categories and just put the total into my register under non-grocery. This allows me not to be legalistic about the specifics of the budget. (If I come across a good sale on something, say toothpaste, I might stock up even if I spend more than I have alotted for that category. And then for the rest of the month I'll be careful not to use all of another category.)

When we first started using this budget, I was trying to keep track of every little purchase and log it in it's own account--like you said, that is too tedious! And with three kids added to the mix, there is no way I'd be able to keep up on that. So I just try to do a simplified version of the more detailed budget. Does that make sense? On paper, we still have specific amounts alloted to certain categories, but in reality those numbers can change to fit our needs.

sam said...

Budgeting can be tricky and here is why. When you first start you are all gung hoe, like a new work out regiment. However, then reality sets in and you don't have the time nor the desire to continue to strive to keep up with a spreadsheet as big as your garden. The budget should template to help you decide how you will spend your money. This is not a template that should be used to consume copious amounts of time to track your money. This is what I would call a train wreck not a budget. There is a lot of freedom in a budget. I don't worry when we are shopping because I know that Lou knows where she is with her money. If she doesn't I know at the end of the month and she really does not like those conversations. Also, Lisa never has to check with me before spending to 'see if we have the money'. The biggest win for Lou in my opinion is that there is MORE freedom for her shopping habits in a budget than there would be w/o. Something really funny about our budget? We NEVER balance a checkbook. I balance the credit card statement as a bank statement. Lou is right, everything comes off the card. Not only is it easy to balance but also you really get a 30-60 extention on any payment you have w/o any penalty! Again though, this works for us may not for you. Do we slip? Sure we do, but the beauty is we don't let our budget drive our lifestyle and by being on a budget it's more fun to put more money in your savings account every month. The only downfall is when we are shopping for clothes I have to get permission from 'her' to buy.
Remember if you are going to start a budget, simplicity and understanding from both parties is paramount. Don't morph it to a point where you don't desire to balance the budget. Lisa keeps it simple in big sections, IE Cosmetics, Clothing, Misc., gas,kids, make any categories you want just keep them simple! I love balancing my budget. It truly is one of my favorite tasks of the month. Why you may ask? There are NEVER EVER EVER ANY SURPRISES! I might be bad at knitting, but I can cook, shop, sew and cut hair better than my wife....And I am definitely more attractive!

Grace said...

Lisa, great post.

We have a budget, too. We save ALL receipts and then log them on an excel budget sheet, which we designed for our family needs.

We started this when we got married. And like you and Sam, my husband and I have NEVER had an argument about money.

We have made changes since our family has grown. The budget sheet shows exactly where our money goes each month, and keeps us aware of our spending habits.

michelle f said...

How freeing! I'm the robo-budget cop in our family but have eased up over the years...def. agree with keeping it simple!

New clothes? what are those :-)