The Nashes stick to a budget because they don’t try to keep up with the Joneses. Instead of worrying about who has the biggest TV or the latest car, Shannon and Bill live within their means. While many Americans are now adjusting to more frugal ways, the Nash family has been living economically for some time now. Their discipline and frugality have allowed them to amass an emergency savings fund–a key line of defense in financially prudent households–that covers three to four months of living expenses. Bill and Shannon use a simple Excel spreadsheet and conduct a comprehensive review and assessment of their finances four to six times a year.
Of course, the process hasn’t been without a few hiccups. One of their first experiences in their new suburban Atlanta home was a lizard infestation–a financial curveball that cost them nearly $2,000 to resolve. The Nashes took in stride what might have thrown many couples off track for several months. However, they remain committed to their tried-and-true strategy of being responsible about their budget, credit, and tax obligations.
THE NASHES’ ADVICE
The amount of money you have coming in must exceed what’s going out. Focus on making sure that your cash flow is positive. If it’s not, you have to do something to make it positive. Start by cutting back on spending. If you’re a stay-at-home mom–or dad–you may have to go back to work at least part time.
Talk regularly about money. The sooner couples talk about finances, the better. Each person should ask: Am I a spender or a saver? Knowing where you both stand will help you see how the other person views money management. This allows both of you to come into the house without feeling the urge to hide purchases or open a separate account that your spouse doesn’t know about.
Educate yourself about taxes. Shannon says one of the best things you can do is get smart about taxes. Although many people dislike taxes and often shy away from the subject, there are many resources available. The Internal Revenue Service has helpful tools on its Website (www.irs.gov). Click on the tab labeled “individuals†for more information.
Tap into your network. The same way you might search for a doctor, ask a colleague for advice before choosing a financial professional. When evaluating tax planners, make sure they have appropriate credentials and ask about their experience. And don’t be afraid to be open and honest with them about your situation–every professional tax expert has heard your story before.
This story originally appeared in the April 2009 issue of Black Enterprise magazine.