Money Lessons for Moms
I’m definitely not an expert in money management, and I usually try to avoid this subject of conversation, but I feel like with the current economic inflation it might be a good time to discuss some money lessons I (and my husband) have learned as we have managed our own money.
Don’t spend more than you are bringing in. Figure out the exact income you are bringing in each month, and don’t spend more than that! Credit cards make it easy to be able to buy things you don’t have the hard cash to buy, but that’s their job! That’s how they make money! So, if you really want to buy something, but don’t have the money for it this month, then save up for it until you can buy it.
Credit cards aren’t evil. On the flip side of the above point—credit cards aren’t bad. I say that lightly because they are bad if they will cause you to go into debt. However, there are so many perks with credit cards—increased credit score, cashback rewards, earn travel miles, receive extended warranties, and the list goes on. So, if you are going to use credit cards for these incentives, then just make sure you are still following the rule of “don’t spend more than you are bringing in.” Set up a reminder to pay off your credit card bill every Friday or every 2 weeks, so you don’t get surprised by the bill at the end of the month.
Pay off debt. Neither my husband nor I knew how much debt we had in student loans when we graduated, and we were in shock to learn the number. We started our marriage with $58,000 of debt (student loans). Before we got married we had read the book Total Money Makeover which helped us to learn how to pay off our debt effectively and quickly. I highly recommend this book to help any person that needs to get out of debt. We were not excited about starting a marriage in the hole, but we realized that the debt was a big blessing in our marriage. We learned how to be frugal, manage money, talk to each other, and get on the same page about spending. We were able to pay off all of our student loans in under 2 years with only a $60k income. Paying off debt helps you to get rid of extra bills each month and gives you more monthly income, which means more freedom!
Have a way to spend money guilt-free. Even if you are digging yourself out of debt, you (and your husband) still need an outlet to be able to spend money on something you enjoy without feeling guilty. My husband and I created fun money accounts right after we got married. Yes, we had a mound of debt to pay off, but we were determined to allow ourselves to have fun too. So we each have our own account that gets money deposited into it each week that allows us to have some freedom to buy things for ourselves without feeling like we are “stealing” from our family. CLICK HERE to check out all the details!
Create an emergency fund. Unexpected things happen—the dishwasher breaks, the car battery dies, an accidental broken bone—and you need to make sure that your bank account can handle the unexpected. In Total Money Makeover, Dave Ramsey says to set aside $1000 for an emergency fund. This is a good number to have as an emergency as you are paying off debt. However, as we started having kids we felt that we needed a stronger emergency fund in case we weren’t able to work or a big emergency came up, so we bumped that number up. We make sure that our emergency fund has 3 months of living expenses. That number might not be best for your family, and that’s ok. You need to talk and agree on a number that suits your family’s needs.
Split your money into “buckets.” Ramit Sethi’s book I Will Teach You to be Rich explains this so much better than I will, so grab his book. Here goes, instead of having all of your money in one account, it’s best to have one main “bucket” account that pours into several other “buckets” or savings accounts. The idea is to have “bucket” accounts for big expenses or things you want to purchase that will come up. Some examples include children’s tuition, medical bills, vacations, Christmas/birthday presents, new car, insurance, home improvement projects, etc. So once you have all of your “buckets” figured out, then you figure out how much money gets deposited into your main account each month, subtract your budgeted food/gas/bills expenses, and then divide up the remaining money to be split into your separate “buckets.” You can set up for this to be a reoccurring deposit into the buckets each month, and so when the bucket has enough money you are able to spend the money on what you desire without feeling like a huge chunk of your main account vanished. This system helps us to budget better and make goals become reality!
Prepare for the future. One day you will want to retire—sooner rather than later I imagine. Have you begun preparing for retirement? You might have a retirement account set up through work, but if you’re like me and self-employed you have to set that up yourself and be sure to deposit money into it so it can grow. Or maybe you invest in stocks or cryto or bitcoin. The point is, you need to think about how you live now and how you want to live when you’re retired and plan accordingly. Do you think $1 million is enough for retirement—take a second and think about it. If you retire at 65 and live to 90 or longer, will $1 million be enough for you to survive 25+ years? It could be, but it’s probably not if you want to travel or spoil some grandbabies.
