Wednesday, 17 October 2007

Financial Lessons From Six Years of Marriage

Being the sucker than I am for any kind of contest, I decided to enter this one from Get Rich Slowly, one of my favourite blogs. Of course what I'd be able to do with a North American Wii is another matter, but I'm always open for new ideas for what to write about (which probably explains why I'd ideally like this for Christmas).

Anyway, here's a few financial lessons I've learnt since I got married. For those of you who are single and hate reading things relating to marriage don't worry, I think they're useful regardless of marital status.

Planning Ahead
As friends of ours will know, when Lorraine and I had been married for just over a year we had the good fortune to adopt our dog, Cookie. Shortly after the following New Year he started limping a bit. Unable to think about anything else I took him to the vet's, where an injection quickly resolved the issue. The cost? Not much, but it was just after Christmas. Not a good time for us.

At the time we had to think where we were going to get the money from. We managed it, but it showed we needed to think ahead for such incidents.

Now we put aside a certain figure each month into an account titled "Pet Care". It's currently in a Halifax Web Saver, which is great for such purposes as the funds can be instantly transferred to a current account as well as earning a healthy amount of interest.

In addition to putting money away we also use a planner calendar so we're aware of what costs might be coming up, e.g. every October we know Cookie has to go and get his boosters.

Making Interest Work In Our Favour
Just after the New Year in our first calendar year of married life we bumped into another recently married couple in our local supermarket. They mentioned that they were saving for Christmas through the supermarket's Christmas savings card. Good idea we thought, drip feed it, make Christmas a progressive cost instead of taking one big hit at the time itself.

Only we improved on that idea. Without giving away names our supermarket allows you to save £144 and then get a £6 bonus just prior to Christmas. Any other interest on that they keep, and you get £6 on the card regardless of whether you reach £144 on February 1st or November 1st. Now we put aside money for Christmas into a savings account each month, get the card just before the bonus date, and keep the interest for ourselves.

Along with that we've also committed to saving for cars ourselves in cash. Along with having interest working in our favour it also helps us when it comes to the actual purchase and we don't have to delve through small print on any finance agreement.

Not Keeping Up With The Joneses
Speaking of cars, after they had been married for a few years my brother-in-law and his wife turned up at my in-laws with a relatively new Honda CR-V. Once they left I was very matter-of-fact with my father-in-law, saying that we wouldn't be changing our car just yet, and once we did it wouldn't be a car like that (being fair my father-in-law didn't have a problem with that - we're quite like-minded that way).

We left everyone else to do the ooo-ing and aah-ing. We did that when we found out what they were forking out in monthly payments. I still ponder whether it was a factor in their eventual divorce.

We miss out on certain things, but we live within our means. We have to hear about the way some people live their lives (especially a former friend of Lorraine's who had her husband working sixty-hour weeks while she went out spending his money lavishly), but we have stuck with it for our long-term good.

Know the Price You Want to Pay
I'm pretty sure I read this in Moneyball somewhere (although search after search proved fruitless), but there was a basic principle that Oakland Athletics GM Billy Beane followed - know your value of each player down to the dollar and what you would give up to acquire that player.

I now have a pretty similar system. When saving for a car I know roughly how much I want to save. When saving for a new TV last year I knew how much I was prepared to pay.

There's also something interesting with technology when you're saving for something - prices come down (providing you don't mind not keeping up with the Joneses), and often your savings and the price of the item you want meet in the middle.

Recently I was looking for a new digital camera, and had a price in mind that I was willing to pay. When high street stores started selling it for that price I knew I could do better. When one online retailer ran out of stock when selling it for 25% less than the high street price I didn't regret not buying one, because I thought it would come back in stock. It did, and my saving had now reached that level. I saved 30% on the cost I was willing to pay.

Just a few things I've learnt, I hope they come in handy for anyone reading.

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