Tips for Successful Personal Finances
Ever wonder what budgeting app is best for you and your family? Not sure where to start? I am asked this all the time and I don’t have a recommendation for you. I still use a manual method and am happy with that for us.
For those of you that do want to use an app, how do you make the right choice? Here is a great article from The Hartford comparing several apps to help you make the right choice.
Let me know what one you use and why. I would love to hear from you.
Last time we spoke about couples merging finances together. I have witnessed many couples who keep their finances separate. While I am not opposed to this, it can create problems down the road. 
I have a friend currently who is trying to piece together her deceased spouses finances. It’s unfortunate, he passed away unexpected and suddenly. Their finances were totally separate. Now she is having to search for where his bank accounts are, where his life insurance is and so much more. Yes, they were fortunate to have the legal paperwork in place – will, estate plan etc. but there are issues with the legal paperwork too. It more complicated for the surviving spouse as they are not only mourning their loss, they have to deal with the financial fallout.
When my mother passed away, my father was lost because he didn’t handle the finances. My mom was a bookkeeper and she handled all the bank accounts and bill paying. He never paid a bill in his life up to this point. He actually made piles on the dining room table of bills. Then the calls started to come in that the bills were past due. He assumed that things were automatic but they weren’t. The story of a spouse in the dark.
Make sure the surviving partner / spouse is aware of your financial situation and has access to the accounts. They should know how to access the bank / investment accounts. They should know where your life insurance policy is. They should know how to access your passwords. Take the time to have this discussion before it’s too late and have a plan in place.
Weddings are an emotional celebration. We love the idea of a bride and groom starting a new life together. We use words like “two becoming one” or “sharing your lives as one,” meaning that everything will be shared as though the couple are no longer individuals. I believe this puts a lot of unnecessary sentimental pressure on a couple to share all their finances even though it’s not always necessary, or even wise, to do so for every single account or property.
So, how do you merge two separate financial lives? There are many successful ways to do this. Some couples keep their individual incomes and expenses separate by having separate bank accounts, credit cards etc. Then, they have a joint expense account for their household bills that they each put money into. Sharing the joint account can be as simple as having each person responsible for different bills, or figuring out the bill totals and having each put in their half. Some people base the joint account total on a salary percentage (this works great when one spouse earns more money that the other). And, of course, some people merge everything and all accounts are joint.
You need to think about what type of financial people you are. Here are 3 questions to think about that will help you decide (and could possibly save some financial squabbles):
Answers to these questions can be tricky, but worth the discomfort. Proactive thought can be a financial life saver for your future. Double check your answers by looking at your account statements and credit reports. You may not be as good at finances as you think you are, or you might be better than you thought. Discuss your habits with each other, as well as any outstanding issues that could affect you both.
I am a firm believer that you both should participle in your finances. You have joint goals in your future, so you should do the financial planning for this together as well. Don’t let the responsibility fall to one person. If something were to happen to the “responsible” one, then the other party would be left completely in the dark, not knowing anything about the accounts or how to deal with them. I have seen many situations like this. It may seem kind, or convenient, to handle the money if your partner doesn’t know how, but it’s not.
Whichever way you choose to handle your finances as a married couple, make sure it’s a mutual decision based on real knowledge of your habits and goals.
I met a woman who asked me some questions when she found out what I do for a living. This subject is one that all of you should be aware of and in honor of Valentine’s Day, I wanted to discuss joint finances. You wouldn’t believe how many people this affects.
Are you married or in a relationship with joint finances? Even when couples share accounts, living space, or property, it’s typically one person who handles the finan
ces in a relationship – paying the bills, savings, investing, etc. But the other person shouldn’t be left in the dark. Think about your future, I have meet many who have no clue on how their finances are handled and then something happens and they now have to take charge.
Because this is your joint future, both should know what is going on and how to access the information at any time. The definition of the word joint is defined by Merriman-Webster as “united, joined, or sharing with others”.
Both of you should be making decisions together, understanding where you are today with your money and where you want to go for the future. You should both know the names of your banks and investments and how to access these accounts, especially if you use online accounts. Think of it this way, if the person handling the finances is not able to do it – what would happen? Could you put food on the table? Would the utilities be paid to be kept on?
Remember, too, that your children can see how the money is handled in your relationship. What you do, and don’t do, shows them just as much as what you tell them.
I also believe that each person needs to establish credit in their own name and if you are listed as a co-owner on the assets you should also be listed as a co-owner on the liabilities. What that means is that if you own a home (your name is on the deed) you should also be on the mortgage.
Many partners are left out of the finances. If that’s you, and something happens to the person who handles everything, you are going to have a difficult time. You may find that the bank accounts that you thought were joint are not. You may find that you thought you owned the home you live in, but you don’t. You may find that you need to open a credit card or take out a loan and you have no credit in your name.
All this happens more times than I can count. If this describes you, then you need to have a conversation today with your partner. You need to what know what assets you have, what liabilities you owe and have a plan for moving forward to achieve your goals. The first step is having this conversation.
In our last issue, we discussed whether you should blend your finances when you get into a relationship. Money will be your biggest source of friction, and having boundaries doesn’t hurt. I listed some of the different financial relationships couples choose. There are different options besides “What’s mine is mine and never ‘ours’ or “It’s all or nothing or I’m out of here.”
Sometimes your best efforts to create a life together fail, and the relationship ends. Today, we’ll discuss how to unblend your finances. Whether you decided to share all of your accounts, or only share expenses, you should separate your finances as soon as possible, because you can be sure that someone’s name is on the wrong paperwork.
Take a look at your…
“But Jill,” you say, “these all sound like things that happen in a hostile breakup. We’re not like that.” Even if your breakup is friendly, and your ex is as trustworthy and competent as a super hero’s alter ego, you still need to separate your accounts to protect yourself in case something happens to one of you. If one of you dies, remarries, or is mentally incapacitated, the law won’t recognize verbal agreements or promises. They only see whose name is on a piece of paper.
Let’s talk about verbal agreements. Let’s say the house and car loan are in your name, but you want to be nice. You don’t need them, and your ex does. Your ex has agreed to make payments, so it’s no big deal, right?
Wrong. Your credit will take a hit with the first missed, or late, payment. And, you may not be able to get a new car or house for yourself because your debt to income ratio is too high. The bank won’t take verbal agreements or divorce decrees with your ex into consideration when you apply for your loan.
Here’s something else to think about: Can you maintain your current lifestyle if you live separately?
If you end up with the house or the car, can you afford the payments? Can you pay for the utilities, the maintenance and the insurance? You may have to make tough decisions, because you could be without the things you need to live if you don’t plan ahead.
Too many people have found themselves temporarily homeless, or had their credit ruined, or worse bankruptcy after a breakup. Don’t let this happen to you.
Is one of your goals to take control of your finances this year? Do you want to get control and understand what you have and what you need? Do you just want to get your finances organized once and for all? Do you feel there are no more ways to cut your expenses? Is
your goal to save more money for retirement or other goal? Whatever you want, January is always a good time to start.
If you want to take a quick look and here’s a few tips from Real Simple Magazine – 22 Smart Ideas to Take Control of Your Money.
For a more in depth look, my book Thrive In Five: Take Control of Your Finances In Five Minutes A Day is a great way to start your finances off with a quick suggestion for each day of the year. Each chapter is dedicated to one aspect of your finances. And it even includes catch up days to when there isn’t enough time to squeeze on more thing into your day. For more information or to purchase your copy, click here.
Finances don’t have to be difficult, but there are things you need to think about when you get into a relationship. You have a way of handling your finances and it’s worked great for you and you like the system.Your partner has a way of handling their finances and it works for them. Seems simple enough. Then you find out that you do things totally opposite. Now what?
You have to come to a compromise that both of you are comfortable with. First, start by really listening to your partner and putting yourself in their shoes. It’s hard to do, but it’s really important. Listen to their reasoning and why they do what they do. Then have the same conversation with the roles reversed. Now come up with a negotiated and agreed upon game plan.
This will take multiple conversations and time. If you both agree to the plan, you have conquered the first hurdle. Here are some of the questions you need to come to an agreement on:
$ What are our goals / what do we want to achieve?
$ How do we get there?
$ Who is going to be responsible for what? Think bill paying, savings, spending, bank reconciliation, credit, debt, investments, retirement, and more.
I have seen this work in many different ways. Here are a few examples:
They keep everything separate. Each person keeps their own income in their own bank accounts.They have agreed to who pays for what bills. Each handles their own investments and goals.
One person handles the big/long term items of the finances and the other handles the day to day finances. So long term is for the future – investments, retirement, savings, college, home buying, etc. and short term are more of the daily finances – bill paying, household purchases, routine items that are in the day to day budget.
The do everything together philosophy. All happens with a meeting of the minds and each person is involved in all aspects of the family finances.
No matter what you choose and how you choose to handle your finances, it all starts with communication and a game plan. All people should know what is going on, where to find the information and how to access it. After my mother died, my father had a hard time figuring out the finances, as he wasn’t involved with them.
Make your joint choices and know that you have the option of trying and changing until you find what is right for the both of you.
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In honor of Valentine’s Day, I want to talk to you about love and money. I have known many couples who were in love until they found out about the other person’s money habits.
Your money incompatibility doesn’t have to end the relationship. If this is the one, you can make it work. You just have to ask the right questions.
This is what you need to know about each other:
With this information, you can decide if you want to keep your finances together or separate. Joining your bank accounts together with someone who has ignored debt or back taxes may mean your money is at risk (even if it’s not your obligation), and in the end, puts you both in the same deep hole with no way out.
Finances can be the doom of relationships. Being informed and making proactive choices is the best way to make the relationship work.
You see this happen all the time. You are in a situation with other people and someone mentions his nice vacation plans. What is the first thing that pops into your head? Are you genuinely happy for him or do you automatically think about how much he’s spending (that includes jealous thoughts of the “he must be making more money than me” kind). You know what I mean.
But in the past few years, I have learned to stop comparing my financial situation with friends and family family (I’m not perfect but I am improving). I have come to realize that I am projecting my values and beliefs onto other people. What I think or believe about another person’s finances has no basis in reality. I am not in their shoes and don’t know what their situation is.
People spend money on things that are important to them. I know that some people may think I travel a lot. When one vacation ends, I am already planning the next. I personally always want to have a trip to look forward to. You might be thinking thoughts like “how can she afford it?” or “where does she get the money to travel?” You may even be envious. But you won’t know exactly how I make my little dreams come true because personal finances are just that – personal. .
Although in a few weeks,, I will shed some light on how we travel.
The other side of comparing your finances is the presumption that you are somehow morally better or worse than others. Grim tales of credit card debt are all over the news, often mixed with stories of foreclosure and homelessness. You may feel good about yourself because your debt is lower, but do you know why the person on the news has the debt? Was it really insane overspending, or was it a medical emergency or a layoff. Maybe the credit cards were used as a last resort to pay bills?
I have heard it said that “to compare is to despair.” This thought process of judging others is detrimental to you. You have no idea whether another household spends more money than they have, is in debt to their eyeballs, or has planned ahead to achieve their desires. You don’t know how much they earn or how much they give to charity. It is much easier to judge someone else than look inward at your own spending habits.
In the budgeting process, people track their daily expenses to see how much they spend and in what category. This can be a great exercise. Once you see where your money is going, you can make life-changing decisions. Where do you want to spend? What do you want to save for?
There are no right or wrong answers. There are only personal choices. Maybe you choose electronics over vacations. Maybe you choose decorating and entertaining over both. Maybe you choose to give your children spectacular holidays or birthdays over everything else. These are the kind of choices your neighbors, friends and family members made when they did something that impressed you and made you envious. They simply chose to spend their money in a different way than you.
So the next time you see someone order an expensive meal at a five star restaurant, purchasing the latest greatest electronics, or buying a designer outfit, don’t judge them. Not only is the thought process destructive, but it is a total waste of your time.
Things that mean very little in a court of law:
What am I getting at? I want you to face the fact that paperwork is part of life.
You can have a lot of wonderful things without legal documents: love; a nice meal; a beautiful sunset. But, you can’t get legally married, register the birth of your child, or insure your home without them. So, if you’re basking in the glow of a beautiful sunset in your own backyard, enjoying a barbecue, and surrounded by family and friends – there was paperwork involved.
Don’t slack on it. Strive to keep it up-to-date on an annual basis. Neglecting your paperwork can be just as bad for your family life as neglecting a loved one’s birthday.
Go through your files and check up on your:
Legal documents are too often overlooked and the results can be devastating. Who’s in charge of your stuff if you suddenly pass away. If you haven’t updated your paperwork, you may have left everything to an unreliable friend, or a deceased parent instead of your spouse or adult child. In this case, I suggest that you name a second beneficiary. For our wills, we even have a third beneficiary. My attorney suggested this and it’s terrific. When my father passed away, I didn’t have to update my will. My second choice was already in place. How easy was that?
I know you’re busy, but when you, or your family, are dealing with a major life crisis, you won’t want to spend time thinking about these things. Make a habit of reviewing your important documents on a regular basis so your loved ones will receive the things you labored to give them.
If you need more convincing, check out this ABC news story