Money Management – Four Principles to Remember

First Principle

The first principle of money management is to regulate your spending so it helps rather than hinders you in realizing the values of your marriage. If there are things you should buy now, to achieve immediate satisfactions that you have agreed to pursue, those expenditures represent a sound use of your financial resources. Buying a home and furnishing it within the first five years of your marriage might be such an expenditure.

On the other hand, the goals of your marriage might include a plan to move to another town and establish a business of your own three years from now. In that case, you would be making the most of your financial resources if you invested as little as possible in your present housing and saved as much as you could to give your future plan sound financial support.

Second Principle

Your income should be the basis for all financial planning. Money management is not day-dreaming. It must have a foundation of fact. Take a look at the money you can count on coming in during the year, and make your plans on that basis.

We may benefit from having some aspirations that exceed our grasp, but if our entire way of life, present and future, is based on a financial scale that bears no relationship to reality, present or future, we are not carrying out a plan; we’re just dreaming.

If your income substantially exceeds your present needs, you will want to provide for the future through savings, insurance, and investments. Insurance and investment counselors can give you guidance about this.

Or, you might consider hiring an assistant to ease your workload or having your wife give up her job so you can have more time to enjoy family living together and to realize some of the non-material values to which you attach importance. If, on the other hand, your income always lags sadly behind your plans for spending money (and this is more often the case), you must either reduce some of your expenses or add to your income.

Third Principle

Change your financial plans as your family situation changes. Stick to the financial plan you make until your circumstances change – then revise it. If there is substantial increase in your income as time goes on, revise your plan and let your family benefit accordingly. Don’t peg them permanently to a hard-times budget, if things are looking up and you can afford to do better by them.

If, on the other hand, your family has grown faster than your income, or if the breadwinner has to cut down on work because of ill health, be ready to make that adjustment, too. At the end of each year, look at your financial standing and find out in what direction you’re moving. Then take a look at your family’s long-range plans, and decide what changes should be made in the light of your present financial condition.

Fourth Principle

Fourth and final principle: financial planning should be a family project. This applies to all families – those in which the husband is the only breadwinner, those in which both husband and wife work, and those in which teen-age youngsters contribute what they earn, too. No matter who is earning the family resources, planning on spending should be a group decision. Family support and cooperation in going easy on expenses this year because of big plans for next year cannot be expected unless the entire family understands how much money is coming in and appreciates the values for which the family is striving.

Nothing places more stress and strain on a marriage than lack of complete honesty about money – where it comes from and where it goes. Few breadwinners tell their families outright lies about the family’s financial condition, but some families are misled because finances are kept a mystery. The wife who feels her household allowance is pretty meager, considering what her husband spends on golf or bowling, is developing a state of mind in which all sorts of suspicions might grow. For the sake of sound money management – but more than that, for the sake of a sound marriage – make absolute frankness the order of the day in money management.