Marriage and Family Finances 101: The 14 Essentials Everyone Should Know

There are two words that are very close to the two words “family happiness.” Those two words are “family finances”! Note that I did not say ‘family wealth’: Happiness in the home, marriage, and family often directly correlates with parents’ ability to properly manage (not necessarily accumulate) and budget their finances. Unfortunately, it is true that more than 80% of all divorces occur, in one form or another, due to finances. More tragic than divorce is the fact that families are separating, children are suffering, and society is feeling the negative ramifications of this all-too-common reality.

To begin with, it is absolutely important to note that the 14 essential principles outlined below are not designed to teach people how to build wealth by applying the principles outlined. The sole purpose of revealing and explaining these principles is for one purpose: to help married couples and people around the world 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 everything good and valuable 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’ result in ‘family happiness’. I can suggest 14 ways how to achieve this:

1) Set a budget and live within your means: First, do you even have a budget? If so, do you really live it? Do you really record all the expenses, so that at the end of the month (when you sit down and go over finances … correct) you know where every penny has gone? At the end of the month, while you are reviewing your finances, did you buy something you didn’t need? Stick to the budget and live within your means!

2) Never accumulate consumer debt: Do you know the difference between Good Debt vs. Consumer debt? Good debt is when you have 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, in point 2, I mentioned never buy anything on credit that you don’t need or have money to. That doesn’t mean you can’t buy your groceries or other expenses with a credit card (in fact, I encourage you to do so). Proper use of credit cards is essential to your financial success. What is the correct 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 that report / score. Do you want lower rates, better jobs, bigger loans, better wages, etc.? Of which it is better that you protect your credit. I tell people all the time that investing in Identity Theft Protection is as important as any life insurance program today. Now, do you know how to build and improve your score / report? It really is simple: never use more than 25% of the credit limit, make your payments on time, and pay the balance in full at the end of the month (sounds familiar).

5) ‘Wealth’ is not the accumulation of money, it is the proper management of it: Our culture and our society certainly have a skewed perception of what true wealth is. If, for example, an individual earns $ 1 million a year, we assume that he is rich. Well, if that person spent $ 1.2 million that same year, that’s certainly not wealth, right? In fact, the promotions and salary increases that we all seek in our jobs will do little if we increase our expenses as our income increases. Robert Kiyosaki refers to this habit as 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 coming out of this ‘rat race’, it is financial independence, it is passive income, and it is time freedom. Learn now 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 skill, and it would be wise to teach it to their children. However, don’t get it wrong: “self-discipline” does not translate into self-denial or impoverishment. There is nothing wrong with buying “things” that are fun, entertaining, or that children enjoy. Where the line should be drawn is in the questions ‘can we afford this’ or ‘this is in our budget’ or ‘we really need this’ etc. And ironically, self-discipline in financial matters will translate into self-discipline in other areas and aspects of life.

7) Save save: That’s it, just save! Learn now to discipline yourself and budget for 10% of all profits. Save for a rainy day, for retirement, for children’s college funds, vacations, investments, etc. Avoid consumer debt, prepare for disaster or unemployment, and save 10% of all profits, ALWAYS!

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

9) Wants vs. Needs: Sabia is the wife, husband, father or son who can discipline himself financially. The ability to sacrifice, do without, save, be patient, and determine wants versus needs is an absolutely necessary attribute to develop; Ironically, this attribute is not only necessary for matters related to finances, but for all aspects of our lives!

10) Money is NOT evil: Unfortunately, most people have engraved in their minds that money is bad. The money is not bad; it is the pride that people develop in owning and accumulating money that causes others to perceive money as “evil.” A rich person’s snobbish attitude, patronizing comments, supposed superiority, and arrogant actions are what “evil” is, not money! “But money created pride,” some may say wrongly; no, the decision 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 other people’s lives. We need more people who choose to acquire wealth for charitable purposes and fewer people who develop the strength to suffer financially because they ignorantly believe that ‘money is bad’.

eleven) Communication and participation are essential: If you are married, are you both involved, informed, and in partnership with the decision-makers in the family’s financial affairs? Otherwise, the same question should reveal the necessary changes that need to be made. Are children simply given money or are they expected to work and earn it? The child will be grateful, and the father will be wise for teaching his son this reality of life in the real world. And perhaps equally important, are children taught the same principles that are outlined in this article: savings, compound interest, credit, insurance, wants vs. needs, etc.? The fact that this article even needs to be written should suggest that our educational system does not teach these important principles, which should suggest that if any parent depends on others to teach their children these necessary financial principles, they will pay for it, literally. !

12) Invest in asset appreciation, not liability depreciationHow often are we personally guilty of making sure our car is loaded with the best features, that our clothes are up to date with the latest fashions, or that our sheds and garages are stocked with all the fun toys and tools? There is nothing necessarily wrong with having these (see # 13 below); However, how unfortunate it is when surplus funds (or worse, funds / debts obtained from credit) go to obtain more toys, cars and clothes instead of assets that will appreciate over time. The key to financial independence is not obtained through raises, promotions, 401 (k) or even the lottery; It is obtained by applying the principles discussed in this article and, more importantly, buying appreciable assets rather than depreciating liabilities. .

13) Be balanced and enjoy life too: Sometimes I read articles from couples saving every penny (literally) so they can retire at 40. Some can do this, and it is good for them. But let’s face it 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, take your kids out for pizza, go out to the movies, etc. Have fun and keep your balance!

14) Give and you will receive: It’s ironic that this is on the list, but it doesn’t suggest that it’s the least important. In fact, it should be number one on this list! Learn now the great truth that when you give, you will receive. The ‘giving’ will be different for everyone. For some, it may 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 so much more in return, somehow somehow, but it will happen!

In conclusion, never forget that it is not about saving, budgeting or investing properly, it is about happiness in your marriage and family life. A good credit score, a great 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.