All Financial Matters

Have you ever written a check for something that you knew you didn’t have the money for? People do that more than you think. They play the game of “robbing Peter to pay Paul”. This is a common practice that can lead to debt and bad money management.

When you take a job, you are given a salary. The salary only changes if you get a promotion. For those that work an hourly wage, the amount of your check changes if you work more or less hours each week. Despite our paychecks being fairly consistent, people continue to spend more money than they earn.

One cause of this is the “buy now and pay later” trap. Knowing that the first payment is two years away gives consumers a false sense of security. They may have walked into the store to purchase a bed, and end up walking out with the entire bedroom set because they don’t have to make payments until 2009! If you didn’t have the money to purchase more than a bed in the first place, what is the logic of purchasing furniture worth three times that much? In two years you may still not have that much.

Credit cards can also be a trap if not used with discretion. Statements come at the end of the month. Erroneously you might think that although you don’t have the money now, you will have it when the bill comes due. The problem with this thinking is that you haven’t figured in the budget the money you just charged to the card. Once you pay the other bills, there won’t be enough to pay the card balance so you pay the minimum. An unpaid balance on the credit card results in a larger balance next month even if you don’t charge anything else.

We have to learn to be financially responsible or the debt situation will worsen. More people will file for bankruptcy or pay credit counselors to fix the debt problem. While these options are available to help those who have gotten deep into debt find their way out, far too few people take advantage of the help that is offered.

Carrying a certain amount of debt has become a status symbol. Everyone else has debt so why shouldn’t I? People are not pressed to get rid of their debt. As long as they can pay minimum balances it doesn’t seem to matter that it will take five years and several hundred more dollars to pay off a credit card.

As long as there is a credit company or store willing to extend more credit, the problem of overspending will continue. How we handle money affects the next generation of consumers. They learn from watching us. What are we teaching them?

The importance of money becomes obvious when we have kids. We could have squeaked by living paycheck to paycheck when it was just ourselves, but now that there are others to think about we have to start saving our pennies. Here are some money management tips for single and two parent households.

Use generic brands as often as you can. The generic brands of a lot of foods are the same thing as the name brands, but bought wholesale from a distributor. If kids don’t like generic cereal, ease them into it. Nine times out of ten, it is the name brand that they are hung up on. Pour the cereal out of the package and into a container. They probably won’t be able to tell the difference.

The dollar store sells many name brand and generic varieties of common toiletries: soap, laundry detergent, shampoo, and household cleaners. To save money, shop here for frequently used items before visiting the grocery store. Then, when you do shop at the grocery store, use coupons for name brand items or take the opportunity to try the generic version.

Clean your clothing at home. Some of us are addicted to professional cleaning. Dry cleaning can be expensive—more expensive than it needs to be. The grocery store sells Dryel® dryer sheets. Dryel® is formulated to dry clean clothing in a home dryer much the same way as a dry cleaner cleans clothing. You can dry clean four to six pieces of clothing per sheet and it is cheaper than using a dry cleaning service.

Purchase a used car. We all want a new car, don’t we? The truth is cars depreciate as soon as they leave the dealer’s lot. Purchasing an inspected used car from a reputable dealer saves money on car payments. Check to see that the car has a good service record and that it has not been damaged in any way before you agree to buy.

Buy clothing in unexpected places. Famous named stores are not the only place to shop. Thrift stores, yard sales, flea markets, and consignment shops all sell good quality clothing. You can even find name brand items here, too. You will have to take the time and search through racks and racks of clothing, but it will be worth it to find clothing for yourself and your family at a fraction of the cost of regular department and specialty stores.

Deduct money for savings directly from your paycheck. We all mean to put a little something away each pay period but we can be forgetful. If you have direct deposit, make provision for a certain amount of money to be automatically sent to your savings account as soon as you get paid. This can still be the arrangement if you have to deposit your paycheck every two weeks. Set up a transfer with the bank to move that money to the savings account each time you deposit your paycheck.

There are no easy ways to save money. It takes effort and focus. We don’t always want to take the time to manage our money wisely, but our kids are worth it.

We all could use some help when it comes to saving money. That odd trip to the store for a sweater that results in a new wardrobe, or a trip to buy a new phone and we walk out with a phone, an answering machine, and a digital camera. These things happen, but adopting some frugal spending tips can make saving instead of impulse spending the norm.

Don’t shop on payday. This is when you have the most money. You haven’t paid the bills or put money away for savings. In error, we believe that we have more money at our discretion than we really have. At the end of the shopping trip, we are a few hundred dollars in the hole and a bill goes without being paid.

Don’t shop for groceries on an empty stomach. This is a universal rule. It never fails; if you shop when you are hungry you can be talked into buying anything. The shopping list goes out the window and so does the grocery budget for the month. Shopping when hungry could also cause you to stop for fast food on the way home because you can’t wait to fix something to eat.

Visit thrift stores and consignment shops. This works for kids when they are babies and toddlers. These stores have beautiful clothing that is in excellent condition. All it takes is a little searching to find a treasure or two at a fraction of the cost. Name brand clothing can be found here also. Thrift stores are a good alternative to “hand-me-down” clothing for younger kids.

Buy in bulk only if it is something that you need. Buying everything in bulk is not necessary. Some bulk prices have a higher unit price than buying a couple of boxes of cereal or baby formula. Carrying a calculator to the store with you can aid in figuring up which is the best buy. Join a shopping warehouse if you frequently buy bulk items.

Ask for a rain check. Some stores don’t give them for certain sale items, but it doesn’t hurt to ask. A rain check can save you money. Don’t buy a six dollar case of water if you can get it for two dollars with a rain check. Buy up to the limit you are allowed to purchase and stock up.

Bargain shop when looking for services. There’s no rule that says you have to go with the first plumber that you call. All companies don’t charge the same amount. Checking two or three places will give you a good idea of how the prices stack up. Choose the one with the most services for the lowest price. If you are not sure, ask a friend who may have had the same need that you do now.

Purchase gifts throughout the year. Don’t wait until right before the holidays or someone’s birthday. Finding gifts throughout the year saves money. Sales after Christmas are the perfect time to find all sorts of merchandise that would make good gifts for the following Christmas. Store your gifts in a cabinet for that purpose so that you are never without something to choose from for gift giving.

A few frugal spending tips can save a lot of money. It takes a conscious effort to start, but once you get the hang of it, it will become second nature.

Kids are enterprising people. When they need more money, they will actually ask what they can do. Teach your children the value of a dollar earned with these five tips for them to make money.

1. Find work around the house. These additional jobs do not have to include their usual chores. Resist creating a job just for them to make the money. This is the same as opening your wallet and handing the cash over to them. Examine what already needs to be done and choose an age-appropriate task. Asking what they need the money for can drive the fee paid for the service. Don’t make it unreasonable, though. Cleaning out the closets may be worth ten dollars but certainly not thirty or forty.

2. Start a needed service in your neighborhood. Parents have the responsibility of upkeep inside and outside the house. As soon as your child is old enough, they can begin a lawn care business. You will need to help them. Create flyers and deliver them door-to-door or put them in mailboxes. State your services and the fee. Elderly neighbors and those that are too busy to do the work make ideal clients. Monitor your child at each job. Only help when they need you to pitch in.

3. Create crafts to sell on eBay. Your child may be the type that enjoys making crafts. If they have the knack, there is a market to sell their wares. EBay offers a no-pressure situation where kids can see business in action. Follow the policies for setting up an account. If they are too young, you may have to own the account. Take pictures of the items and assist your child in writing a description of them for a viewing audience. Selling on eBay introduces kids to the art of owning and maintaining a business.

4. Enlist their help in monitoring younger siblings. A child of seven or eight is old enough to keep an eye on a three year old while you are in the house. This is not a babysitting job, but a monitoring one. If you need to cook dinner or finish some other household chore, hire your youngster to keep an eye on their brothers and/or sisters while you do so. Stress the main points: Keep toys out of their mouths; keep them away from the stove; go where they go. Too many instructions will have your child zoning out.

5. Hold a yard sale. If a child wants some extra cash, they can get rid of toys and clothing that they don’t play with or can no longer wear. Enter the yard sale. Yard sales are an excellent way for kids to make a few bucks and clean their rooms at the same time. Instead of throwing away these items or storing them in the attic, let others derive the same benefit that your child received from them.

Kids are hard workers. Asking for more work is a sign that they are learning how valuable money can be to their lives. These five ways to make money are a start. Add more of your own as you think of them.

Most people don’t fall into a pile of debt overnight. It takes time to rack up credit card bills and get behind in house payments. The key is managing your spending habits before things get out of control in the first place.

Take a look at your spending habits. Each of us is either a spender or a saver. There are distinct characteristics for both types of people.

Spenders love to buy things. They go with their first impressions. Impulse buying is their specialty. Not allowing time to think about a purchase before making it leaves them with stuff that they could have done without. Spenders live for today with little thought to the future. Why save when you can be happy now?

Savers are on the opposite end of the spectrum. They think about the future all the time. In fact, they give more thought to the future than they do to the present. They sacrifice to the point of piety. Enjoyment of life is not in their equation. The sad part is that they may not even enjoy themselves when they reach the point in life that they have been saving for. A penny saved is a penny earned.

Striking a balance between the two polar opposites is the best character trait to possess. While we should think about the future, we mustn’t obsess to the point that the present holds no meaning other than to service the future. Money is a means to live life to the fullest, but not the only one.

Start with last month’s purchases. Look at bank statements, credit card statements, and ATM receipts. The ATM machine is usually the fastest way to overspend. You put in your card and it spits money out at you. Most people don’t even ask for a receipt. At least if you had one, the amount could be recorded later when you returned home.

A budget is the best way to keep an eye on your money. Know what you have allotted to each category and stick to it. After the first few months you will be able to fine tune the line item amounts. Don’t cut yourself to the bone, thus making a budget hard to follow. On the other hand, don’t give yourself so much leeway that you go over budget every month.

Do you need that new sweater? Check the closet. There may be a clothing item or two that still fits and looks good. Visiting the mall just to “window shop” is too strong a temptation for the big spender. Instead of walking out empty-handed, they’ll pick up a few things that were on sale.

If ATM’s or debit cards are a problem, carry cash. Make one withdrawal a week for groceries, gas, and other incidentals. When the money is gone, that’s it. Writing checks for bills encourages you to track them in a ledger or electronically. Using cash may seem antiquated in today’s society, but it is still the best way to keep track of your spending. Receipts can be kept until the end of the month and then reconciled.

Taking the time to see where your money is actually going can help to curb those spending habits. Try to spend a little and save a lot each month. Hold out for those things that you want to see if you still want them a month or two from now when you have saved up the money.