Today we're going over 5 major money mistakes families make and how you can pivot things to hit your financial goals faster!
Major Money Mistakes Families Make (and How to Fix Them)
It’s funny how we perceive time and seasons. Like right now, we’re moving towards autumn, which means the year will technically wrap up in a few short months.
However, fall is also a bit of a reset or a do-over for many.
Maybe it’s because we’re in back-to-school season, and we see kids preparing and gearing up for classes. Or we’re excited about the upcoming breaks and trips we’ve planned to see family and friends.
Either way, over these past 13 or so years I’ve been writing about finances, I’ve noticed that September seems to be when people get a bit of a second wind.
Which is great and I want to be right here to cheer you on.
I like to embrace the energy and use it, so you have a win or two with your family finances before the year finishes.
To start off, I want to discuss some ways we sabotage ourselves when reaching our money goals.
How we approach finances almost always fails because it’s either – let’s be honest – boring. Or, it’s so rigid you immediately want to escape because life happens as these past two and half years prove.
Of course, there are many ways it can go wrong, but in the 13+ years I’ve been writing and covering family finances, I see some mistakes come up again and again.
I want to go over these five major mistakes and cover habits and strategies that speed things up if you’re doing well or can help turn things around if you’re not happy with your current strategy.
In this episode, we’ll get into:
- The five major money mistakes families make
- What you should be doing instead that will make managing your money so much easier
- Share a few tips on how to make it a lot more fun. Seriously
So much to cover, so let’s get started!
Resources to Manage Your Money Easier
- Best Budget and Money Apps: Personal Capital, Tiller, Mint
- Grab Your Copy: Jumpstart Your Marriage and Your Money
- How to Hack Your Habits to Achieve Your Financial and Fitness Goals
- Inaction is a Slow Death
If you want to chat more about creating better money habits, questions, or share your own tips, please join us at Thriving Families on Facebook.
Thank You to Our Sponsor Coastal!
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#1 Not Having a Clear Plan or Reason for Your Money
If I had to rank money mistakes, either by how serious they sabotage your success or how frequently I see them, this mistake is at the top of the list in both cases, and that's not having a clear plan and reason for your money.
This applies no matter where you are in your financial journey or what goal you're trying to pursue.
We're talking about saving up for an emergency or vacation, investing for retirement ( whether that's traditional or early), or you're looking to pay down debt. You need to have a roadmap that you can follow and a way to stay motivated through tough times.
Let's face it: if you are tackling something big, like paying down massive debt or investing for retirement, you're talking about a large amount of money. That it's not going to be an overnight thing. It's going to be a process.
I want you to have a clear idea of what you need to do monthly but also have that long-term view, that big-picture plan. I want you to have the reason for why you're doing it firmly embedded in your mind because that will keep you motivated through the tough times.
How exactly do you do that?
Now I'll link to the episodes in the show notes that go into more detail,but two key things you need to master are creating SMART goals and then also defining and visualizing why you want to tackle this goal as a priority.
With smart goals, you're not just taking a very vague goal, like paying down You're attaching a number I want to pay. $20,000 of debt. I want to pay $30,000 of debt. Whatever it is.
You then come up with a timeline. You can work backward and see, ‘okay,if I want to hit this in the next year, following two years, three years, whatever it is. I need to put aside this much money to pay down.’
Creating a Game Plan From Your SMART Goals
When you have a concrete number, you can compare it to your current budget. Is it possible for you to achieve this? If not, what adjustments do you need to make?
It could be that you have to optimize your budget and look for ways to lower your expenses. Or maybe you have to increase your income. Either by negotiating with your current employer, switching jobs, Or earning extra money on the side with a side hustle or a gig.
That initial piece of getting specific with your goals can then help you craft a real plan to achieve them.
The second component is having a visual way to remind yourself. Now for some, what they like to do is change the background on their devices, on their computers with the goal that they're achieving.
For example, maybe you are trying to pay off all this unnecessary debt because you want to switch careers. So you could put the career that you want as a screen saver, as a reminder.
Maybe you want to have more flexibility with your schedule and time with the kids. Well, then a family photo could be a way to do it. You can also put a picture on the refrigerator.
There are a lot of goal-based apps that you can use, Whatever method you prefer, go for it.
The idea is that you are feeding yourself this motivation regularly to keep on the plan. We'll get into this a little more, but when you have those check-ins also keep that in mind, not just the numbers, but the why behind your goal.
So that's the first money mistake and how you can fix it.
#2: Having One Person Handle ALL the Finances
The second mistake I see with family finances is that they have one person handle it all.
I'm not talking about someone who's the go-to person. Most families, including us, have that it where one person takes care of the logistics.
I handle the day-to-day with the budget. I run the numbers. I love to put together a spreadsheet. And we find it's a convenient way to delegate and take care of that. It doesn't mean that my husband, Rob, doesn't have a say.
I make sure it's baked into the system that we talk about not just the goals but that he has access to the numbers. That's important in a relationship, marriage, and your finances for a few reasons.
One, I've seen a lot of resentment from the person handling the finances. In some cases, they feel like there's a lot of pressure that they have to get it right. At the same time, they feel that the other isn't participating or maybe that the family doesn't buy into the budget that they put in. When the family breaks the budget, it frustrates the finance person and they want to give up.
Then I've also seen the opposite where the person handling the finances is a bit controlling (and this is an entirely different episode, whether that's intentional or not). How that affects the relationship is that the other feels like they have no say, no power in their marriage. It doesn't feel like a partnership.
In fact, some describe this feeling as being a child in the relationship. Not only is that damaging for your marriage, but practically speaking, also your finances, because you're not on the same page.
Team Up with Your Finances
One of the things I suggest is even if you have a go-to person is to make sure that it is easy for both of you to see the numbers and have a regular way to check in so that. You both have input on the budget and on the goals.
It's easier said than done if you haven't had these discussions before. I do have some tips in my book Jumpstart Your Marriage and Your Money where you can have these conversation starters to make it easier to talk about finances more productive and not play the blame game with each other.
I want the two of you to feel like you have a say in the direction of both of your goals and then also with the finances.
Mistake #3: Thinking a Particular Budget Will Solve Your Problems
let's talk about this third one, cause this is another huge mistake that families make. It's thinking that a particular budget or tool is going to solve all your financial problems.
No one budget, apps, site, or even podcasts has the corner on the best financial advice. The reason why there are so many tools and resources out there that do work. It's because we have different goals as families that we want to achieve and we also have different circumstances that we're all dealing with.
So it makes sense that what tool works for someone. I may do a great job for them. But might not be the right tool for you.
For me, I love talking about the 5 20, 30 budget. I think that's a great budget to start off with. If you knew to that system with budgeting. But then also for those that just want a high level, easy to manage way to approach their numbers. But that doesn't mean, I think it works for every family.
But that's the beauty of this. You can test things out. Same with budget tools and apps that are out there. There are some incredible ones. Some of them specifically designed for married couples, some of them designed for families, with kids, things that are very much automated and things that give you control over every single penny.
And tracking And if you've listened to this podcast or my other podcasts, couple money. You've probably heard the different approaches that families have taken. And yet. They've still achieve some of the same goals. Like for example, I've interviewed families who have retired early and for some tracking, every single penny and transaction was the way that made the most sense for them. And that's great.
And then on the other side, I've had families tell me that they don't budget. They do have a system that they handle their finances, but they don't have what some people consider a traditional budget.
While all of them have a plan and the timeline, how they handle the day to is going to be different and has been different. So I hope that makes you feel better, that if you're not happy with the tool, the problem It could be that the tool's just not the right fit for you.
Now later this month, I'm going to do a Q and a session. Or I talk about different apps and tools that are out there for managing your money. And if you want to join in and ask a question, maybe get some ideas of what could be the right fit for you based on your goals. And how you like to handle your finances.
Please make sure you're subscribed to the VIP podcast list. It's add simplify and enjoy.com/join. So that you can get an update for that. It's going to be free. I like to keep it smaller for listeners and people as part of the community. So I can give a little more attention.
As we'll discuss in that particular session, The great news for you is that there are some fantastic tools out there that are either free or low cost, and they can help you get over that finishing line.
Mistake #4: Not Automating Your Core Finances
We're hitting the home stretch. I'm getting excited and this one is an easy one to fix. This mistake that a lot of families make is they don't automate their finances. It, I feel like this is a really big opportunity. That's being missed with families. Because let's be Most of us are busy.
We ourselves have full lives that we do enjoy. We have the kids. We have work, volunteer, hobbies, things we have to do around the house. Very quickly, our weeks do get filled. I would say it's normal. Uh, To have some things kind of slipped through the cracks and yes, that includes paying bills and finances. So you would do yourself a huge favor if you spent just one evening and get your essential bills taken And also schedule any transfers to savings. Little extra debt payments, contributions for retirement and so forth.
That investment of one evening pays off in dividends. Either once a month when you're reviewing the numbers or some people do it twice a month. It takes 15 minutes tops. For me to, for example, just go through the budget, make sure the numbers are adding up. Make sure that payments were correct. And for those. Bill's that do fluctuate. I schedule the average payment.
And then it takes I'll say one minute. To adjust the number to the correct amount. For example, certain utilities. Might vary depending on the month, whether it's electricity, water, trash, whatever. And so that's an easy fix, but I'm spending. I'll just estimate on the high end and our total each month. To get things done, but realistically it's probably half an hour just to do the budget review and the bill pay review for the entire
So I feel like for an investment of a little bit of time, You get so much time bought back for yourself. To enjoy life a little bit and take care of the more important things.
Mistake #5: Not Having a Way to Track Your Progress (and Adjust) Regularly
We're at our fifth mistake. Can you guess what it is? I'll give you a second.
The fifth mistake I see families make is not having a way to regularly track your progress and adjust things. If you listened to this podcast for a bit, or you've read my book, jumpstart your marriage and your money. I talk about money dates.
And the reason I feel like money dates are important is that they're regular low key check-ins with each other that will allow you to go over the numbers. You can make adjustments if needed, but more importantly, it's also to make sure you're still aligned with each other and with the goals that you have.
Too many times, we don't acknowledge that our goals shift and change or something happens and we just can't sustain a certain momentum on a goal. For example, maybe the car breaks down. You have to reset things for a month or That's fine, but acknowledge it, talk about it and then readjust your budget.
Initially it might take a little bit to kind of get into the swing of things, but if you grab my book, I give you some icebreakers. I just want you to feel less stressed when you're talking about finances.
And then also it's a great protection. Unfortunately, I've seen where couples don't check in with each other. And the Goes off the rails. And even though it was initially a small mistake by not having that conversation, it snows vol.
It snows ball into something much bigger. And then it becomes a problem where you're more stressed And now you have to dig yourself out of this hole and completely pivot how you handle your finances.
This is great, both as a preventative measure, but then also proactively planning and adjusting for the future. It is a wonderful thing for your relationship, your marriage.
Because you're still trying to keep each other on the same page. So these open and honest conversations. I feel like should be at least monthly. Some couples do a little more frequently.
With a monthly cadence, it's easier to catch things when they're small. And then also you get to enjoy them when they become a regular part. You're not saying, okay, we're going to bring out the spreadsheets. It's more like, all right, let's just review the numbers.
What's working for us? Do we have any vacation coming up? How do we want to plan and save for that? And then it becomes the two of you working on the goals together. Instead of attacking each other with the budget.
So those are the five biggest mistakes I see families make over and But then hopefully you can see there are different strategies and solutions you can do instead.
That will make managing money so much easier, less stressful, and a little bit more fun.
Support the Podcast!
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Photo Credit: Guy Kawasaki
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