Managing money in modern families; a little financial planning at the outset can go a long way - includes 10 money tips

Ebony, Oct, 1990 by Alex Poinsett

Managing Money In Modern Families

If you haven't won the lottery, inherited a gold mine or reaped an investment bonanza, you should be fashioning a money-management plan for your family. Experts say the time is long gone when you could provide for their needs simply by working hard and stashing a little bit away monthly. Regardless of your income or whether you're planning for your child's college education, retirement or other goals, you must consider the impact of taxes, inflation, interest rates, savings and investments on your family's future.

With that in mind, Mark and Sheila Bowie of Hazel Crest, Ill., started joint financial planning in 1984 while they were still in college - four years before their marriage. "We decided that we didn't want to pay maybe $600 in monthly rent that could be going on our own home," recalls Mark, 29, a social worker. "So right after graduation from the University of Illinois, I started working and saving money. Sheila did the same after graduating from Bradley University two years later."

Methodically, the Bowies saved the $3,000 down payment on their $70,000 home and moved in after a Jamaica honeymoon. Today, blessed with a baby daughter and living well within their combined income of nearly $58,000, they're planning to buy a larger home within two years and to invest in mutual funds. Believing that working for themselves (rather than someone else) will be their ultimate financial security, Mark plans to turn his amateur cabinetmaking into a business within 10 years, while Sheila parlays her nurse training into an adult-care service.

However, both understand that entrepreneurship dreams are no substitute for thoughtful money management. It begins with a detailed analysis of your financial resources, needs and goals. Are your present savings, investments and insurances right for your family? Can you generate more savings? Can you save on taxes? Can you provide for your children's college education? Can you retire comfortably when you're ready? How much money will your family need to live comfortably should you die?

Some of your answers depend on the family budget you set up and review about every six months. Like a ship's compass, it tells whether you're headed in the right direction or sailing in circles. Before paying anyone, you should first pay yourself. That is: 1) Set aside between $2,000 and $5,000 in bank savings, in a credit union or money market fund as a short-term emergency fund. 2) Insure your life (to replace family's lost income in the event of your death), home, health and auto. 3) Invest to accumulate wealth (as opposed to income) and avoid using your investments as emergency funds.

Victor and Suzette Fears of Houston, Texas, both 28 and the parents of two, married four years ago after courting two years. They believe that God will provide for their needs, but they're almost debt-free because they usually buy with cash rather than credit cards, which can become debt traps. Victor, a department store salesman, and Suzette, a schoolteacher, believe that anything they can't pay for within 90 days, they can't afford.

Unlike many traditional Black families where the husband was presumed to be automatically the most adept at handling finances, Victor and Suzette started out quite differently. "We established when we were first married that there was no my paycheck and your paycheck," Suzette recalls. "There was no my money and your money. It was our money. Whatever bills we acquired before we were married weren't his bills or my bills. They were our bills. We always worked together on our finances. If either one disagreed on a possible purchase for the house, we simply didn't make it. But if I buy some clothes that he doesn't like, he's not going to ask me to take them back. He knows that I like them. But I won't want to wear them if he doesn't like them."

And so in this spirit of togetherness, encouraged by many financial experts, the couple manage their finances jointly. "We used to disagree over my desire to tithe to our church," Suzette says. "We hadn't tithed in the beginning and I wanted to. Victor was very practical in arguing that we couldn't afford it. But we manage it now."

While the couple live comfortably in their lower-middle income neighborhood, their 10-year plan is to move into a more plush area and to live quite well with the $100,000 that Victor expects to earn from his own marketing firm. Be advised, however, that if you have a similar long-range goal, you may have to drastically alter it because of an investment second in size only to buying your home - the cost of a college education for your children.

Currently, typical yearly tuitions for four-year, public institutions, attended attended by 71 percent of undergrads, are about $2,186 for each child, according to Research Associates of Washington (D.C.). Considering that tuition is only about one-fourth of total costs which include room, board, books, etc., you're talking $10,000 or more a year for each child at today's rate. Estimates for, say, 10 years from now are even higher.