6 Steps to a Simple and Successful Financial Life

I think we can all agree that finances play a key role in our married lives. It’s the need to provide a quality life for our family that drives most of us to work, and we know that the way we spend our resources directly affects our lifestyle now and down the road.

Money stuff is important.

That is not to say that money is the center of life or that managing the family finances must be an oppressive burden. In fact, financial success is really just a matter of making good choices consistently. And as readers of Simple Marriage, do you know the best path toward achieving your financial goals?

Keep it simple.

Really. In a world dominated by consumerism, credit card commercials and crazy derivative stock options, you will be well-served to take a deep breath and consider what you really want from life. If you are wise enough to be a regular reader of Simple Marriage, I’m willing to bet that your true priorities fall close to home and close to your heart.

If so, I have some advice that I trust you will value. This isn’t earth-shattering and it’s really not original. In fact, it is the same advice we have heard from our grandmothers our entire lives. It’s not complicated, but it sure is effective.

Six Simple Steps for Financial Success

1. Build a basic budget…together.

OK, so maybe you hate idea of having a budget and counting every penny. Honestly, I don’t care how detailed and meticulous you want to be with this. In fact, simple is better. The two key components of a meaningful family budget are: (1) to proactively plan ahead for how you will spend your money and (2) to create it with your spouse. And the real beauty lies in the latter.

You and your spouse must create your budget together and you must agree to follow the same budget, pinkie-swear and spit-shake. When you take this approach, a budget can become a surprisingly valuable tool in your marriage. Real communication is needed to formulate a plan, and real trust is developed when you both stick to it out of respect for your spouse.

2. Work together from a single account.

Do you and your spouse operate with separate checking accounts or a “yours, mine and ours” approach to your family finances? I would strongly encourage you to consider simplifying your life by consolidating everything into a single checking account. Not only will it be easier to keep track of, but you will benefit by shifting your mindset to one of unity with your money. As a bonus, you can expect that the openness and communication required to make a single account a success will carry over and enhance other aspects of your married life.

3. Eliminate your debt.

None of us enjoy sending out those payments to the bank, car finance company or student loan office each month, right? In fact, I think we can all agree that it sucks to have your income spoken for by debt payments before you even receive a paycheck. So, if we all hate the payments, why do so many families have them?

It’s a matter of mindset. If you feel like you’ll never have anything of value without an accompanying payment book, you’re probably right. However, if you are fed up with being normal (i.e., deeply in debt), you can shed the debt and achieve financial freedom. You set the priorities, and you make the decisions that will allow you to dumb the debt. My wife and I paid off over $53,000 in debt in around three years, and I can tell you that it’s not easy but it is worth it. And the lack of payments really simplifies your financial life.

4. Stick with simple (and effective) investments.

As a rule, if you don’t fully understand something, you should not invest in it. If you chase the latest hot trend and buy what everyone is recommending, you are almost assuring yourself of poor returns. Keep in mind that if thousands of highly-paid professionals spending their entire lives studying the market cannot beat it, neither can you.

Instead, take a simple approach and focus your investing in areas with a long track record of success. Personally, I think it is tough to beat a diversified mix of index mutual funds for retirement investing. They are not sexy or flashy. But they are very effective, low in cost and easy to understand. That’s a formula for long-term success.

5. Enjoy the simple things in life. Live within your means.

At the end of the day, it really does come back to living on less than you make. I hope you make a lot of money and love what you do to earn it. However, the critical point here is that you really don’t need a ton of money to be financially successful.

The key is contentment. Quit placing your value in material things and trying to maintain a high-cost lifestyle. When you learn to appreciate your family and value the simple pleasures in life, your need to impress the neighbors really does start to fade.

6. Pass it on.

In my opinion, the best part of simplifying your financial life and finding contentment with your lifestyle is the impact it has on your relationship with your spouse and the example it sets for your kids. When you break the cycle of debt dependence and fights about money, you set the stage for financial success for generations to come. You literally have the ability to change the future shape of your family tree.

Were these suggestions brilliant, original and completely unexpected? Of course not. I’d venture to guess that you knew these things, but you may not be living them. The key is to take action.

Simplify your financial life and invite new success with your money and, most importantly, your marriage.

How do you feel about these suggestions? Where can you improve your finances by taking a simpler approach?

Photo courtesy kevindooley

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