Today we are talking to Gretchen Smoot. Gretchen Smoot holds a BS in Business Administration and Economics from the University of Florida and an MS in Economic Development from Utah State University. Since 2006 she has worked in the real estate industry in Utah . She has been with Century 21 Everest Realty Group as the Director of Finance since its inception in 2009 as it has grown to be the largest Century 21 office in the world for the past three years. She and her husband have four small children and enjoy spending as much time as possible in the mountains of Utah. She volunteers extensively within her religious community and is passionate about finding ways to help others! A favorite quote is “No one ever injured their eyesight by looking on the bright side”.
Tell us about you and your husband’s background
Growing up Gretchen’s husband’s parents did not talk about money. They wouldn’t ever talk about money and then all of a sudden they would make large purchases. One day, while they were dating, Gretchen was going over bills. For the first time, her husband realized people had to pay for power when he saw her paying her bills. This was the complete opposite of what Gretchen grew up with. Her family growing up was broke. They had a large paper route every single day. Everyday they would throw papers after school while they were doing homework in the car. There wasn’t money for big expenses. Then her parents got divorced, and the money problems continued. That is when she decided she didn’t want to have those money problems when she was older.
She and her husband have learned to work together to balance their finances. They decided early in their marriage that they weren’t going to go on vacation without the cash to do so. Her husband is the spender in their marriage. Her husband taught her to be ok with spending money and she taught him it is ok to not spend money.
How to create a budget
Many people do not know what their net is each month (meaning how much money is in their bank.) You need to know what deductions are going out. Are your withholdings right? Are you on the right health plan? This way, you know when the dollars come in they are truly yours. Next look at your fixed expenses (mortgage, utilities, etc.) Then find out what is discretionary. The rest left over is your debt reduction. You have to plan for your known-unknowns (car registration, christmas, birthdays.) People don’t tend to plan for those things. Gretchen has built into her budget an average for those things. If you want to increase the amount you can bring into debt reduction, then there are three things you can ask: 1. Can you bring in more money? 2. Can you change your fixed expenses (refinance your car, refinance your home) 3. Can you change your behavior in terms of your discretionary spending. IF you can change it from “this is my budget” to “this is my financial plan” it makes it a lot more fun.
So many people think of the word budget as a negative thing. Gretchen tied what they were doing to a monthly reward. She recommends making a visual to track your progress.
Gretchen and her family had their struggles financially, but seeing a budget as a financial plan helped to take some of the stress out of them because they knew every dollar had a home, and those homes were very purposeful to help them accomplish the goals they wanted for their family.
Gretchen reviews her family budget at least once a week and they review their budget together once a quarter. Camille mentioned that when she uses a budget she feels like she has more freedom because it gives her freedom to spend.
In the United States the number one reason for divorce is money. Some people will have financial infidelity, meaning they are not being honest with their spouse about their money. It is important to talk about money amongst couples. Set your goals together.
It is important to allow yourself not to be perfect. It is a budget and not a commandment. Give yourself an opportunity for wiggle room. Allow yourself to make mistakes, and know that it is not going to happen overnight. It is a long term process.
Gretchen recommends finding a program that works for you. She uses Excel. The LDS church has a great and easy tool for how to use a budget. You can find that at https://providentliving.lds.org/self-reliance/finances/financial-calculator?lang=eng. Gretchen also recommends Dave Ramsey and using loan calculators.
Kids and Money
Gretchen wanted their kids to have a healthy relationship with money. They wanted their kids to know that money is not bad. Money can be a great tool to bless and help others if it is used properly. They provide all the necessities for their kids (clothes, backpacks, etc.) Anything that is extra their kids have to provide for themselves. If the kids are invested in it, they care more about it. She wants to help her kids see that money is a tool to do things you love.
Gretchen’s kids do chores. They do not get paid for their regular chores. If they want to earn money they do additional chores. She does not give them an allowance. She pays her kids according to what is age appropriate for the kids, what fits in her family budget, what they trying to earn for, what is their motivation, and how hard they are working. She pays the kids every week. She tries to explain that they don’t get paid every time they work because that is the same way mom and dad get paid. Their cash is stored in an envelope with a ledger that tracks the money. It helps them understand the tangible value of money. If the kids forget their envelope at the store, they don’t get to buy what they want. She explains it to them by saying, “mom and dad don’t take out loans, and we don’t want you to take out loans.” It is a way to teach them to be prepared and to not take out loans.
They have tried to teach their kids that just because you earn a dollar it doesn’t mean you spend a dollar. They require their kids, for every dollar spent, 10 percent goes to tithing (giving) 10 percent goes to savings, and they can spend the rest. As long as their choices aren’t harmful or inappropriate, they are allowed to spend their money any way they want.
Mom Squad Challenge: Physically sit down and write down a goal for your financial life.