Better Parenting» Family Finances

Showing Teens the Importance of Saving Money From Their Summer Jobs

Debbie Dragon — Tue, 20 Apr 2010 13:50:16 +0000

Many of us look back at our teen years and think of the carefree times with friends, the first car we owned and our first love. For most people it was a time in our life that we didn’t have to worry too much and most likely, we rarely, if ever thought about saving the money we earned. Times however have changed, and if you have a teenager who will be earning money this summer it is a good idea to sit down with them and talk with them about money management and the importance of starting to save.

As adults, especially in today’s world, many of us are wishing that we had learned about money and its importance at a younger age. If we had only started budgeting our money, saving our money and investing it earlier in life, where might we be now? Budgeting, saving and investing money is a life skill that is a necessity and it is never too early to start learning.

Need vs. Want

Many teenagers would love to spend every penny that they earn. The first step in teaching them about the importance of saving is explaining to them the difference between a want and a need. A need is something that is necessary like food, clothing, transportation, shelter, etc. Wants for teenagers are typically expensive clothing and shoes, fancy cars, video games and various forms of entertainment. While it is ok to spend some money on our wants, it is important to learn self control and discipline in the form of financial planning.

Create a Simple Budget

Helping teens set up a budget for the money they will make during the summers of their teen years will be the foundation of how they earn and spend their money throughout their life. Teach them to set aside a certain amount of money each pay check for essentials and a few luxury purchases. The remainder, which should be a large portion of their paycheck, should go into savings.

While it may seem strange to have teens begin saving for their retirement, in this day in age it is practical and can help to greatly make up for the deficiencies that they will face come retirement age. With pensions and other benefits diminishing, it will be more important than ever before for the teen generation of today to start saving at a very young age.

Motivation to Save

There are a few different things you can do to help get your teen motivated to save their money. Showing them in black and white how their money can compound interest and turn into a small fortune for them by retirement age, is a good place to start. Just a couple of thousand dollars in savings from each of their teen years can multiple to a lot of money.

Some teens might be better persuaded by showing them what they could have now with their money ( which is not a lot) compared to what they could get with it later, after it has multiplied.

Even if your teen is resistant to the idea of saving most of their money now, it is important to push them to do it. Some day they will be thanking you.

How to Save Money by Giving Your Child an Allowance

Bill Dwight — Mon, 05 Apr 2010 13:00:03 +0000

“Huh?” you say, “Won’t handing out allowance money to my child only increase my family’s spending?” No, not if you treat an allowance as a budget instead of a handout.

Here’s how it works:

Step 1: Give your child some purchasing responsibilities

Make your child responsible for some subset of his or her spending. Pick something your child really cares about. For young kids, this might be as simple as small treats or modest knickknacks. For example, my eight year old likes the occasional pack of gum as well as orange tic-tacs. For older kids, you might put them in charge of purchasing related to their entertainment, online games, sports, or hobbies. My oldest son is a drummer. He’s in charge of his drumming related purchases – which can definitely add up! I also like to put my teenagers in charge of purchasing their own clothes.

Step 2: Work out a budget and matching allowance

Once you’ve identified what your child is responsible for purchasing, work out a budget using sample items to calibrate the total amount. For the young ones, maybe it’s the rough equivalent of one pack of gum a week plus one Matchbox car a month. For my teenagers, I have them make a list of the essential clothing items they think they’ll need, tally it all up, and submit it to me and my wife for review and approval. (If you want to be harsh and simulate what goes on in the corporate world, just arbitrarily slash their budget in half like my old boss used to do! OK, I’m only half kidding…) Do whatever works for your family, your values, and your current financial situation.

With budget in hand, set an allowance to match it. Note that it’s often handy to have separate allowances that are delivered in different time-frames. For example, I like to deliver each teenager’s clothing allowance annually. That way, they get the experience of managing – or mismanaging – a relatively large chunk of money over a long period of time. That’s an important skill to master. If they run out of clothing funds, they either have to go without for the rest of the year, or make additional clothing purchases from their weekly general spending allowance. If they choose the latter, it means foregoing movies and other social activities for a while. The more they work through these types of trade-offs, the better. Of course, the important lesson is: you can’t have it all.

The nice thing about this disciplined budget-based approach is that you won’t feel swayed by what other families are doing. Your allowance amounts aren’t arbitrary, variable, or emotional. They have a clear explanation backed up by a practical budget and a clear set of expectations.

Step 3: Track the balance and get out of the way

With responsibilities, a budget, and an allowance in place, your job is primarily to get out of the way. It’s their money and their responsibility to make the decisions – as long as they keep their balance above zero. Of course, if my eight year old announces that he wants to buy cigarettes instead of tic-tacs with his money, I’ll step in. Obviously, you have the power of veto when a purchase defies your family’s values or poses health hazards. But use your veto power sparingly and only when really warranted. Otherwise, let them practice making their own decisions. Let them make mistakes and deal with the consequences (like blowing the budget on a wear-it-once dress only to ride out the rest of the year in T-Shirts).

You’ll often find that kids grossly underestimate what their budget should be. That’s OK. It’s all part of the learning experience. Rather than correct it right away, I’d advise letting them run with the lean budget so they can discover the mistake on their own. If they’re falling short due to poor purchasing choices, gently coach them on how to be more cost conscious: Do you really need designer jeans? Will you really wear those more than once? What about EBay? If their purchases are reasonable and they just underestimated their needs, allow them to renegotiate the budget when appropriate. Just don’t let that become a habit.

So, how does this save us money?

The budget-based allowance approach saves money the way all good budgets do: by putting constraints on spending and slowing down purchasing decisions. An essential element of the plan is ownership. You’ll be amazed at how frugal kids can be when it comes to spending their own money. Spending Mom and Dad’s money? That’s easy! Spending their own money? Not so fast!

You’ll also notice another pleasant side effect of this approach: it reduces family tension. Putting your child in charge with a budget eliminates the all-too-common whining and arguments around purchases. The point of purchase changes from extended begging (“Mom, can I have that? Why won’t you buy it for me? Pleeeeaase!!! Whaaaaahhhh!”) to a largely emotion-free assessment of the current balance (“Hmmm – do I have enough to buy this?”).

Saving money and saving nerves: now that’s what I like to call a “twofer”.

Expanding the Family

Mec Arevalo — Fri, 02 Apr 2010 13:01:41 +0000

If you ask other people, opinions are sure to vary. There will be people reminding you about the population problem of the world. There will be people who will wish you’ll have twins. There will be people making you feel guilty about your only child having to share. And then there will be people wondering why you would want more when you already have more than one child.

And then of course, there are the real, practical concerns of having to divide resources. Pregnancy will cost you, depending on the difficulty of the pregnancy and the circumstances of the delivery. Breastfeeding will save you on formula but diapers, well-baby visits and vaccinations will still add up. Food, clothes, other nice-to-haves and in time, tuition fees aren’t free either. And then there would be the hassles of finding a good day care or a trustworthy babysitter. You will also divide your time and energy between your spouse and child/ children. ‘Me’ time will be harder to come by.

Scared already?

Then again, sometimes, blessings in the form of children come unexpectedly. And sometimes, however impractical it may seem, we just long for another one. What then are the things that we do have to keep in mind?

Expanding a family is a very personal decision that only the couples involved can make. You can take into consideration existing children’s thoughts, feelings and specific needs but ultimately, the decision is yours to make. Make the decision out of nothing but love and stand by it — your other kids, relatives, and friends will come around.
Try not to worry excessively about finances unless you really have no means of supporting your kids. Your priorities will change and you can learn to budget well.
Time management and routines will help you enjoy each member of your family, no matter how few or many of them are.
Each addition to the family causes stress. Even a goldfish can become a source of conflict and tension, what more a new baby. But all the resulting changes can become positive if you embrace them and adjust accordingly. Every addition is also bound to bring with it some, if not a lot, of rewards. Each child at least will also be an extra set of hands to help around the house.
Love only gets multiplied, never divided. But yes, your time will be divided and you must divide it according to where each child is. You cannot delegate breastfeeding but you can delegate burping and changing to your husband so you can have more time with the older child, who may need more stories read to him initially. The baby won’t mind and the older kid(s) will be assured and will have less reason to be jealous.
Sibling rivalries are natural and common and even healthy, up to a point. The degree of rivalry, however, will depend on the parents and their discipline. Showing favouritism, comparing out loud and sending signals of guilt can all aggravate anxiety and jealousy in a child and tension among siblings.
A child, or another child, is no solution to a rocky marriage. Deal with major problems first before even thinking of expanding your family as it may just lead to catastrophic results.
There is nothing wrong about parents of handicapped children wanting another one, wishing it will be a healthy one this time. Handicaps can bring forth a lot of beautiful traits in the family, like compassion and empathy and tolerance. A healthy child is sure to benefit from these lessons and a handicapped child is sure to benefit from having someone more to love him.
There can be no total preparation for each new addition. Pregnancies may become difficult. Some babies are more sickly than others. Some will grow up requiring special care. Again, it is finding the positive that will help families through any of these hurdles. It’s how you react to adversity that will determine your success.

To quote Marguerite Kelly (Family Almanac), “Of all the reasons for having more than one child, the joy and the surprise of watching each one unfold, and so differently, is surely the greatest — and the most lasting.”

Expanding the family is a personal decision — so long as you know you will not be overstretching the resources necessary for each addition’s care, then you are bound to do just fine.

Allowance for Kids – When to Start and How Much to Give

Debbie Dragon — Wed, 24 Mar 2010 19:40:07 +0000

Lessons in money management should start at a young age and an allowance is one of the first tools we can use to teach children how to manage money. These early lessons pave the way for a solid foundation in the important world of personal finances.

Kids by nature get comfortable with Mom and Dad footing the bill for everything from clothes, vacations, toys, and even the impulse buys at the checkout counter of the grocery store. When parents agree to splurge, kids learn to ask for more. However, that kind of thinking can be halted at a young age when an allowance comes into play. Many parents resist the notion of allowances or incorporate them in a way that soon becomes ineffective.

So how can you effectively teach a child to handle their own money?

When Is the Right Time?

Experts and parents often squabble about the appropriate age to start giving allowances. Essentially, when a child is of the age where they begin asking for material things, it’s time to start an allowance. Waiting until a child is a ‘tween’ (9-12) or a teenager can often be too late for effective learning. Older kids may have already been heavily influenced by wants and will resist parental notions of an allowance. Starting with a younger child who is capable of understanding the basics of counting money (around age 4), there may be a higher success rate during the institution of an allowance that carries on to later years.

How Much to Give?

Different families will view the amount of an allowance differently using criteria such as age, chores being done, or what other friends and family give to their own kids. Financial experts feel it is entirely appropriate to provide a weekly allowance equaling one dollar for each year of the child’s age. As kids age, their spending amounts will increase so this method may be the way to remain consistent while meeting the demands of growing children.

How To Distribute?

Many parents will tie an allowance in with chores as their own parents have done. However, child development experts say this may not be the best method for money lessons. By keeping allowances and chores separate, your child can learn two lessons: one about financial management and another about personal responsibility within the family. Parents may also wish to pay for special jobs that get completed such as cleaning out the garage or washing the car. Jobs outside of the normal responsibility can help reinforce the value of good work.

How To Spend?

By rights the money given in an allowance should be spent per the child’s wishes. However, to instill good financial sense, parents should work with kids to understand spending and saving. Allot a percentage of the money to be spent as a child wishes but require that a percentage also go towards savings.

Deciding Spending Limits

Parents should discuss their expectations with their children when it comes to spending allowance money. After the prerequisite percentage is put into savings, the remaining amount should be spent within those expectations. Parents and kids should come up with a list of things kids must use their own money for each week. For instance, decide who is now responsible for paying for a night at the movies, gifts for friends, luxury clothing, toys, and other entertainment. Kids can learn the importance of avoiding impulse buys rather quickly when they realize an overpriced video game means they will not be able to go to the mall on Saturday night.

Again, families’ views on allowance will vary greatly but one thing is certain – the earlier kids learn and the more parents are involved in money lessons, the more likely kids will grow up with a healthy view of money and be able to manage their own personal finances throughout life.

Planning to Become a Single Income Family

Amy Morgan — Tue, 16 Mar 2010 13:30:42 +0000

The joy of being a parent is priceless, but it does come with a price tag. Whether you decide to become a single income family, or are forced to rely on one income due to a job loss or injury, it is beneficial to have a plan in the works. Here are some tips to getting a plan in place to prepare for this life-changing event.

Get a Clear Picture of Your Expenses

It sounds simple, but it is so important to really know how much money is coming in and leaving your household. A great solution is to use an online banking option, and using online bill pay. This will give you a clear picture on what you are spending.

If you aren’t comfortable with online banking and bill pay, “old-school” methods work just fine. A piece of paper, pencil and calculator are great tools for keeping up with your finances. It is just important to find a system that works and one that you will stick to.

Sacrifice and Reduce

You knew that this tip had to be a part of this topic; there has to be some cut backs on what you spend. Living on a single income requires dedication and communication between spouses. Really think about what you can live with and without, and plan special treats. It always feels better when there is something to look forward to.

For example, if you are used to buying a latte at your local coffee shop everyday, you can change that habit and save money by making coffee at home. A special treat may be that you buy a latte every Friday. It is a sacrifice and reduction of spending, but just think about how special that Friday latte will be!

Make the Change Slowly

If at all possible, make the spending changes slowly. This is obviously not an option if job losses occurred, but if you can control it, change it slowly. Instead of spending both pay checks down to the last penny, start putting away 5% of both incomes. Each month, try for more until you are putting one paycheck away per month.

No matter what your reasons are for becoming a single income family, the steps to get there can be challenging. A plan, communication and compassion are vital to making it a reality. In addition, pack your patience because it is a life-changing event.

5 Family Budgeting Tips that Work

Belinda Mooney — Sun, 14 Mar 2010 14:34:20 +0000

In today’s economy trying to make ends meet can be a real challenge, especially for families with several kids. But there are a good many things you can do to help stretch the family budget. You may already be doing some of these, but you may not even have thought about some. Here are five ways your family can stretch its budget.

Avoid Eating Out

You may be saying to yourself, “This one is easy. We never go sit down for a meal at a restaurant.” And while that may be true how often do you grab a $1 burger for the kids while running around? Dollar burgers and drinks can add up real fast especially when you are buying for several people. Take snacks from home with you or keep some in the car for the kids and avoid the fast food trap. It is amazing how much money fast food can steal from you budget.

Keep a Spending Diary

One great way to see exactly where your money is going is to create a spending diary. For one week write down everything you buy whether it is a coke or just a cookie. Have the whole family take part – even the kids. Your family will be shocked to see where money goes, and often for the little things.

Enjoy the Free Things in Life

Take advantage of the free things that are available where you live. Instead of spending money on movie tickets, take in a concert in the park for free. Go to story hour at the library. Instead of a day at an overpriced amusement park, spend the day playing miniature golf. Most neighborhoods have plenty to do if you simply look.

Decide What’s Important

Cutting everything out but the bare basics may seem like a good idea but often it is not, except for very short times. This is where you have to decide what is important to your family. Your daughter’s piano lessons may be very important to you and her. See where else you can save so that she can continue to do those things. Have her take part in the action. She can take piano but she may have to pack a lunch for school instead of buying. Apply the same thing to yourself. If you enjoy lunch out with friends, pack your lunch each week and only go out to lunch on Fridays.

Talk About It

This may not seem like much of a budgeting tip but it may be the most important one of all. Discuss your family’s budget and needs with your children. There is no need to make things sound worse than they are but at the same time they need to understand the reality of your situation. Many times kids just assume the money is there to spend. When you discuss the family budget together everyone can have an input into what can help make those dollars stretch.

Make Your Own Baby Food

Belinda Mooney — Fri, 26 Feb 2010 20:20:10 +0000

Making Your Own Baby Food Is Simple and Easy

Your child is growing older and getting teeth. You can hardly imagine yet it’s actually time for her to move into eating solid foods. But baby food is costly. Along with the rest of the costs included in caring for a child there should be a way to help you save on child charges, right? Well, there is. You can choose to make your own. It’s not only more cost efficient, but it really is much better for your little one as well.

Wholesome Food for Baby

Among the key benefits of preparing homemade baby food is you manage exactly what will go into the what he is eating. There aren’t any additional additives or disguised ingredients you are unsure about. And if you are into natural and organic foods, you understand that the price of organic child food is absurd. Now you can make your own.

Putting Together What You Need

You will require hardly any special equipment to get you started on making your own baby food but there are some accessories which are helpful. A baby food mill is extremely nice. What’s more , it means that you can prepare “instant” little one food wherever you are. They’re very portable. A small food mill is good or a hand blender but none of these are essential. They simply prepare the process simpler and easier. A blender works very well. However , if you do not possess any of those do not worry. A fork still mashes food nicely. You will also want several little storage containers, pint size freezer bags or ice cube trays. Now you are all prepared.

How to Get Started

You want to start feeding your little one simple foods in the beginning. Things like bananas, peaches, green beans and sweet potatoes. Stay away from foods which result in allergic reactions like strawberries. If the food is actually soft or very ripe in the first place for example bananas you can mash it very easily when it’s needed. For certain foods including pumpkin or apples you will want to cook them until very soft. After that drain them, saving the water. Now put some into your blender or food mill next add a little bit of water and puree. Instant baby food!

Freezing Your Baby Food

You could easily choose to puree whatever you happen to be having that day or you can make bigger batches and freeze some. An ice cube tray is fantastic for this! Basically fill up the tray holes with the pureed meals and freeze for a couple of hours. When the baby food is frozen solid take them out of the tray and place in freezer bags. When you need to use them simply put it in the microwave for a few seconds or just allow thaw at room temperature. It does not take especially long for just one food “cube” to thaw. Making your own baby food is that quick and easy to do.