Husbands and wives often avoid conversations about money management. In the US, financial conflict is the second cause of divorce. While in the Philippines, one out of four couples separate because of the same reason. Why is that? That is for another blog post.
For now, let’s check this simple guide on money management to help you become a confident and financially savvy mom.
Why Do I Need Money Management
Money Management, also known as personal finance is about handling money. It covers budgeting, saving, insurance, mortgage, debt management, investing, retirement, and legacy planning. In short, it’s knowing where your money goes. It’s an integral part of marriage that is often neglected. Let’s look at the benefits below:
- Reduces stress and anxiety. Knowing the basics of money management lowers the risk of running into financial problems in the future. It is good to be financially prepared for life’s uncertainties.
- Learn how to budget. In Proverbs 21:5, King Solomon espouses careful planning and avoids hasty decisions because it leads to poverty. Setting aside an amount for daily expenses is necessary to achieve financial goals.
- Practice stewardship. As Christ-followers, we believe that everything belongs to God, even our money. So the way we handle our finances reflects how we honor what God has given.
- Debt Management. Understanding financial concepts empowers you to make informed decisions about managing and reducing debt.
- Set financial goals. Money management gives you the confidence to set financial goals. This includes building an emergency fund, saving to buy a home or a car, paying off debts, making wise investments, planning for your children’s education or your retirement.
- Modeling to your children. Children look up to their parents for everything. When they see a mom who is good at money management, they will imbibe the same principles and follow your lead.
How to Practice Money Management at Home?
You have seen the benefits of knowing how to manage finances. Let’s look at some pointers on how you can build confidence in becoming a financially literate mom:
1. Educate Yourself
It is never too late to start learning about personal finance. Regardless of your background or mistakes in the past, you can always learn and unlearn. Read books and articles, listen to podcasts, and watch YouTube videos. Do not shy away from financial management seminars because they can help a lot. Here are some books you can start reading:
- Rich Dad, Poor Dad by Robert Kiyosaki
- The Psychology of Money by Morgan Housel
- The Total Money Makeover by Dave Ramsey
- Your Money or Your Life: 9 Steps to Transforming your Relationship with Money by Vicki Robin and Joe Domingues
- Creating Wealth and Managing Finances by Dodong Cacanando
- Till Debt Do Us Part by Chinkee Tan
- No Nonsense Personal Finance by Randell Tiongson
2. Create a Family Budget
A budget is a protective tool for your family to create financial stability. As Dave Ramsey says, “A budget is telling your money where to go instead of wondering where it went.” How many times have you wondered where your paycheck goes, right? It is because we have never set aside a specific amount for our daily and monthly expenses. Setting a budget protects the family from overspending. It also encourages families to live below or within their means. To be honest, creating a budget is not easy especially if you have never set it before. But it can still be done. Remember, the best time to start is now.
3. Set Money Goals
Are you a planner kind of mom or a spontaneous mom? Both have pros and cons but when it comes to finances, it is better to have a plan. Discuss your short-term and long-term goals with your husband, especially if you are a single-income family. Do you want set up a college fund for your children? Or planning a vacation next summer? These entail large sums of money that is why careful planning is necessary.
Part of setting money goals is debt management. Do you want to pay off your loans or credit card debt? Of course you do! How do you plan to go about it? Setting financial goals determines your next move and improves your money management skills.
4. Update your Insurance
When was the last time you spoke with your financial advisor? Maybe it’s time to set an appointment to review your policy. A good FA (financial advisor) will analyze your current finances and recommend steps in securing your family’s future.
Maybe you have negative experiences with insurance or FAs so you avoid them altogether. That is truly disappointing and understandable. But not all insurance companies and FAs are the same. Find a trustworthy FA who will be patient to sit down with you and help you prepare a financial safety net for your family.
American Financial Advisor and author Suze Orman says, “If a child, a spouse, a life partner, or a parent is dependent on your income, you need life insurance.”
5. Teach Your Children About Money
We don’t only teach our children biblical values, we also teach them financial literacy. Passing on the value of stewardship, saving, tithing, and entrepreneurship will help them make wise financial decisions in the future.
My son, do not forget my teaching, but keep my commands in your heart, for they will prolong your life many years and bring you peace and prosperity. Proverbs 3:1-2
6. Persevere despite setbacks
Don’t expect to develop money management skills overnight. Like any skill, it takes time and a lot of practice. You will face setbacks and discouragement along the way, but don’t give up. You are making sacrifices today to protect you and your family’s future.
According to the World Bank, only 25% of Filipino adults are financially literate. Let’s not be part of the statistics and start a new trend of financially savvy moms and families. We need to change this for our children’s sake.
Learning the skill of money management is beneficial for moms. This creates confidence in managing the family’s budget, setting financial goals with the husband, and securing the future of the children. However, money management is a team effort. Your spouse has to be on board too. At the end of the day, learning the skill of money management prepares you and your family for life’s twists and turns. It’s your way of preparing for the unexpected. However, no mom can do it alone.
What money management practices are you following today? If you have not, what will be your next step to becoming a financially savvy mom?
If this post was helpful, feel free to share it with your friends. You can reach out to me if you have questions on the topic.