September 18th, 2012 - Category: Budgeting
One of the first rules I learned about saving is that you need to have an end goal. Perhaps you are saving for a vacation, your child’s college, furniture, or a new house. Setting funds aside each month becomes a lot easier if you have a vision for where all that money is going.
The same is true of kids.
I want it NOW!
Like many adults, kids want immediate gratification. They go to the store, they see a pretty new ball, and they want you to buy it. Depending on their age, they may even throw a tantrum to let everyone in the store know that they want it and that you are failing to buy it for them.
But if we can strategically turn our “no” into a financial lesson, we make more progress than just firmly denying their new-found must-have.
The old visual tool
My mother used to bring home huge Sears and J.C. Penny catalogues and have me circle or cut out pictures of my must-haves. I’d sort my treasures into envelopes for birthday, Christmas, and earning. When Christmas rolled around, I’d sort through all of those visual reminders and decide what was still on my list and what had been a passing phase.
She would then sort through those must-have prizes and eliminate what she knew she would not buy for me. Then I knew that if I really wanted that new Rainbow Bright backpack, I would have to spend my own hard-earned money for it. That is when the real question came—how much did I really want it? We weren’t talking about my parents’ money at this point. This was coming from my pocketbook.
Out with the old
Today, fortunately, we don’t need to waste quite as many trees. Now the kids can log onto Amazon and maintain a wish list. Parents can then add some of those wants to their child’s purchasing options on My Job Chart and the child instantly has something worth working for.
And, as a parent, you have accomplished several great things at one time including:
· Validating that you heard your child’s request.
· Respecting that request and making it possible for them to fulfill it themselves.
· Encouraging their hard work without nagging.
A third grader’s dream
The thing that my daughter wanted most in life was a TV for her room. For some reason she believed it would make her 8-year-old life complete. While I wanted to roll my eyes, I instead took the opportunity to use this lust to my advantage.
She started saving, and then we went window-shopping so she could have a visual of what she wanted. The visual helped her. Since she had something she was working towards, she was willing to pass up an item at the dollar store to save for the TV. And when she got it, it was more meaningful than a gift because she had earned it.
It took her about three months to find another must-have, and she is now completely focused and intent on earning for it.
April 11th, 2012 - Category: Budgeting
Remember when we suggested that your kids (and you) keep track of every cent spent for 30 days? How is that going for your family? Hopefully, it’s starting to become a habit – one that will continue beyond the initial 30 days. It’s important to have a clear picture of your spending habits as they really are and not as you may think they are. Remember, this is not a time to make judgments on how your kids (or you) handle money – this is simply to track spending habits, not change them; at least, not yet. Record-keeping helps take the mystery out of our spending habits, as well as eliminate excuses. Just don’t use it as a time for lectures to kids or self-depreciation. This record will later become a useful tool. As we learn better, we can do better.
There are several ways to go about this type of record-keeping. Get a receipt for every transaction; even a stick of gum or a soda and keep it in an envelope or certain part of your wallet. If no receipt is available – write it down and keep the note with your receipts. Each night, gather your receipts and log your transactions into a spreadsheet or Qicken® or a small notebook; whatever works for you. Small purchases are the easiest to be overlooked so pay special attention to them. You may prefer to carry a tiny notebook to record your expenses in. Find a method that you can keep up and help your children do the same and then stick with it.
Keeping track of your money is just as important as saving your money. Now is the time for a little OCD to kick in. Every time any of you get money (paychecks, odd jobs, the kids’ MyJobChart chores, even a dime picked up off the ground), LOG IT IN. Do the same thing every time money is spent; every cent that enters or leaves your life … write it down. Be sure to remember the three-legged stool of financial literacy (“saving, sharing and spending”) we have discussed in previous blogs and enter the amounts saved or shared. Record EVERYTHING.
As you and your kids do this, you will feel a sense of power. You will start being in charge of your money instead of the other way around. And if you are one of the lucky ones who has mastered these skills already – more power to you – but for those who still feel at the mercy of their money, or lack of it, it’s time to show the money who is the boss. Children who learn money management skills before they leave their home for college and employment as adults will find great joy, peace and success in their lives. And speaking of college – next week, we’ll delve into saving for college – a huge aspect of financial literacy. Talk to you then.
March 27th, 2012 - Category: Budgeting
In the last post, we talked about parents needing to be good examples for their kids when it comes to money management. Businesses and corporations track very single penny earned and are aware of how each dollar is spent. While basically all adults have “an idea” of how much they are spending on things, not everyone keeps careful records. Many simply employ the “fly by the seat of your pants” type of money “management.” When a paycheck is earned, they pay the most pressing bills, buy some groceries, get some gas in the car and then try to hang on until next payday. If you don’t fit into this category – good for you – but if you do, don’t despair. Money management is a learned skill.
A new month is fast approaching. As an eye-opening experiment, write down how much you think you are spending in typical categories such as rent/mortgage, utilities, food, gas, clothing, entertainment, school expenses, charitable giving, medical/dental expenses, savings accounts, gift-giving, debt repayments, insurance, etc. Then keep track of every single penny that you spend for the 30 days in April (or any 30 day period); even a pack of gum purchased needs to be recorded. You need to be able to analyze your current spending habits in order to plan ahead and create a workable budget.
Have your kids do the same thing – they can keep track of every penny they spend for 30 days, including items “earned & purchased” via the MyJobChart.com chore chart and its Amazon store. Be sure that you and your kids also have a page to track where the money is coming from. Write down your monthly salary and/or if you are a commission-earner, keep track of all commissions earned. If you have any other source of income, write it down. The kids can record whatever they earn from doing their chores on My Job Chart and any other source of income they may have; babysitting, part-time jobs, etc. if they are old enough.
Keeping careful track of your expenses will help you recognize your needs when you set up your budget after this 30 day experiment. You may realize you are spending money in areas you did not list when you tried to project what you are currently spending your money on. You will need this information in order to determine what is working and what isn’t.
During this 30 day period of record keeping, pay attention to advertising, marketing and consumerism. You might want to make a note about why you purchased some things and be honest if something was simply an impulse purchase. Mindless spending is as detrimental to your financial well-being as mindless eating is to your physical health. Only awareness can bring about change and improvement.
April happens to be “National Financial Literacy” month so it is a perfect time to work on our own finances and to teach our children the skills they will need throughout their lives.