Take Charge of Your Family Finances in 2014

As a working mother and CPA handling the rigors of tax season, the demands of a 3-year-old, and the desire to occasionally see my husband,  I can certainly understand how managing the family’s finances  sometimes falls to the wayside. But it doesn’t have to be this way.  Smartphone applications, customer-friendly banks and brokerage houses, and some savvy planning can help you take charge.

Understand your financial picture

Meredith’s daughter, Tallulah, learned to take control of the family’s finances from an early age.

The first task for us all, from cash-strapped entrepreneurs to retiring CEOs, is to take an honest look at our current financial picture.  Sure, we may know what our checking account holds, but we need to see the whole picture: assets, liabilities, income and expenses.

If you already use accounting software (e.g., QuickBooks or Peachtree) for your business, consider setting up a personal file to automatically download your bank and credit card transactions or make use of free smartphone apps to do this work for you.  A personal favorite, Mint.com, allows you to seamlessly link bank, brokerage, loan, credit card, and retirement accounts and then automatically tracks and categorizes your daily transactions. At the swipe of your iPhone (or Android device), you can pull up color pie charts showing a detailed breakdown of your spending habits, including just how much you’ve spent on those caramel lattes this month.

Build a budget

Once you’re seeing the big picture clearly, budgeting is next. In a business environment, we wouldn’t hesitate to follow this requirement and analyze monthly budget-to-actual reports. Yet, when managing  our own finances, monthly budgets become all too easy to neglect. Again, if you’re a small business owner, consider turning to the accounting package you’re using for your company. You likely already have access to a tool that can also work for personal budgeting.

QuickBooks allows you to easily create month-by-month budgets. Simply allow the system to generate a new budget based on last year’s spending (you can do this at the click of a button!), and then tweak the figures for 2014 depending on  what changes you may be facing for the new year.

Set financial goals

Perhaps the nicest part of taking a hard look at your spending is the ability to set – and reach –financial goals.  Saving for a summer vacation?  Looking forward to an early retirement?  Fantasizing about your 3-year-old going to Savannah College of Art and Design?  Lay these plans out today, and start a savings fund for each one.  Now you’ll have real motivation to pass up that extra round of poker at the Hard Rock casino.

Mint.com offers goal-setting tools, and they become even more effective when combined with the features of an online bank such as Capital One 360 (formerly ING Direct Electric Orange), which allows you to set up as many savings accounts as you’d like with custom names for each of your separate goals.

These banks also frequently offer more attractive features than their brick-and-mortar competitors. For example, Ally Bank waives ATM fees nationwide and will even reimburse you if a local bank’s ATM tries to assess you a fee. Instead of charging overdraft fees, Capital One 360 provides all customers with access to a low-rate line of credit that they borrow against when they overdraw their account. If you have a 10-day overdraft of $100, the bank will charge you interest at a rate of $0.031 per day. Grand total?  Just 31 cents! Compare that to the standard $31 fee your bank likely charges now.

Also take a look at the interest and CD rates online banks offer.  Chances are they can beat your local branch.

Revisit and adjust insurance coverage

As you grow savings and build assets, revisiting your insurance coverage annually becomes an important task. Policies taken out years ago may not provide sufficient coverage for today’s needs.  Beneficiaries may need to be changed, and lower premiums may be available if you restructure your policies.  Find an agent whom you feel comfortable working with or request a referral from your attorney or CPA.

You’ll also have to take a proper inventory of your belongings for purposes of homeowner’s insurance. KnowYourStuff.org allows you to make such a list, room by room, so you can file the proper claims if a disaster, accident or theft occurs.

Taking the time needed to get your financial house in order will allow you to make smarter decisions when it comes to the business of running your family and reaching your personal goals. If you want to learn more about what steps you can take to get there, please contact us.