All Financial Matters

It’s hard to teach teenagers something that they don’t think they already know. Parents are seen as ignorant of what is important to them. Despite what they think, however, parents do know about money and the consequences of using it unwisely. Show them what you know by teaching them a few things about money.

Parents have experience on their side. They have dealt with money and the ups and downs that come with it. Parents can lend insight to teenagers about how to make and manage money. From day one, they can set teenagers on the right track to understanding the advantages money and good credit can bring into their lives. Here are some tips.

1. Start a savings account. When your teenager receives money from their first lawnmowing or babysitting job, take them to the bank. Saving money is an important part of managing money. Ask them to give their money a month to sit in the account before they spend any of it. This will be hard, but one job may pay forty dollars that will be gone in a weekend. After a month, their savings account may have $200 in it. That can buy a new outfit and leave some money for a rainy day.

2. Invest in a certificate of deposit. When your teenager has accumulated around $500, have them put the money in a CD. The longer you keep the money in a CD, the higher the interest rate will be for you. Try a one-year certificate. After a year, you can sit down with them and decide what to do with the money.

3. Sleep on it. When your teenager sees something that they really want to purchase, ask them to sleep on it for a night or two. Parents know all too well about buyer’s remorse after an emotional purchase. Implementing the “sleep on it” rule of thumb in your household can save your teenager from feeling that same remorse. They want a scooter today, but by taking the time to think about the purchase, they may choose to save to buy a motorbike instead.

4. Develop a financial plan. Adults are told to come up with a budget for their family, but teenagers can benefit from a similar plan. Get them to list their wants and needs in two columns on a sheet of paper. Wants and needs are subjective things, so be sure that you explain the fine line difference. They don’t have to do it in one sitting. Give them time to think about it.

5. After they prioritize their wants, let them figure out how much money they would have to save to purchase it. To make the process less painful, they can figure up how much money they want to devote per month towards the purchase. This leaves them disposable income for dates, nights out with friends, and incidentals like gas.

Raising a teenager that understands money is not impossible. Starting when they are young children lays the ground work for future teachings. Teenagers that can take control of their money become adults that won’t want for it.

Children learn by watching others. Who do they watch more than their parents? As parents, we need to be careful to put our best foot forward in matters of money in order to give our kids a healthy start in that arena.

A parent that spends money today without giving thought to tomorrow will almost certainly teach their child to do the same. Using money as a means to an end is not a good lesson to pass on. Money is important because it is a necessary tool of life. Money does not turn a house into a home, but it does keep a roof over one’s head and food on the table.

Money that is handled with respect is money that will be around for more than one day. Lack of money is the reason why many couples in a marriage argue. Parents that come from two different backgrounds when it comes to money will likely butt heads. Before the children become adversely affected, the parents need to talk out their differences and come to a common viewpoint on how to handle the family finances.

Learning to save takes time even for parents. We didn’t all grow up with money-savvy parents. But now it’s time to break the cycle of overspending and debt. Parents can take a money management class or read a book on the subject. As they learn, so will the children. The information can be shared at family meetings.

If the family doesn’t have a financial plan, start one. Gathering the family together to do this is another way to include children in financial decisions. Being part of a family meeting shows children the role money plays in the home. Family meetings can be a place to voice any concerns about money and to find answers together.

As a child, my family didn’t have a lot of money. When I was old enough to have a job, I would spend my money on whatever I wanted. I didn’t want to live a life where I was deprived of things because I didn’t have money. I worked hard, but spent every cent.

This carried over into my adult life and created problems when I got married and started a family. My parents didn’t do anything wrong, there just could have been a few more “right” things done. We never talked about money. It was a “grown-up” thing and children weren’t included. I went with what I perceived to be the truth when it came to money.

It is better to explain money matters to your children instead of letting them draw their own conclusions. That doesn’t mean that each decision you make needs to be run by them first. But when major money changes occur, include the children in the discussions so that they know what is going on and how the family plans to deal with the situation.

Poor money choices, even for the right reasons, can affect the way children deal with money. You may think that the children aren’t watching, but they are — carefully. Make use of every opportunity that you have to arm them with the tools that produce good money management decisions.

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.