Tuesday, March 26, 2013

Frugal Newlyweds Financial Guide Part 4: Financial Checkups

If you are new to this series, welcome!  This series provides engaged and newlywed couples a financial guide to the road bumps that happen when you get married.  Here's a list of what you have missed.

Part 1: Gave information on learning about your own and your spouse's financial family tree.
Part 2: Use this spreadsheet or create your own to help you sort through each other's financial accounts.  Determine which accounts to save, which to close, look at changing and adding names and beneficiaries.  This is essentially the nuts and bolts of combining your finances.
Part 3:  Plan your future.  Look over your finances and determine your goals.  I gave a list of goals from most important to least important that you can use.

Today we finish with Part 4: Financial Check ups.  Just like it is important to regularly go see your dentist even if you brush your teeth every day, it is just as important to have regular financial check ups no matter how well you think you control your spending.  My husband and I do brief checks on our finances each week and a slightly more in depth look each month and then normally around New Years we reflect over the year and determine our new goals.  All in all it doesn't take that much time and by doing this we have been able to save about 50% of our income, while giving and living a great life.  Remember, I'm just a teacher and he works construction, so it can be done.

Weekly Financial Check Up Basics:

Open up your Mint.com account.  It should have all of your accounts linked to it.  If it doesn't make sure to add them.  If you don't like Mint then you should have some other program like Quicken or use a spreadsheet system.  I have found that Mint has worked great for me for over six years, so I would recommend it to anyone.

Scan through all of your purchases for the week.  Make sure they have been categorized correctly.  Look at the trends section to see how your overall spending is looking for the month.  If you spent a lot this week, you might want to tone it back some.  Determine what areas you might cut back on.

That is all you really need to do each week.  If you do this step, it will really simplify to the other check ups.  I have to admit that sometimes we have gotten really busy and didn't check the categories in mint for a while.  We ended up with a bunch of uncategorized transactions and we couldn't remember what we had bought (Wal-Mart can mean so many different categories for us).  Make sure to stay on top of this!

Monthly Financial Check Up Basics:

This needs to completed with your spouse.  As with any conversation that is important, make sure you have both eaten and are relatively well rested.  It is amazing how much better it goes if you do those two things.

Open up Mint.com and get our your goal sheet.  If you had debt, look at whether you are reaching your monthly goals toward paying it off.  Celebrate if you actually were able to pay off an account entirely.  I have vivid memories of when my parents paid off their mortgage.  It was a big thing in our house and made a huge impression on me of what a positive feeling you get when you pay something off.

Check out your emergency fund.  Did you need to use it this month?  If so, you might want to plan on putting future savings towards building it back up.

If you don't have any debt and your emergency fund is in good shape, then look at how you are progressing towards your goals (future home, car, retirement).  In Mint you can create goals and it shows you graphs of how you are doing.  We currently have our early retirement goal in mint and it is fun to see how we are doing on the thermometer graph.  As a math person, I can't get enough of graphs.

Finally, reflect on your purchases and your happiness.  Were there any purchases that you made that were unnecessary and didn't really bring you much happiness?  Companies spend billions of dollars to convince you that you are unhappy and that you will only be happy when you have their product.  Be smart.  Analyze. Are you really happier?  The more often you do this happiness inventory to easier it will be for you to make smart purchases.  Be careful before dissing a purchase that your significant other made before they analyze the happiness level it gave them.  Never forget that your marriage should be priceless, so before getting into a discussion over something they bought determine if it is really worth it.

Yearly Financial Check Up Basics:

To be honest your yearly financial check up should just be a rerun of Part 3: Financial Goals.  It is so important to make goals together, because either you are working together toward the same goal or else you are slowly splitting up.  Make sure you can come up with things to work together towards.  It will bring you so much closer and make your marriage much more fulfilling.

What do you do if you don't have the same goals?  First, you should really pray about it if you have any faith at all.  I am a very strong willed person so I will be convinced of one thing and my husband might quietly be pushing for something different.  However, when I slow down, calm my brain and really think about it, many times I am surprised that I actually agree with him.  If it is something that is extremely far away in the future, put of the debate for a while.  Things might happen and your argument wouldn't even be needed.  A good example of this is a couple to argued about where she would have a baby when they would have kids (he wanted hospital and she wanted home or a birth center), but it turned out they weren't able to have kids at all and ended up adopting.

Make sure to reflect on how last year's goals went.  Maybe you had a certain savings goal and you didn't reach it.  This is okay as long as you reflect on what happened that year to prevent it (maybe a health issue, etc.).  If you are a compulsive shopper, find out what your trigger is for that behavior.  Once you have identified the trigger (maybe driving by a certain store), avoid that trigger like the plague.  What happens is when you go by that trigger your body pretty much goes into zombie habit mode and wants to finish the script that you have been doing every time that you go by that trigger.  A good example of this would be a habit of buying coffee every morning (I drive McD's and it is always packed, so someone must have this habit).  You need to start making the coffee yourself and maybe plan a different way to drive that avoids going right by your typical coffee place.  

If you reached your goals you really need to celebrate.  My husband and I saved for four years before we bought a house.  At the beginning saving was really new and exciting as we kept track of it in mint and I created a graph in excel.  In the middle though it started to lose that sparkle and we really had to create incentives to make it fun.  I promise it will be worth it in the end.


If you follow all four parts of the newlywed financial guide you should really have a rock solid financial marriage.  However a word of caution: Make sure money is not the only focus in your marriage.  Money is just a tool.  You can just use it for yourself or I believe you can make the better choice which is sharing it.  Find charities that you believe and donate not only your money, but your time as well.  You will get much more out of giving than just hoarding.  Good luck and let me know if you have any other ideas or tools that you would want added to improve this series!

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