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Teaching Kids about Money

Finance, Parenting

Today, Mr Credit Card from www.askmrcreditcard.com is going to contribute with an article about things we can teach our kids about life and money. He asks that you check his best credit card offers page if you are looking for a new card

I honestly think teaching kids about money this is the most overlooked thing that most parents do not teach. Instead, kids learn from our behavior and how we treat money. But I really think the subject of how to manage money must be taught.

I have three kids and teaching them stuff is sure tough. But as a parent, I would like to instill good habits (including money habits). Here are some of the things I think we can do to teach them about various aspects of life that will affect their outlook about hard work and money.

Reward Hard Work hard and Not Just Results – Some kids are talented at certain things like math or baseball. Very often (in their early ages), they excel in school or sports without much effort because of talent. But very often, because of the talent, they do not develop the habit of working hard (because they do not have to). But as they grow older, they are going to face obstacles. If they do not learn the value of hard work and overcoming difficulties, they will hit the brick wall often. Teaching them the value of hard work (even if they are talented) is so important.

What has this got to do with money?  Well, I think delayed gratification is one of the hardest thing to teach, so we try to praise our kids when they achieved something due to hard work. We tell them that they accomplished it because they worked at it and we explain that to be able to afford expensive things, they have to study hard, work hard and earn their own money!

Going to Shop Does Not Mean You Have to Shop! – There are various ways to go about doing it. One way is simply to explain concepts as they come along. For example, initially, my kids always wanted to buy stuff when they go to Toys R Us or anywhere else. To put a stop to this nonsense, we had to explain that just because we went to a shop does not mean we have to buy anything. We could be just looking, doing some research or simply buying a gift for someone else.

Ask Them What Happened To Stuff They Bought A While Ago – Another thing that we like to bring up to our kids when they want to buy something on impulse is to remind them of something they bought in the past and whether they are now still excited over it and playing with it. Chances are that they will say no! We found that this was a very effective way to make them realize that they should think twice before buying anything.

Teach Kids to Compare Price – Here is another technique we use: When we go grocery shopping, Mrs Credit Card asks the kids to compare prices of the cheapest cereals. We explain to them that even though they love a particular one, there are times when it is not the best time to buy it. They should only buy it if it is on sale. We also ask them to compare the price relative to the weight of the product to see which gives greater value for money. After a while, they catch on and only buy cereal that is on sale!

Make Them Work – I see lots of kids organizing lemonade stands outside their houses during summer. It could be to draw crowds for a garage sale or to raise money for a fundraiser. I think this is such a great thing as they can learn so many things just from selling lemonade. They can learn the the concept of selling things for a profit.

Another common task kids or teens take is to work to earn some money. It could be as simple as baby sitting, walking your neighbors dog or working at the ice-cream shop. Making them realize that they need to earn before they can spend is a good lesson.

Slowly Give Them More Responsibilities – As kids grow older, I believe in giving them more responsibility. It could be making the oldest kid look after their younger siblings. Or giving them tasks like clearing the trash, doing the dishes, etc. I know of some parents who give their teens prepaid credit cards to start teaching them about using “credit” (though it is not technically credit). Maybe that is a bad idea as you want them to know to manage a student credit card when they are old enough to get one.

Selling Things For Fund Raisers – One of the things that I admire about the Boys Scouts is that they are always doing fundraisers for their scouting trips and events (no money, no outings). It teaches them “cold calling” or more likely, approaching Dad and Mom’s friends to sell things like coffee beans and Christmas wreaths!

Teach Them Not To Waste Stuff – Another thing I like to emphasize to kids is not to waste stuff. Whether it is the water when they brush their teeth or making sure they do not waste food, we are pretty particular about this. I think this is a good mindset to instill in our kids.

Performance Matters More Than How Good Your Look – I find that kids like to buy fancy stuff and beyond a certain age, they are conscious about brands. I’ve mentioned this before, but when my kids first played baseball and soccer, they keep bugging me to get them the fancy gear. I had to keep telling my kids that how you perform matters more than your gear. After a couple of years of playing, I think they have finally come to realize this and no longer bug me about things.

It’s a Never-Ending Process – Teaching your kids about money and other things that are important is a never-ending process. But you have to do it when they are young because once they grow older, they tend not to listen to their parents anymore and are more likely to be influenced by peers.

Update:  This post has been included in the Carnival of Debt Reduction.

Budget Lesson, Part 7

Finance

It’s been a month(again!) since I’ve written a post for the budget series, so I’ll be continuing that today.  See these posts for the history of this series.

This time, I’m looking at how to reduce my “set aside” funds.  These are the categories that don’t have specific payout amounts and happen at irregular intervals.   One of the convenient features of our set-aside funds–also a feature of our non-monthly bills–is that the money sits in our checking account, providing a buffer against overdrafts.   The buffer is big enough  that I can withdraw our entire month’s discretionary budget on the first of the month.

  • Parties  – Twice a year, we have large parties.  We have a barbecue(not necessarily low and slow, I’m in the midwest) and a Halloween party.   We also have three kids with birthdays.   Each year, we try to do something exotic at the barbecue.  One year, it was a turducken.  This year, we’ll be skipping the show-off portion of the show.    The Halloween party is never expensive.   I don’t drink much, so the bar stays well-stocked without frequent expensive shopping trips.   We throw two large parties for less than $300 combined, and our guests start RSVPing a year in advance.  We’re fun.   The kids are getting gypped this year.   I am over my addiction to expensive birthday parties for my kids.  There will be a small party for one, a sleepover for another, and a party combined with some cousins’ birthday parties for the third.    It sound horrible but all of them will have fun.
  • Gifts  – We set aside money for presents, but we don’t feel we need to spend all of the money we have set aside.   Anything left over stays here.  Eventually, it will be something nice for all of us.
  • Pet Care – We have 4 cats and a dog.  Cat litter and food are expenses that we can’t make disappear.  We don’t buy the fancy food, but we also don’t buy the stuff that uses cardboard as filler.   We have set a new limit at 3 pets, but that limit will only be reached through attrition.   There’s nothing to cut here for a few years.
  • Car Repair – This is another category with nothing to cut.   If we don’t spend it, and something catastrophic happens to a car, we’ll be covered.  If it doesn’t, we’ll have a bit more cushion in our checking account.
  • Furnace Warranty – When we bought a new furnace and air conditioner, we got the extended warranty.   This is an unlimited renewal warranty, so, in 5 years, we’ll have to buy it again to keep it.  If we keep it forever, they will eventually replace our furnace when it dies.
  • Medicine/Medical – It’s a sad fact that people get sick.   We set aside a small amount to cover our costs.   The costs rise and fall, but over any given quarter, I don’t think I’ve been off by more than $5.

I’ve taken a hard look at most of the bills over time, so there isn’t always a lot to cut.  Next time, I’ll be addressing our discretionary spending.

Karate Guess So

Finance, Life

琉球国唐手家・明増盛の「慈恩」(Ming Zengsheng, 1869 - 1945)
Image via Wikipedia

“Walk on road, hm? Walk left side, safe. Walk right side, safe. Walk middle, sooner or later, [makes squish gesture] get squish just like grape. Here, karate, same thing. Either you karate do “yes”, or karate do “no”. You karate do “guess so”, [makes squish gesture] just like grape. Understand?” -Mr. Miyagi

It occurred to me that lately, I’ve changed my day-to-day cash flow plans a couple of times.

A year ago, I was running on a fairly strict cash-only plan.

A month ago, I was running on a strict budget, but doing it entirely out of my checking account.

Now, I’m loosening the budget reins, and moving all of my payments and day-to-day spending to a credit card, including a new balance that I can’t immediately pay off.

The thing is, changing plans too often scares me. Like the quote at the beginning of this post, I start worrying about being squished like a grape.

The simple fact is that any plan will work.

If you want to get out of debt, just pick a plan and run with it. If that means you follow Dave Ramsey and do the low-balance-first debt snowball, good for you.  Do it.  If you follow Suze Ormann and do a high-interest first repayment plan, great. Do it. If you follow Bach and pay based on a complicated DOLP formula to repay in the quickest manner, wonderful!  Do it!

Just don’t switch plans every month. If you do that, you’ll lose momentum and motivation.  Squish like grape! Just pick a plan and go. It really, truly does not matter which plan you are following as long as you are following through.

This applies to other parts of your life, too.  For example, there are a thousand fad diets out there.  Here’s a secret: they all work. Every single one of them, whether it’s Weight Watchers, slow carb, or the beer-only diet. The only thing that matters is that you stick to the diet.  If you manage that, you will lose weight on any diet out there.  Except for the jelly bean and lard diet. That one will make you extra soft.

Another secret: the productivity gurus are right. Every single one of them. David Allen, Stephen Covey, Steve Pavlina, and the rest. They all have the One True Secret to getting the most out of your day.  Really.   Pick a guru and go! But don’t try to Get Things Done in the morning and do 7 Habits at night. Changing systems, changing plans, changing your mind will make you sabotage yourself.

The real secret to accomplishing great things, whether it’s paying off $100,000 of debt, dropping 40 pounds in 3 months, or tripling your productivity is to do it. Just get started and, once you’ve started, don’t stop. If you keep going and stay consistent, you’ll accomplish more than anyone who hops from system to system every few weeks.

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ING Rocks

Finance

 

INGDirect Sale
INGDirect Sale

I just got an email from INGDirect.   To celebrate Independence Day, they are having a sweet, sweet sale.

You can:

  • Open a checking account and get between $50 and $126 for doing so.
  • Open a Sharebuilder account and get $76 to start buying stocks.
  • Get $1776 knocked off the closing costs of a mortgage.
  • Get $76 in a new IRA, to give you a little boost for retirement.

Take advantage of all of that and you’ll get $2054 in cash or discounts.

Seriously, this deal rocks.  If you don’t have an INGDirect account, get one.  There are no overdraft fees and no monthly fees.

The sale ends tomorrow at midnight, so hurry.

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Cooking Poor

Finance

Frugal cooking can be an intimidating concept.   It’s easy to turn a meal into a huge expense, but it’s not that hard to trim your grocery budget without sacrificing variety and flavor.   It just takes some planning and a few money-saving techniques.  We usually feed our family of five, often with guests, for about $100 per week.

Schedule your meals. Find or make a weekly meal planner.  I recommend this or this.  Cross out the meals you don’t need to worry about due to your schedule that week.  If you won’t be home, you don’t have to cook that meal.  Fill in the meals in the remaining slots.  Keep your schedule in mind. If you get home from work at 5:30 and have to be somewhere by 6:30, dinner needs to be something quick. Also, make sure you include every side dish you will be serving.  Now, look at the recipe for each dish in every meal.  Write down everything you need to make all of the food you plan to eat that week.   While planning your meals, think about how to use your leftovers.   If you cook chicken breasts one day, the leftovers can be chicken nuggets the next.

Take inventory.  Take your meal plan and a pen while you look through all of your cabinets and your refrigerator.  Why buy what you already have? If you already have steaks in the freezer, don’t waste your money buying more.  If you have it, cross it off of your meal plan shopping list.  Whatever is left is your shopping list.   Review it.  Is there anything that can be combined or eliminated?  Is there a key ingredient for a sauce that’s missing?

Don’t forget the staples.  If flour or sugar is on sale, stock up.  Anything you use on a regular basis is a staple, buy it when it’s cheap.

Build a shopping list from your meal plan.  When you are in the store, stick to your list.   It’s hard, but avoid impulse purchases at all costs. Don’t shop hungry, don’t buy things just because they are on sale, and don’t dawdle.  Get what you need and get out.

Avoid pre-processed food.  We slice and shred our own cheese.    Buying the pre-shredded cheese costs an extra $5 and saves just 5 minutes.  Don’t buy pre-sliced apples or anything that will only save a few minutes for several dollars of cost.

Every couple of weeks, I cook a large pot of either beans or rice and keep it in the refrigerator.  Almost every meal that we cook gets a cup or two of beans or rice added to it.  It doesn’t alter the flavor much, but it adds a few extra servings for pennies.  It’s a healthy way to stretch any meal on the cheap.

We have a large bowl in the refrigerator filled with mixed greens.   We buy whatever salad-like greens are on sale and prepare the large salad all at once.   Most meals start with a salad, which makes it easier to fill up without relying on the protein dish, which is generally the most expensive part of a meal.  As a dedicated meat-eater, it took some getting used to, but it’s a good meal–cheap and healthy.

Cook enough for at least 3 meals.  That will eliminate 2/3 of the work involved in cooking.   Plan ahead to make your meals simple and easy.

Freeze the leftovers in usable sizes.   Stock up on semi-disposable meal-sized containers.   Freeze some in single-serving sizes for work, and others in family-size servings for last minute meals at home.  Preparing for last minute meals keeps you from serving garbage or takeout when life gets in the way of your plans.

Avoid wasting leftovers.   Wasted food is wasted money.

When you are done cooking meat, take any drippings or scraps and throw them into the slow-cooker along with any vegetable scraps laying around.  Cook it overnight, then strain it into an ice cube tray.  You now have stock/broth ready to be added to any recipe.

Plan for serial meals. Chicken breast leftover from today’s meal can become chicken nuggets tomorrow, to be shredded into chicken salad the next day.

When there isn’t enough left for a full serving, we put the remains in a resealable bag in the freezer.   When we accumulate enough to fill our slow-cooker, we dump in all of the bags with a couple cups of water.    I look through the refrigerator for any leftovers that have been overlooked that week or any vegetables  getting close to being too old.  It all gets cut up and added to the cooker to cook on low all day.  I rarely add seasoning because everything going in the pot tastes good.  We never get the same meal twice and our “free soup” is never bland.

That’s how we cook cheap, without sacrificing too much time.  How do you save money cooking?

This post is a blast from the past.  Originally posted here in January 2010.