Sunday, February 17, 2013

CFO of the Family

I read a fascinating article about whether or not couples should share bank accounts. It doesn't really apply to my marriage, Adam and I basically merged finances as soon as we started our first jobs out of college. But one line really got my attention: "If one partner is relegated to being the “chief financial officer” of the relationship, it could cause strife if the other partner feels left out."
I am the chief financial officer of my relationship. Why wouldn't I be? I love tracking financial data. This week I spent a few hours setting up a account (finally!). I first heard about mint over a year ago, but I was lazy. Basically, I finally wanted some graphs on how much Adam and I spend on restaurants and alcohol and I have never been motivated enough to get Excel to do it. Also, now I can give Adam the username/password and he can see all our our general financial info in one place. As he put it: "I'm the Chief Auditor." He assures me that he doesn't feel left out.

I've noticed that most of the people I associated with before grad school seemed to have one of two ideas about managing their finances. Either they were just plain bad at it or they were intensely conservative about money.

The bad with money camp was guilty of all the usual things: using credit cards excessively, buying things they really couldn't afford, forgetting about bills, etc. I have less of these friends now as I've gotten older; often I've noticed people get better with money as they age.

The conservative camp is also guilty of some odd financial decisions. Some always paid with cash then found at age 25 that they had no credit rating at all, even friends with past bad choices had an easier time buying houses and cars. Others vigilantly paid off loans but ignored rates, often paying higher rate loans later.

I was raised to be in the conservative camp, but I try not to take it to extremes. I have a credit card that I use for everything, but I pay it off every month and I use the reward points to buy discounted gift cards at stores I go to frequently, or to lower my balance when I make a large purchase like the house. I let professionals conservatively manage my retirement accounts but I will open a brokerage account for my own investment strategies later this year. The family cash flows are protected by life and disability insurance policies and a small pile of cash.

I wonder, is it really hard for people to manage their money? Do they just hate doing it? One thing I've noticed is how important having cash and good credit is. I get discounts on things because I can buy them up front (cell phones, car insurance), or I get discounts because I have good enough credit to get 12 month-same-as-cash deals (furniture, home improvements). Because I have money, it's easier for me to save money. It's really not a very fair system. One thing I would like to see is instant credit report access provided either for free or very cheaply. Once a year seems like an odd restriction.

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