Monday, November 1, 2010

Making the System Work for You

This is us the weekend we decided to change the way we look at our family's finances. Yeah, I wasn't that thrilled during the actual conversation. Trust me.

So, you've made the decision to clean up your finances, to get organized and in control. It's a little intimidating making that commitment, not knowing exactly what's ahead, and how things will work out. When you're in that starting point, the safest way to stay on track is to make things as simple for yourself as possible. If you're using the magic jars, the best way to begin is with the tried and true method. From Gail's website and interactive budget you know that your variable, or "life" spending, should be about 25% of your net income. (The budget is posted a couple months back) The jars that Gail has assigned are Food, Transportation, Entertainment, Clothing and Gifts, and Other. If you're just beginning, it's best to start with these divisions.
Once you've gotten the hang of spending with cash, and only withdrawing from the bank machine once a week, you get to play with the system to make it work best for YOUR family. It's your money, and every family is going to have their own quirks and needs. The basic starting point is pretty universal, and as you go it can be tweaked to work better for you. If you are making changes to the basic standard though there are some guidelines I'd suggest.

1) Only make 1 change at a time. If you decide you want to change the withdraw schedule, AND the number of jars, AND the amount you're taking out it will be too much to deal with all at once. Prioritize which changes are the most important to make and start there.

2) Keep the number of divisions between 5-7 jars. The more divisions you have, the harder it is to track exactly where your money is going. If you keep it simple you make less work for yourself.

3) Don't make a change without your spouses input. When we decided to change our withdraw schedule from weekly to semi-monthly (Based on Ted's pay) it took 2 or 3 discussions for me to warm up to it. Considering I'm the one that is in charge of day-to-day spending I needed to be on board. It's worked out for the best for both of us, but it took some practice for me to think of a budget for 15 days as opposed to 7.

4) Review what's working, and CELEBRATE it. Be proud of the work you've put into managing your money. For a lot of people it doesn't come naturally and it's not easy. Don't beat yourself up over slip ups, but don't dismiss them either. Try to figure out what needs fixing and fix it.

5) Keep it about the team. I was not eager to start, I hated talking about our finances, and I didn't want to fix what needed fixing. It was only after I realized how much BETTER I felt talking about things that I wanted to make changes and make things better. Without a spouse that was encouraging and kind I don't know if I would've done what I needed to do. Making taking control of your finances a together thing will bring you more understanding of your spouse and increase your chances of success.

1 comment:

Anonymous said...

I love the magic jars... I do quite well with them, now my problem is that I have a separate account for money that goes towards food and craft supplies for my dayhome kids, sometimes I use that money for unneccassary purchases(rarely,lol) but it still happens.