Part Two

Putting First Things First

That’s why in the first module we’re not going to talk about money at all. Your partnership is, most importantly, about love and dreams. It’s about mutual respect and tenderness.  Money is there to serve as a tool to provide you both with a means to be, do, see and have all the wonderful things you planned in those early heady days of hope and excitement.

Take a moment to remember that now.  Remember why you got together in the first place.  Feel those feelings and take them with you as you go.

There is no right or wrong in money management. “I’ll take the high road and you take the low road” is not the approach you are looking for.  I want you both to take the shortest, fastest road, with lots of lovely lay-bys to stop and enjoy…well, the view of course.

We’re probably going to stir up some lurking discomforts for each of you individually and within your relationship.  If we do and you experience uncomfortable moments, remember that first and foremost you love your partner.  Be respectful in all communication.

Part Three

Your Safety Net

If all else fails, here’s the ultimate safety net.

It was a wedding present to me from the wisest woman in the world.  As a dear friend, she asked me what I would like from her as a gift for my wedding, (yes to the same boyfriend).  I replied, (knowing my dear friend was also a respected psychotherapist and counsellor), “Give me something that will help me during the difficult times I know we certainly will face.”

Soon a package arrived containing a simple wooden carving of two people in a warm embrace… but with instructions.  We were to accept if we both agreed that this figure would represent a request to give serious consideration to a deeply important issue.

It was addressed to both of us and here’s what it said.

In your marriage you will have times when you have something to say but you feel the other person is not hearing/listening/respecting you and you feel you have tried everything else.

When this time comes, pick up the carving and hold it in your hand.  While you hold the carving the other person is to stop what they are doing and listen to everything you have to say.  As long as you hold the carving they may not answer, interrupt, question or leave.  They must sit quietly and just listen.  When you have finished, put the carving down.

The other person can choose to pick it up or not – to reply or not.  If they want to reply, they pick up the carving and hold it and have their say. They may wait several days before picking up the piece and responding they may choose not to respond ever. That is their right. You cannot force a response, you may not even need a response.

The carving represents respectful communication on deeply important issues. It is not an excuse to hold someone prisoner while you berate them or tell them everything that is wrong with what they are doing.

Do not abuse it. Use it wisely and yours could be the 1 in 3 partnerships that succeeds.

I now pass this gift on to you as you begin this journey together.

Thomas J. Stanley in his book “The Millionaire Mind” states,  “Having a common interest in wealth-building activities is a key for couples who wish to become financially independent”.

Congratulations on being one of those couples. And now you are equipped to handle yourself with dignity, integrity, kindness and understanding as you progress. I wish you success!

Part Four

What We Will Be Doing

Every week over the next six weeks, I will be setting you tasks divided into two elements.

1. First you will have a task or tasks designed to help you identify and build your own personal and mutual financial psychology.
   These tasks will help you find out why you do what you do financially. They will weed out the bad habits and build on the good habits. Believe it or not, this is where 80% of money management lives.
2. Secondly you will have tasks that are simple numbers exercises.
   These are designed, step by step; to build up a real accounts based blueprint for your family life.

As you go through the action items in each module, you will be guided to do some independently, then get together to discuss the results. In the exercises take turns to go first, always listen all the way to the end of what each person is saying before commenting.

Any not so positive comment must be sandwiched between two positive comments.

When sharing your results create a space where you both are comfortable and will have no interruptions.  Do not allow discussions to trail all through your everyday conversations.

Action!

Actions of the Week

1. Choose an object to represent your need to be heard.

If you both agree, buy an object or select one you already have, that will represent your need to speak and be heard in quiet acceptance.

2. Why are you doing this course? (separately)

• What will it mean to you if you change your financial habits now and take charge of your financial life?
• What will it really mean for your future to be comfortable and confident in handling your money?
• Who do you want to become financially?
• What things will you be able to give yourself and those you care for?
• What experiences will you be able to have and what experiences will you be able to share with others?
• Close your eyes for a moment and see yourself in 12 months having taken control of your money? How does that feel?
• See yourself in 5 years and 10 and 20 years? How will your life be different if you complete this course starting now?

3. Why are you doing this course again? (separately)

Now, answer all the same questions again but this time see yourself in 5, 10 and 20 years NOT having taken control of your finances.

• What will your life be like if you just keep on doing what you have been doing up to now?
• What will that cost you?
• What will it do to your health, your relationships, and your day to day life?
• What things or experiences will you never have?
• How does that future feel to you?

4. Significant Financial Others (separately)

When you are part of a family, the decisions you make impact others. While you may have chosen to take this course, others in your family may not have. It is not your job to make them learn what you want to learn, not to instruct them second hand.

So, make a list of the people impacted by your decision to examine and/or restructure your attitudes and management of your finances. How will these people be impacted, physically, emotionally and financially? Do they know about and/or support you in following this programme?

• List three ways in which they will be benefited by your following this programme
• List three ways in which they may be threatened by your following this programme?
• List three ways in which you can minimise any unpleasant impact for these people?

5. Your first lay-by (together)

Do something enjoyable together now. Don’t skip this. This is your first stop off on the road to financial peace of mind. Take the time out and you will not only make it to the end of the road, you will also enjoy the journey together. Reward yourselves (both of you) for taking this first step.

That’s it for this module. Easy wasn’t it. See you next week when we’ll be getting into your first numbers exercise.

Part Two

Make up your own rules

Today’s society is such a mixture of cultures and concepts. Many different traditions are blending and producing ever-new solutions to age-old arrangements.

There are all kinds of partnerships.

• We have the traditional male/female but with or without family, in one or two family homes, in one or two different geographical locations.
• Then we have similar single gender arrangements.
• Some people choose the wife/mistress, husband/lover arrangements.
• Some are doing shared housing only situations.
• Many families have grown up children living at home longer than ever before.

I could go on. The permutations are endless. All are equally valid and all require a complete openness when establishing a supportive financial structure.

Within all the possible partnership arrangements, there are sub considerations.

• Who is earning more?
• Who has the greatest earning potential?
• Will there be children?
• If so, who will be the primary carer, if there is to be one at all.
• What are the natural strengths and/or ambitions of each partner?
• Who wants to go out to work, who doesn’t?
• Who is self-employed, has flexible working practices or works part time?

And so on and so on. You get the picture.

As a financial coach, married to a financial coach, I have had the opportunity to witness some of the simplest and most bizzare financial arrangements you can imagine. From splitting everything down the middle to the last penny, to total sharing complete with joint accounts, to separate but contributing equally/percentage per income, to detailed pre nups for future financial gain, you name it.

The only rule is that there are no rules. There are only tools. Each to their own.

And therein lies the key.

Part Three

Your Financial Partnership

The elements are all the same. How each partnership selects and collates those elements is entirely a matter of choice.

It might seem the simple solution is to just let the person who knows the most about money, or is the most comfortable with money or is willing to assume responsibility for money take control. However, while it may seem obvious, evidence suggests that the long-term effect of allowing another person to be in charge of your financial arrangements to your exclusion has a seriously detrimental effect on both parties.

It is said that health and wealth are the two areas in which one should never give up personal responsibility. I agree entirely.

For a healthy financial partnership to last, the structure must not be the one delivered by the biggest earner, or the one who manages the household accounts or the one assumed by the person who has the best financial knowledge. A healthy financial structure is one, which allows for the needs of both parties, regardless of earning power or past history.

The problem is that most of us have never examined for ourselves the financial attitudes we bring from our past to our new situation. If we don’t know ourselves financially, how can we be expected to communicate our needs to a partner and contribute to a new structure that supports both.

In this module the action items are designed to have you take a look at what habits and attitudes you may have brought with you to your new partnership. If they serve you great. If they don’t dump them and start afresh.

Remember when you were getting together with two of everything. Two mixers, two toasters, two televisions, two houses etc. Some things it’s great to have two of, some it is just a waste and some are in direct conflict. Some things are missing.

Take a look at what you have and have fun designing a new arrangement made up with the best of both.

You will also begin your first numbers exercise. It is your net worth. Do it separately or together, whichever suits your chosen arrangement.

Part Four

1. Your money & your mind. (separately)

• What did you learn from your father about money? (adapt to suit the particular arrangement of your original family)
• What did you learn from your mother about money?
• What did you learn about money at school?
• Are the people who shaped you financially, financially secure?
• What patterns do you have around money that get you in trouble?
• What does money mean to you?
• If there was one thing about yourself and money that you would change, what would that be?
• What do you believe about yourself and money?

2. Money & your partners mind. (separately)

List the top three things that your partner does financially that you admire.

3 Money & your partners mind again. (separately)

If there was one thing that you dislike about the way your partner handles money, what would that be and why?

Part Five

4. What are you worth?

In financial terms this exercise is about establishing your “Net Worth.” What that means is that you will add up what you own, subtract what you owe and the result is your “Net Worth.”

In the next few paragraphs, I have given you easy to follow instructions on how to complete this first exercise. I recommend you take a moment and read all the way to the end to get an overview before beginning back here with item number 1.

The entire exercise should take you less than 2 hours in total during the next week although you may have to take some time in between the beginning and the finish for some of your questions to be answered. You need to pick one day (today sounds good) and add up everything you own and everything you owe on that day.

Round off numbers to the nearest £. Estimate conservatively. If you are not sure of a value, make a good guess. Getting the picture 90% correct and finished is better than aiming for 100% accurate and never getting there.

Your Assets (everything you own)

In your notebook on a new page write “Assets” across the top and underneath list the following headings shown in Italics in the following order.

1. Investment in Real Estate
(Do not include your home). Write the current market value of any real estate you own. If you own more than one piece of real estate list them separately and their value.

2. Investment in Business
Write the current market value.

3. Partnerships
Write the current market value of any investment you have in partnership with someone else.

4. Art, Collectibles, Autos etc.
Write the current market value of any collectible items you own.

Now add 1-4 together and that total is your “Illiquid Assets.”

What that tells you is the total value of the things you own that would take some time to sell and turn into hard cash if you wanted to.

Draw a line under this total and call it Total A

Leave a line and continue with:

5. Monies owed to you
(Also known as Debtors or accounts receivable). List the people who owe you money and how much they owe.

6. Pension Plan
Write down the current surrender value. If you don’t know this, just call up your pension company and ask them for the surrender value. It may be zero.

7. Life Insurance
Write down the current surrender value. Again, if you don’t know the answer, call up your insurance company and ask them for the surrender value. It may be zero

8. Stocks, Bonds
Write down the current value of any stocks or bonds that you own. If you do not know, call up your broker and ask them for the current value of your account.

Now add 5-8 together and that total is your “Liquid Assets“.

What that tells you is the total value of things you own that are easily sold and converted into cash if you need them.

Draw a line under this total and call it Total B

Next:

9. Cash
Count all the cash you have in your pockets, purse and piggy banks and write down the total.

10. Cash Equivalents
This is money in bank accounts, credit unions, money market accounts, the Post Office and so on. Write down all the money you have in all your accounts.

Now add 9-10 together and your total is your “Capital currently Available (uninvested)“.

What that tells you is the amount of money that you have in cash or an easily accessible account that you could use easily.

Draw a line under this total and call it Total C

11. Your principal residence
Write the current market value of your home.

12. Personal property
Write a list of the things you own such as jewellery, furnishings, cars etc and estimate what you would receive for them if you had to sell them today.

And finally for this part, add Total A + Total B + Total C, together with the answer from numbers 11 and 12 and that total is your “Total Assets“.

What this tells you is the value of everything you own if you had to sell it all today.

Draw a line under this value and call it Total X

But of course even if you sold everything you had today and had the money in your pocket, before you could go on a spending spree, you would have to pay anyone you owed money to first.

So let’s find out about the money you owe.

Part Six

Your Liabilities (everything you owe)

In your notebook on another new page write “Liabilities” across the top and underneath list the following headings shown in Italics in the following order.

13. Accounts Payable
This refers to bills such as for electricity or telephone, which you have received but have not yet paid. List them and their value.

14. Business Loan.
Write down any monies that you may have been loaned to put into a business.

15. Credit card balances
List your credit cards and their balances.

16. Lines of Credit
This includes hire purchase or lease agreements such as for a car and shop credit like store cards. List them and how much you owe to each one.

17. Mortgage
Write the amount outstanding on your mortgage today.

Now add 13-17 together and your total is your “Current Liabilities”

What that tells you is the amount of money that you owe if you had to pay everything you owe today.

Draw a line under this total and call it Total Y

Next, one last calculation and you are done.

Result!

Your Net Worth

Take your total Assets (Total X) and subtract your total Liabilities (Total Y) to give you your “Net Worth“.

When you take your liabilities from your assets, this tells you the amount of money you are worth today. If you were to sell everything you own, pay all your debts and walk away with all you possess in your pockets, it would be this amount.

That’s all there is to it, so go back now to the start of this Net Worth exercise and strut your stuff. Focus on one item at a time. When you don’t know the answer, pick up the phone and ask the person who does.

Net Worth is best calculated at least annually. However, in the beginning of learning about your finances and when you are making major decisions I recommend redoing it every 6 months and even quarterly.

That’s it. See you in module three when we’ll be having some fun learning about spending money.

Part Two

Presenting a united front

One of the main reasons that Income is under pressure in a new partnership is because her twin sister, Expenditure, is suddenly growing up without clear direction. Like a wayward teenager with busy parents, she is off trying out new things unsupervised, sometimes with serious consequences.

We’ve all heard that children seem to have an in-built radar to detect and exploit any chinks in parental armour, especially those where parents might disagree on an issue.

Expenditure is the same.

It is crucial for financial stability that a couple understand each others spending habits, are aware of the others needs and wants and have an agreed plan. Then when expenditure wants to go on an unauthorised spree, both partners are clear what the other would say about that and can react accordingly.

Before you begin to think that all this asking and agreeing sounds like a financial prison take heart. As I have said many times already, and I will no doubt say again, such is the importance of the point, there are no rules except those you as a couple agree upon. Even those should be flexible and under constant review. We are human beings, growing and changing in an ever faster moving world and our financial plans should allow for that.

It is not Financial prison to discuss, agree and be working together towards the goals and dreams you both want. Financial prison is not having enough money to do the things you want to do.

That brings me to this weeks’ exercises. Before we go there I want to remind you to be kind during these exercises. They may stir up some of the darker sentiments such as resentment and frustration. In addition, it is not unusual for either or both partners to be just plain dog tired from grinding out their guts providing for the family so frayed nerves may also be present.

Go easy, right now you are just fact-finding. Reserve analysis and comment for later.

Part Three

What is your income?

List all sources of income and how much they provide. The total you take in every month is your “monthly income” When you multiply that by 12 you get your “annual income”.

You probably won’t need any help with this part; it’s self-explanatory. I have however given you some headers, as it is easy to forget some less obvious items or not realize they should form part of your list.

The entire exercise should take you less than 30 minutes. Round off numbers to the nearest £. Estimate on the low side. If you are not sure of a value, make a good guess. Get a real figure as soon as you can get the information.

Salary, Business Income (net of expenses and taxes), Child benefit, Royalties, 2nd Job, Dividends.

• Salary
• Business Income (net of expenses and taxes)
• Child benefit
• Royalties
• 2nd Job
• Dividends.

If your salary is irregular or commission based, take your total annual salary for the last year (less any exceptional income that you might not usually have) and divide it by 12.

You can print out the form below to help you complete this task.

Income Calculation

Part Four

Where does the money go?

The second action item is designed to help you identify how much your life is currently costing you. In financial terms this exercise is about establishing your “Expenses”.

What that means is that you will add up everything you spend in a month and list what you spend it on.

• The total you spend every month is your monthly “Expenses”
• When you multiply that by 12 you get your yearly expenses.

Don’t panic. Admitting to exactly what you spend is perceived as such a frightening thing. In reality, knowing what you spend and on what is one of the most comfortable pieces of information you can carry in your head.

Again, I have given you easy to follow instructions on how to complete this exercise. I recommend you take a moment and read all the way to the end to get an overview. The entire exercise should take you less than 2 hours in total during the next week although you may have to wait in between the beginning and the finish for some of your questions to be answered. Round off numbers to the nearest £. Estimate on the high side. If you are not sure of a cost, make a good guess.

List everything you currently spend your money on. I have given you a list of items to jog your memory at the end but replace these with your own personal list. You know what you spend your money on. The more detail you put into this list, the more information you will have for clear decision making later on.

Do not spend much time searching out exact figures, estimate and move through this exercise quickly. As you actually spend during the month ahead you can compare back to your estimates and update them until you have a more accurate picture. There is often a difference between what we spend and what we think we spend. The areas of difference will highlight your “blind spots” in your spending…. If you have any.

The easiest way to get the complete picture is to begin with your regular bills or your direct debits. Take each of these, for example your mortgage, and fill in the amount you pay each month. Then fill in the other items, such as groceries, etc with an estimate for each area of expense in your household.

Some commonly asked questions

• What do I do with bills that I pay once yearly?
  You divide these evenly by 12 and put the value in each month. If you pay your car insurance once per year, you still drive it twelve months so the cost is actually a cost to you each month you use your car.
• What do I do with bills that I pay twice yearly or quarterly?
  You also calculate the monthly figure. If you pay twice yearly, multiply the figure by 2 and divide by 12. And so on.
• My electricity/telephone/gas invoices are two months in arrears. How do I calculate what is for one year.
  Take the payments you made over any twelve-month period, add them together and divide by 12.
• What do I do if my expenses are mixed business and household or if I run two homes?
  I strongly recommend that you fill in a separate sheet for each household or for your business. It is not so important at this stage it will give you clearer information for decision making further into the exercises. If you have more than one household or a business, take a separate page for each.
• Christmas is a big expense in my household. Do I put it all in December?
  Even though you spend the money in December, estimate the amount you spend on Christmas and divide it by 12 and add it into your monthly expense. The same goes for your summer holiday and other seasonal events. You still need to earn the money throughout the year to finance these.

That’s all there is to it, so go back now to the start of this Expenses exercise and put in your own list and numbers. Focus on one item at a time.

Expenditure Calculation

Part Five

Calculate your monthly net profit/loss

Now you have your monthly Income figure and your monthly Expenses figure. Subtract your Expenses from your Income.

• If the result is a positive figure, that is if your Income is higher than your Expenses, you have a “monthly Net Profit.”
• If the result is a negative figure, that is if your Income is lower than your Expenses, then you have a “monthly Net Loss.”

Action!

Actions of the Week

1. Use the forms above to calculate your income and expenditure.

2. Create your own financial structure (separately first if you prefer)

Begin to think about what might be the best financial structure for you as a family.

• Would the traditional model of the earning male and stay at home female suit you and if so how will that practically work?
• Will there be a joint family account for housekeeping or cash per week for example?
• Or might you prefer each to keep their own accounts and contribute an agreed amount to common bills?
• If so, what bills will that be and how will the contribution be agreed upon? Maybe you will split the allocation of bills between you.

3. Do Nothing

It’s not decision time yet. A little more information is required to make the best decisions. For now, just put the financial and psychological information on the agenda and begin to see where you sit individually and together.

Your next module will give you tools to analyse the answers to all these action items. For now, just put them all aside, relax and take a break. The hardest part is all behind you.

Have your night out and talk about anything but money.

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.

Part Two

Getting the Balance Right

When you get the time vs money balance right for you, your life will change beyond recognition. It’s an intensely personal thing. How much time and how much money you need, and in what proportion to each other, is specific to each individual. In this module, we’ll address how you can begin to quantify those for yourself.

Let’s look at what you earn.

Your working hour has a value that is a very important component of your financial life. And your hourly rate is either good enough for you or it is not.

You don’t really need some calculation to tell you if you feel that you are being paid what you are worth. You already know that in your gut. But you can look back at your list from last module. Did you end up with a net profit or loss?

If you had a net loss then you clearly believe you deserve more things in your life than your hourly rate allows you to afford. And look at your “must have” and “nice to have” lists. Can you afford your must haves? Can you afford your “nice to haves?”

Bear in mind when looking at these numbers, that I mean the real kind of “can I afford it” which is the “can I pay for this in cash today without using credit or taking money from my 10% personal financial future” kind of affording it.

I often tell the story of a lady I know who was married but considering divorcing her husband because she felt his real love was his work. I feel it is worth repeating here as one of the best examples of how our partnerships flounder under the time/money issue.

Her husband worked all hours possible and rarely was home in time for dinner. The children were always in bed when he got in and weekends he was so tired he slept or vegged out in front of the telly. They had a beautiful house, nicely decorated and with all the mod cons. They drove really nice cars. The kids had everything they needed. The only thing missing was their father being around and she had had enough.

Over lunch one day, as she insisted in picking up the check, I asked her why she would put her marriage at risk over me when I wasn’t a particular friend. She stared at me like I was speaking a foreign language.

I then asked her how long extra her husband would have to stay at work to pay for the lunch she had just given me. I went on to ask her how long he had to work to pay for the sheepskin coat she was wearing, the ski trip the kids had just taken and the new suite of furniture she had ordered.

It took another few minutes before the penny began to drop. Everything she spent on herself, the children and the house translated directly into hours her husband needed to work which translated directly into her thinking he loved his work more than her.

I suggested she add another item to her “Can I afford it?” checklist. I suggested she add “would I rather have this item or would I rather have my husband at home for the hours it would take for him to work to pay for it?”

We are under so much “Pressure to Purchase” in today’s society that the providers in our families struggle under the stress of keeping up. Knowing what you really want (compared to what the Jones have or what the media persuades you that you need) and together agreeing to earn for those projections is key to alleviating the money vs time stress.

Remember when your partner used to be fun. That was the pre-pressure era. Get that back now!

Part Three

Hourly Value

There are two sides to the hourly value question.

One is a simple question of arithmetic. Are you earning enough per hour to pay for the life you want to lead?

If the answer is no, there are a number of ways to maximize your income. You can work for a promotion or a raise. Perhaps you can get mentored or trained for another higher paid position. You can learn new skills and offer them for an increase in salary. You can change your job for a higher paying job or start a business or second income stream part time. If you are self-employed you can raise your hourly rate, work more hours or offer more services. These are just simple ways. There are lots of creative ways to increase your income specific to you.

The second is a more emotional question. Whether you are employed or self-employed, do you value yourself enough to ask for the hourly rate you are worth?

While you remember that your worth is not counted in money, remember that the worth of your partner is not counted in money either. You both have earning power. And that is distinct from worth. For the bills, the mortgage and so on there is money, everything else is priceless.

Action!

Actions of the Week

1. Calculate your hourly rate. (separately)

Take your monthly salary/income and divide it by the number of hours you work. Do not divide it by the number of hours you are supposed to work if you took all your lunch-breaks and went home on time every night. Divide it by the number of hours you actually work in an average month.

If you have some, do not include income that you do not work for such as dividends or returns on other investments. This is called passive income. Calculate using only your active income; that is income that you would not have if you did not put in the work to generate it.

2. What are you really worth? (separately)

Explore how you feel about your hourly rate. How does it make you feel? Are you being paid your worth? Is it smaller or greater than you expected? If it is less than you feel you are worth economically write in large red figures the figure you believe you should be paid per hour. And then write 20 reasons why you are worth that figure. Finally, write one paragraph describing your perfect work and how you would be paid for doing that perfect work.

3. Increase your income (separately)

Divide a clean page into three vertical columns and make three lists of ideas on how you can increase your income. The first list is for the short term (1-6 months), list two is for medium term (6mths – 3 years) and list three is for longer term (3 years). Make sure to put actual figures with your ideas. It is important to set real numbers targets for your mind to focus on.

4. Money or Time (separately)

Go back through your expense list and calculate the time value of the items on there. Ask yourself if you would rather have the item or the time. Write about what you learn about yourself and your ‘must haves’ with this new awareness. Do this exercise for your partner’s income also and ask yourself if you would rather have their time or the item.

5. Draft your financial plan (together)

Begin to draft your financial plan together. Set agreed net worth, spending and income targets. Agree on how you are going to manage your money and your time within your partnership. It will be a working document and will change over the next months particularly as you try, test, review and adapt what you find.

Take your time with these exercises, they will grow with you as you grow together. Next week we will be looking at some key financial milestones that you may want to build into your plan if you have not already passed them.

It’s exciting now; you are nearly there.

Part Two

Your Emergency Fund

An Emergency Fund is just that, it’s a fund that you keep for emergencies. Very often we go along on a monthly basis paying our bills and keeping ahead (just) until something happens. One of you might have to take sick leave from or loose their job (or choose to change a job) which means the family has a short period of reduced income or inconsistent income. This can put unnecessary additional pressure on an already pressured situation.

In particular where more than one person is involved, it is especially important to provide for those times of our lives when problems hit. They may be challenges or crises that effect you both together. But lets face it, challenges or crises may come that drive you apart. My clients include widowed people, divorcees, and those who are dealing with serious illness in their lives that leaves them having to shoulder the family finances bereft of the support that is no longer available.

The first key to financial peace of mind and being able to sleep at night without financial worries is to have a little cash put aside. How much should that be? Action item 1 will help you calculate it for you. It sounds too simple but I cannot even begin to communicate the difference it will make to your whole sense of security and freedom from money worries. With even just a little bit of money in the bank you will begin to know what it feels like to be rich. Be careful, it’s contagious, you’ll want to feel more of it. You might even get to enjoy putting money aside.

Also you must talk about insurance and pension provisions. Each family will have their own requirements. But right now I want to talk about debt for a moment.

Part Three

Dealing With Debt

It’s a huge subject and one that I am not going to go into in much depth in this part of Family Finance. However, debt is so prevalent in our culture that I know a significant number of people doing this course will have a debt problem. Mind you, the debt is rarely the real problem. It’s the repayment of the debt that’s the problem!

Some of you will have come this far and will not have been able to find the targeted 10% monthly net profit figure because of what it costs you to service your debt. If this is you, I strongly encourage you to book a private debt-coaching programme to blast that out of your financial life once and for all.

In just four to six weeks, you will finally understand debt and how it is working against you. More importantly you will have a plan for total debt elimination that you can follow and (the key to all financial planning as far as I’m concerned) have fun with your life while you are doing it.

Some of you will have come this far, calculated your income and expenditure, revised it according to the 4 way exercise, done what you can to increase your income, found your 10% and have debt. Equally for you. If you have any debt at all, you could eliminate your debt in double quick time and use the extra cash to put you on the fast track to the next stage of financial freedom.

It is virtually impossible to build wealth and service debt at the same time. So begin here now. Make a commitment to yourself that you will not add to your debt from today forward and at least do exercise number 2 to begin to deal with your current debt

And that’s it.

This was an important piece of work for you to do together. I want you to acknowledge that and to acknowledge each other for being willing and committed to taking this road together. A large percentage of families break up over money difficulties and your courage to deal with this subject proactively has given you a better chance of harmony and longevity in your partnership. You may have work to do, but you have both shown that you are prepared to do that work together towards common goals.

What you have done so far has given you the tools of basic healthy money management. Simple but effective, I hope that they change the direction of your financial life. I know it has for many others.

Here are the last action items for Family Finance.

Action!

Actions of the Week

1. Emergency Fund (together)

Calculate how much you want to put aside and a date by which you will achieve this. To do this, you must ask yourself if income were to cease tomorrow and your family had to survive until either or both of you found a new source of income, how long would you like to give yourself to do that.

A rule of thumb is 2-24 months depending on your own comfort level. Now multiply the number of months by your Must Have total from module 4. Put two big fat red lines under this figure.

This is your first goal to achieve using your 10%. Divide the total by the amount that is your 10% monthly net profit and you will find out how many months it is going to take you to fill your emergency fund. Mark this date in your calendar.

2. Drop the Debt (together)

List each debt you have showing the total you owe, the amount you pay per month and the number of payments left to pay. Pick one of them that you would really like to have paid off. Call it debt number 1. Do not pick your mortgage if you have one, leave that one to last. What date is the last payment of the debt you have chosen?

Go back to your net monthly figure. I want you to find from your current income £75 – £100 per month that you will pay extra towards that debt every month until it is paid off.

Look at what happens if you add the extra money to your monthly payment for that debt.

How many of those increased payments will you have to make to that debt? Note the difference in the date?

When you have paid that debt off, you can put the £75 – £100 PLUS the monthly minimum you were paying to debt number 1 towards the next debt you want to pay off and so on until you are debt free.

Do this before you begin to build your emergency fund or if your debt is slight, try to do both.

3. Celebrate good times (together)

Throw a party. Go to a party. Take each other out to a party. Stay in and have a private party. Whatever you do make sure it has the word “party” in it. It is important to mark and remember the times you did things together for your mutual benefit. Heavens knows we all remember the bad times easily enough. Do something that will help you remember this time you stood together and committed to put a financial plan in place to support your mutual dreams.

4. Financial Education (together and separately)

Schedule financial time for yourselves. Take out your diaries and agree on one hour per week during which you will continue to plan your finances, review your progress and add to your financial education. For a subject that drives our lives like no other, an hour a week is such a small commitment for such huge rewards. Talk openly about money in your home. Include everyone in the family. You’ve started now, keep going.

Well, that’s it. You are all done. Or are you only beginning? There is a “wealth” of resources out there if you want to continue your education in this subject in a way that is fun and gets results. This course has dipped your toe in the water, there’s much more wonderful information waiting for you to help you on your way at your own pace. Enjoy your financial journey.