It’s a commonly accepted notion that the two largest causes of stress in relationships are communication and money. In my non-scientific estimation, I believe the issues arise from communication (or the lack of it) ABOUT money (or the lack of it). According to an Ameriprise Financial study, nearly one-third of all couples clash over finances at least once per month, even the happiest couples. And two-thirds of couples haphazardly fall into their financial roles in the relationship, with no deliberate discussion.
That’s why Budgeting & Money Management is a major aspect of Strategic Family Management. In order to get more done with less, you must be intentional in your communication and planning. So, the following are five money management tools every family needs to use in one way or another.
Money Management Tools: Allocated Spending Plan
If you’re like me, the first thing you learned about money management and financial literacy was to create a budget. I agree that a budget is a useful and necessary tool. But it is not the easiest place to begin when tackling your finances for the first time. Especially if you are facing a major life change like combining two incomes, eliminating an income, starting a business or increasing your family. Knowing how much money you are spending and when is the place to start. That’s where an allocated spending plan can help.
The following video will show you how I create an allocated spending plan for our family. I learned this tool in Dave Ramsey’s Financial Peace University course.
ALSO RELATED: God’s Great Provision
Money Management Tools: Monthly Budget
Once you know how much money you and when you spend it, you will know whether or not you have enough money for your month. The next step is budgeting. You cannot budget without a baseline. A simple zero-based budget is a great way to start. That means every dollar you make has a home at the end of the month. That home could be your mortgage, tuition, groceries or savings, but every dollar has a home. There is no such thing as extra money.
To make it easy Mint.com and EveryDollar.com offer free online tools where you can keep track of your monthly budget. If you find that your budget is tight, or in the red at the end of the month, apply some budget basic principles may be necessary. my blogging buddy Amiyrah Martin from 4HatsAndFrugal.com shares her approach in the video below.
Money Management Tools: 52 Week Saving Plan
Savings is a must for every family. And I’m not talking about retirement or investment accounts. I mean liquid cash that you can access when the inevitable unexpectedly happens. What do I mean? At some point, you will have car trouble. Whether it’s a major mechanical issue or a rock jumps up off the wheels of a semi-truck and crack your windshield, at some point in life you will have an expense you weren’t planning to have. That’s the time that having money set aside is necessary.
A few years ago I found the 52-week saving plan online. It’s a simple and easy way to set aside money for savings in very manageable amounts based upon the week of the year. For week 1 you save $1, week 2 $2, week 3 $3, all the way to week $52 when you’ll set aside $52. When complete successfully you have more than $1300 to use as you please. I use this to fund my annual Christmas account.
ALSO RELATED: Practical, Purposeful Gifts to Give Your Children
Money Management Tools: Envelope Cash System
This was by far the hardest, but best money management tool we’ve adopted. Based upon your allocated spending plan, choose the categories that can be paid for in cash. Gas for your car. Groceries. Hair care. Fun money. Once you’ve made those choices, each week (or pay period or month if you choose) withdraw that much cash from your account and use only that much for those items. Once it’s gone, it’s gone. It really helps to control spending and lessens the ease and convenience that comes with a swipe of your debit card. It forced us to be intentional about our everyday spending.
To keep track of our weekly allocations I use this nifty organizer wallet from Buxton. I highly suggest a cash management system like this over paper envelopes that wear and break down over time.
Money Management Tools: Solicit Professional Help
If you’re having trouble getting started or you have tried and just can’t seem to get it right, solicit professional help. There are hundreds upon thousands of resources available in bookstores, online and in person. Of course, I only recommend those I know and trust, so here’s my list of suggestions.
- Financial Peace University: Everyday budgeting, saving and debt reduction.
- MND Accounting: personal and business accounting services, tax preparation and strategies.
That’s all folks. It’s a short list.
What money management tools do you find useful? Which ones do you need to start using?