Tuesday, February 23, 2016

Let's Talk About Money





Welcome to another Let's Talk Tuesday! Today is all about the green stuff - money. It's what we work hard for every day, and we all love it, right? Unfortunately, keeping it and spending it wisely is the hard part. I mentioned in this post that Chris and I follow a budget, and I've had a few readers reach out to me asking if I would explain more about how Chris we manage our money. So today is all about the steps we take and the habits we've formed in order to keep our finances in order.

1. Save, save, save. 
We follow this rule- always pay yourself first. How much you save every month is obviously up to you and dependent on how much you make per month/paycheck, but never skip a payday without paying yourself and saving something. We have committed to this since the beginning of our marriage - even when we were broke, and I had no job except for nannying on the side. We save every month, and you'd be surprised how quickly it will add up.

2. Build an emergency fund.
The first thing we saved for was our emergency fund. We have a certain amount in savings that we consider "emergency funds" and will only pull money from it for things like - putting in a new HVAC system (which has happened to us twice - real life), replacing a broken refrigerator (also happened to us), patching up a roof leak (again, happened to us), or any other emergencies that life throws at you. On that note, whenever we have to take out of the emergency fund, we always try to save enough to put it back so that we always have a certain amount saved for those unexpected expenses.

3. Make a budget.
This is the hardest part, for sure - so bare with me! We make a monthly budget as well as an annual budget. We start with our annual budget and it focuses on the big picture - How much do we want to spend on house projects? How much do we want to invest/save (outside of the emergency fund)? How much do we want to spend on travel? How much will we spend toward fertility costs? Your questions may be different based on your lifestyle - How much do you spend on daycare? How much do you spend on school expenses? Whatever it is that you spend money on (big picture), try to budget for it so you have an idea of what you spend on certain things. Start with what you expect to make annually (after taxes) and start budgeting from there. For example, we take our annual pay together and come up with a total of how much we think we will spend on big picture things and we will not go over that. As far as a monthly budget, we have calculated over the years how much we spend on groceries, gas, shopping, etc. and we have a budget in place for that each month. The bottom line is this - think about what you spend your money on, plan for it, and make changes if you're spending too much on one thing that is out of your budget guidelines.

4. Keep your credit in check.
One reason we have an emergency fund is because we never want to charge anything on our credit that we can't pay off the next month. We only charge things like gas, groceries, etc. on our credit cards and we make sure we pay the balance off every month. If we can't afford it, we don't charge it. When we first got married, there were several things I wanted (for the house, etc.) that we just couldn't afford. We wanted to travel, but we couldn't afford it - so we saved, we didn't charge. Credit cards can be very dangerous if you think of it as a means to pay something off later. We look at credit cards as a way to earn points towards certain things and to build credit - that's it. Other than that, it is just like a debit card for larger amounts since we always make sure we can pay it off month to month.

5. Stick to the plan.
This can be very difficult because life happens and things come up - but if you have a plan, sticking to a budget and having those guidelines is so helpful in making sure your finances are in order. If you set aside a certain amount for a house project (for example: we budgeted to landscape our backyard this year), stick to it and do not exceed the amount that was originally planned. Overall, I think the best money habit you can have is forming a plan and sticking to it. How you save or spend your money is different for everyone, but nothing is more important than having a plan in place on how you can control your saving and spending - and stick to that plan in order for you and your family to be comfortable and successful with your finances.

If I'm being honest, Chris is definitely the brains behind our finances. When we first got married, he created an excel sheet, and we had weekly budget meetings on Saturday mornings. This is not a joke. I hated it at the time - I mean, I had to budget in my manicures and pedicures (!!), and at one point, those were completely cut out because we simply could not afford it. Now, because of that budgeting and planning, we have an emergency fund saved up plus extra to spend on things like our backyard and travel. I'm telling you - it's all in the planning and saving (plus a husband who cuts out your time at the nail salon - HA), but seriously, it's all worth it in the long run. Do you and your family already follow a budget plan? I'd love to hear your thoughts! Thanks for stopping by!
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