How do you manage your money?

Back when Sean and I first moved in together, we both worked full-time and our expenses were shared. He had his bills to take care of, I had mine. We both had vehicles we took care of ourselves but we shared the cost of rent and groceries. He usually paid when we went out. (In my defense, he made more money!). Not much changed when we bought our condo. And over the following years, we were disciplined enough to save up to pay for our wedding and honeymoon, new vehicles when ours fell apart, and other expenses and splurges that came up.
 
Fast forward to today (and add in a new house, two children and two new (used) vehicles, plus factor in my move to part-time self-employment and Sean's new job.) Somewhere in the past eight years, we went from a couple who was very much in control of their finances, to a family who’s left financial planning somewhere in the rearview mirror.
 
We’re doing everything we’re supposed to be doing and, in the day-to-day, everything’s fine: Our bills are paid, we have food in our cupboards, we contribute to RRSPs and RESPs, etc. But we don’t have a plan. And I really want one. I see lots of people in similar financial situations saving up and doing wonderful things — buying boats and taking vacations and renovating their houses. Now that our girls are getting older and the full burden of daycare will soon be behind us (though we’ll still have after-school care to consider), I’ve realized that some of our own dreams of family vacations and renovations may soon be within our grasp. But, as everyone has told me, that “extra” income has a way of working itself into your everyday cash flow if you’re not careful (just like all that money once spent on diapers!).
 
I interviewed money maven Gail Vaz Oxlade a few years ago for a story on how to plan for maternity leave (you’ll know her from TV’s Til Debt do us Part or Princess and she’s also the author of several great books). Whether you love or hate her no-nonsense, I-don’t-care-if-you-hate-me approach to doling out advice (I love it), the woman speaks truth: Money management is not rocket science, but it is math, and you have to ensure the figures add up.

The biggest message she has for people is that creating a budget is absolutely essential. Too many of us waltz through life, just letting cash flow in and out without truly knowing where it’s all going. The key is to write down everything you’re spending for a month to see where your money actually goes, then set a budget to follow, strictly. If you allot $300 for groceries a month, that’s all you get, and if that runs out before the end of the month, you have to make due with what you have or cut back somewhere else in your budget to buy what you need (and learn from it for next month so you make a better shopping plan).
 
That idea of cash just flowing in and out of our lives rings so true. Sean and I have talked about creating a budget a dozen times. Why don’t we have one? Laziness is the only answer I can come up with. And then I kick myself for thinking that the things we spend our time doing are more important than getting ourselves on the right financial track — and all the fun and freedom that comes with that, along with the security of knowing there's a cushion to fall back on in case of an emergency. I know that we’re both very capable of doing what it takes to get there, as that’s how we lived before kids. I’m just not sure why taking this first step is so hard. From the sounds of news reports detailing the overwhelming debt load Canadians carry these days, it looks like we're not the only ones without a plan.
 
How does your family manage finances? Do you have a budget or another way to plan and save? I’d love to hear any tips or resources you’ve found helpful. Leave your comments here or tweet me @T_Chappell
 
 *Photo: KittyCanuck/flickr