Money and the Magic of Seeing It All Together

Carolina Reid is a writer and business consultant who is working with Djed, LLC, a new, family app company. The app is designed to solve the main problem families and close knit tribes face increasingly: keeping in sync about important stuff.

Tech-proficient families realize that keeping useful information of all kinds in one easy-to-access place is a hack at best, one that requires a lot of managing as more digital information comes in each day. That is until Djed is released in June.

This post is one in a series of revelations about how transparency and collaboration can make life a lot (way) easier. Carolina is a mother of three who works part-time outside the home.

— — — — — — — — —

Something about the afterglow of the holidays brings up a desire to budget and get ahold of our financial lives. Google reported that in January people searched for the term “Budget” over 823,000 times. Maybe we overspent. Maybe we feel the crush of a little too much clutter. Maybe we want to make room for an exciting new experience this year.

Since I am a mom with an MBA (INSEAD), I combine logic with that particular blend of flexibility (and non-logic) required of anyone deeply in tune with the needs of people in our care. I am usually not a big fan of looking backwards either, but with money, understanding the past is key to understanding the future.

I used to do a decent job of at least the records-keeping part. When I was single, I kept meticulous files, storing them in rows of beautiful, European-style binders I developed a taste for in business school. Getting married, and soon adding kids to the mix, made time too precious and, we wanted to spend it joyfully, not huddled over numbers.

So I ceded this financial planning job to my husband, just to streamline that part of our lives. And along the way I lost a granular view into our finances.

In the developed, tech-literate world there are 600 million households or modern “families.” Being in a family is good; it is supposed to contribute to longevity and lower blood pressure. But there is an element of bureaucracy that is introduced when one person begins to handle the finances, and the other wants a look in.

In thinking about how families manage their finances at Djed, we interviewed a few hundred couples, the majority of whom had children (and/or pets). In 87% of the cases, one person was almost solely responsible for finances. And in nearly all of those, the other partner said they really didn’t know much about what was going on. More than 90% of the time the other person was very interested in the family finances, but just didn’t have the access. Their making peace with it was perceived as a lack of interest by their partner managing the finances. The obstacle was that sense of bureaucracy, layered with a desire not to have a confrontation about it.

The reasons why we end up this way can be speculated upon, and are. But, in most of the cases we saw, it boiled down to a practical fact that one person in the family owns the bill-paying and once empowered, they grab the bills and they own the online accounts. It’s all either physically or electronically squirreled away.

So if I want to know something about money in the family, I can always rifle through our files, but by far the easiest thing to do is to make a request of the comptroller person I am married to. He has the info at his fingertips.

Whoops! Suddenly we were a throwback to a 1950’s household in which the husband handled the finances and the wife didn’t have much of a view into the money beyond her managing of the household. The problem was, with an MBA, I am better equipped for former. We did not have a great way to share all that data. I think my husband tried to share things, but when your kids are 1, 3 and 5, sitting down with a financial spreadsheet is about as likely as getting them all to smile and look in the same direction for a holiday photo. So time passes and I try to get better at home things. And I did get better, but definitely not more thrifty.

For a long while women and men (my husband took home ec in Oklahoma, while I opted to take wood shop in New Jersey) were truly encouraged to be proficient in home skills. People were deliberately taught the sorts of skills that helped trim costs, things like sewing to repair things and cooking with skill and practicality, from their moms, grandmothers, or in home economics class in school. So people thus raised, could really take pride in their managing of a household budget. I think home skills went by the wayside for a variety of reasons; in part due to the emerging convenience and take out food industry, imports from China that made clothes so much less expensive (and now comprise nearly 7% of landfill), and a desire to change outcomes for women.

My mom had only a grudging relationship with crafts and tasks like sewing and cooking. So she opted not to pass much of that along, except for one excellent cheese cake recipe and an evening she helped me make my first Boeuf Bourgignon. Worse yet, I went straight into the workforce (far from kitchens and sewing machines), and I have been sending my own pants to the tailor for the $10 button repair ever since. Now though I try to repair (badly) the knees on my son’s pants. (It seems that for boys at a certain age, nearly every place they go involves a slide into an imaginary home base.)

So my boy’s pants are ragged and mine are expensively repaired and I am no help on the home ec front. But if I had a little access to the data, I might still be able to make a positive impact.

People need rewards, especially to improve. Most financial planners, coaches and behavioral scientists concur that without feedback and rewards, habits are very hard to change. Moreover, knowing where you stand is important and empowering. With no transparency, there is little motivation to change any behavior. If you don’t have the tools in hand to see any immediate results and rewards, you are less likely to stick with any hard-fought changes.

Imagine going to all the trouble of learning how to sew or cook as way of getting a hold of some outside expenses, and never really knowing if it helps? Whereas, immediately seeing that your savings are going up and your costs are going down (or not) would be nice feedback. Likewise, if your reward to yourself for a long week is a shopping spree, a lack of financial transparency means the reward is the spree itself, with no mechanism for accountability.

With the division of labor in most families, the person generating or managing a lot of the costs is the least likely to see the immediate impact of her decisions. If you think about it, two to 4 (5 to 8?) people sharing close quarters and much more. However, all but one of them knows how things are looking financially, and therefore knows what plans are realistic and which are not. Perhaps, having one person all knowing and all deciding worked once. But today it’s out of sync with the roles that people play in their partnerships.

It’s also the kind of thing a lot of families have declared as their status-quo. It’s a lot like getting stuck in traffic. We used to accept that there was no possible way around traffic, and all the other people stuck in it with you were the case in point. That was before there were traffic-sensing GPS systems built into cars, or the Waze app on your phone.

So maybe there is a way to avoid finding yourself in this semi-functional financial situation. The Djed app is designed to bring the right level of transparency back to all kinds of important information from financial, to medical, to just the day to day or season to season calendars.

In the meantime, there are a few tried and true hacks that can get everyone at least feeling more like a financially functional family unit.

The key is to get it all in one place. When you can see what you have, what you are spending money on, you can make choices. Otherwise things are swept to the back of our minds and papered over with relativism. Relativism means we think of one thing as pretty cheap, because at the time we were comparing it with something astronomically expensive.

So this January, I decided to tackle the family finances, starting with recurring costs. Generally it’s the stuff we sign up for that becomes our nut to cover monthly or yearly before we have any fun at all.

These were the steps:

1. Get a snapshot of the whole year of income and expenses (Use a spreadsheet or, for the financial ninja’s, try Quicken)
2. Categorize it, if possible, and at worst, add up the major expenditures (this is pretty easy actually)
3. Stack rank it. Most expensive to least expensive. For us this looked like this…

Our List of Recurring Expenses

1. Housing
2. Taxes
3. Healthcare
4. Cars
5. Vacations
6. Camps/Lessons/Teams
7. Trips
8. Golf club
9. Dog Walker/Daycare/Boarding
10. Yard maintenance

Take a look at each thing, in some granularity. And then think about the experience: ask yourself, “Does it spark joy?” (thank you Marie Kondo)

The Revelation came by just seeing everything together: it changed my January and opened up a new view to what the year would hold. I noticed how much financial space some things were taking up. There were things that do indeed spark joy. I love, love, love pulling into the house and seeing the yard all tidied up, for instance. Then I thought of my emotions as I am pulling up to the golf club at a place we go in the summer. Truth be told, it’s fraught. The pro there is aloof, some of the members are icy, and my favorite people can only play when I cannot.

We joined the club because of how accessible this easier course would be for kids. But really the kids don’t want to go, so each attempted outing was a battle of wills. Next there was a dog walking service that we loved — they were adorable and always sent photos. Except I took up running with a friend and the dog gets a lot more exercise now.

It’s not that I did not know about what we had. What I had not realized that between the two of these single items, it nearly totalled a year in a private school. Or a great vacation. Or just a little peace of mind.

Last week I made some cuts based on all this new clarity. It’s kind of like creating space in a closet.

There is something about clutter: it becomes an obligation to derive benefit from something you are not really using. It brings joy to see it gone.

And, there is one more step. Now…

1. Go to Djed.com, see how it works, request a demo, and get the app first: be the first one out of that family finances traffic jam