In retrospect, it evolved to being a family project over time, versus being a formal declaration. Here are the elements that I found that enabled successful team work:
Agree on the big stuff. We had an agreed approach on these major parts of our plan:
- How much to pay ourselves first. In recent years, we began automatically setting aside 20 percent or more of my salary, before paying monthly bills. In addition, we set aside 10% for future known (e.g. property taxes, routine maintenance, car purchase) and unknown (e.g. minor storm damage) expenses. As a result, we were able to put money in savings and create an emergency account.
- Make choices on where to spend AND not to spend. For higher priority areas, we spend higher amounts for better quality or value. One high priority area is to have a home in a good neighborhood, providing great neighbors, an excellent school system, and stable home values. We also make sure that we have enough funds to maintain and keep our house in good condition. Another priority is our health. We spend more on fresh, low processed, low/no additive foods and my spouse does cooking at home. We also take time to exercise and maintain our health.
Low priority (i.e. reduced spending) areas included: automobiles, entertainment and gadgets. We buy quality, economical vehicles and drive them for at least 10 years or 200,000 miles, which ever comes first. We take big vacations (e.g. a cruise) every few years and smaller vacations in the intervening years. We take advantage of local memberships (museums, amusement parks, etc) which provide a year of admission for only 2-3 times the cost of one visit. We try to avoid the black hole of electronic gadgets. We don't own a wide screen TV, video game controller, and don't have cable or satellite services. In addition, I don't have a cellphone.
Utilize one's strengths and interests. My spouse has a degree in food science and is very interested in nutrition and culinary arts. In addition, she loves to do gardening and has a good sense of quality and design. I have a degree in engineering, enjoy pondering financial matters, and like to solve minor household problems. We leverage our interests and strengths to build the family wealth.
For example, my spouse will choose the furniture to buy and I will negotiate the price. While I do have input on the furniture, I usually go with her decision. And she lets me ask for a cash discount, even though the price may be acceptable to her.
Overall, these elements have made wealth building a family project. As our daughter becomes older, I expect that we will also have her participate in the financial decisions of the family, including such topics as higher eduction.
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This is not financial advice. Please consult a professional advisor.
Copyright © 2007 Achievement Catalyst, LLC