As a mom, you want to take good care of your family, and that includes managing money wisely. But despite your good intentions, you may still find your family among the ranks of many who struggle financially.

You can change that. Here’s how you can develop wise financial strategies for your family:

Know your money management personality. If you’re a "Frugal Family Financier," you try to do everything as cheaply as possible. You probably have only one checking account and one savings account, and you may have no credit cards at all (or just one – and you pay the balance off in full each month). You resist replacing "big ticket" items like cars and appliances until they fall apart.

If you’re a "Capable Currency Manager," you likely spend everything in your checking account(s), but you don’t touch your savings. You work diligently to save for the future and shop around to get the best deal possible on whatever you want to buy.

If you’re an "Ambitious Breakeven Caretaker," you work hard but can’t seem to get ahead. A lack of discipline, skills, or both prevents you from achieving financial security. You can usually manage to pay your bills on time each month, but not save for the future.

If you’re an "Extravagant Home Economist," you live for today – and often live beyond your means. You likely have more credit than you need and use it to excess, ending up in serious debt. You don’t bother to shop around for the best deals on what you want to buy, and you have little or no savings. Once you recognize your money management style (and that of your spouse), you can identify what your specific money problems are and focus on solving them. Be respectful of one another (not judgmental) as you work out your differences.

Set up checking accounts in the way that fits your family best. Consider whether it would work better for you to have just one checking account for your family, two accounts managed separately by you and your husband, or three accounts (one joint account and two separate accounts).

Stay on top of paying bills. Assign the task of paying bills to either yourself or your spouse – whichever one of you is most gifted in this area. However, if you’re not the one who actually pays the bills each month, make sure that you stay informed about the process. Know that they’re being paid on time. Know approximately how much is being spent on monthly expenses and extras. At least every six months (and preferably once a month or quarter), schedule a meeting with your spouse to discuss your finances in detail.

Set financial goals. Write down specific and measurable financial goals for one year, five years, and 10 years from now. Put your goals in order, from most important to least important, for each time period. Have your spouse do the same, and compare notes. Once you’ve identified similar priorities, you can organize your finances to meet those goals. Consider whether or not you might want to hire a carefully selected financial planner to help you achieve your goals.

Choose insurance wisely. When purchasing life, home, auto, and other types of insurance, strike a balance between what you need and what you can afford during this season of life.

Prepare a will. Realize that preparing a will is the only real way to choose your children’s guardian and have your assets distributed as you would like when you die. Don’t put off this important task.

Balance your checkbook. Reconcile your checkbook to your bank statement each month by looking through the last month’s transactions. Use the statement’s ending balance, then add deposits appearing in your checkbook register but not on the statement. Then subtract outstanding checks (those you’ve written but that aren’t on the statement). The total should equal your checkbook’s balance on the same closing date. After you have a reliable balance, keep your checkbook updated by making sure you always record every transaction that affects your checking account and continuing to check your records against every monthly bank statement.

Organize financial paperwork. Organize your bills, receipts, bank statements, and other financial documents in a way that allows for easy access at any time.

Establish a budget. Discover how you’ve been spending your money by tracking your expenses for the past year, noting what you spent in each expense category (regular monthly expenses, plus less frequent expenses such as home insurance, vacations, or Christmas gifts). Then compare that with how much you earned in the same period of time. Pay special attention to how you spent discretionary income (not fixed expenses, but optional expenditures for clothing, food, entertainment, etc.). Understand that the money you spend on discretionary items – even if it’s just a few dollars a day – can make a big impact on your budget. Think and pray about what you’re willing to give up (perhaps Starbucks coffee each morning, or new clothes every month) to reduce your discretionary spending.

Set spending limits for each category in your budget. Keep in mind these general guidelines: 30 to 40 percent of your take-home pay for housing costs (including taxes, insurance, and utilities), 10 to 20 percent for food, 10 to 15 percent for car and other debt payments, 15 to 20 percent for varying expenses (like clothing, entertainment, and home repairs), and five to 10 percent for savings. Use financial software to help you develop and maintain your budget records. Every month, check to see how your actual spending compares to each category on your budget, and make the necessary adjustments to get your spending under control.

Choose a bank or credit union wisely. Visit several convenient bank or credit union locations, and pick up brochures from each one that outline each institution’s services and fees. Compare them. Look for the best deal for your family’s unique needs. Make sure your institution is insured by the Federal Deposit Insurance Corporation (FDIC).

After you select a place, minimize the fees you’re charged by understanding the rules of your account (such as a minimum balance requirement) and not violating them and developing a positive relationship with your bank (get to know people who work there, don’t excessively overdraw your accounts, don’t make late payments, etc.).

Prepare well before asking for a loan. Go into a meeting with a loan officer with some idea of the monthly payments you can afford (usually, fixed obligations – including the loan you’re requesting, your rent or mortgage, car payments, credit card payments, etc. – should not exceed 40 percent of your gross income). Be prepared to answer these questions: "What do you want the money for?", "How long do you want to take to pay the loan back?", and "Where do you plan on getting the money to pay it back?".

Save all you can. Build a nest egg for the future that will help you with both short-term needs (such as an emergency fund of three to eight times your monthly salary to cover an unexpected job loss, medical bills, car repairs, etc.) and long-term needs (such as your children’s college costs and your own retirement income requirements). Spend less than you earn. As soon as you receive each paycheck, deduct a certain amount and immediately put it into a savings account. Then discipline yourself to make do with what’s left.

Invest wisely. Understand that every financial investment involves risk, and that, in general, the higher the risk, the more you should expect to earn. Educate yourself about investments such as savings accounts, stocks, bonds, and mutual funds. Diversify by putting your money into a variety of different kinds of investments to spread out the risks while earning the most you can. Keep in mind that the mix of assets you choose should be based on the amount of time before you’ll want to use the money and how much risk you are willing to take. Periodically review your investments to see if they are performing as expected.

Give all you can. Invest toward goals you embrace by tithing and giving money to worthy causes. Check out charities before you donate to make sure they’re legitimate.

Use credit responsibly. Figure out how long it will take to repay credit card debt at various interest rates and monthly payment amounts. Visiting a Web site such as www.bankrate.com can help you do so. Do all you can to pay off your credit cards in full every month.

Order a copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion); you’re entitled to one free credit report from each bureau per 12-month period. Call 1-877-FACT-ACT or visit www.annualcreditreport.com to order them. Promptly correct any inaccuracies you spot on any of the reports. Improve your credit rating by avoiding collection actions, foreclosures, or repossessions; paying on time; staying well below your credit limit; and keeping your current balance low.

Try to prevent identity theft. Store new, unused and canceled checks in a safe place. Keep your financial records and other important documents (like your Social Security card) in a secure place like a safety deposit box. Never give out personal information on the phone or through the mail or Internet unless you’re the one who initiated the contact.

Shred your personal papers before discarding them. Get a locked mailbox. Carefully review all bills and statements you receive; promptly report any errors or questionable charges. Update your computer virus-protection software regularly. If you do become a victim of identity theft, file a complaint with the Federal Trade Commission, and file a report with your local police department. Also, immediately place a fraud alert on all your accounts that have been affected.

Reduce debt. Commit to spending money only on necessities as dictated by your budget. Ask God to help you be content with what you have, thankful for it, and disciplined enough to live within your means. Focusing on higher-interest debt first, pay down all your debt (credit cards, student loans, car payments, your mortgage) as aggressively as you can. Consider refinancing certain types of debt if doing so will save you money. Dedicate any lump-sum income you receive (such as tax refunds or bonuses from work) to paying down debt, rather than additional spending.

Talk to your creditors as soon as you know you’ll have to fall behind on a payment, such as after a job loss or major illness. Be honest with them about your situation and work with them (and possibly also a credit counselor) to develop a manageable new payment plan. If you’d like a credit counselor to help you (services are usually free), contact the National Foundation for Credit Counseling at www.nfcc.org or (800) 388-2227. Avoid filing for bankruptcy at all costs; it’s truly a last resort and will mar your credit record for years to come.

Downsize your lifestyle. Base your lifestyle on what you truly need and can afford instead of trying to keep up with your neighbors. Have the courage to scale down significantly to enjoy the peace of mind that comes with savings, such as by trading in your car for an older model or moving to a smaller house. Simplify by considering whether or not you really need an item or service before buying it. Substitute by getting something else that costs less or by making it yourself. See if you can borrow the item you need, or ask someone else to split the cost with you and share the item. Shop off season for the things you need. Compare prices at several different stores. Use coupons. Never buy anything on impulse. Look for low- or no-cost ways to have fun rather than spending a lot of money on entertainment.

Teach your kids how to manage money well. Be open and honest with your kids by disclosing how much your family earns and how much things cost [Editor's note: if your kids are very young or you're uncomfortable with the possibility of your kids sharing personal information with those outside the family, you may want to refrain from sharing the exact details of your income at this time.] 

Help them understand your thought processes when deciding how whether or not to make a purchase. Teach them the importance of prioritization and delayed gratification. Consider giving your kids an allowance or paying them to do extra chores around the house. Help them set up a savings account or (for teens) a checking account.


Adapted from Dollars & Sense: A Mom’s Guide to Money Matters, by Cynthia Sumner, copyright 2005 by MOPS International. Published by Fleming H. Revell, a division of Baker Publishing Group, Grand Rapids, Mich., www.revellbooks.com.

Cynthia Sumner is the author of three books for moms and a former contributing editor for MOPS International’s MOMSense magazine. She holds a degree in economics and an MBA with a concentration in finance. Currently Cindy directs marketing for Sumner National Bank, serves on the bank’s board of directors, and provides bookkeeping and accounting services for a moderate-size farming operation. She and her husband have three kids and live in rural Illinois.