A few weeks ago I had a “WOAH” moment about our finances. I had reviewed our monthly spending and was shocked at some of the numbers. At one point I even recall audibly saying, “We spent how much on food?!” and called Brandon over to the table to look at the numbers with me because surely my eyes were deceiving me. They weren’t. We had spent an insane amount of money at restaurants and cafes so we knew something had to change.
Fortunately, it wasn’t a crushing financial moment. Brandon and I already make responsible decisions with our income and the money we spent was money we had allocated to be spent. We just hadn’t intended to spend almost our entire entertainment budget on food. It had been intended to cover concerts, movies, festivals, and dining out. We sat down and reviewed a local calendar of events for things happening in and around the city throughout the next month or two so we can break our entertainment budget down a bit more and make sure we enjoy both going out and dining out.
Anyway, the point of all of that is that my oh-my-god moment wasn’t a crushing moment because we have learned to make intelligent money decisions, especially on payday. In fact, there are 3 main rules that we have that help us manage our dollars and keep from finding ourselves broke on the week between paychecks.
Rule 1 – Add to our savings account
It’s a common personal finance rule to “pay yourself first” and we adhere to that very strongly in our finances. We have already maxed out our 401k contributions through our employers but we still make sure to put 10% of our paychecks into savings. Yes, in most cases you can borrow from your 401k in case of an emergency but you don’t actually want to do that. Your 401k should be for retirement and your savings account should be for emergencies and your family.
In most cases you can set up your direct deposit to send 10% to your savings account and 90% to your checking account but I prefer to transfer the money myself. Seeing the money, making the decision, and completing the transfer, is a mental victory for me. It encourages me to remain mindful of my money and consciously develop better finance habits.
Rule 2 – Pay your bills
I can’t even begin to tell you how many people I know that receive their paycheck, go out for the weekend, and then sit down 3 – 4 days later to look at how much they have left and which bills they need to pay. That’s exactly the way you should manage your money if you want to have a great time but don’t care about whether your bills are paid or not.
We don’t go out on payday unless we’re spending money that was aside for entertainment during the previous pay period. Friday night is, not-so-excitedly, for paying bills. That helps us make sure everything is up to date, no late fees are being accrued, and our credit scores stay looking good.
Rule 3 – Budget the balance
Now that you’ve added money to your savings account and paid your bills, what’s left? Sit down together and allocate those remaining dollars until every dollar is budgeted somewhere. In our budget that usually means sitting aside money for groceries, gas, parking garages, dogs, entertainment, etc. You could also factor in pharmacy, clothes, crafts/hobbies, etc. It just depends on your lifestyle.
Once we’ve allocated money to each remaining budget category, we will usually review our month ahead in my planner (I love this one from Create 365) and schedule our dates (like our weekly Saturday Pancakes) and other events. It helps keep us on track and focused.
We also have what we refer to as “Money Monday” which means that every Monday night we sit down together and go over bank balances, cash-on-hand, and budget plans for the week ahead. It keeps us both involved and aware of the state of our finances and it keeps those dreaded money fights at bay.
We keep our household budget in a budget planner that stays in our home office so that we always have our financial data available and can review it at a glance.
What are your best money management tips? Any marriage + money tips to share?