It’s appalling how many adults in today’s world have little if no knowledge of personal finance skills. They are just going through life flying by the seat of their pants when it comes to how to handle their money and finances, often, unfortunately with disastrous results. This is clearly evident when you hear the statistics for the amount of personal debt in our country. And so very often these people will say that they had absolutely no guidance from their own parents on the subject. That money was not discussed in their households when growing up. That it was often viewed as a source of tension as they witnessed their parents fighting about it. Money should not be a taboo subject when it comes to raising kids. And it certainly should not be a source of anxiety and despair. It is simply a tool/resource that if managed well can bring much joy and security to one’s life. The key here, of course is in managing it well. And this is (obviously) not an innate skill that we are just born with, but (especially in today’s consumeristic, ad driven, and complex society) needs to be taught. I have argued many a time that more needs to be done on this at the high school level with courses on personal finance and financial literacy skills. But the education can and should begin much earlier than that from a very young age. Money is a part of life, and lessons on what is all about and how to manage it can be incorporated into everyday life from the time a youngster can talk. It is imperative that they begin on their journey with the skills and knowledge to be financially successful adults. Here are some of the lessons that should be imparted on youngsters before they leave the nest to embark on their own exciting independent lives. #1. Money comes from work – Kids can see you going to the ATM and taking out bills. They watch you whip out your credit card to make purchases. It is all pretty magical. It is important that they realize that you actually earned all this money you are spending to get stuff. It cannot be apparent to them unless you tell them. In their own little world, you can begin to let them earn their own spending money to further understand the concept. Some parents tie their chores to their allowance. Others feel chores should be done as a member of the household without pay. But you should provide something (extra chores?) that they can be doing to earn their own spending money. As they get up into their teen years, they can begin to earn money outside the home by babysitting, dog walking, yard work, etc. And in later teen years, with an hourly wage job. #2. Money should be saved – Most kids first impulse is to want to go out and spend those shiny new quarters and crisp dollar bills they now have in their hot little hands. Heck, there are many adults who have that impulse. That is why saving needs to be taught. Help them to set up goals. If they have their eye on something that costs more than one week’s allowance, help them to set up a savings plan to pay for it. Of course, this will start very simply when they are tiny, saving up 2 or 3 weeks of allowance, and escalate to bigger spending goals as they grow #3. Money needs to be budgeted – They will not be either spending all their allowance or saving all their money. Help them to see that they can spend a portion of it on todays wants while still saving a portion of it aside for future goals. This is the beginning of budgeting. By the time they are older teens they should be responsible for as much of their own wants and needs as possible, such as clothes, phones, entertainment, car expenses, etc. This money can come from an allowance or (preferably at least some of it) from work outside the home. Help them to figure out how to organize their money to pay for these things and to also be saving for future needs (a car, college expenses, an apartment, etc.) #4. Learn the difference between wants and needs – Kids can be impulsive (again, ditto some adults). It is up to you to show them the difference between frivolous spending and real needs. They need to be taught to really think about purchases rather than just thoughtlessly throwing money away. Use examples in your own life. Let them in on your own thought processes when weighing a purchase #5. Teach them about advertising. I heard a statistic once that in today’s world we are bombarded with something like 2,000 ads a day! Children do not even know that these ads are trying to sell them something. Talk to them about that. Discuss with them how to be a savvy consumer. Teach them to be strong against the lure of very convincing and attractive advertising. Tell them that if they buy brand names vs generic they are paying for the advertising. #6. Teach them that stuff does not equal happiness. Show them by example how it is possible to lead a very comfortable and happy life without a lot of stuff accumulation. Here is an opportunity to show them just how joyous a frugal life can be. Talk to them about peer pressure and the concept of “keeping up with the Jones’s”. When your kids are much older, before they go out into the world for good (college aged), it will also be important to tackle some more adult topics with them, such as credit cards and debt, credit ratings, saving and investing, emergency funds, and even eventually mortgages and saving for retirement. I will cover all this in a later blog All the best to you and especially to your kids for learning to create a bright financial future!
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People say having kids is expensive and while they are definitely an expense, much of that expenditure can be trimmed up dramatically with a more frugal approach. There are certain times in the child rearing when spending can skyrocket if you are not careful (the holidays for example) and back to school is one of those times. First of all, it should not come as a big surprise that in September the little sweeties will be heading back to the classroom. Therefore, it should not come as a big surprise to your pocketbook. This is an event that should have been included in your budget all along. When I was using the envelope system (see February’s blog) I put in a few bucks (maybe $10) out of each paycheck into the “School Supplies” envelope so that I would be ready when the time came without having to break out the old credit card and go into debt for a perfectly expected event. But the savings don’t end there. It is also in how and what you go about spending this school supply budget on. Obviously you will need supplies for the classroom. But take a good inventory first. How much can you reuse from last year? Does your child really need a new backpack this year, or might he be able to get by another year (or more) with this one? Take this approach with all supplies. Sometimes there are notebooks that only have a few pages written in. Rip out those pages and you have a brand new notebook for this year. And while it feels good to have that fresh pack of colored pencils at the beginning of the school year, does the old pack still have enough life in it for another year? Once you are sure that you are not buying “wants” for the new school year but actual needs, then it is time to replenish the supply. I am all for back to school sales. Know and watch your prices and comparison shop. Just because it is listed as part of a school sale does not mean the price is actually a bargain. If there is a really good price on something, (loose leaf paper for 17 cents a pack?) then by all means stock up on that item for the rest of the school year and even subsequent school years if there is no limit. And you do not have to give in to the desires of your children that just have to have that particular (insert popular character/name brand here) item. Remember there are other lessons to be taught to kids than the ones they learn at a classroom desk. And you as parents are obligated to teach them. Now we move onto another category of possible contention. School clothes. And while it is nice and fun to start off the new year with a whole new wardrobe it is not necessarily necessary! Once again take careful stock of actual needs. And once again refrain from giving in to entitled demands. Another point in question, is do these “new” clothes actually have to be new? I shopped for much of my kids clothing needs at thrift shops and yard sales and back to school was no exception. And I can guarantee you that no one could look at my kids’ wardrobes and tell me which items were purchased new and which were “preworn”. As the kids got a little older and more aware of their “wants”, I would let them make the choice. I would give them each an envelope with a certain amount of money in it for school clothes and off we would go shopping. It was entirely up to them as to whether they wanted to buy a nice “new” wardrobe with that money for a few bucks an item at the thrift shops or whether they wanted to take that same amount of money and just buy a few name brand (or whatever) new items at the stores, or shop a combination of the two. Of course, remember you are still their parent and retain final say on what is appropriate to buy and wear with “their” money, and what items they need to buy (socks and underwear might not be on the #1 “gotta have it” list, but a necessary expenditure never the less). And another non-classroom lesson learned here . . . budgeting their money! There are also year-long school related expenses to consider, like school lunches. Consider your budget here as well. Is it cheaper for them to bring their own lunch? (hint: Almost always) (another hint: This goes for adults as well). And although the grocery stores are blasting you with back-to-school lunch items at this time of the year, these are usually not the best things for your lunch budget. For instance, do not be tempted by those cute little single serve packs of anything. Buy your own (pretzels, dried fruit, crackers, cookies, cheese, etc. etc.) and prepackage it yourself into Ziploc bags or even better reusable containers (P.S. aside here, I reuse Ziploc bags too). Have the kids participate in the preparing of their school lunches, making as much of it themselves as possible. The more they are involved in the prep the more they will be likely to actually eat it (and bonus, another life skill lesson learned!). I always told my kids to bring home what they didn’t eat rather than throw it away in the garbage. It drives me crazy how much perfectly good food gets thrown into school lunchroom (and all) garbage cans. If they bring it home, they can eat it as part of their after school snack or take it again the next day. So, I hope you can see that sending the little ones (and not so little ones) back to school does not have to be quite the piggy bank shattering event that it can become if you are not careful. Stretch your frugal muscle and save your dollars. Your piggy bank will thank you for many years to come. And who knows, maybe even your kids will thank you someday for all the (out of school) lessons learned. 😉
Here we are mid-summer, the height of “fun” season, with so many ways to enjoy this glorious time of year. And the myriad of activities at our disposal can run the gamut from free to ultra-expensive. How are you doing so far? Here’s a tip. The amount of money spent does not equate to the amount of fun had. It’s as simple as that. Let’s look at some ways you can have a great summer without breaking the piggy bank, and some alternatives to those activities you are currently forking over oodles of your hard-earned money for. We’ll start with kids who, as anyone who has ever had them in their lives knows, can be a huge drain on your pocketbook. But as the financial savvy among us know, only if you let them. The first thing that comes to mind with kids and summer is camp. This phenomenon alone can empty your piggy bank. The first question that comes to mind is “Do they really need to go?” At the risk of sounding like the old fart that I am, back in my day, we didn’t all get shuffled off to “enriching” summer camps. We just stayed home and played with our siblings and neighborhood friends all summer. And dare I say, used our imaginations and got plenty of exercise to boot. If you still have the need (or desire) to send your kid(s) to camp, there are less expensive, and yes, free options. Look into them. Your little Einstein can have just as much fun at a town or church camp, often run free of charge, then at a fancy “science” (or art, music, sports, etc.) designed primarily to relieve you of your money. Give it some thought before you sign on the dotted line. As for entertaining the little darlings at home (and may I add here that it is not necessarily our job as parents to “entertain” them?), there is no end to the fun things they can do for free or a small layout for materials. There is art (painting, drawing, sculpting, etc.), water play (small backyard pool, water balloons, sprinkler, etc.), backyard games (tag, soccer, hide and seek, red rover, etc.), indoor (board) games for rainy days. Or take them for a bike ride or a hike or a picnic. Get them involved in some gardening. Have them make a little fairy garden. Take them to the library to check out some books and videos or take part in the many free activities offered there. Have a make-your-own sundae party or a campfire and make s’mores. Look around for free family activities in your or neighboring communities. There are often free concerts in the park, street fairs, and other kid-friendly events listed in your local paper. The possibilities for free fun are only limited by your (and your children’s) imagination. Use it! And many of these activities double as adult entertainment too, even for those of you without children in your lives. Bike rides, hikes, picnics, games, campfires, s’mores, ice cream sundaes, and concerts in the park can all be enjoyed by you too. The library is not only a source of free reading material and videos but often also offers programs geared to adults as well, from book clubs to art classes to writer’s groups. There is something for everyone. Again, keep your eyes and minds open to opportunities in your area. Let’s look at some of those things that drain your pocketbook in the summer. I’ve already mentioned concerts. You can find many for free. Even the paid events will often have cheaper outdoor lawn seats available. I much prefer these “seats” anyway as it is very pleasant being outdoors under the stars enjoying the music.
Going out to eat can get costly in the summer months (and always). Why not take turns hosting potluck dinners with your friends at each other’s houses, or take it out to a park or beach? If you just can’t stay away from restaurants, try skipping the appetizers, keeping drinks to a minimum (one or none), sharing an entree, and/or a dessert, or having the dessert when you get home. At least this will keep the cost down to a minimum. And save the eating out for a special occasion. If you do it all the time it loses its specialness and joy anyway. And then, of course, there’s vacation. The cheapest thing to do of course, is not to go on one, or to opt for the ever-popular “staycation”. But if you must go away there are many things you can do to keep the costs down. Staying for a week at a place with a kitchen will cut your meals budget. Going in on a place like this with friends will cut the cost even further. And just as I suggested at home, look for free activities in the area. You can always go on their town’s website in advance to check out the calendar of events. If you don’t want to rent for the week, you can try house-swapping, either with people you know (to check out a new place with in-the-know references as to what is good to do), or through a house swap registry. Some other tactics to save money would be to go on a shorter vacation (do you really need a whole week away?) Try this midweek to save even more. And always be sure to use any discounts you have available, AAA, AARP, Groupon, discount coupon books, etc.) And as for those money intensive kids on vacation, make sure to give them a budget ahead of time. It might be a good idea to provide them with their own vacation fund (for treats, souvenirs, etc.) ahead of time. When it’s gone it’s gone. It’s up to them how long they make it last. This doubles as a good lesson for them for future budgeting (wink, wink). Here’s to enjoying the glorious bittersweet last month of summer. Keep the activities simple and on-budget and you can look back on your delightful summer with no regrets and no debt, only fond memories to treasure forever. |
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