Being financially responsible means considering both the short-term and long-term aspects of finances. Managing these two areas helps build not only financial strength, but also helps keep us emotionally healthy as well.
A lot of stress is caused in marital relationships when money is not well-managed, or when a budget plan is not approached as a team effort. My wife and I have found that our weekly budgeting sessions make us feel a lot better about our finances, stretched as they are, because we are controlling our money - and not the other way around. We have resolved to continue to be financially and emotionally solvent through 1992 using these concepts:Short-term planning
-Pay a full tithing. No more needs to be said. If we do not keep this commandment, we cannot expect the Lord to help us manage our finances or to recieve the spiritual and temporal blessings promised through obedience.
-Spend less than you earn. this seems simple, but is actually hard to do. People can always out-spend their incomes.
The desire for bigger homes, cars and recreational equipment is always tempting us to extend ourselves to the limits of our income - and beyond. We have had to decide to go without some things that seemed "essential" in order to not spend every cent earned.
-Have some kind of spending plan. The only wa to control income and expenses is to itemize each from historical patterns, then determine what to do in the future. That is how successful corporations are run, and family finances are no different.
Budgets do not have to be complex, but need to account for funds earned and spent. As you determine where your money has gone, you might be amazed at how much is spent on non-essential items, including impulse purchases. If you have already decided what you can spend from planning and a budget, it is easier to say "no" to other purchases.
At the beginning of our budget period, we write checks for all regular payments and subtract those amounts from the checkbook. I mail them as they are due, but since we have subtracted the money from our checking, we are less likely to spend money we think is in the account but that is really committed to bills due later in the month.
-Save! Every month we spend hundreds of dollars on utilities, food, rent, taxes and transportation, and often forget to pay ourselves. No matter what our circumstances we should save for ourselves, even if it's only $10 a month.
It's great boost to our "money morale" to think that not every cent goest to someone else. and over time, that small amount each month can build up with interest and principal into large amounts. Then we can reward ourselves with prudent special purchaases and be prepared for emergencies without ruining our budgets. Our goal is to have financial resources taht would keep us going for six months if our income was decreased or stopped.
For longer range savings, we take advantate of a 401K savings program, which includes matching employer contributions into a tax-deferred acount to be used a retirement. If your employer does not have a 401k, anyone can take advantage of an individual reirement account (IRA). We encoiurage our childre to save for missions, college and other things they want. It's never too early to learn the habit of saving.
-Carry adquate insurance. Insuring our homes health, vehicles and lives is an important part of good financial and emotional health. There is a risk that we might never use the insurance, but the peace of mind is essential. And if accident, disater or death strikes unexpectedly, major expenses could bankrupt many of us or take a lifetime to repay. Often employers contribute all or part to the costs of premiums for different types of insurance.
We recently were blessed with twin girls. The day afater they wre born, our son had an accident and emergency surgery. Without insurance to pay the majority of the expenses incurred from these two events, we would be paying for them the rest of our lives.
-Have a will. Draft a will and keep it updated every few years, or whenever you have major changes in family or finances. using a trust can help ease taxes and the burden of managing investments. Trusts are not just for the walthy, but can be structed for those with simple or sophisticated financial needs.
-Keep accurate financial records. Besides helping you track you financial progress, legtimate tax savings can be had with a good accounting of expenses that are deductible.
By reviewing our spending plans, savings balances and financial self-reliance progress, we get excited about continuing the process.