Where Does Your Dough Go?
By Ellie Kay
Spring 2007
When my youngest two boys were three and four, they loved to help me bake bread. I let them wash their hands, don miniature aprons and stand on stepstools at counter level to help roll the bread into balls for yeast rolls. About halfway through the batch, each would sneak a lump of dough, take a bite, pass it to the other and then put it in the pan. Two little boys with big bellyaches made me realize where the dough would go before I was able to stop the nibbling!
A big part of financial management is keeping track of where our dough goes. Just as some people prefer whole wheat rolls while others like sourdough, there are various ways to keep track of your money based on personal preferences. Here are a few options to help you know about your dough:
Credit card management. In this system, both spouses pay the majority of expenses with a credit card. All expenses are assessed monthly when the credit card statement arrives (or online) and purchases are tracked.
Pros: If you are disciplined and pay off your cards at the end of every month, then consider this option. By charging monthly expenses on a card that generates frequent flier miles or other perks, you earn a “two-for-one” value: You track your money and earn flight credits at the same time. Another benefit of this method comes at the end of the year when credit card companies separate annual statements into categories such as gas, food, entertainment, travel, etc.
Cons: If your family carries significant amounts of credit card debt, then this is not the best tracking resource. If individuals are susceptible to impulse buying, then this method is not recommended because of the likelihood to overspend.
Tip: If you choose this method of tracking your money, then perform some plastic surgery and cut up that card the first month you cannot pay off the balance. For a list of cards that offer the best frequent flier miles, no annual fees and other perks, go to www.bankrate.com.
Checkbook management. Here, users write checks for all purchases higher than $10.
Pros: Checks can provide an effective way to track spending, because bank statement reconciliation is a visual reminder of where the money is going. Getting a gauge on spending is as simple as opening the checkbook. Since both spouses cannot write checks as easily in a one-checkbook family, this system should help eliminate impulse purchases.
Cons: Sharing one checkbook for all purchases can cause inconvenience. Some people are not dependable at remembering to enter the amount of purchase into the checkbook.
Tips: If one spouse is responsible for the majority of expenditures and the other needs only an occasional check, then this could be the system for you. Since most check orders come with several check entry registers, let the “non-spending” spouse take an extra register and immediately enter the check amount. Then transfer the amount to the primary register in a timely manner.
Computer management. Programs such as Microsoft Money 2007 can help organize family finances from tracking checkbook entries and balances to monitoring investments to assisting in tax preparation.
Pros: For the computer savvy, this is an easy and efficient way to track money. The program allows the downloading of bank information and categorizes spending with the click of a mouse. It can even produce a graph of where the money is going. Special accounts may be created at MoneyCentral.com (“My Money”) or Quicken.com (“My Quicken”), accessible from any computer so that each spouse can check balances and neither will have an excuse to overdraw the account.
Cons: If one spouse is not computer proficient, then it could hinder access to financial records by one spouse, which may lead to resentment. The key to this system is the ability of both partners to use it. The less-proficient spouse could be tutored until he or she is comfortable with the program. But computer software and hard-drive capability cannot help if individuals forget to update records, so be sure to maintain this discipline. Also, a computer crash could wipe out months (or years) of records without a proper backup, so you must periodically save records on a programmable source.
Tips: If you and your spouse have a marriage made in computer geek heaven, then this system can save much time and effort. Tax time becomes a breeze with the proper software, enabling you to complete your taxes literally in minutes rather than hours.
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Ellie Kay is an author, radio/TV commentator and motivational speaker at military events. Her newest book is “Half-Price Living: The Secrets of Living Well on One Income” (Moody Press, 2007). She is the wife of a fighter pilot and mother of seven children. To receive Ellie’s free newsletter, browse money-saving tips or invite her to speak at your military base, visit www.elliekay.com.