Family finances: how to manage your money in a recession - includes ten tips

Ebony, Oct, 1991 by Alex Poinsett

Couples cut corners by clipping coupons and adopting other cost-saving measures

BE HONEST! When was the last time you had a summit conference on money with yourself (if you're single) or your spouse? Can you account for 100 percent of your income and outgo? 50 percent? 25 percent? None of the above?

Your answers are critical because they indicate how well or how poorly you're coping with the impact of the current recession on your family finances.

Recognizing that they either had to get their financial act together or risk bankruptcy, a 30ish California engineer and his wife, who prefer anonymity, computerized their finances. Listing all of their creditors on the lefthand side of a spread-sheet, they lined up 13 vertical columns across tilt, page. "Monthly Due Date" headed the first column. The second read, Balance." The remaining columns simply listed what bills would be paid on the first and the 15th of each month. Thus, they saw at a glance what their saving potential and credit/debt situation would look like six months into the future.

Similarly budget-conscious, Lewis and Helen White of Westburv N.Y., say jokingly that the recession has forced them from a yacht to a dinghy. To keep from capsizing, the couple zeroed in on small expenditures. "For two weeks I listed everything that I spent and found out that I was wasting a lot of money," recalls Lewis White, 33, a clinical social worker. "I cut out all of that. Now I occasiolially take my lunch to work. "

Helen White, 37, director of a hospital dietary department, frequently does her own hair rather than visit a beauty salon once a month. The mother of two sons, one 15-month-old and the other 15, she enthusiastically supports the family's budget-cutting crusade. The couple saved about $1,500 last summer by vacationing in nearby Rhode Island. They reduced their food bill by about 10 percent, cut back on family entertainment and postponed major purchases. Lewis White is thinking about getting a second job to make ends meet and to save more than the current 5 percent of family income. "Right now," he says, "we're just getting by."

Susan, 33 and Steve Murray, 32, of Kensington, Md., have also embarked on a budget-cutting campaign. Married three years ago, the couple waited two years before buying carpeting. They save on electric bills by substituting fans for air conditioning and running their dishwasher only twice a week.

Susan, a kindergarten teacher and track coach, and Steve, a heavy equipment mechanic, keep a tight rein on their budget by listing all items in a loose-leaf notebook. Susan, who gave birth to a son the day after she posed for our photographer, is a grocery-coupon clipper who saves hundreds of dollars by buying large quantities of discounted items. "We have learned to live beneath' our means rather than 'above,"' says Steve, "because we want to save 10 percent of our income. Right now our saving is only about 5 percent."

Allowing themselves only three credit cards, basically for identification purposes, the couple also set aside only $25 a month for impulse buying. "If we don't have enough money for something, we don't buy it, " says Susan. I'll even wait two or three years to get exactly what I want. Steve doesn't buy that much either. Eating is his biggest expense," she says of the 6-2, 220-pound former athlete.

With an annual income nearly $30,000 more than that of the Murrays, Chicagoan Michelle Whittingham Bentley, 41, and her husband, Ray, 35, chief administrative officer of the Cook County Puplic Defender's Office, are not quite as Spartan. Expenses such as a private school tuition for their daughter, a 15-month-old son in day-care, payments on two buildings, a car, a van, their basement rehabbing and Michelle's student loan all restrain the Bentleys, who manage to save about 12 percent of their income.

The Chicago couple, who rent out one of their buildings, also check for errors in their credit report at the local credit bureau.

"We don't have money problems [they avoid credit cards and second mortgages], but we have to take steps to make sure we don't live above our means," says the Rev. Michelle Bentley, associate minister of the First Unitarian Church and a chaplain at a drug rehabilitation center. "We could be living in a big $250,000 home, driving a fancy car, and dressing in designer clothes. We chose not to."

Echoing his wife, Ray Bentley adds: "I bought a van so that if I lose my job or something happens to hers, we have a fall-back. We have a vehicle we can use to start a business. I've been looking at some of the home services because there's a real need for that. I'm not too proud to go out and do carpet cleaning or auto detailing. We want to have our own business going within five years because we're working toward financial independence."

Both the Murrays and the Bentleys invest in mutual funds, thus eliminating daily stock market watching expertise. "If people have the interest and the time to learn, it makes sense to invest in individual securities, " says john W Rogers jr., president and chief investment officer of Chicago-based Ariel Capital Management, a Black-owned firm that manages $300 million in mutual funds. "But for those people who don't have the time, the interest or the inclination, mutual funds are the best way to invest."