Everyone I know has their own unique relationship with money and budgeting. For many years I had struggled with student loans, credit card debt and general spending. I can remember my dad telling me to save my money, so that some day I can pay for a house, or other things I may want in the future.
I realize, far too late in life, that my dad was, in fact, right. I should have saved more, but I also believe that there is no time like the present to start something that you wish you wouldn’t have begun earlier. Saving is important, but what is really going to propel me to where I want to be financially, will be making smart moves with my money.
So knowing what I know now about money and finances, I seized the opportunity of having more time on my hands, to get down and dirty with a financial plan for my growing family.
Covid Crisis
During these last nine months there have been a lot of changes to our family, financial situation and the way we plan for things. I was furloughed from my job pretty early on. At the beginning of the closures and stay at home orders, no one knew what to expect. I have to be honest that I thought it wouldn’t last more than a few weeks before we were all back to our normal way of life.
That turned out to be incredibly ignorant, and I wish I would have allowed my mind to better prepare for what laid ahead for all of us. So with all the time I had at my disposal, I got back into detailed budgeting of our everyday expenses. It was a bit of a challenge at first, because my husband and I hadn’t yet established joint accounts or formally joined our finances before this. We had always been pretty good at keeping our spending down, but with the impending arrival of our first child, unexpected expenses were becoming a norm for us.
Budget Every Penny
Initially the first items listed on our monthly expense sheet included our new mortgage, groceries, utilities, gas and internet/cable. Under previously normal circumstances I would have also included a line for entertainment/travel/dining, however most of that was out of the question with the stay-at-home orders we’d been put under. As I looked at the expenses, I wanted to dive further into securing our future, since the new theme of our lives was going to be chaos…
Being in our mid 30’s, and having spent our early careers in non-profit positions and athletics; both with little promise of providing anything more than a do-good feeling… I knew we needed to get serious about our saving and investing. An easy place to start was in our monthly budget.
I added a line in our expenses for money to transfer from checking to savings each month. Yes, we could just move the extra money from account to account whenever we wanted, as my husband so obviously pointed out. But, putting it in our budget helped me to visualize the commitment we were making to saving more and spending less.
Your Money Should Make Money
The next piece of building our less fragile future was putting our money in places that would help us to build wealth. I spent the better portion of a week researching the best banks to put our savings and checking into, to provide us with the best return. In the end, we chose a bank that promised a 1.75% interest earned on savings. (**interest rates have changed since this article was written) This bank is fully online, so within minutes we had both a joint savings and checking account set up, earning us interest on our money that was otherwise just sitting there.
The second big step I took in our budgeting process was dedicating time to finding the best options for us to roll our retirement accounts together. With several job changes over the years, we had acquired multiple retirement accounts, and had yet to see the value in consolidating the ones that we could. After speaking with several account managers, we’ve found a number that we were comfortable contributing to a retirement fund each month. Once we’d done that, I placed that number in our expense line as well.
The expenses were quickly adding up, but I had to remind myself, and my husband, that by budgeting our savings and investments into our monthly expenses, we were growing our wealth at a steady rate.
Consistency is Key
Budgeting has become a monthly process, as we look to tailor our spending to anticipated expenses. New items that have been added to our expense sheet include Baby Medical and Nursery Items. To make sure there is enough money in our existing budget, we’ve made some changes to the way we optimize the spending on our utilities, and reducing the amount allocated toward groceries (my monthly splurge!). Budgeting used to be scary to me, but the more time I spend on it, the more confident I feel about our financial future, even in these unpredictable times!