By Lindy Earl
Finances and money, in my opinion, play too large a role in our world, for the most part. I’m sure there are trust fund babies out there who never think about money. That’s not the norm and I’m convinced they are no happier than the rest of us.
Reality says that we need money to live. How much depends on a great number of factors, mostly our experiences. If you were raised in a large home with designer clothes and dinners out often, it’s simply your norm. Thus you need more, just to maintain what you think is a normal lifestyle. When you’re raised with very little money, even a little bit can seem like a huge amount. Enjoy that feeling!
Finances, money, is an incredibly simple concept. You have and income and outgo. That’s it. Two forces – the amount brought in, and the amount that goes out. That’s the entire formula. It really is first grade math.
Now, the income can be of various sizes and from any number of sources. You may work one job and earn a good sum. You may work five jobs and still not bring in much. No worries because income is only half of the equation.
Outgo is simply the amount you spend. Some of our expenses are fixed, like rent/mortgage and insurance. Other expenses, such as utilities, vary, so you need to allow for high electric costs in the summer when AC runs. But if you have gas heat then your heating bill will increase in winter. It’s a simple game.
If you don’t have any money at the end of the month, then you have two options: increase income or decrease outgo. Thus endeth the choices. That’s it! It’s really not complicated.
How to increase income? Be creative. You could get a second job, start your own business, or monetize one of your talents. People really will pay for homemade baked goods or a handyman for small house or car repairs.
If you’re maxed and can’t work one more hour, then you need to cut expenses. Of course your luxury items go first, such as movies and dinner out. After that you might cut your clothes budget. You can turn the heat down and take shorter showers to save on utility bills. Do you really have to have cable, and every channel? What about your cell phone? I have a friend who cut off her internet, which meant going to the library to use her computer. That was commitment to living frugally!
Not everyone has financial troubles, but everyone has money, and everyone has an attitude about money. Is it meant to be spent? Is it meant to be saved? Is it meant to be shared? Some people thinking giving to charity is pure insanity.
In order to get along with others about finances, you need to first know yourself. Are you a spender or a saver? A friend of mine was a total spender, until she married a spender, and one of them had to be responsible. It was her.
There are formulas out there for what percentage is a reasonable or normal amount to spend by category. For example, housing is often 25% of income. Okay. Easy, right? Not so fast. Does that 25% include the utilities? If so, is your phone a utility? It may have been when it was attached to the wall, but now? Hmmm. And is it a food budget or a grocery budget? What’s the difference? A food budget would include meals out, but a grocery budget wouldn’t. But would a grocery budget include things like cleaners, such as dishwasher detergent? You certainly don’t eat it, but where else would it go? I created something that I called a Slush fund in my budget for items that just don’t fit anywhere else.
What about money that you brought into a marriage, especially a second marriage? How will household expenses be divided? What about Wills and children? Does the second spouse have priority over children? What if a second spouse moves into a family home, and the home owning spouse passes? Is the new person now homeless so that the children can inherit?
I think the answers to all of these question vary in every case. You need to do what works for both of you, taking all this, and more, into consideration. The point I’m raising here is to be aware. Put a lot of thought into the finances of your relationship. If you’re used to spending, will there be friction if you marry a saver? Will you see the money as yours together, or maintain separate accounts? Do you split bills in half, or maybe by percentage, if one spouse earns significantly more than the other?
I do suggest, whether married or unmarried, no matter how much income and outgo you have, that you have a budget. Budgets are very freeing. Simply list all your income, then all your expenses. If it’s a negative number, either increase income or decrease outgo. In the beginning I suggest revising your budget every six months until you have a solid plan, then once a year. Budgets are fluid because expenses change, such as utilities. If you create and keep to a budget you will find a great serenity in your life.
Dating is difficult. Relationships can be stressful. Money makes people a little nutty. But, there is nothing you are trying to do that other couples haven’t successfully handled before. Just gather all the information you can possibly collect ahead of time. Have a lot of very factual and honest conversations. Then hold hands and move forward together.
That’s Life After Divorce.
Lindy is a Speaker, Columnist, Author, and Consultant. Contact her at LMEarl@EarlMarketing.com or find her on Face Book.