Susy Yamada is a home-schooling mother of 5 children, who is always looking for new ways to teach and learn. She and her husband have principally raised their family in New York City, in a fluid, ever-changing, too small apartment, where they still live with their 3 youngest.
Motivated by several significant events in my extended family and my misunderstanding of simple employment benefits last year, I decided it was time to learn more about my family’s finances.
Getting my family’s financial life in order has involved laughter, tears and a healthy dose of embarrassment. But it has been worth it. Prior to this journey, I got the basics done: paying bills, managing monthly cash flow, balancing our accounts. However, I had no idea whether these decisions were benefiting our family in the short or long term. It turns out both me and my husband were both living in the dark.
Studies reveal that most of our ideas about money are rooted in the home we were raised in. I had a belief that as the “keeper of the hearth”, and nurturer of my beautiful children, I was exempt from being responsible for or showing interest in money. Moreover, the “money is evil” paradigm stopped me from learning about and practicing informed money management.
These feelings had a profound effect on the relationships in our family. We rarely discussed money because certain values had been established and followed early on (e.g., no credit card debt). Despite this basic foundation, many of our financial practices were not based in any purposeful direction or goal. While the consequences for this lack of direction have not affected our highest values, we missed out on opportunities to create greater cohesion as a family by discussing our “direction” and “intention.”
My learning began by being open to counsel. Misty Vieira, a small business bookkeeper, who I hired to help me in this process, encouraged me to track my spending for three months. My children termed this process, “ruining their Christmas.” Misty walked me through setting up an online accounting program that tracked all our accounts and spending categories. Every morning I updated the accounts and double checked that every transaction was categorized correctly. Misty’s guidance and direction was essential in helping me understand the language of money such as “in the black,” “line of credit” and differences in meaning of the word “balance.”
Another key individual, Lee Ann Fatalo, a financial advisor, helped me make a financial plan and actually follow it. While I found some of her questions about my family’s expenses invasive, I see now that her need to have this information was critical to helping me move forward with my goals. She was the person who knew the path ahead, and could guide me down it.
Labeling expenses led to the most trauma. I felt threatened when my advisers categorized expenses with words that made the items sound less lofty. Those conversations made me want to quit. My emotional response was so visceral I knew I needed to look deeper. It turns out I would categorize everything I wanted as “educational,” which mean that the spending was justified because the purchase was for the good of the children. In some ways, I felt that my identity was being attacked. While I have made some strides in understanding my emotions around money it is clear to me that there is more to know about myself. The labeling process revealed important information that helped me modify spending in ways that contributed to our family’s long term goals:
- We made 52 Amazon orders that year, which almost always included multiple items. I started putting my library card in the front pocket of my wallet to remind me that I borrow books first, then consider adding them to my collection.
- The arts and supplies spending seemed high, so we committed to using the resources we already had in the closet. The resulting projects have been truly creative and more reflective of the small, sweet hands that made them.
- Beyond belief was the fact that we had been paying for 2 Netflix accounts for more than a year. Of course, I quickly consolidated to one!
- I discovered many hidden recurring costs that we had signed up for, which at the time, seemed needed. It took several days to figure out how to cancel these recurring payments, but well worth the hundreds of dollars of savings each month.
- Our Quicken reports showed us how much we were simply giving away. While much of our charitable donating matched our values, we were prey to random requests and were often too generous for our financial situation.
Perhaps the most important outcome of this process has been that my husband and I have worked together. Before this experience, I perceived my husband as rounding down costs of his projects and rounding up mine. Now, we have effective conversations because we look at the truth of Quicken reports. We no longer guess or assume we have adequate funds. We know. This knowledge has helped not only diffuse strong emotions, but also help us gauge our progress towards meeting our long term goals.
The journey has been embarrassing at times, but fun because I am on the frontier of what was unknown. I surprised myself that I can do this -- and it has been exciting.
Do you shy away or embrace managing your finances?
What are your assumptions about money? Publicly hate, secretly love?
How can knowing more about your money help you put a down payment on your dream?
P.S. Thanks to Janna Taylor for helping pull this story out of me.