Tuesday, January 17, 2012

Money Matters

Many people use the beginning of a new year as an opportunity to make changes in different areas of their lives.  We set goals to eat better, get in shape, and spend more time with family and friends.
During the past few weeks, Meghan and I have taken the time to reflect on our financial situation.  We looked back at 2011 and how blessed we were, but also looked forward to 2012 and to how we could continue to make the best use of the resources we have been given.  In this post, we want to give a little insight to how we have approached our finances in case anyone might be looking for some ideas to tweak the way they approach money.
First of all, let me say that I have always been a little tight with money.  Growing up, I can remember stuffing birthday money in small boxes under my bed and calculating just how many hours of mowing grass it would take to buy something I had my eye on.  After I started out on my own, my friends and I tried to pile as many guys in a 3-bedroom house as possible to save money on rent.  I also took advantage of free public transportation to and from work to save on gas.
Since Meghan and I have been married, we have attempted to be purposeful with the way we use our money.  Neither of us were ever been really big spenders before marriage, but we had heard for most of our lives just how contentious money matters could be.  Knowing this, we sought to come up with a mechanism to track our spending and savings in a way that would be responsible.  Realizing that the money we have is a blessing from God, but is also finite for most of us, we have a few simple tips below that might get you to thinking about your finances.
Have a goal.  One of the things that I have never really been good at is having a plan with money.  I have just tried to save as much as I could, but could not tell you for what purpose.  Meghan taught me the importance of having a goal and sticking to it.
Our first big purchase actually came shortly before we were married.  We both recognized that the vehicle I was driving was hanging on by a fraying thread and would need to be replaced soon.  So we planned for a bit and set out to buy a gently used vehicle that was more reliable.  Since then, we have learned the value of having a goal – from home renovations to a new home purchase.
Your goal may be simple.  It could be just to put a little aside in your retirement fund or buy a new couch for your living room.  Or it may be a big life change – planning for a new baby or taking a once in a lifetime trip.  Whatever it is, jot your goals down and be sure to reflect on them regularly.
Take time to budget and track your progress.  We created a budget when we were first married, realizing it would certainly be a moving target.  We tried things in the beginning and had no idea if it would work for us or not.  During the past two years, our budgeting has evolved to a point where we feel pretty comfortable with our approach.  Yes, it takes time and can probably be a little frustrating, but we know exactly where our money is going.  We use Excel mostly, but there are other programs that you can get for free to help you manage your spending.  There are some simple Excel templates that you could try out, or you could use some free online tools that were created just for this purpose, such as Mint and MoneyWell.  Find a tool that works best for you.
And don’t fret if you have a month or two that doesn’t go exactly as planned.  There will be unexpected costs that come up from time to time.  The key is to stick with it and modify it as you learn more about your spending habits.
Learn from others.  There are so many resources that can help you improve your fiscal fitness.  A blog I read from time to time, Get Rich Slowly, offers many good lessons from people who have struggled in their past, but who have figured out how to get over the hump.  There are also many sites that provide guidance on DIY projects and saving money in different areas of your life.  And although money discussions can be sensitive around associates, you can learn some good lessons from family and friends and different approaches they take.
Talk about it.  Meghan might argue that we do too much of this, but we have become better over the past two years of trying to discuss where we spend our money.  Let’s face it – there are things I want to spend money on that she just doesn’t (and will never) understand, and vice versa.  But we would both agree that discussions about purchases are easier when we are at least reading from the same book.  Discussing finances is not always easy, but we have found that doing so makes it much easier to reach the goals we have set together.
We realize that we are certainly not personal finance experts and have only a limited amount of experience with money.  We have only been married a short period of time, have never paid off a house, and have never sent the first child to college.  We will most certainly continue to change our spending habits over time.  We are still learning about each other first and foremost, but we realize that there are a lot of things in our future that will be a little easier to tackle with planning today. 
So wherever you are in your life – just starting out, trying to figure out a life with kids, or knocking on retirement’s door – it’s probably not a bad idea to give yourself a financial check up.  We can always make improvements, and there’s still a lot to learn.  For any of you out there who might have any recommendations for others, we'd love to hear them.
-Andy

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