Published by Scott
Mar 03, 2009
photo credit: wwarby
Have you sat down with your children and discussed the value of saving money yet? I posed the question to my twitter followers and was fascinated by some of the responses I received. I had figured that some people would have the money talk when the child was old enough to start doing chores around the house or maybe when they started asking for expensive clothes. I don’t recall the exact age, but I was probably around 7 or 8 when my parents discussed the importance of saving money for a rainy day. At the age of 7 I really didn’t need an emergency account, so all the money I earned went towards savings.
I received several comments from twitter friends that started teaching children about money management during the high school years. A couple had even started as early as 2 years old when they took the children shopping and discussed how much items cost at the store. My favorite comment came from a mother who had opened a bank account for her daughter when she was only 3 months old. Any cash gifts given at birthdays or holidays was going to go straight towards the child’s bank account.
It can be tough to teach your children about money when your child is begging for candy or a toy at the store. Taking time when you are at the dinner table or getting ready for bed to discuss how they can help them understand where money comes from. At 5 my daughter understands the concept that money is earned and that we don’t just visit the store and buy anything we want. Our toddler though doesn’t have any concept of money yet and thinks he can have anything. The beauty of diversion for a 3 year old is priceless and I will miss using some of my stealthy tactics with him in the store.
Maybe you’ve waited until your children are a little older and have the ability to take more responsibility with money. You might have conversations about working for extra money or doing chores around the house. Have you let your children make financial mistakes so they can learn from them? If your child wanted to buy $100 jeans, but it would deplete savings, would you allow it to happen?
Discussing financial situations with your children can also impact the way they look at money. Do you and your spouse communicate openly about your finances with your kids? If you are shopping for a car, do you set expectations around your budget?
What are you doing to teach your kids about saving money? Do you take time to discuss how you earn your money and what expenses you have to pay each month?
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Published by Scott
Mar 01, 2009
photo credit: HarshLight
Countless hours were spent as a kid playing my favorite board game, collecting rent on apartments and hotels while negotiating for Park Place and Boardwalk. What type of Monopoly player are you? Do you play with the properties you land on or do you like to barter and make deals? Playing Monopoly might seem like a childish game, but it definitely has some sound money managing principles that teaches you to stay within a budget and not stretch yourself thin. In Monopoly if you can’t pay your rent, you must declare bankruptcy. In the end the bank forecloses on your property and the other players can pay off the liens.
The game of Monopoly may have been the first time that you learned some basics about budgeting your money. The rules are easy to follow, but how you play the game is up to you. You can simply roll the dice and pay rent or you can build up a vast wealth of apartments and hotels.
Even though Monopoly is just a game, what are some money management tips we can learn from it?
1. Cash is king. The bank in Monopoly only accepts cash. Building up passive income through property rentals can help you achieve your goal of building apartments or hotels. Today, you are payed by your employer in cash and it’s up to you on whether you invest the money or just pay your landlord rent.
2. Negotiate. You won’t get anything unless you ask. That goes for a raise from your boss or Board Walk that your friend currently owns. Will they sell it for $300 or $1,000? It probably depends on how they are doing in the game at the time. If you don’t attempt to negotiate and make a deal, you might not win the game. If the asking price is $2,000 for your future wife’s diamond ring, will you ask to negotiate? Did you?
3. Pay your bills on time. It’s funny how Monopoly imitates life. When you land on luxury tax, you must pay it or start selling off properties. The game comes to a stop until you take action. You don’t have a chance to pay the minimum on a credit card and move money towards another debt.
4. Being a landlord can be fun. Owning hotels on Park Place or Boardwalk can be very lucrative when a fellow player stops on your property. Owning property can create a passive income stream that can pay for your retirement or children’s college. In real life you obviously want to charge a market rate and not something expensive like Boardwalk that has the potential to put your tenant into bankruptcy.
5. An emergency fund is always needed. One roll of the dice and you could wind up in jail or owing a huge luxury tax. If you’ve overextended yourself and purchased property without an adequate emergency fund, you’ll wind up having to sell something. Having an emergency cash fund or rainy day fund can help you navigate through tough times. Having an emergency account in real life can help you fix a flat tire or purchase a new washing machine.
Do you have a favorite game you played that taught you money management skill?
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Published by Scott
Feb 12, 2009
photo credit: Paul Keleher
You just received your 2008 tax refund, do you have an eye on the new 24″ iMac or will you put it towards your emergency savings account? Will you use the tax refund to pay off credit cards, save for a vacation, or maybe start investing in the stock market? I wonder if the current economic recession will cause people to set money aside for a rainy day or start an emergency savings account that can pay for car repairs or doctor bills. Maybe you will use the tax return to fund your child’s 529 college savings account this year. Here are several changes my family is making in 2009 with our tax refund:
1. Change tax withholding amount. We have received a refund for the past two years and we need to adjust our return so that we don’t continue loaning the government “free” money.
2. Add funds to our emergency savings account. Our goal is to have 1-2 years of savings in our ING Orange account for emergencies in case we lost our jobs for an extended period of time.
3. Add additional funds to college 529 plans. We chose Vanguard for our 529 college education plan as they have low fees, great funds, and an easy to use website. Since our children are young they can benefit from the current prices of S&P 500 stocks.
What is tempting to do with our money:
1. Buy a new imac 24″ computer for my home office. Yes, I love macs and have had my eye on the new imac for several months. I’ve visited our Mac store several times and asked dozens of questions, and I think I’ve impressed my wife that I still didn’t buy one. My plan is to convert my Powerbook into a desktop by finding a separate LCD monitor and external mouse. Total savings $2,000
2. Buy a new vehicle. It’s tempting to upgrade to another SUV or minivan that would give our family some more legroom, but it just doesn’t make financial sense right now. Many of our friends swear by the Toyota Sienna, but we have yet to make the purchase. Our vehicles run great and they both have over 100,000 miles, but are both paid off. It’s hard to make another car payment just for a little extra leg room.
3. Buy a new refrigerator. Kind of strange that I would even put this down as one of the things I would buy with our tax return, but our fridge is driving me crazy. Each time a guest comes over to our house, they say that it’s annoying to open up. When we bought our first home our GE refrigerator fit perfect, and in our current home it’s not a counter depth model. It sticks out a good 4″ and the right door hits our kitchen door each time you open it. Very annoying, but our refrigerator works fine. How can I justify spending $800+ for a new one?
So how will you be using your 2008 tax refund? Emergency savings account or 24″ iMac?
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Published by Scott
Feb 05, 2009
I recently wrote about Mint.com and how I started using the site to track our personal finances. After a few weeks I am still very impressed with Mint and the ability to track daily transactions for our bank accounts and our credit cards. In fact, I think it has already saved us about $500 a month in our living expenses. I actually enjoy games and challenges and have started to establish some tight restrictions on spending categories. My goal is to be more aggressive and start saving more money with our grocery budget. I feel that with a little work I can make some smarter decisions with our grocery item and still buy quality food for our family. I’m not willing to sacrifice quality, but I will drive a little further for a bargain.
How did we save $200 on groceries in January? Since I abandoned my old excel spreadsheet I was able to watch our transactions hit Mint the very next day. This allowed me to track spending more closely and defer or hold off on several purchases. For instance, our grocery budget was set to $500 which might seem a bit high for a family of 4, but still well below our average of $600-$700. As we approached the $500 in our food budget I would buy only the necessities to make it through the end of the month. Milk, eggs, cereal and some basics helped stretch our budget to $500 for groceries in January. I didn’t buy large containers of fresh fruit from Costco and stayed away from store bought cookies or soda. In fact my wife bought an ice cream maker and we have been enjoying some wonderful treats. Could I save even more each month? Sure. You might be feeding your family of 4 for far less and I would love to hear your feedback on your personal budget. Could I be using the cash envelope system to help lower my grocery bills? Probably, but I’m happy to see the progress so far with over $100-$200 in grocery savings.
We didn’t use coupons and I’m actually very bad at clipping coupons from the newspaper and trying to find coupons for products we actually use each month. I remember when we were first married that I would fall for buying items just because we had a coupon. I think I bought a huge bottle of Tums when we were 25 years old. I think I ate two of them and finally threw the bottle away. Some of you coupon clippers could probably help me shed another $40 or more of my monthly grocery budget. I would appreciate any tips you might have. Any fun and easy website you would recommend would be appreciated.
We bought 90% of our groceries from Raley’s supermarket. This is not a discount grocery store like Walmart or FoodMaxx, but a regular grocery store chain. Could we save more by shopping at a deep discount store like FoodMaxx? Probably, and in February I plan to do most of our shopping at Foodmaxx. Why haven’t I done this before? Foodmaxx is about 10 miles from my house and it’s not convenient. I know I should probably buy more bulk items and go twice a month to save more money. Believe me, my frugal friends who have a $350 grocery budget remind me all the time. In case you are wondering, the other 10% of groceries are purchased from Costco. I mostly buy coffee and paper items from them. What is my food budget going to be for February? I’m hoping to spend $450 on groceries from Foodmaxx.
How about you? Are you making any changes to your grocery budget next month? How have you saved money on groceries? I would love to hear some of your stories.
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Published by Scott
Jan 23, 2009
