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5 Things You Should Know About Your Money

The following post is from Christina of Northern Cheapskate: 5 Things You Should Know About Your Money

I’ve met more than a few people who say they don’t worry about finances in their house.  They let their spouses take care of everything regarding their money.  They have no idea how much money their spouses earn, what their bills are, or if they have money saved for retirement.

No one wants to think about unpleasant possibilities, but not every marriage lasts forever.  And let’s face it, everyone dies at some point.

You really can’t afford to be in the dark when it comes to your finances.  After all, that’s why it’s called personal finance.   Get started today by sitting down with your spouse and having a sincere, uninterrupted, honest conversation about your money.

You can start today by learning about the items on this shortlist:

Income.  Make sure that you know exactly how much money comes in every month.  You need to know this because your situation can change, and you need to know how much money you need to live on.  Don’t guess at this number; be specific.  Start looking at your pay stubs (and your spouse’s).  I’ve known more than a few human resources professionals who have made simple mistakes that have cost me money (not taking out the correct amounts for taxes, and insurance, not giving me a pay raise when I was due one).

Debt.  How much money do you owe?  Where do you owe money? And what kind of interest rates are you paying? Seeing the total dollar figure of your debts can be a great motivator to pay them off, and knowing the terms of each debt will make it easier to determine where to start.

Have a heart-to-heart talk about debt with your spouse.  A dear friend of mine discovered after her husband died that he had accumulated more than $50,000 in debt she knew nothing about.  She knew that he took care of the bills, but had no idea he was borrowing money to do it. It was devastating to her finances and to the memory of her spouse.  Check your credit report for free and correct any errors in the report.    Learn your FICO score and work to improve it so that you can find lower interest and insurance rates.

Expenses.  How much money do you spend on regular expenses?  Sit down with your spouse and discuss everything you spend money on – from keeping the lights on to dinners out to your Netflix subscription.  All those expenses add up.  Know what they all are, and you may discover there are some you can trim, or even eliminate altogether.

Saving.  How much do you have in savings?  Do you have an emergency fund?  How much is in that fund?  Do you have any money saved for retirement?  How is it invested?  What about kids’ college savings?  You do not want to reach your 50s and discover that you don’t have enough saved for retirement.  You don’t want to face a major home repair without money in the bank.  Discuss your savings and set savings goals.  Plan for short-term savings (like replacing your old washer), long-term savings (like retirement or college), and fun savings (like a vacation.)

Estate planning.  Do you have a will?  Do you have a power of attorney?  Do you have a living will?  Do you and your spouse have life insurance?  Do you have an adequate amount of life insurance?   Who are the beneficiaries?  If you’ve ever been through a divorce and remarried, be sure to change those beneficiaries – you don’t want your ex to get your life insurance.  Who will take care of your children if something happens to you or your spouse?  Get your affairs in order NOW.  Do not wait.  Proper estate planning ensures that your family is taken care of if something were to happen to you, and it makes sure that you and your children are taken care of if something happens to your spouse.   An estate plan protects all that you and your spouse have worked for.

Learning more about your money is not an easy task, but it is a necessary one.  Head to your local library to read up on topics like estate planning and investing.  Meet with a trusted financial adviser, and most importantly, keep talking to your spouse and your family about money.

Do you know much about your family finances?

Christina Brown is the creator of Northern Cheapskate, a blog dedicated to frugal living through coupons, freebies, and money-saving ideas.  She lives in the rural north woods of Minnesota where she clips coupons, pinches pennies, and chases her three boys (a 6-year-old and twin 4-year olds) as a stay-at-home mom.