This Blog Is For Women

2.  It’s YOUR money, make sure you keep some for yourself!

Think about it.

It’s YOUR money, so you should really make sure you keep some of it.

A good rule of thumb is to put 10% of everything you earn into a separate savings account.  Be diligent.  Be vigilant.  Without fail.  Once you’ve acquired “3 Months Salary”  this will become your ‘Emergency Fund” (for a roof…furnace…car repair).   This should take you about 30 months to achieve.  If you make $2000 a month, then you will have amassed $6000.

But don’t stop!

Continue to pay yourself first indefinitely and this will become your nest egg.  And at the rate given above you’ll be tucking away $12000 every 5 years.  If you start this young, and increase it with your increased earnings you will create a very comfortable cushion and a real sense of accomplishment.

There are a few pearls of wisdom that have helped me be successful when it comes to money management.  I’m going to share those with you during the next series of blog posts.

image: flickr.com/photos/60891720@N06/

1.  Live below your means.

This is something that began with my grandfather, and maybe his father before him.  My grandfather was bringing children into the world during the depression.  He had it tough.  Living below his means meant that he was able to tuck a little bit of money away every month.

By following this piece of advice, you will set yourself up for financial success.

After you get to know me, you’ll appreciate that I like to state the obvious.

Obvious:  Saving money means saving money.

Explaination:  Let’s say you go to  the grocery store and you got specials on cereal  and peanut butter so you stocked up and got 3 of each, reducing the total cost by $9.  (Some stores even put a note at the bottom of your receipt ” you saved $9.06 today.”)

Did you save money?  Answer:  No – You spent less money.  You didn’t save money.  Not unless you transfer $9 to your savings account and actually save the money.

The rationale here is that your budget should include being able to purchase all of your needs at the regular price. If you get a deal that doesn’t mean you should be spending more on something else.    It means that you should be saving more.  So do it!  Save the difference.

Challenge:  Next time you get something for a reduced price and you save money, actually save the money.  Right, log in to your online banking account and make a transfer to your savings account.  I recently cancelled cable television reducing my costs by $46 a month.  So, now I’m saving $46 a month extra by transferring what used to be a cable bill into my savings account!

That’s a savings of almost $600 a year.  For real.

PS, I’m saving that extra $600 into my vacation account.  Cable TV was entertainment, and so is a nice south vacation!

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• Below Your Means (thisblogisforwomen.com)

If you start paying your children (let’s not call it an allowance, there must be a better word) you might be wondering what you’re paying for.

A young child is too young to really make the connection between completing jobs and getting paid, but you can try if you like.  It didn’t work for me.  The little ones always wanted to help me do something whether is was mop, wash widows, dust, set the table or cook.  So, it didn’t make sense to itemize the tasks.

As they get older, you might want to make a list of the jobs you expect them to have completed in order to get their pay.  I like these jobs to be the ones that help the communal good of the family.  Things like taking out trash, vacuuming floors, cleaning common bathrooms, washing dishes or emptying the dishwasher.

I don’t offer pay for things like doing your own laundry or keeping your room clean or keeping up with school work.  These things are expected.  And they come with reprimands of their own if they are not done properly.  Plus, I let the boys’ rooms get a little messy at times.  Most times, really.   They have to live in there, not me.  So a bit of stuff on the floor and things out-of-place is not really any big deal.  I can close the door if it bothers me and every now and then I get them to do a good purge and clean up.  The biggest reason their rooms are messy is because they have too much stuff in there…but I don’t want toys all over the house, so that’s the price we pay.

If there’s a big job to do like raking the leaves in Fall, or hours of shovelling after a storm, or if you’re working on a project that needs extra capable hands you can post the job with a set pay.  This is nice incentive for kids looking for a little extra cash for something they’ve been saving for.  The job isn’t mandatory though, they can forfeit the job and the pay.

So, it’s really up to you if you want to pay specifically for jobs or just generally pay the children so they can learn about money.  I don’t recommend giving them money for nothing though.  They should be contributing their share to the running of the household.

Other posts you might like:  3 piggy banks,  How Much Help?,  Kids and Money

So you’ve decided to take my advice and pay your children.  (See my last post Kids and Money.)  Now what?

First you need to decide how much.

How much depends on a few factors.  Age, your means, and the child’s spending wants/needs.  When my son was 3, he’s 12 now, I started by paying him $3 a week.  When he was 6 it went up to $6 a week.  at 9 it was $9 a week.  And that’s where it stopped.  I could put it up to $12 now that he’s 12, but we haven’t negotiated that.    So, there’s a guideline if you like.

I chose amounts that were mulitples of 3 as the weekly pay amount.  And that was done on purpose.  I also pay the children in small bills or change so they can divide their pay.

The next thing you need to do is set up rules.

Yes, you heard correctly.  As the parents it’s up to you to set the spending rules for your children.

In our house everyone has 3 piggy banks.

1. pocket money or spending money
2. saving up money
3. live savings.

When the children are paid, one third of their pay goes in each bank.  The pocket money can go straight in their wallet/purse if they have one.

Any time we go shopping, they can use their pocket money for impulse purchases like gum or candy.  There are weeks that they don’t spend all of their pocket money.  This money can then be reallocated to the saving up or life savings banks. (My kids choose to put it in their saving up money 9 times out of 10.)

The saving up money is not for impulse purchases.  This money is to be used to save up for something.  My kids have saved up for things like a new game, iTunes money, or a toy.  Sometimes they have a joint savings goal and they have bought Wii console, a Trampoline, a Playstation and accessories.

Life Savings is exactly what it sounds like.  It’s money that they have put away for major life purchases, like university, to start a business, to buy a car, or a home.  This money is never spent.  2 years ago my oldest son had amassed $1000 in life savings.  He used it to purchase an interest bearing  investment certificate that pays 5% a year for 5 years.  (A great rate, for sure!)  And he continues to fill the life savings bank.

The purpose of the 3 banks, I’m sure you can see, is to teach children that there are many different types of money needs.  And some of them take time to save for.

This is why I chose the pay rates I did for the children:  multiples of 3 work for the lesson.

Other posts you might like:   How Much Help?,  Kids and Money, Help Around the House