Mastering Your Finances

Tips for effective financial management at home.

7/18/20233 min read

Financial planning - not exactly anyone's idea of a fun time. Couples report money to be THE NUMBER ONE thing they fight about. And no wonder - money is incredibly consequential. Handling it well can put you on the path to achieving your goals, but handling it poorly can lead to absolute ruin. By implementing smart strategies and adopting healthy financial habits, you can take control of your money and create a solid foundation for your future. Whether you're just starting your financial journey or looking to improve your current practices, these tips will help you gain clarity, reduce stress, and make smarter decisions with your money.

  1. Track Your Expenses

    You can only start a journey by knowing your current position, period. Many of us think

    we know roughly how much we spend on groceries every month, but estimates can be

    WAY off. I know what you're thinking: "I can't track every single transaction in my family's

    life!" You're right. That's not practical. But all you need is an average month. Get a picture

    of what an average month looks like for your household, and we've got a starting point.

    How? You can use your debit and credit card statements to add up your monthly expenses.

    Many providers will automatically sort your expenses into categories for you. Or, you can

    use an app like RocketMoney (this is my choice). Make a list that looks like this:

  2. Set Clear Financial Goals

    Now that you know where you are, the next step is to figure out where you want to go. What are your goals? At this point, you should start thinking about needs versus wants and likes versus loves. Imagine your budget as a canvas on which you're about to create a masterpiece of financial well-being. When it comes to "likes versus loves," think of it this way: "likes" are like those little pleasures that bring a smile to your face momentarily. They're like a quick treat at your favorite café or a weekend movie night. On the other hand, "loves" are the experiences or investments that genuinely light up your life, like that dream vacation you've been planning or saving up for. In your budget, try to channel more of your resources towards these "loves" because they provide lasting happiness and fulfillment.

    Now, let's talk about "needs versus wants." Picture your financial journey as a road trip. Your "needs" are like the fuel, the tires, and the maintenance that keep your car running smoothly. These are your essential expenses: rent or mortgage, groceries, utilities, and such. Then come the "wants." They're like the scenic detours you take during your road trip—the things that make the journey more exciting and enjoyable but aren't necessary to reach your destination. It's important to strike a balance between these two. Cover your needs first to ensure a stable foundation, and then allocate a portion of your budget for those "wants" that bring joy and fun.

    At the end of this step, you should have a picture of where you want to go in the form of a set of goals. What dollar amount are you going to set aside each month for your "loves"? What is your monthly cost of "needs"? Can you get that down any further? And there is nothing wrong with the wants and likes in life, but what portion of your money makes sense to allocate to that?

  3. Create a Realistic Budget

    This step is already halfway done! In Step 1, we got a look at your current expenditures. Maybe it just needs tweaking, maybe you need a complete overhaul. Either way, this is the time to do it.

    This is also the time to consider your debts if you have them. Whatever financial plan you designed, it must include a plan to pay off your debts, including student loans, car loans, and credit card debt. Start with the debt with the highest interest rate, usually credit cards, and start chipping away at it. I know it can seem daunting to stare down often large numbers, but debt elimination is a marathon, not a race, and your future self will thank you. Prolonged debt is a major impediment to financial security and building wealth. Whatever amount you can afford each month, put towards your loans. Make the payments automatic if you can so you don't even have to think about it.

Effective financial management at home is a journey that requires commitment, discipline, and ongoing education. By implementing these tips, you'll gain control over your finances, reduce stress, and set yourself up for a more secure future. Remember, small changes and consistent efforts can make a significant impact over time. Stay focused, stay motivated, and celebrate each milestone you achieve along the way. Take charge of your financial well-being today and enjoy the rewards of financial stability and freedom tomorrow.

sample household budget
sample household budget