February 24th, 2012 by Lisa

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!

Posted in Health and Lifestyle, Money Tagged with: , , , , ,

February 18th, 2012 by Lisa

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

Posted in Money, Parenting, Preschoolers, School age Tagged with: , , , , , , ,

February 17th, 2012 by Lisa

Learning about money can start at a young age.

Young children can easily grasp the concept that money is needed to make purchases. (It’s amazing how many adults have forgotten this concept, with the advent of the credit card.)

In order for children to learn this lesson, it is important for them to have money.  At first, they’re going to need you to give it to them.

It’s a good idea to start paying your children as soon as they are old enough to ask for toys when you are out shopping.  This will serve 2 purposes:

  1. It will teach them to budget.
  2. It will teach them the value of saving, and not spending on impulse.
  3. (O.K. I lied, it will serve 3 purposes not 2.) It will save you money in the end.

“Wait!” you ask.  How can paying your child save you money?  Simple.  You will no longer be responsible for purchasing gum from machines, ice cream at the corner store, or toys that are begged for while shopping at a department store.

You will simply allow your child to use their money to buy the things they want and can afford.  When they say they want something, you just have to say ” Did you bring your money?”

Suggested posts:  3 piggy banks, How Much Help?

Posted in Money, Parenting, Preschoolers, School age Tagged with: , , , , , , , ,

February 15th, 2012 by Lisa

Money is powerful.  When you’ve got enough of it, you almost don’t give it a second thought.  But, when you don’t have enough it can be like the Holy Grail.

Something that was instilled in me from a young age is the power of lifestyle.  Specifically, the power of money and living below your means.

The thing about living below your means is that it gives you a buffer for times when things are tight.  And it also gives you a means of saving for something special or important.

When I was 15 I got my first job.  Minimum wage was about $3/hr.

At 15, I didn’t really have any significant expenses.  I lived at home, ate my parents’ food, and they transported me to and from work.

Before I got my job, I was making an allowance of $5 a week.  That was enough to get by.  A movie ticket was around $4.  A new casette tape was about $8.

My mother knew the power of  money and she made me an offer.  One I couldn’t refuse.

She offered to continue to pay me my allowance each week on the condition that I put my paycheques in the bank (and they were actual cheques, the paper kind, that you had to take to the bank in order to deposit.)  The further condition was that I didn’t spend the money.  She would continue to pay me my $5 allowance each week until I reached a bank balance of $1000.  

If you do the math you can see that in order to earn $1000 at $3 an hour I was going to have to work about 300 hours.

I started working at the end of summer, and by January I had $1000 in the bank.

My 2 best friends also had jobs.  Both of them relished their new found spending power and had several new sweaters, cassette tapes and had seen all the latest movies in theatres.  They had abandoned the bagged lunch at school opting for cafeteria lunches.  And between them, they had about $100 in the bank.

This was a big lesson for me.  A lesson in the power of saving money.

I decided that I would continue to give myself a weekly allowance, and I even doubled it to $10.  But I continued to deposit my paycheques and to not spend money out of the bank.  By the time I turned 16, and got my drivers license, I had enough money in the bank to buy myself a used car.  And after that point I used some of my pocket money to buy gas.

At 17, I paid for all of my meals and shopping during a vacation to Florida – my best friend came with us, and that was part of the deal.  If I didn’t bring a friend my folks would foot the bill for everything, but if I wanted to bring a friend the two of us would each have to pay our own expenses.

When I graduated from grade 12 I had saved enough money to pay for my first year of university and my books.

I continued to work (2 jobs) through university and graduated with no student loans, a car that I owned, and money in the bank.  This money, I used as a down payment on a house.

You can imagine how sad it makes me to read about students graduating from university these days who have taken student loans to pay for all of their expenses during school: tuition, books, residence, food, entertainment, and transportation.  They are under a huge mountain of debt and many of them have no idea of the value of money.

This is not their fault.  Banks offer them the money.  It’s expected.

But there is another way.  It’s not easy.  I didn’t say it was.

This week I’ve got money on my mind.  I’ll be sure to post some of my ideas on how to help children learn about money and it’s power.

Posted in Health and Lifestyle, Money Tagged with: , , , , , ,


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