Family Finance
Module 4: I (with all my quirks) do take thee (hopefully with none of thy quirks)

Have you read the quote over there on the right?

I know it’s a childish nursery rhyme and is barely appropriate in today’s fat-free world, but it remains one of the simplest truths of peaceful co-habitation.

Jack Sprat eats lean, his wife eats fat.

Jack could dig his heels in and demand that his wife learn to eat lean, and Mrs. Sprat might waste years nagging Jack to at least try a bit of fat. Or they could enrich both of their lives accepting each other for who they are, accommodating their differences, appreciating the benefits of being individuals and enjoying their time together.

It’s the things that make us different, that make us special, that give us a little sparkle. What do you think it was that made you fall in love in the first place? It was the magic of a human being showing themselves in all their glory when allowed to express who they really are and being admired for it

Part One

Spend on What Makes You Happy!

In every decision, from which bathroom tiles to where to go for holiday, we consciously or unconsciously express our individuality. Respecting that individuality is key to harmonious living. And so it is with money. It is very much so with money. If each person were allowed to spend money on the things that give him or her happiness, being happy would lead to a happy shared life.

Yeah right! I can see the primary earner among you, recoiling in horror just thinking of the consequences of turning to the other partner and saying “From now on honey, you can buy whatever makes you happy, that’ll solve all our money problems.”

But wait, I haven’t gone completely mad, there is another piece to the jigsaw.

As important as respect is, there is another “r” that must go hand in hand with it to make it work. That’s Responsibility.

Part Two

Respect and Responsibility

I’m not advocating that anyone start stomping their feet on the floor like a spoilt brat demanding to have the latest techno gadget just to express their inner child.

If you want something and you need to have money to buy it, then it is important to be responsible about where that money is coming from. There is immense pressure on the family earner to provide. Sitting down together and making a spending plan that includes the things you both want, adding a splash of individual wants and planning for the income to cover it is a sure fire way to easing that pressure.

The numbers may remain the same, but the environment changes for the better.

In turn, if you are the provider and a partner wants something that you feel is frivolous, it is not up to you to judge or reign in the purse strings just because you might not hold it to be of equal importance. There must be two –way conversation and agreement.

And this does not apply just to partners.

One client and his wife, who also worked, had postponed plans to reduce the hours the husband worked because they were saving extra money to put their second son through university. I asked them if their son was taking responsibility for some of the finances required. It transpired that not only was the son not preparing financially; he was dragging his heels to prepare academically also.

I suggested that they go home and ask their son if what they were planning to provide for, was what he wanted them to provide him with.

The answer was a resounding No!

He wanted to take an apprenticeship in motor mechanics. His best friend was the son of a large garage owner. From hanging out at the garage, the owner noticed that the boy had an exceptional interest and understanding of the finer electronics of newer cars. He wanted to take him on to train him and PAY him while doing it.

The parents had planned the family financial future, without discussion with the person who was driving a large part of their decision making. Their increasingly reticent son became enthused when they actually asked him what he would like and his enthusiasm was so contagious they could see it was the right thing for him to do. The parents subsequently began the process of gearing down their income requirements.

There is no substitute for open discussion in a respectful environment. Children will learn more from you about attitude to and expectations of money than anywhere else. Why not include them as early as possible in healthy financial planning and responsibility.

I know children as young as 8 years old who trade their own stock market account on-line. Give them the information; give them the respect to contribute to decision making, give them the chance and you might be amazed at the wisdom that resides in small heads.

Part Three

4-Way Action

In the “4-way” action item below you are guided to divide your expense list into:

  • Must Haves (MH)
  • Nice to Haves (NTH)
  • Investments (I)
  • DR

MH’s are those expense items without which your life would not function such as food.

NTH’s are those items that you could do without if you had to such as the weekly trip to MacDonalds for example.

I’s are those items that you pay from which you get some kind of return, such as pensions.

DR’s are monies you pay to repay debt such as loan payments or car payments.

Let’s talk some more about the ‘must haves’.

Part Four

Here is the key to MH’s.

We all have to pay our electricity bills and feed ourselves. And for some of you, you must have a car to get to work so your car, car tax and insurance are vital. Less obvious yet equally vital to are some of those items may appear frivolous but without which life would seem stripped of any pleasure. It has to be said that equally important as feeding our bodies is feeding our minds and our spirit.

You can give me three square meals a day every day but if I don’t have a good book on the go life’s not worth living. I jest, but only just. It is absolutely true that key to my health is a monthly massage. It releases stress, unblocks pains, prevents illness, re-energizes me and is vital time out in this busy working mother’s life. For me, a monthly massage is a “MH”. For someone else that may be a frivolity, for another person just once a month would be draconian.

The point is, each person knows what is vital to him or her. We will all have similar lists up to 90%. The other 10% will be individual and reflects who you are and what is important to you. What must you have in order to feel that you are living and not just existing?

As well as a tool for mutual financial understanding and planning this exercise is a tool to help you identify ways of increasing your net monthly profit. Your first target is for a 10% monthly net profit at least. This is the magic figure, according to timeless mathematical and spiritual principles that you need to put aside for tomorrow. The rest you can enjoy today.

Enough information. It’s time to do. Lets get into this week’s action list and place another stake on your road to financial harmony.

Action!

Actions of the Week

1. The 4 way exercise (separately)

Take your expenses list from last week and do this “4 way” exercise.

  • First mark all your MH’s according to the notes in this lesson in one colour with a highlighter.
  • Then mark all your I’s in a second colour.
  • Next mark your Dr’s.
  • The remainder are your NTH’s.

Then get together to discuss and compare your results.

2. Improve your net income figure (separately)

Take your NTH list and go through them one by one.

  • Mark the items that you are paying for that no longer give you any pleasure or enough pleasure to make it worthwhile spending your hard earned cash on.
  • Mark items that you feel guilty paying for, (such as a gym membership you never use).
  • And ask yourself on each item ” Is this item (or a percentage of this item) worth more than my future financial security?”
  • When you have examined how you feel about each NTH, make a list of the items you want to dump.
  • Add up the amount of money you will save by doing this. Congratulations, you have just improved your “net income” by this amount EVERY month.

Again, get together to discuss and compare your results.

3. The magic 10% (together)

Draw up a financial plan based on today’s numbers that gives you 10% monthly net profit. Respect your individual needs and your common goal.

4. The other 90% can be magic too. (together)

Remember that your money is a means to allow you to live your life the way you dreamed about when you got together. Have fun planning how you are going to spend the other 90% as a family.

Be flexible playing around with your expenses. It’s a bit like buying new clothes; you go into a shop, try something on, it fits or it doesn’t, you keep it or you don’t and you move on. Keep it as light and easy as that.

If you dropped your weekly drink in the pub off your Must Have list but find you can’t live without it, put it back. If you thought you couldn’t live without your ciggies but find that actually you’d rather put the money towards that round the world trip, change the numbers and see what that does to your financial picture.

You are in charge.