Are you a busy family looking to make managing your money much easier?
See how we handle our money system and accounts so that we're working towards our goals even if we're bus with work or family!
Easy Way to Manage Your Money
A financial system that requires you to constantly check and worry about your money isn’t going to cut it for most families. It doesn't for us.
With two kids, work, hobbies, and friends, we have a full life and we love it. Quite simply we see money as a tool, not the goal. It’s to help us to care for our kids and other loved ones.
So while I respect those highly detailed spreadsheets with line by line breakdowns of every cent, I save that for quarterly reviews. (If that…)
We want a 👏🏼simple 👏🏼and 👏🏼effective 👏🏼financial system.
Instead, budget monthly and do weekly checks on Fridays that usually are five minutes just to make sure everything is running smoothly.
It took some time, but we’re grateful to have a financial system that allows us to focus on the big stuff. We love even more considering these past 18 months.
If you’re looking to make managing your money much easier, while still hitting your family’s financial goals, this is your episode.
Today, we’re discussing:
- Quick overview of how our financial goals and system shifted to fit the season of life we’re in
- What principles give the framework to our financial system so we can hit our goals
- How to keep lifestyle inflation in check while still enjoying some fun
Are you ready? Let’s get started!
Resources to Easily Manage Your Money
- Best Budget and Money Apps: Personal Capital, Tiller, Mint
- Grab Your Copy: Jumpstart Your Marriage and Your Money
- Join Our Thriving Families Community on Facebook
- Free 401(k) Analysis: blooom
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Building Our Financial System
Before we get into the process, I think it's crucial to talk about three key principles we do our best to follow when it comes to handling our finances.
- Live on one income, have fun with a second.
- Automate our transfers to achieve our goals.
- Keep our budget flexible.
Let's break them down one by one.
Live on One Income, Have Fun with Second
If I had to nail down that one thing that has been a game changer for us with our family's financial goals. It's basing our necessary spending on one income.
Actually that was a tagline on Couple Money for a few years – Live on one income, have fun with the second.
I'd love to say that when we began our marriage, it was with this fantastic plan to hit financial independence. Honestly, we didn't even think about or know about financial independence until years later.
The whole idea of keeping our essential expenses under one income was simple. It was a necessity.
See, we met in college and when we got married, Rob had his first post-graduation job and I just started an internship. Considering the area, was actually pretty good pay, but we didn't know if it was going to last, beyond that semester so we made a decision.
We did have some friends kind of give us a hard time for being so conservative with our money but it was the right decision for us and it did set the tone for our finances together.
Using this mindset help us grow that gap between what we were earning and what we were spending. It also gave us more options.
For example, as I was approaching graduation, I was offered a job opportunity in Raleigh. That meant of move.
Rob would have to find some new work, but because we had simplified things, we did have the savings to make the move. It took some time, but Rob found a job that he enjoys and pays well.
We didn't realize it at the time, but the timing of our move was fantastic as Raleigh had began to explode in growth and job opportunities. If we had lived close to the edge with our budget, I'm not sure we would have taken that job and we may have missed out on a great opportunity.
We were able to start off our marriage with his foundation of living on one income. But I realize for most families, it's not something that can be done overnight.
To hopefully make things easier for you. I do have an entire episode where I break down the process of how you can shift into this system.
Automate to Achieve Our Goals
The second key principle for us. As our take on a personal finance classic, pay yourself first.
Here's how it translates for us. What we do is we set our goals for the year and long-term. Then we work backwards and see how much we need to set aside each month. And then we go ahead and automate those transfers.
We take this seriously, this idea, when we say pay ourselves first. Once the direct deposit comes in the next day, the transfers start happening. When we were working on our debt, those were payments that automatically went out. We were saving an emergency fund house down payment. Vacations, whatever the goal was, the idea is as soon as that money came in, We put it to work.
Not only has that helped us pretty much stick with their schedule? Yes. There were times we need to adjust or pause our payments. But it also gave us peace of mind.
We were working towards our family's financial goals while giving attention to the people and projects that mattered the most to us.
When we were starting out, these transfers and payments were smaller. But year by year, we increased it. So now we can make a substantial dent. With paying down our mortgage. And build up our investments.
Keep Our Budget Flexible
Finally the last key principle when it comes to our financial system is keeping our budget flexible.
This is where the money dates can be really helpful because it gives us a consistent and regular time to check in with our finances. For us, we find that the monthly rhythm is best.
Initially, when you do a money date, it will feel a little bit formal because you're getting used to your system. Honestly, now they're very casual conversations where we quickly review. What happened with the finances and the accounts? And then we talk about what's upcoming through this year or maybe beyond.
If we know we have a family getaway or a trip coming up, we're going to adjust things in the month before so that we can have some extra spending cash when we're out of town.
We find that doing these monthly checkups and adjusting our budget this way makes the most sense for our family. It keeps it flexible for upcoming expenses that happen throughout the year.
It could be taking those family trips or those semi-annual life insurance payments or getting the girls ready for back to school shopping.
All these things happen throughout the year. So we need a budget that can adjust to it quickly and easily.
Setting up the system doesn't take a lot of work, but it does take time, especially if you have several accounts between the two of you.
Depending on your bank, you may find that it's not as hard as you imagine. For us, we had to make a switch to find a better banking option.
It was well worth it because now we can easily set up savings accounts for specific goals and transfers are handled very quickly.
So there you have it. Those are the three key principles that we have in place with our financial system. That's allowed us to hit coast by while still having fun. And enjoying our time as a family.
Keeping Lifestyle Inflation in Check
One of the big challenges with families is making sure that you keep it lifestyle inflation in check and we're no different with that.
Looking at your budget, you can see that it shows up in different ways. As you're earning more money, you may see that you:
- upgrade your car or your home
- your vacations become much fancier the destinations, much further.
- buy more tech
It doesn't necessarily mean that getting these upgrades to your lifestyle itself is bad or is going to destroy your financial goals.
The problem happens when you're spending the money without checking in and taking a moment to ask yourself,
- Is this aligned with the priorities?
- Are we sacrificing more important goals for this?
- What value are we getting out of this spending?
One example I remember of where lifestyle inflation can really harm you is when I chatted with Kevin from Financial Panther.
We were talking about how he was able to pay off $87,000 of student loan debt in less than three years.
He mentioned that he had to resist that urge as a new attorney to not upgrade his lifestyle. 'cause he wanted to get rid of the debt first. And so that's what he did.
He kept living like a college student and he took on some side hustles to increase his income to the point that he was able to knock out all that debt.
On the other hand, let's look an example of where we personally feel that spending a little extra gives us a better value.
When we are going on family trips, we do try to shop around for some good deals. With accommodations. But something we've been spending a little bit more money on. Is using Airbnbs. And when you're renting the entire place, it is not the cheapest option. Most times, but that's okay because they fill a need for us.
And give us value when we are exploring a town and we come back and the kids still have energy. They have a space where they can run around while we still relax. In the end, the vacation is about relaxing for all of us and having an Airbnb Gives us that option.
Even though we're doing extra spending in this area overall, It hasn't budged our budget that much, but we feel like we're getting a great value out of it.
So when you're looking at lifestyle inflation, Don't just look at the numbers. Look at the numbers and the value that you're getting out of that.
I am a big believer again, of having the money dates. Or budget parties, whatever you want to call it. Because these check-ins are crucial.
They help you to reflect. Yoko through different seasons of life and in those different seasons, your priorities will shift and change. Your budget should reflect that.
That's why it's so important to have a way to reflect and get a sense of where your money is moving and why. If you're happy with it, that's great. But if you need to make a change, Then it's much easier to do.
With these reflections, you may find that you have enough to take care of your needs. Have some fun. And now can put more money towards those long-term goals. That will make a big difference with your family.
It could be that you could use that money instead of upgrading your devices, that money goes into college savings. Or seed money to launch a business. Or buy a rental property, whatever your long-term goals are. Some families want to cut back on their main job. So they have more time with the kids.
You can move towards these goals much faster as you gain more control and awareness over your money.
So while I don't think all lifestyle inflation is a bad thing. If you let it get out of the control because you're not reviewing it periodically. It can damage your family's financial goals.
Again, I want you to hit that balance of enjoying your money now but making sure that you're taking care of the people. And projects that matter most to you.
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