When I first got married in 2006, I had no idea what I was doing. I was a young E5 (25 years old) who only knew what my parents taught me about marriage. Which wasn’t much. So my wife and I jumped into “playing house”. We did pretty well. We didn’t set the world ablaze, but we were pretty comfortable. In 2008, we built our first home. In 2017, we bought another home. And finally, in 2020, we bought our current home. We have held on to all of these homes. I realize now that my wife and I are Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of our household. We make decisions, plan for the future, deal with important issues, and decide how to share the profits. It truly is akin to running a business. Anyone who is married and/or planning to get married needs to understand the complexities of running a household. The more you treat your household as its own business, the more successful you will be. The more successful you are, the less stressful you are.
Budgeting- Budgets are a huge part of running a household. It is usually one person that closely follows the budget. It is hard for multiple people to control the budget. One person may know that the cable bill averages $150 a month. The other may see the bill for $160 and pay it. The person who usually tracks the bill will know that something was out of wack. Decide how the budget will be run. I have seen couples who inject all of their capital (money) into one big bank account. We decided to never do that. I created a separate checking account (that my wife has access to) that automatically gets $3000 a month injected into it. All of our bills and some investments are paid out of this account. It reduces stress across the board.
Capital Expenditures (CapEx)- The definition of capital expenditures is “money spent by a business or organization on acquiring or maintaining fixed assets, such as land, buildings, and equipment”. You will need this same reasoning to run your household. Your home will need upgrades, repairs, new furniture, better equipment, etc. My wife and I have a budget of roughly $400 a month for CapEx. This keeps us on track for the month of spending. Spending on the house can spiral out of control if unregulated. For example, with our $400, we may buy $100 worth of solar lights the first week. Then we may purchase a desk for the kids the second week. Depending on what we have left, we may buy some items for the garden. A home always needs to be making progress. Do not allow your home to fall stagnate. Businesses rarely get to remain in one place. Competition would eat them up. Always have a plan.
Major purchases/Emergencies- These are definitely something that has to be dealt with. Many purchases will not fall into your CapEx budget. Emergencies are the first thing to ruin your plans. Usually, something like a hot water heater or air conditioning goes bad. These items cost a lot of money and you may have to use savings for purchasing these items. Also, planning a vacation is major ordeal as well. My family tries to go to Turkey every few years. It is very expensive. If we plan on going in July, we start planning for the trip in January. We buy the tickets in March and ensure visas are on hand. It is a major event and needs to be treating as such. It is almost like planning a military operation. The more seriously we take these events, the less likely they are to negatively affect the household.
Meetings- Meetings are an important factor in running a successful household. Communication may be the most important part of running a household. My wife and I constantly talk about upcoming events and expenses. This way nothing catches us by surprise. My wife usually controls the food budget and CapEx budget for the house. I mostly do the bills and investments. 95% of the time we don’t have to get in each others way. However, we may need to ask for assistance in our areas of expertise. For example, If she has spent the CapEx money and something like buying school supplies pops up, we can divert money from investments to buy those school supplies. Teamwork and communication are key.
Cash Flow/Profits- Cash flow is king. Because we have multiple streams of income, we have the luxury of having multiple paydays. This allows us opportunities to go with the flow. The household is always in flux. As much as we try to control the outcomes, we are ultimately never completely in control. For example, we recently had a squirrel in our attic. It cost us $1400 to catch it and also to prevent it from ever coming back. Most times, however, we have money left over. Remember, our investments are part of our original budget. Always pay yourself first. When we have additional income from our multiple revenue streams we can evaluate the household and decide how to best spend it. Usually, it is invested right away. Sometimes it is best used for additional CapEx or vacations. Businesses (and households) still need to have fun.
Running a household is extremely satisfying for us. We started by having little to no additional income. Now we have maximized our work income as well as created additional streams of income. This has allowed us to become our best selves. We feel like the most successful CEO and CFO ever. We never gave up. We continued to push as things hardly went our way. It was worth all the frustration to be in the place we are today. However, we still keep pushing. We currently have 30+ projects that need capital around our new house. So we steadily keep grinding towards our goals. Never sell yourselves short. Running a household is an amazing achievement.
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Leave a Reply