Family & Marriage Finances 101 – The 14 Essentials Everyone Should Know

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There are two words that are very closely synonymous with the two words “family happiness” – those two words are “family finances”! Notice I didn’t say “family wealth” – happiness in a home, marriage, and family is most often directly correlated with parents’ ability to properly manage (not necessarily accumulate) and budget their finances. It is sadly true that over 80% of all divorces result, in one way or another, because of finances. More tragic than divorce is the fact that families are torn apart, children suffer and society feels the negative ramifications of this all too common reality.

At the outset, it is absolutely important to note that the 14 essential principles described below are not designed to teach people how to accumulate wealth by applying the principles described. The sole purpose in revealing and explaining these principles if for one purpose – to help marriages and people everywhere experience the family happiness that results from the application of simple financial principles. Will applying these principles require effort and change? Certainly! But doesn’t all that is good and useful in life also require constant change and effort?

Fortunately, with a little education, self-discipline, and effort, we can really make sure that our “family finances” lead to “family happiness”. May I suggest 14 ways to achieve this:

1) Set a budget and live within your means: First of all, do you even have a budget? If so, are you really making a living from it? Do you actually record all expenses, so that at the end of the month (when you sit down and look at the finances … no) you know where every penny has gone? At the end of the month, when looking at finances, did you buy something that you didn’t need? Respect your budget and live within your means!

2) Never accumulate consumer debt: Do you know the difference between good debt and consumer debt? Good debt is when you need to borrow money for some type of investment: a house, your education, or to start a business, etc. Consumer debt is simply buying anything on credit outside of these three areas. If you don’t have the money to buy it, don’t buy it!

3) Credit cards are not bad: Now above in point 2 I mentioned never to buy anything on credit that you don’t need or have money for. That’s not to say you can’t do your groceries or other expenses with a credit card (in fact, I encourage you to). The proper use of credit cards is essential to your financial success. What’s the right way to use a credit card? It’s simple: never use more than 25% of the credit limit, make your payments on time, and pay off the entire balance at the end of the month.

4) Understand the importance of building and protecting your credit: In my opinion, protecting your credit is just as important as protecting your social security number. Your financial future and your success depend on this ratio / score. Do you want lower rates, better jobs, bigger loans, better pay, etc.? That you’d better protect your credit. I tell people all the time that investing in identity theft protection is just as important as any life insurance program these days. Now do you know how to build and improve your score / report? It’s really simple: never use more than 25% of the credit limit, make your payments on time, and pay off the entire balance at the end of the month (that tells you something)!

5) ‘Wealth’ is not the accumulation of money, it is the good management of it: Our culture and our society certainly have a biased perception of what true wealth is. If, for example, an individual earns $ 1 million a year, we assume they are rich. Well, if that person spent $ 1.2 million that same year, it sure isn’t wealth, is it? In fact, the promotions and pay raises that we all look for in our jobs won’t do much if we increase our spending as our income grows. Robert Kiyosaki calls this habit the “rat race”. We need to learn how to properly budget, manage, save and invest our money – not just spend it. So the real “wealth” is getting out of this “rat race”, it’s financial independence, it’s passive income and it’s freedom of time. Now learn how to manage your money before it manages you! Both men and women would do well to change their perception of “how much my spouse can earn” to “how well they manage their finances”.

6) Self-discipline and self-control are essential: Self-discipline when it comes to money is far more important than any advanced course in accounting or financial management. Parents would do well to develop this ability, and they would be wise to teach it to their children. However, don’t get me wrong – “self-discipline” does not translate into self-denial or impoverishment. There is nothing wrong with buying “things” that are fun, entertaining, or that the kids would enjoy. Where the line needs to be drawn is in the questions “can we afford it” or “is it in our budget” or “do we really need this” and so on. And, ironically, self-discipline in financial matters will translate into self-discipline in other areas and aspects of life.

7) Record Record: That’s it, save! Now learn how to discipline yourself and budget for 10% of all income. Save for a rainy day, for retirement, for children’s college funds, vacations, investments, etc. Avoid consumer debt, prepare for disasters or unemployment and save 10% of all your income – ALWAYS!

8) The importance of insurance: Do you have adequate and adequate home insurance, life insurance, health insurance and automobile insurance? Otherwise, you potentially set yourself up for financial disaster. And, in our time, do you have protection against identity theft? This type of insurance is just as, if not more important.

9) Desires vs. Needs: Wise is the wife, husband, parent or child who can discipline themselves financially. The ability to sacrifice oneself, to do without, to economize, to be patient, and to determine wants versus needs is an attribute absolutely necessary for development; ironically, this attribute is not only needed for issues related to finance, but in every aspect of our life!

ten) Money is NOT evil: Unfortunately, the majority of people have stuck in their minds that money is evil. Money is NOT bad; it is the pride that people develop in owning and accumulating money that causes others to perceive money as “bad”. A wealthy person’s snobbish demeanor, patronizing comments, supposed superiority, and arrogant actions are what is “evil” – not money! “But money created pride,” some will say wrongly; no, the choice to become proud is what created the pride. Money is absolutely necessary for our daily survival; and if we choose, our excess money can also free up our time and create opportunities and resources that help and bless the lives of others. We need more people who choose to gain wealth for charity, and fewer people who develop the strength to suffer financially because they ignorantly believe that “money is evil”.

11) Communication and involvement are essential: If you are married, are you both involved, informed and co-decision makers in the financial affairs of the family? If not, the question itself should reveal the necessary changes that need to be made. Are the children just getting the money, or are they supposed to work and earn it? The child will be grateful, and the wise parent would be the parent for teaching their child this reality of real world life. And perhaps just as important, children learn the very principles described in this article – savings, compound interest, credit, insurance, wants vs needs, etc. ? The fact that this article even has to be written should suggest that our education system is not teaching these important principles, which should suggest that if a parent depends on others to teach their children these necessary financial principles – they will pay for it, literally. !

12) Invest in the appreciation of assets, not in the amortization of liabilities: How often are we personally guilty of ensuring that our car is equipped with the best features, that our clothes are updated with the latest fashions, or that our sheds and garages are filled with all the fun toys and tools? There is nothing wrong with having them (see point 13 below); However, how unfortunate it is that excess funds (or, worse yet, funds / debts obtained through credit) are used to get more toys, cars and clothes rather than assets that will appreciate over time . The key to financial independence is not achieved through salary increases, promotions, 401 (k) or even the lottery – it is achieved by applying the principles discussed in this article and, more importantly, , by buying valuable assets rather than amortizing liabilities. .

13) Be balanced and enjoy life too: Sometimes I read articles from couples saving every penny (literally) to be able to retire at 40. Some are able to do it, and so much the better for them. But let’s be realistic and enjoy life too. Maybe it’s setting aside a few hundred dollars a month, or just $ 20 – but take your wife on a date, get your kids pizza, go to the movies, etc. Have fun and be balanced!

14) Give and you will receive: Ironic that it’s on the list – but it’s not the last suggesting it’s the least important. In fact, he should be number one on this list! Now learn the great truth that when you give you will receive. Everyone’s “giving” will be different. For some, it might mean giving to a charity, giving to a neighbor, a church, a family member, etc. But, give without expectation or thought of reward or return, and you will receive much more in return, one way or another. sort of, but it will happen!

In conclusion, never forget that it’s not about saving, budgeting, or investing properly – it’s about happiness in your marriage and family life. A good credit rating, a large bank account, an excellent insurance policy, and even a healthy retirement account are comparatively insignificant compared to marital and family happiness, which can be achieved by applying the above principles.



Source by Matthew Toone

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