Fiscal responsibility

Yesterday I watched the documentary IOUSA, so now I'm thinking pretty seriously about money. The documentary is mainly about our national fiscal policy, but it had some pointed comments to make about how most Americans manage their persona finances as well.

Although I am not the worst, I am a child of the credit card age. I got my first credit card before I was 18 - which is crazy when you think about it. I came out of graduate school with huge student loan debt. My husband and I, early on in our life together, bought a brand new car because we didn't have enough money to repair our old car. Our credit was good, so we were able to finance the whole thing with no money down.

And we're pretty normal, if not more responsible than the "normal" we see.

Watching the movie yesterday, I thought about how I'm currently managing our money, and how it always seems to be gone faster than I expected it to be. We could, and should, be saving a lot more, and we could, and should, pay down our debts much faster than we are.

I think I need to handle more of our spending the way I handle the kids' allowances. They get their allowance from me on the 1st of the month, and they look forward to that day and plan what they will buy. We go to the store and they get their toys. The rest of the month, if they want something, they have to wait if they don't have any money left. It's a challenge, but Carbon is starting to try and save some or all of his monthly allowance so he can buy larger and more expensive things.

This is the old-fashioned, before credit way of buying things. This is not how I manage my own purchases, but it should be. I'm going to try giving myself a series of "allowances", with days of the month that they are designated. For instance, I could take out the money for the family clothing allowance on the 10th, and I could go shopping and get the items on our list for that month. We don't ever have "emergency" needs for clothing, so it can be planned out. And if it doesn't all get spent, it can go in the savings account.

For larger items that we need to save up several month's allowances before we can purchase, we can set up a few sub-savings accounts at our credit union, and I can transfer the monthly allowance into that savings account on its designated day. If I max out the number of sub-savings accounts I'm allowed, I can always set up some envelopes or jars and save cash in them.

The main advantage will be in changing how my husband and I think about our money. The secret to fiscal security may be just as simple as "Don't Buy Things You Can't Afford".