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I’ve had a bank account since I started working at the age of 16. My mother was the sole manager of our family’s finances and instilled within me the principle of financial responsibility at an early age. I am very proud to say that in 17 years, I’ve yet to fall into debt.
When my husband and I got married, we naturally had to merge our ways of managing finances. While it was difficult for me to relinquish some financial control to my husband, we agreed that it was the right thing to do in our marriage. While I still contribute significant input, my husband is responsible for much of our finances.
So how have we managed to stay debt-free? Here are some of the principles that guide our financial decisions:
1. We are judicious when it comes to credit card use. There was a time when I felt like I owned a credit card for each store at the mall. I’ve since closed all of those accounts and both of us have committed to using just two credit cards. My husband and I have also committed to paying our credit cards in full each month to avoid added finance charges.
2. We do our homework. When it’s time for a major purchase or an unexpected expense arises, I am the one that does the research. My husband often teases me about how long it takes for me to make a major financial decision. However, the extra time I spend finding the best price typically saves us a significant amount of money.
3. We live within our means. While this principle seems basic enough, if we don’t have the money, we don’t make a purchase. Very often this means that my husband or I have to delay a purchase until we have the money to pay for it.
4. We strive to save for a rainy day. I will admit that up until last year, my husband and I were diligent about maintaining our savings. After our daughter was born, I dropped my hours to the minimum needed to maintain my status as an RN. While we don’t regret this decision to make our family a priority, the result was a gradual depletion in our savings. If ever there was a time to bulk up our savings, it’s now. We never know when a car will need a major service (as was the case just one month ago) or our home will need to be maintenanced. It is always wise to have several months of expenses saved up in the event of a change in employment status, illness, or other major life event.
5. We are working towards establishing a budget. This has been our greatest challenge, mostly because our expenses vary from week to week. Both my husband and I have erratic work schedules and there are times when we eat out more in one week than others. Apart from our typical monthly expenses (mortgage, utilities, cable/phone/internet, etc.), we spend a significant amount of money on food and gas. Neither my husband nor I shop for clothing, electronics, or other items unless there is something specific that we need. We are currently looking at software programs to assist in our budgeting needs (any recommendations?).
6. We are planning for the future. Both my husband and I are committed to contributing to our 401K in order to plan for that oh-so-distant day in the future when we might retire. It’s worth looking at your employer’s retirement plan to see if it is worth contributing to. Some initial questions you might want to ask your employer include finding out about the plans offered and how much the company will match.
7. We seek the guidance of financial advisors. Several years ago, when my husband and I returned home from the UK with income, we opted to seek the assistance of a tax accountant. Because of the nature of our careers, we continue to elicit his assistance when filing for taxes.
While we are by no means experts in the area of money management, we’ve found that with a little restraint and planning, we’ve managed to remain debt-free.
What are your best tips for managing finances in your home?
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Great tips, Caryn!