16. We cooperatively track expenses, follow a budget, and use money charitably.
(Note: this blog post contains frequent parenthetical comments, both family stories and details of personal financial habits.)
I grew up learning conflicting financial advice from family members.
My grandfather had lived through the Great Depression. For him, debt was always bad. "Avoid debt!" he would teach me. "Earn and save you that you can be generous."
(My grandfather even paid off his home mortgage sooner than economically sensible. He intellectually knew that his refinancing to a low interest rate and annual tax deductions made that debt a wise choice because the money with which he might pay it off would be more significant elsewhere. But emotionally he was so allergic to debt that he paid off the mortgage as soon as practical.)
My father's family were ranchers. They grew oranges and avocados, and raised cattle. For them, debt was good because of leverage. Why save $100 when you could use it as the down-payment for a new tractor or field, which would increase your ability to earn by much more than $100?
(My father's career is a consulting actuary. Since graduating college, his understanding of leverage, risk, and other economic principles is among the best, and is still for hire. Yet in the late 1980s my mother still would not let him put on his car a bumper sticker that read "Actuaries do it with captives".)
So by the time I was college-aged I knew a lot about budgeting, saving, and investing. I did not expect to marry someone with an equally sound financial habits or knowledge.
I met my wife at UCSB when we were both students there. She was working at a campus computer lab to pay for her own tuition. She could make and follow a budget, and would be graduating college without any debt. Points in her favor!
My wife and I have been very careful with expense tracking since we married. All of our receipts go in a bowl whenever we get home. Once a month (or so) we enter them into a spreadsheet with expense categories. If we notice that we are spending more than our wages we change our spending habits. If we notice we are spending more than usual in any category we make changes.
(A modified version of this spreadsheet is towards the back of this Math 25 file.)
(Not every spike in spending is alarming. There are exceptions. A very few home improvements, such as granite counter tops, basically transfer part of your wealth from the "cash cushion" that normally sits unused in your savings account to your home value; those we do not count as "spending" since we postpone them until they do not wipe out our cash cushion. Then there are the types of unavoidable and unusual expenses that are supposed to hit your cash cushion: vacations to a family reunion, unexpected home maintenance, etc. So not every spending spike causes changes in spending habits.)
(Also, during the two years when our two boys were born we did spend more than our wages because my wife worked much less. But we also cut back expenses, so we did not overspend by much. Another appropriate use of our cash cushion.)
Johnny Cash famously said, "Success is having to worry about every damn thing in the world, except money." By that standard my wife and I have always been successful. We avoid most money worries by being content with what we have and by spending less than we earn. Gifts from family meant we started our marriage with as much cash cushion as a couple living in an apartment need.
(We also did what I once mentioned before: we waited until our monthly household profit would cover a mortgage and
property tax before buying a home, and waited again until our monthly profit would cover the cost of children before having kids. During those years of wait we put most of our monthly profits into savings, rather than chasing the latest technological gadgets or going on vacations whose absence would one day make us less content. I still use this phone instead of a smart phone. Friends we help teach budgeting to are always amazed how much we save by having only one car that gets good gas mileage, by heating the house with firewood, by buying food in bulk, and by not eating out too much.)
Moreover, my wife and I agree about how to be charitable with money. We tithe locally. We support well-rated micro-finance and aid organizations such as Finca and Heifer Project. We use our liquidity to obey scripture by offering interest free-loans to friends in need and friends who are small business owners.