WHO CONTROLS YOUR HOUSEHOLD FINANCES?

Once married couples start sharing their finances, there is a natural tendency to over-spend with each person assuming there is enough money in their joint bank accounts to cover his or her individual expenses. In effect, no one is truly in charge of the household finances and they often end up spending the same dollar twice. The result is bounced checks, overdraft fees, late fees, higher interest rates and troubling phone calls from creditors.

The first step to better money management is talking and praying with your spouse about shared values. Out of respect for one another, the process should be completely transparent. There can be no such thing as secret bank accounts, undisclosed student loans, or “his” and “her” accounts (except in so far as is required by sound estate planning).

It’s vital that you reach agreement on your short-term and long-term financial goals, recognizing that this may entail some compromise by both of you. It’s also important to decide in advance who has the talent and time needed for managing the money on a day-to-day basis. You should agree that no major expenditures or investments be made without the agreement of both parties.

Next, you should determine your actual monthly take-home pay, using your payroll statements. If one partner has a fluctuating income, take an average over an extended period, preferably a year. If you receive a windfall, such as a year-end bonus, don’t include that when calculating your monthly income.

Once you know what your take home pay is, you know how much return should make to the Lord out of gratitude for all He has given you.

Next, use your bank statements to determine your other expenses. Then sort your spending into three categories: fixed expenses, variable expenses and flexible expenses. Fixed expenses include such things as rent or mortgage payments, transportation, union dues, food, clothing and daycare. Variable expenses include utilities, semi-annual insurance premiums, repairs and medical expenses. Flexible expenses include such things as dining out, entertainment, recreation and vacations. Convert all your expenses to a monthly average

Armed with this information, you may be able to trim expenses without crimping your lifestyle. It may mean dining out a little less often, using a library card instead of a credit card, swapping DVDs with friends, buying generic groceries and medications, using online coupons and commuting by carpool. But you might be surprised at how small changes in spending habits can lead to big savings over time.

For example, asking for water instead of a soft drink at lunch each day can save $420 a year; skipping a gourmet muffin three times a week can save $435. Using online grocery coupons can save you $1,500 per year.

Use ATMs sparingly because the cash you withdraw is hard to track afterwards. If you must use an ATM, make sure it’s part of your bank’s network or you could pay hundreds of dollars a year to gain access to your own funds.

Of course, if you want to enjoy truly big savings, trade in your gas-guzzler for an economy car to save $1,500 a year on a 40-mile daily round trip commute (not to mention the savings on car payments).

Saving money can be painless, too, especially if your company has a 401(k) plan in which they match your retirement contributions up to a set amount; or, if they have a Medical Savings Account that allows you to set aside pre-tax dollars for medical expenses. Of course, you’ll also need a “rainy day” bank account for unexpected bills so be sure to set aside any “found money” (tax refunds, cash gifts, refunds). And, if you receive a pay raise, consider increasing your savings contributions or using direct deposit to pay yourself first.

Finally, learn your credit score, which is used by lenders, insurers and others to determine your creditworthiness and interest rate. Interest payments are a large part of every household budget. In fact, the average household carries more than $15,000 in credit card debt and pays $225-375 every month in credit card interest charges. The Bible says the debtor is slave of the lender and Jesus said you cannot serve both God and money. So get a free credit report online and start paying down your card charges. Pay off your high interest credit cards first and always pay more than the minimum on your outstanding balance. Once you've discharged the debt, limit credit card usage.

Finally, sit down with your spouse once a month, or whenever a large unexpected bill is incurred, to go over and adjust other household expenses.