We are young. Both just turned 23. And we are only one year out of college. We are both blessed to have jobs, but we certainly aren't rolling in the dough or living in the lap of luxury. We both bring home steady starter incomes, but if we don't live wisely, we could end up in a heap of trouble faster than you can say "heap of trouble." So, I thought I would share a few of the happy habits we have implemented in our little life to save pennies, plan for the future, and steward our finances well.
First of all, side note to all you single ladies, marry a man who is wise with his money. Don't look for a man that is necessarily rich, but someone who takes finances seriously. When Jeremy & I started dating at the age of 18, whether or not he was money smart was not on my radar, but I am so thankful that he is, and that he kept on liking me even when my dad called right after we started dating and told me I had 37 cents in my bank account due to a few too many trips to Anthropologie and Target. Another story for another time.
I have since wised up, and we find a lot of peace and joy in keeping on top of our finances. We have no debt except our mortgage, and Lord willing, we don't want to ever have debt. So, here are a few of the things we do on a daily basis.
1. Make a Plan
Thanks to Dave Ramsey and my wise hubby, we have a zero-balance budget which means every cent of our income has a home. A place for everything and everything in its place. After tithe and paying for Jeremy's grad school, we divide everything into very specific categories.
We have spending categories and saving categories as we work to pay off our mortgage faster, save for retirement (it's never too early!), save for things like trips, house projects, a someday new (used) car, and investments.
Jeremy made a game plan based on what he thought we would spend on things about 6 months before we even tied the knot, and then I weighed in to talk about realistic estimates for groceries, etc. We allow ourselves to change things if necessary, and after a year of living with the budget, we had another big sit down talk just last week to reevaluate and see what changes needed to be made to our categories.
Before every single purchase, we know exactly where it fits into the budget. "Where is this going in the budget?" is a commonly used question in our conversations. If it doesn't have a home, it goes back on the shelf or we figure out how to wisely move things around to make it fit if it is a necessity.
2. EEBA (Soon to be Goodbudget...in Nov 2013) EEBA stands for Electronic Envelope Budgeting Assistant. There is both an app for your phone and a website, and we use it to track every day expenses. It's FREE! I don't think you have to use this system of doing things (in fact Jeremy sometimes prefers his excel grid), but the point is to write down everything you spend. This may sound daunting, but it is so easy to lose track of where your money is going if you don't write it all down. Now, it is just habit to me that as soon as I fork over some cash or swipe my card, I pull out my app and type in the amount.
Before we had smart phones, we just wrote everything down and then typed our expenses into an excel document at the end of the day or every few days to keep track of how much we had spent in any particular category.
Because of EEBA, we can share everything which means that when I purchase groceries, he sees that amount deducted on his app as well, so we don't get to the end of the month and realize that between the two of us, we overspent.
Here are some photos from eebacanhelp.com to show how it works. I love this little buddy. Seriously, those of you that don't write down your expenses...how do you do it? How do you know where your money is? It took me a while to learn this, but now that I do, I can't imagine not tracking costs. And with a handy little app like this, it's easier than ever!
As I mentioned before, we ask each other "Where is this going in the budget?" on a regular basis. We are each other's best accountability partner.
We also work on being honest with each other about expenses and struggles. If I feel like I really need some more money for a certain category, I have to be willing to share that with Jeremy, and he has to be willing to listen to what I am saying. If he is stressed about our finances, I need to be a safe sounding board.
Working on a team makes everything easier. And finances can either be a strain on your relationship or a bonding experience.
4. Allow both husband and wife to have a little bit of personal spending money
This has saved us many an argument. Men and women just have different priorities. Jeremy loves to play golf. I love to shop for clothes and home stuff. If he had to get my permission every time he wanted to play golf, I would be tempted to spout some sassy remark like "Haven't you whacked around enough golf balls in the grass this month?" to which he would reply "Don't you have enough dresses already?" (Doesn't he know a girl can never have too many dresses? Sheesh.)
We each have a personal spending budget each month which we can use however we please. If I desperately want a new rug that doesn't fit in our preset house budget, I can save up for a couple months and use personal money. If I want to go get a manicure, I can use personal money and he doesn't have permission to scoff at my financial decision as long as it fits in that set amount. If he wants a new pair of jeans or a pocket knife or some other manly thing, I don't have to know why. He can just get it.
What a relief.
5. Cut back where possible
Here are some ways we personally cut back: - We don't pay for cable. We get 15 or so channels by just plugging our TV into the cable jack, but we don't actually pay for cable service. We have wireless internet and Netflix, and very rarely do I ever wish we had more. - We don't eat out much. We each have a little chunk of money to spend on eating out for lunches and such, but if we eat out together, it is a special treat. - We buy used things whenever we can. I just love thrift stores, yard sales, estate sales, and flea markets. - We plan our grocery shopping strategically. It's amazing what having a budgeted amount will do for your motivation to save. Making grocery lists and sticking to them will help you cut back without even trying! I also shop at Costco, but I plan those trips out very strategically and stock up financially so I can stock up on bulk wholesale products!
6. Remember that God will provide
I think it's in a woman's nature to worry. And if I'm not Matthew 6 careful, I can come up with just about every scenario in the book that should have me worried about the future. But as much as we budget and plan, the Lord knows the future and has it all covered in advance. Does that mean life will always be comfortable? Absolutely not. But it means I will always have what I need.
7. Don't forget about rainy days.
Everyone has a different way of saving, but the moral of the story is that saving is SO important. Because rainy days will come. And if you aren't prepared, the rain will make the sunny days less frequent.
When we bought our house, we chose the amount of our down payment carefully knowing that we needed to keep some money stashed away and quickly be able to make our way back to our full 3-6 months of expenses in savings (which we did within a few months after buying our home).
In the few weeks after handing over that check of a lifetime, his computer broke completely and had to be replaced and I was told I had 7 cavities (hole in the bank account...and in the teeth). As bummed as we were to have to fork over that cash, we weren't nervous because we had the money set aside for occasions such as those!
So here are a few simple tips and a very long blog post. If you made it this far, thanks for tuning in!
I highly recommend listening to and reading from Dave Ramsey for wisdom on finances. We are just two little newlyweds trying to learn how to be smart, and it helps to hear from older, wiser people who have been in our shoes!