While I don’t tend to be one to quote statistics, sometimes you come across one that is so profound that it seems to stick with you. I read a BusinessWeek article recently stating that women control 80% of the household finances in today’s American family. Surely there are many of you reading this article right now that can connect with this figure, but likely you didn’t suspect it to apply to so many other wives and mothers. Due to the shear number of us striving to balance the family checkbook properly, picking and choosing the best places for our family’s resources is an important topic to discuss.
Since statistics have made us the leaders of our family’s income management, it’s important that we take this role seriously. Management in any sense of the word requires a plan, so creating a family budget is a good place to start. Begin by making a list of all sources of income you alone, or you and your spouse, bring in each month. This list could include income from jobs, rental income, daycare money received, or many other possible sources. Once this is completed, then make a detailed list of all of your expenses or bills each month. While we always think of items like the mortgage or rent, car payment, and utility bills, I always encourage people to also list amounts spent on groceries and entertainment.
The goal of a budget is not to restrain yourselves from having any fun, but to make sure you are enjoying a lifestyle within your means. After these lists are completed, you can then easily see if your lifestyle is within or outside what your income supports.
Now that you have your budget clearly outlined, you can move onto the next step of managing your family’s finances properly. Of the many things my father has taught me, one of his most popular phrases has always stuck with me throughout my working years. He always said, “Pay yourself first,” or in other words, “Save, save, save.” I know this practice can be difficult given the many forces vying for our dollar, but it really is a practical sentiment. Certainly, many of you experienced or knew of someone who suffered a layoff, elimination of overtime, or other loss of resources during our most recent economic downturn. Those without savings have been especially hurt, having to turn to payday loans or high-interest credit cards simply to make ends meet. This practice is not advantageous, and only creates additional difficulties in the future. By beginning a practice of saving now, you’ve at least provided yourself with an umbrella for those “rainy days” ahead.
After establishing a plan for savings, protection of the things you own is the second most important item for those in charge of the finances to review. Protecting resources like your home and auto against fire and accident is essential to protecting not only yourself, but also others. Many times we think only of the two items listed above when looking at our protection needs. We also should consider how important our income is to our family’s well-being. The ability to work and earn a wage or care for children is a large asset that should be protected. When considering protection needs, be sure to not only place a value on the car or home, but also on your own and your spouse’s life as well.
Once you have firmly established a budget, and a savings and protection plan for your family, adhering to it every day is the only challenge left to overcome. Many times it is difficult to deny our children the new sports equipment or latest MP3 player to hit the store shelves. The best way to combat the constant wants of our kids, is to teach them the skills you are already successful at doing. By helping our children learn to save for the items they want most, causes them to have more pride in what they own. By teaching these skills early, kids are more likely to be successful money managers in the future.
As the keys to our family’s financial success, wives and mothers have yet another role to add to their already long list of responsibilities. But, by following a plan, we are bound to be as successful in the role of money manager as we are in the roles of wife and mom.
Elisabeth A. Hall is a Financial Professional.