kids and money

8 Ways Having Kids Makes You More Frugal

Carrie Kirby — Thu, 12 Mar 2015 11:00:05 +0000

I was chatting with a childless friend over dinner about how I'd been feeding our family of five on $80-$100 a week. The friend was flabbergasted.

"My shampoo alone would take up most of that budget!" she said. (I hope she was exaggerating.)

The fact is, all of us are as frugal as we have to be to get by, except for those of us who fail to stay out of debt. But having kids actually makes us more frugal because we have to save more of our income to pay for their present and future needs. But there are other important ways that being a mother of three drives me to spend less on all aspects of life.

1. We Are Practically Banned From Restaurants

I used to brunch with toddlers. We'd hold our kids tight while we waited in line, lest we lose them in the sea of waiting adults. We'd ply them with Cheerios while we waited for our food, try to prevent their eggs from hitting the floor, but inevitably, one of us would have to dart out to the sidewalk to avoid disturbing other patrons when a kid started crying.

Add onto all this stress the fact that many fellow restaurant patrons don't want to see us there, no matter how hard we work to keep our kids from disturbing them. And the huge tip we'd feel obligated to leave to compensate for the mess we left.

Finally one Sunday morning, it hit me that this was not easier than making eggs at home. Nope, it was just more stressful and expensive. If I wasn't enjoying a relaxing treat, why pay to dine out? Now we dine out with our kids only rarely, and when we do, it's likely to be at the least expensive restaurants (because those are the most kid-friendly ones). And we're not alone: Non-parents are more than twice as likely as parents to eat in upscale restaurants, according to a recent survey.

2. We Would Just Fall Asleep at Bars

Hitting a bar or two with coworkers after work was a weekly ritual when my husband and I were childless professionals. I recently read a San Francisco bar review that noted the cocktails were "only" $10, and I realized that this habit, while fun, was probably one of the reasons my husband and I never had much left in the bank at the end of each pay period.

Nowadays, getting a sitter is too much work, no one wants to see our babies at bars, and we can't stay up until the clubs open — so we enjoy our wine or cocktails at home, where we never have to tip the server.

3. We Are Playing for Keepsies Now

When we were a childless couple, we once seriously underestimated how much tax to withhold from our paychecks, and when tax time came, we owed thousands. It was a momentary freak out, but it wasn't hard to pick up a few hours of overtime at work, and cut back on going out until it was paid.

With three kids to provide for, we know that we don't have the budget flexibility for an "oh, well" moment. We can't easily put in more work time because we are busy with the kids, and we have less fat in our budget to trim in an emergency. So we were forced to be frugal enough to build an emergency fund.

4. We Have No Time to Shop

Ever hear about deeply indebted consumers who shop compulsively every day? That certainly wouldn't be me, even if I actually liked to shop. Between running Girl Scout meetings, cooking meals, school pick-ups, and ice skating lessons, I'm lucky if I can get to the grocery store, much less a clothing store. If it's true for my wardrobe, it's even more true for our house, which is full of outdated and scratched-up furniture — not just because we don't have the extra money for a Pottery Barn splurge, but because we would never have the time to select new furniture anyway.

Besides, this way we don't feel bad when one of the kids scrapes the coffee table with a pair of scissors or bleeds all over the old rug.

5. Time is Now More Precious Than Money

Like many mothers, I cut way back on my work time when my children were born. This, above all things, is why I got into frugality: I was on the lookout for ways to not have to leave the kids in order to earn more money. And I'm not alone in this desire: A Pew study found that fully a third of American parents feel they're not spending enough time with their children.

6. Baby Gear Introduces Us to the Second-Hand World

When having a baby (probably more than any other time in life), we suddenly need to acquire a lot of stuff we never owned before — and that we will use for only a short time. All the clothes, shoes, tricycles, and such, are usually only good for a year, or so.

I might have stopped by a thrift store now and then before having kids, but that sudden need for baby stuff is what got me into visiting consignment events, cruising Craigslist, joining Freecycle, and actively seeking hand-me-downs from other families. Once you've tapped into the second-hand and sharing markets for kids' gear, it's only a short step to using the same resources to acquire things for yourself. My current bike — my main means of transportation since we don't own a car — came to me via Freecycle.

7. Kids Are Expensive — Like, Maserati Expensive

It's not just the cost of feeding, clothing, and housing children, or the worry about how we're not saving enough for college. It's sports. It's back-to-school shopping. It's pressure to throw the best birthday party. And the child care — oh God, the child care.

Even if we try not to go crazy spending on all the above categories, raising kids is more expensive now than ever, and it forces us to be frugal in every other area of our lives.

8. What We Really Long to Do is Free

In a recent survey, parents were 29% more likely than the childless to report getting fewer than six hours of sleep a night. This might explain why after work, childless friends might be out riding their new road bikes or taking cooking classes, but if I have a free two hours, my activity of choice is sleep. Sweet, free sleep.

How has having kids made you more frugal?

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This article is from Carrie Kirby of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Financial Lessons Everyone Should Learn by Kindergarten

Kentin Waits — Fri, 27 Feb 2015 12:00:05 +0000

We each grasp financial lessons at different points in our lives, but we're never too old — or too young — to start learning. Some lessons, however, are so basic that understanding them is nearly a prerequisite to financial survival. Whether you need a refresher yourself, or are responsible for shaping a young person's relationship with money, here are five financial lessons everyone should learn by kindergarten.

1. Money Represents Labor

At its most basic level, money is just labor in physical form. Whether you worked for it using your mind or your muscle, the green stuff is the result of some form of effort. And without making your six-year old mop the floor for a bowl of mac 'n cheese, there are ways to gently and positively make the connections between effort and financial reward.

Of course, the secondary value of this lesson is how it can alter spending behavior. The "aha moment" you want to encourage goes something like this: "If money is labor, then the things I buy with my money also represent my labor." Fully grasping that concept is the root of healthier spending behavior for life (and if you're like me, you know a shocking number of adults who still don't quite get it).

2. Spending Is Not the Same as Investing

Though each may drain our wallets and bank accounts for a period of time, spending and investing are entirely different animals.

Dropping $3500 for a leather couch is spending, but using that same amount to buy a good used car that will get you back and forth to work is investing. Think of it this way. If the item or service you're buying will provide some sort of tangible dividend (such as the ability to stay employed, advance in a career, sell at a profit later, etc.) , it's an investment. If it doesn't meet that simple criterion, it's just plain old spending. If you haven't already, learn the basics of investing and put its power to work for you sooner than later.

3. Consumer Credit Is Dangerous

It may not seem this way, but every time we use a credit card, we're taking out a loan. Granted, it might be a mere $3.89 for a hamburger, but it's a loan. And let's face it, the last thing credit card issuers want their customers to do is pay off their balances every billing cycle (credit card companies have an endearing term for those who do — "deadbeats"). They'd much rather have all those hamburgers, shoes, smartphones, and haircuts add up at a 17% percent interest rate.

Teach your kids the dirty secrets of credit cards. Tell them about the evil geniuses that lurk behind the magnetic strip. You know, the ones who conceived the evil formula of convenience + frequent use + low minimum payments = long-term debt and high returns. Create a bedtime story about an overspending prince who became a pauper because of plastic. It's a cautionary tale for the ages.

4. Understanding the Difference Between Wants and Needs

When I was a kid, I desperately wanted a green plastic toybox shaped like a large frog. I don't remember the brand name, but I do remember wanting to own one so badly that every fiber of my 40-pound body nearly vibrated with green-plastic-frog-toybox desire. I never got it. Kids want things with such wild enthusiasm that it's difficult for them to distinguish what they want from what they need. Had I been asked way back when, I'm sure I could have made a case why that frog toybox was essential to my survival — because it certainly felt that way.

But at any age, being able to clearly distinguish wants from needs is an essential skill. Why? Because we live in an economy that's made a science of confusing the two. Indulgence and denial aside, it's the identification that matters and it's the first step of being able to live within our means.

5. Money Can't Buy Happiness, But It Can Buy Choices

The value of money rests not in its ability to make us happy, but to buy us options in life. Authentic, well-financed choice is a rare bird these days. Many of us feel like we have choices, because we're presented with so many options as consumers every waking minute. But to me, most of these sorts of choices feel low-value — "trinket choices" manufactured purely to encourage spending. Only the most financially disciplined can afford to exercise a potentially life-altering choice like switching careers, moving across the country, starting a business, or retiring early. This level of choice gives us the power to reinvent ourselves at any stage of life.

Granted, these are only five lessons in a long list of financial fundamentals. But together, they form a great foundation for building security and wealth. If you're still learning, let your curiosity motivate you. And if you're helping a young person learn, be patient and avoid instilling a sense of fear about money. Remember, real power comes from understanding that money is not mysterious, wealth is not always the result of dumb luck, and financial security is within our control.

What financial lessons did you learn early in life? Who taught you and how? Which ones are you still learning?

This article is from Kentin Waits of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

What Helped You Become Financially Aware?

Kentin Waits — Tue, 22 Jan 2013 10:30:12 +0000

We all know people who, while being fantastic and otherwise brilliant human beings, just aren’t good with money. For whatever reason, they haven’t embraced a financially-responsible lifestyle and are anything but strategic about saving. It’s as if these folks missed the Money Management 101 curriculum that echoes in the back of our own minds. It prompts the question — why are some people financially aware and others seemingly blissfully ignorant? (See also: A Beginner's Guide to Frugal Living)

My Financial Wake-Up

I think my own turning point with money began at the tender age of 13.

As the youngest son of an older father (he was 52 when I was born. And before you ask, no, I wasn’t an “oops” baby), I was eligible to receive dependent benefits from Social Security when my dad turned 65. My parents, evidently seeing some seed of responsibility in me, allowed me to manage this modest monthly windfall all on my own.

Once a Saver, Always a Saver

Now, to a child of 13 back in 1982, $120 and some change each month was some serious cabbage.

I already had a bank account by that time, but now I had a reason to pay attention to it. I remember filling in those old bank passbooks (long extinct now), and although I wasn’t sure what my goal for the cash was at the time, I knew it was important to save it.

I didn’t do anything particularly brilliant to make the balance grow more quickly, and I didn’t leverage it to start a highly-profitable childhood business (what kind of young capitalist was I?). But in spite of my slow-and-steady approach, something kind of wonderful happened — I become aware of money. I logged my deposits and the interest religiously, watched the balance grow, and understood what I could afford and what I couldn’t.

I received those checks every month until I turned 18. During those five intervening years, nearly without realizing it, I began to understand the potential of money, the power of saving, and the amount of time it takes to build a nest egg. Combined with the part-time jobs I had during high school (candy counter clerk, fundraiser for the local police department, janitor, and kitchen helper at a nursing home, to name a few), I put some serious mileage on that little savings passbook.

Was It Me or the Money?

Now, so many years later, I wonder how much that early exposure to money helped to shape my choices and define my financial style. Would any amount of money have had the same effect, or was it precisely due to feeling responsible for an amount I considered substantial at the time? I’m not sure I know the answer. But I am glad I had the opportunity to experience some fiscal responsibility so early in life and feel like that little passbook held a hefty enough sum to smooth my first few teetering steps into adulthood.

Financial awareness can come from all sorts of things — early exposure to money, financial hardship, an inheritance, or a loss. How those situations are presented to us and how we respond to them can make all the difference in the world. It leads us to websites like this as part of a smooth journey or as an unexpected destination after a bumpy and wild ride.

What moments in your life helped shape your current relationship with money? What led you here as a fan of this site or this topic? Did your childhood help set up you up for healthy relationship with money later in life, or did you have to overcome some negative modeling before you found your groove? Let the rest of us know in comments below.

This article is from Kentin Waits of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Arguing Over Money Drives Your Kids to Credit Card Debt

Emily Guy Birken — Tue, 27 Nov 2012 11:00:30 +0000

Just in case you didn’t have enough to worry about, researchers from East Carolina University have recently discovered yet another way we can screw up our kids. Apparently, children of parents who argue about money are more likely to be burdened by credit card debt as college students.

This cheery information comes on top of concerns about the financial literacy of young people. According to a 2009 study by Annamaria Lusardi, Olivia S. Mitchell, and Vilsa Curto, “fewer than one-third of young adults possess basic knowledge of interest rates, inflation, and risk diversification.” That level of financial illiteracy is hardly a good foundation for handling credit card debt, and yet that is exactly what is happening with college students. And according to the Journal of Family and Economic Issues, there is also “growing concern among educators that more students are dropping out of school, not because of academic failure, but because of financial reasons, and credit card debt especially.” All of this together makes it clear that we as a society need to do a better job of preparing our children for financial independence.

But what, exactly, are we doing wrong? And how can we better prepare our kids for the temptations of credit? Here is a basic breakdown of the East Carolina University study, and some tips for increasing your child’s financial literacy before they find themselves quitting college to pay off their credit cards. (See also: 7 Important Lessons Frugal Parents Teach Their Children)

The Study

Researchers, led by Adam Hancock, developed the College Student Financial Literacy Survey, and asked 413 undergraduate students from seven different American colleges to take part. Among the topics on the survey:

The number of credit cards the students owned and the amount they owed on each one.
What kind of interactions the students had had with their parents when discussing finances.
Financial knowledge of credit cards, loans, insurance, and personal finance.
Attitudes toward credit — whether the students regarded credit cards as costly, safe, frightening, etc.
The students’ comfort level with only paying the minimum each month.

The Findings

Of the 413 students surveyed, almost two-thirds owned a credit card, and nearly one-third had more than one credit card. The researchers found that there were three top predictors for how many credit cards a particular student had: class year, gender, and whether or not parents argued about money. In particular, juniors and seniors were almost four times as likely to have two or more credit cards than freshmen and sophomores. This finding makes sense, considering the fact that the 2009 Credit CARD Act was partially enacted to help prevent minors from taking on credit they couldn’t afford. Upperclassmen are more likely to be over 21, meaning they don’t need a cosigner to take on a credit card. In addition, women were twice as likely as men to have multiple cards — although the researchers were a little more vague on the probable reason behind this one. Finally, students whose parents argued about finances were twice as likely to have two or more credit cards as those whose parents presented a united financial front.

These conclusions would not necessarily be troubling if the students carrying these multiple cards were able to handle their debt responsibly. However, students with more than one card were three times as likely to be carrying at least $500 in credit card debt. The bad news for parents keeps coming, because coming from a home with a lot of fights over money also doubles the likelihood of carrying more than $500 in debt.

Arguing over money was problematic for kids from every walk of life, as well. It might seem like a reasonable assumption that money fights would be more common among lower-income families, which might also correlate with higher debt in the next generation. But the study actually controlled for wealth, and found that even kids from wealthy backgrounds were more likely to take on credit card debt if their parents argued about money.

OK, Money Fights Are Bad — but Why?

While the researchers don’t have a specific conclusion as to why arguing over money can have such long-lasting consequences on the kids, the study’s authors suspect that money fights are an indicator for unhealthy financial attitudes and actions. Study co-author Adam Hancock suggests that “kids growing up in that sort of atmosphere may be witnessing some unhealthy financial decisions. And they tend to act out those same behaviors.”

Another possibility for why money fights could have such lasting consequences is because they make the entire issue of finance fraught with negative emotions for everyone in the household. Kids will feel like money is something you can’t talk about without starting a fight — so they don’t talk to their parents about money. When they get out on their own, they may choose to handle financial issues without asking their parents for advice and seriously get themselves in trouble.

Neither of these possible explanations completely explain why parents fighting about money could result in kids with credit card debt — and that’s because there is only a correlation between the two factors. That means that we can say that two things seem to be related to each other, but we can’t know for sure that one causes the other. (Remember your college statistics class? The one you slept through?)

Basically, without a much larger study that includes many more participants and that looks into many more specifics of the fights between parents as well as other background information on the families, it’s a little fast to assume that all parents who have arguments over money will be looking forward to Junior racking up credit card debt the moment he gets out on his own.

Financial Literacy at Home

That being said, teaching financial literacy to our children is an important part of preparing them for adulthood. Whether or not you and your spouse have occasional spats over the mortgage, the Visa bill, or how you’re going to pay for the college Junior might drop out of, you can always use these strategies for keeping your kids money literate:

1. Include Your Child in Money Discussions

We tend to shield our children from financial conversations. After all, budgeting, bill paying, and saving can all feel like a bit of a bummer. And while there is no reason to bring your child into your financial worries — no 9-year-old needs to know that you’re concerned about how you’re going to pay the mortgage — that does not mean they’re unable to handle money discussions in general.

Start when they are small, and talk to them about why you choose one loaf of bread over another in the grocery. Help them understand that you try to save money by comparing prices, and ask for their help in figuring out what is cheaper. As they grow, include them in more of your decisions. For example, you could ask them to help you to figure out where the family can go on vacation based on the budget you have set aside.

When money is shrouded in mystery for children, they won’t suddenly wake up at age 18 knowing how to handle their finances. Introduce the concepts to them slowly, in the same way you teach your children to read — with age-appropriate lessons.

2. Give Your Kid an Allowance

While one of the biggest flame wars you can see on parenting websites is on whether or not to give allowances as payment for chores, financial and parenting gurus can all agree that the allowance itself is key. Having the responsibility for money each week — and making sure that you don’t simply buy the kid anything he wants when the allowance has run out — is one of the best ways to teach budgeting skills and delayed gratification. After all, we all learn by doing, and it’s better for Junior or Sis to learn early that cash doesn’t last forever and that some things are a waste of money.

3. Encourage Your Teen to Get a Job

Many parents feel that their child’s job is to do well in school, and have no other expectations of paid employment for them. Even if that is how it works in your house during the school year, it’s a good idea for your teen to have a job over the summer. Learning how to be a good employee, how to be responsible with a paycheck, and having some part in saving up for college or another big goal are all important lessons that come from teen employment. If they also work during the school year, then they will have a trial run at figuring out work-life balance before they find themselves on their own, which is another important financial lesson.

The Bottom Line

Even if you and your partner fight about money — and really, who doesn’t? — all is not lost. Yes, money fights may be correlated with irresponsible credit card behavior, but you have the ultimate influence over your child. As long as you are proactive in using that influence instead of just letting your child soak up negative atmosphere, then you can rest assured that they are learning good habits from you. And by talking to them about money, you give them an opportunity to have an open dialogue with you later on if they hit a bump in the road.

Now, for the million and one other ways you can mess up your kids…

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Great Financial Gifts for Children

Aaron Crowe — Tue, 11 Sep 2012 10:00:42 +0000

Think back to your childhood and the toys you played with, and there's probably a toy you wish you had as an adult to either play with or give to your children. It could be a game, favorite doll, bike, little red wagon, or anything else that sparked your imagination.

For me, after a Big Wheel Racer, I was always fond of piggy banks. I was a geek saver even as a child, and I too often used my allowance money to buy coin sorters and other contraptions to store my change before taking it to the bank to put in a savings account. My favorite was a small, clear plastic case where you put a coin in at the top, and it would roll down a path and fall into a slot for whatever size coin it was. It was an easy way to count coins and helped get me on the road to being a saver.

I've received plenty of other great financial gifts since then, and have bought some for my daughter in the hope of teaching her some financial life skills. Here are some great financial gifts for children. Since children through college age can still use financial gifts, not all here are toys, but they are still great gifts. (See also: 5 Reasons Why You Should Give Kids Cash for the Holidays)

Piggy Banks

The pink little piggy is usually a child's first introduction to saving money. It's where they (and you) can put extra change, giving them a chance to spill the coins out on the floor every once in awhile and learn how to count money. The banks come in many sizes and colors, and one of my favorites is the Money Savvy Piggy Bank that has separate compartments to save, spend, donate, and invest. The Moonjar Moneybox and its compartments to save, spend, and share is also popular. The best piggy bank, however, may be one without a hole in the bottom that you have to destroy to get into.

Play Cash Register

Having fake dollar bills and coins to count and give out as change for "transactions" from your friends is a smart way to learn how to count and learn the value of a dollar. What child hasn't played "store" at home and sold groceries or whatever? A cash register is a necessity for any play business.

Monopoly

What better board game to learn about money than this classic that has been around in some form since 1883 (when it was called "Banking")? The Game of Life also does a great job teaching about spending and saving, but Monopoly is tops for teaching how to manage money. Should you buy that low-rent property? Is it worth it to build a hotel? How can you negotiate with other players to get the properties you want?

Passbook Savings Account

Believe it or not, banks still have these, which still have written ledgers to keep track of balances. It's the best way to learn how to save because it's real money that belongs to a child. I helped my daughter open one in kindergarten so she could put birthday money in it, with the goal of saving for a car or college. The interest rates that these pay are low, so consider moving large sums to other investments such as CDs.

Education Savings Plan

Also called 529 Plans, these investments grow tax-deferred. The donor is in charge of the plan and decides when the money is taken out. Giving a 529 Plan donation to a grandchild, for example, requires having a Social Security number of a parent. In that case, the parent will be the custodian of the account, so the grandparent won't get any tax benefits by donating.

In Idaho, which has 27,000 such accounts with $230 million in assets, a single person with a child can give up to $4,000 annually to their child's 529 account, while a married couple filing jointly can give $8,000 annually, says Idaho Treasurer Ron Crane.

"What a great gift to give to a newborn child or to a kid just starting school," Crane told me in a phone interview.

Retirement Account

Helping children see the long view is difficult, especially if it's 50 years away. Creating a family retirement account is an ambitious step for teens, but one that FamZoo says takes only 30 minutes to set up for a lifetime of savings. Here's how it works — a parent or other relatives matches a teen's earned income contributions to a Roth IRA in the teen's name. Use a savings calculator to show them how much money they'll save in 50 years — usually $1 million or more. A custodial account can be set up for a teen, and the contributions and investments can be made online. It's a smart way to reach the ultimate long-term goal of retirement.

Stock

Buying a child stock in Disney, or any other company they're excited about, is a smart way to teach them about investing, the stock market, dollar cost averaging, and reinvesting dividends. You can often buy stock directly through the company — $250 to start through Disney with minimum additional investments at $50 — or buy through a broker and ask for a keepsake stock certificate.

Besides physical toys and financial gifts, the best financial gifts to give children are continuing discussions about money and the importance of saving it. Without regular talks about how money can be saved and used, you might as well just give them a Big Wheel to ride on without teaching them to ride on the sidewalk only. You don't want them to get run over — whether on a toy or financially.

I'm sure there are other financial gifts out there that are worth giving to kids. What were some of your favorite financial gifts as a kid? Please respond in the comments section below.

This article is from Aaron Crowe of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

30 Signs That You Were Raised by Frugal Parents

Kentin Waits — Mon, 20 Aug 2012 10:24:41 +0000

Frugal folks come from all sorts of backgrounds. Some were raised in typical American families with traditional buying and spending habits and came to embrace frugality much later in life. Others were raised by parents or grandparents who made simplicity part of everyday life — from the way they cooked and cleaned to the way they fixed their cars and celebrated holidays. For those of us in the latter group, we can spot another member a mile off. There’s a sort of unspoken but common shorthand that comes from years of shared experiences. What follows is my tongue-in-cheek way to tell if you were raised by frugal parents (or if you might be on the way to becoming one yourself). (See also: 7 Important Lessons Frugal Parents Teach Their Children)

1. You skip the headlines in the Sunday paper and head straight for the sales inserts.

2. You’ve washed (or seriously considered washing) tin foil to use it a second time.

3. You remember smuggling homemade snacks into the Saturday matinee.

4. You know how to buff your shoes to high shine by adding a bit of water or heat to the polish.

5. You’ll still stop to pick up a penny.

6. You ignore the suggested use or recommended quantity directions on most products.

7. There’s a coupon organizer in your purse or car (extra credit if it includes a calculator).

8. You save rubber bands or twist-ties.

9. The chocolate milk you were served as a kid was heavily diluted with regular milk.

10. You have a loyalty card to any thrift store chain.

11. You can sew a button, darn a sock, or repair a seam.

12. You firmly believe that vinegar and bleach are the only two household cleaning products anyone really needs.

13. Your family holds a contest to guess how much money is in the change jar every six months.

14. A little mold on bread or cheese doesn’t cause you to immediately toss it.

15. There’s an almanac somewhere in your home.

16. You know the technique for properly canning food.

17. You know what Green Stamps are.

18. Your medicine chest has at least two hotel soaps or bottles of shampoo in it.

19. You know how to change the oil in your car (even if you don’t always do it yourself).

20. The primary toys of your childhood were wooden blocks, the great outdoors, and a tire swing.

21. You know the balance of your checking account (within $5.00) at all times and without looking.

22. Negotiating the price of a used car inspires a sense of adventure and thrill.

23. You know the secret magic that’s contained in every bottle of furniture scratch cover.

24. You have a secret stash of used, neatly folded gift wrap from previous holidays and birthdays.

25. You regard empty butter and yogurt containers as a reuse challenge, not trash.

26. At least three pieces of your household furniture were acquired through dumpster-diving, a yard sale, an estate sale, or thrift store.

27. You brag to friends about how much you saved instead of how much you spent.

28. You can calculate any product’s price-per-ounce in mere seconds.

29. Your dryer sheets have three times the life expectancy of other people’s.

30. You rinse out laundry detergent bottles and cut open toothpaste tubes to get at the last bit of product.

Though these signs are offered with a bit of humor, there’s a grain of wisdom that guides each. Our modern-day mantra of "reduce, reuse, recycle" is just a new spin on an old refrain. For many of our frugal mentors, there was simply no other way to live. The tips and tricks they taught us are recounted here with as much respect as comedy — and with a gratitude that comes from rediscovering best lessons of our childhood.

What other signs suggest that you might have been raised by frugal folks? What favorite or quirky saving technique have you unwittingly adopted and passed on to your own kids?

This article is from Kentin Waits of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Great Summer Jobs for Kids and Adults

Debbie Dragon — Mon, 09 Apr 2012 10:24:08 +0000

The lazy days of summer may not be here yet, but for many kids and adults, now is the time to start thinking about a summer job. There are summer jobs for children of all ages, and some new opportunities for earning income as an adult become available during the summer months, too. Here are some ideas to get you started. (See also: 25 Ways to Make Money Today)

Jobs for Kids Under 12

Once children realize that having money means they can buy fun things, they want to earn some money of their own. Until the child is old enough to get working papers, they’re not allowed to get a job. To encourage their entrepreneurial spirit and desire to earn some money, here are some ideas for helping young children earn some summer cash:

Lemonade stand
Bake sale
Car wash (in your driveway)
Yard sale
Summer chores around your home
Yard work (perhaps there are some elderly neighbors who could use a hand raking their yard or clearing away brush?)

Jobs for Tweens 12–16

As children reach their young teen years, they’re often more determined to make some spending money of their own. This is the age when the kids begin asserting more independence and spending more time out with friends, and thus, the desire to have money in their pockets increases. Unfortunately, they’re still too young to get on payroll at most places, but they have a few more opportunities for earning money than the younger children. Here are some ideas:

Lawn care
Babysitting, mother's helper, or junior camp counselor
Pet sitting or dog walking
Selling their outgrown toys and video games on eBay or Craigslist
Online businesses

Jobs for Teenagers With Working Papers

Once a teenager is old enough to get working papers, he or she can start applying for “real jobs.” There are limitations on the type of work they are allowed to do, but some common summer jobs for this age group include:

Fast food employee
Restaurant waitstaff
Paper delivery person
Camp counselor
Lifeguard
House cleaner
Amusement park staff/ride operator
Telemarketer
Administrative assistant

Once your teenager is old enough to get on the payroll of a company, you should stress the importance of saving a percentage of their income if you haven’t already. You can even help your teenager earn their first million dollars, since they have adequate time to use the power of compounding interest.

Jobs for Adults

As an adult looking to earn extra money during the summer months, you have a wide range of options, from temporary employment at local tourist destinations to part-time evening or weekend jobs centered around your existing career. You can even start a summer business to grow your income. Here are a few ideas to get your creative juices flowing:

Lawn and garden service (See also: The 6 Best Lawn Mowers)
Tourist destinations: hotels, day camps, resorts, and campgrounds
Bartending
Babysitting (many parents are in a jam during the summer months when school is out)
Freelance and work-at-home jobs
Farmhand
Organizing assistance (help others get their garages, basements, closets, etc organized)

This article is from Debbie Dragon of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Great Teachable Money Moments to Share With Your Kids

Annie Mueller — Wed, 14 Mar 2012 14:14:34 +0000

This post was underwritten by BMO Harris. Learn more from BMO Harris to help your kids understand the value of money.

Handling money is a skill, but it isn't a skill like talking or walking; your kids won't pick up good financial habits just because you have them. It's a skill that must be taught, and you're the best qualified to teach it to your children. After all, who could care more about their future, both financial and otherwise, than you do?

Look for these teachable moments in your life, and use them to pass on the financial insights you've gained over the years. As you share your own good money habits, you're helping your kids build a solid financial foundation for their own futures. (See also: 7 Important Lessons Frugal Parents Teach Their Children)

1. Use Coupons and/or Shop Sales

When your children get excited about some new product, article of clothing, or toy, get excited with them. Then tell them, “I'll be happy to keep my eye out for a coupon or a sale so we can consider buying that item.” Younger children will probably respond with something profound, like “Huh? What's a coupon?” Older children will probably respond with an eye-rolling extravaganza.

For Younger Kids

Coupons give you discounts, you can explain, so that you can save money for other purchases. Sales provide the same thing, just in a different way. That's really all you need to say, unless there are more questions. Then, if a coupon or sale comes along, let your child in on the excitement of the purchase. You've not only shared the concepts of discounts and saving money off the retail purchase price, but you've also helped your child build willpower for the most important financial habit — delayed gratification.

For Older Kids

Put older children and teens on the lookout for discounts and sales. Give them a top dollar, the highest amount you're willing to spend for the item. You can say something like, “I'm willing to spend X amount to buy this for you. You can either find it for that amount or less with coupons and sales, or you can make up the difference with your own money.”

2. Save Money Together

Saving money is a foundational financial habit, but one that can be hard for kids to understand. Even older children can struggle with the “far distant” goals of saving for college or a car, and younger kids don't really understand why all those coins keep going in the piggy bank instead of to the toy store. Fortunately, there are better ways to pass on the savings habit.

For Younger Kids

Find a big glass jar and put it in the kitchen or another prominent location in the house. Gather the kids together and let them know that this jar is for a special family treat. Have everyone gather all the spare change they can find in the house for a good start. Then keep collecting change until the jar is full, when you get to cash in and enjoy the benefits of all that saving.

For Older Kids

When it's time for a big purchase the whole family will use and enjoy (car, television), call a family meeting. Let the kids know the purchase you want to make, that you'll be saving X amount of money first, and whether that's for the entire purchase price or just a down payment. (You've also just introduced a great way to talk about down payments, interest rates, and credit in general.) When kids can see their parents saving for a big purchase instead of opting for instant gratification, it makes the concept of waiting and saving real and important. You can also invite them to contribute, so the purchase can be made sooner.

3. Purchase a Gift for Someone

For a very simple introductory lesson in setting and sticking to a budget, use the next birthday to appear on your calendar. A one-time, one-item purchase is a simple way to understand and apply budgets, which makes it easier for kids to understand and apply budgeting to bigger, ongoing expenses.

For Younger Children

Set a budget first and share with your child how much the budget is. Explain that a budget is the amount of money you have available to spend on the gift — it's okay to spend less, but you can't spend more. Then go shopping. When you spot something that might work, check the price first. Ask your child, is this more or less than we're able to spend today? Keep at it until you find something that fits both the recipient and the budget.

For Older Children

Send them out on their own (if appropriate) with the amount of money you're willing to spend and a few ideas for a gift. Have them include a cost for gift wrap in the budget. They'll need to deduct the amount from the total budget.

4. Plan a Vacation

Planning a vacation is a fun and more involved budgeting experience. Kids can't help but get excited about a vacation — new places! Out of school! Hotels! Camping! Eating out! What they easily miss is the cost of a vacation. Let your kids help you plan; they'll not only have the fun of anticipating, they'll also start to appreciate the monetary value of the experience.

For Younger Kids

It's often easier for kids to understand a budget when it's applied to a limited situation like a vacation. Sit down with them, your vacation brochures, and your budget. Explain options, such as, “This hotel is more expensive, but it has a bigger pool. We could have fun in the pool, but we could only afford to stay for three nights instead of four.” Let them share what their own priorities are (bigger pool, more activities, more eating out, more time?).

For Older Kids

Let them see your budget and the choices you have for spending money. Then ask them to make some of the plans. For example, spend more on eating at nicer restaurants, but skip that amusement park? Or pack picnic lunches and save enough money to stay an extra night?

5. Repurpose, Repair, and Reuse

Avoiding unnecessary waste is a thrifty habit, and an environmentally friendly one. Introduce your kids to the 3 R's of saving money on stuff: repurposing old items, repairing broken or worn items, and reusing by purchasing used (rather than new) items. These skills are a step up from using a coupon or shopping a sale, and they will make your kids more self-sufficient and financially savvy.

For Younger Kids

Make seasonal purchases from thrift stores, garage sales, or online classified ad sites such as Craigslist. Let your kids know what you're looking for. Explain that the reason you're purchasing used (ski coats, roller blades, whatever) is because you'll not only be saving money (by not paying the purchase price of a new item), but also because you'll be avoiding waste, which is really another way of saving money.

For Older Kids

Finding a way to repair broken items rather than toss them out and purchase replacements is both financially and environmentally smart. Give your older kids some lessons in basic fix-it skills, such as fixing a bicycle tire or sewing on a button or a patch. If you have the time and ability, help them develop more advanced skills as they are ready, from basic engine maintenance and repair to using shop tools or a sewing machine. Don't be overwhelmed; the idea isn't that you have to teach them all the repair skills they can know. You just want them to catch the concept of saving money by being able to learn and apply repair skills when needed.

6. Help Out the Less Fortunate

There's nothing like some perspective to help kids understand how much they have. Seeing how little other people have can help kids to appreciate and care for their own things. Finding those teachable moments together will not only instill gratitude, it will also help them build habits of being generous with their time and money.

For Younger Kids

Get your kids involved with a community project for the needy, whether it's helping gather Toys for Tots or collecting cans for a food drive. Doing this sort of volunteer work together can start all sorts of conversations — what does it mean to be poor? To be rich? To be jobless? To be homeless? Why does this happen? What's it like in other parts of the world?

For Older Kids

Volunteer as a family at a soup kitchen or homeless shelter, or take older kids on a mission trip to a third world country or nearby community in need of help. Don't miss the opportunities that come around unexpectedly, too, whether that's baking cookies for a sick neighbor or buying gas for a stranded stranger. It's easy to overlook teaching children how to be generous with their money, but don't make that mistake, even if giving means a sacrifice for the family. Learning that money is a tool to help other people is an important part of a complete financial education.

What kind of teachable moments do you share with your kids?

This article is from Annie Mueller of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The Best Money Tools and Toys for Every Age Group

Linsey Knerl — Thu, 29 Sep 2011 10:24:19 +0000

It was almost four years ago that I initially researched the world of financial teaching tools for kids. At the time, I thought that many of the top-notch products on the market aimed at introducing children to money would be a great holiday gift. Now I realize that it’s never too early to pick up a reputable toy, tool, or application that can instill important money values into your child’s education. Here are some of the top picks I’ve identified, broken down by age group. (See also: This Season, Give Your Child the Gift of Fiscal Responsibility

Birth to Age 3

While they really can’t absorb many financial principles at this age, there are things they can learn about money. For starters, money doesn’t go in the mouth. They can also start to grasp a basic familiarity with cash by playing with toy piggy banks, complete with play money appropriate for their age group. (Look for toys that won’t become a choking hazard; they should be clearly marked for kids under 3.) The Fisher-Price Laugh n’ Learn Bank has been around for years, and it is one of the only banks on the market that’s approved for children as young as 6 months.

Ages 3–5

Preschool is an exciting time for kids! We like to get things rolling with a hands-on lesson in coinage and the appropriate names and values for each. In addition, we have found that DVDs are a major boost to the “wow” factor when teaching money. Our favorite is currently Munchkin Math: Counting Money, which has the kids singing the values of money and playing little games between activities. This is also the perfect age to teach basic business foundations by encouraging your little one to play “store.” There are dozens of amazing products on the market, but our favorites for durability and “kid appeal” come from Melissa and Doug. They offer some of the most innovative food and grocery sets around, and their play money seems to last forever!

Ages 6–8

For those who have grasped the basics and are now on to spending money and basic change-making skills, I find that the Rock N’ Learn: Money & Making Change DVD is great for kids with a short attention span. (Parents be warned, however; the songs are loud and you may not be able to tolerate it for very long.) My wiggly boys seem to absorb quite a bit via the Rock N’ Learn DVDs, and the recommended age for this DVD is spot on. You will also want to include them in basic shopping tasks at this age, which can include having them clip coupons, count out money at the register when checking out, or picking out the lowest price product at the store. (We always have the kids pick the cheapest “pink” milk from the grocer’s fridge.)

Ages 8–12

From age 8 on, I highly suggest that adults employ some kind of allowance system. The benefits for making kids work for their allowance are many, but even if you just hand them a couple of bucks a week for nothing, there can be a lesson made of the experience. There are many resources available to help kids track their earning, spending, and saving, and many of those I mentioned in my previous article are still around and awesome (including the Moon Jar and Money Savvy Pig.) Whatever you choose, however, try to avoid any banks or products that count the money for the kids. While it is neat to hear a robotic bank count out pennies, it defeats the purpose of having kids manage their own cash.

The Teen Years

Learning shouldn’t stop now, especially since kids will be exercising new freedoms with their money. For a fun way to reinforce basic economic facts in a way that football fans will enjoy, I think the Financial Football Game from Visa will help to engage bored students and break the monotony of textbooks. When you’re ready for a real-life application of using a budget, nothing compares to the concept behind Bill My Parents and their prepaid card for teens. Unlike other cards, which parents tend to load and forget, the BMP card provides updates to parents on every purchase made via text notifications and provides the control parents need to help get kids talking about where their money went.

College and Beyond

Parents, I’m pleading with you — PLEASE don’t forget about your college-aged kid just because they no longer live with you. They are going to make some of their most harmful mistakes while in their late teens/early twenties, and even with the new age limit for consumer debt accounts, there will be a need for preparation and practice. If you send care packages, now would be a great time to include a few choice issues of some of the better financial magazines on the market. If you find the hardcore economics reads to be too dry, an Inc. or Fast Company subscription will at least get their entrepreneurial juices flowing.

Are you incorporating an understanding of financial skills into your child’s daily life? Even with the classes offered in today’s schools, there are never enough “official” lessons being given to our youth. Take the lead as a parent, uncle, or friend, and see what the child in your life knows about money. The answer may surprise you, and the outcome to teaching them what they should know can only make our world a better place.

This article is from Linsey Knerl of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Five "Jobs" for Children

Xin Lu — Wed, 01 Jun 2011 10:24:13 +0000

I have decided that my child will not have an allowance when he grows older because I do not want my son to feel entitled to getting money for doing nothing. He will have to earn his money. Here is a list of "jobs" that I think kids can do to earn their spending money. (See also: Hey Kids! It's Time Your Butt Got a Job)

Couponing

If your children are old enough to read, then they are able to help with couponing. Kids can help identify and organize coupons, and then parents can reward them with a fraction of the money saved. If a kid really wants to buy something, then I think it is also his or her job to find a deal on the item.

Household Chores

When I was nine, my parents paid me for washing dishes. Other common household chores like throwing out the garbage, cleaning countertops, and folding the laundry can also become paid tasks for a child. I think a child probably shouldn't be paid for cleaning up his own room and toys, but extra work such as organizing the garage or cleaning the kitchen and toilets should be rewarded.

Extracurricular Academic Work

In fourth grade we were rewarded Pizza Hut coupons for reading books and writing book reports. If you think of school like a job for kids, then I think it is okay to pay kids for academic work beyond what is taught at school. One thing I plan to do is to let my son write essays about any topic he wants. If they are sensible pieces of writing, then I would pay him for his work. Of course, he will have to do all his regular schoolwork first.

Recycling

In middle school I collected cans and recycled them for a few dollars every month. I think children as young as eight or nine can do work like crushing cans and sorting cans and bottles. You may need to drive them to the recycling center to redeem the goods for cash. It is a good way for a child to cut down waste and earn some money. In states where you can redeem cans and bottles for cash redemption value (CRV), the money could add up quickly. In fact, a teenage girl we know asked friends, family, and neighbors to contribute to her recycling, and she was able to save up enough money for a trip to Africa.

Yard Sales

Every once in a while kids can go through what they have and see what they want to keep and what they want to get rid of, and then they can organize a yard sale. I did this once when I was young, and I made about $23 after putting up signs around the neighborhood and cleaning out my room. I sold some of my old books and toys that were taking up space anyway. My mom supervised me and chuckled at the paltry amount I earned, but all that stuff would have gone into the trash or to Goodwill anyway, so I really lost nothing.

I believe that making children earn their money will make them appreciate it more. If your kids are too young to get a real job, then these are real ideas for how they can earn money from you and others.

What do you think? Do you pay your kids an allowance unconditionally, or do they have to earn it? What do you pay them for?

This article is from Xin Lu of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Frugal Uses for a Camera

Meg Favreau — Fri, 13 May 2011 10:36:22 +0000

If you don't already have one, buy yourself a camera. Buy your mom a camera. Buy your kid a camera.

I know that writing on a frugal living website, I can receive a lot of flack for encouraging you to buy something, especially something as potentially expensive as a camera. But more and more, cameras (by which, these days, I mean digital cameras) are one of those tools that easily pay for themselves by helping you achieve other frugal goals. (See also: How to Really Save Money When You Shop)

Here's how a camera fits in with other common frugal advice.

Valuing Experiences Over Stuff

From birthdays to vacations, one of the most common frugal tips is to spend money on experiences instead of things. But, that said, if I travel somewhere amazing, I want something to remember it by. Photographs can provide more vivid, lasting memories than any t-shirts or tchotchkes, and they can always be printed and displayed.

Generating Side Income

Not every source of side income is going to require photographs, but if you're making something for sale on Etsy, reviewing local restaurants, or finding antiques at yard sales to sell on eBay, a decent camera can easily pay for itself.

Teaching Kids Financial Values

When I was young, a simple point-and-shoot camera was the first "big ticket" item I owned. Giving a kid a camera can be a great way to teach about taking care of things so they last, as well as valuing experiences over stuff. If you feel like getting your kid a film camera, only having 24 or 36 shots on a roll of film can also provide a great lesson about conserving what you have (as 11-year-old Meg could tell you with her several photographs of squirrels at the Grand Canyon).

Making Informed Purchases

Taking a picture of a product and showing it to your significant other or someone else for feedback can help your decision-making process. Cameras are also great for protecting yourself in the case of pre-existing damage to something you've bought. Check out Julie's article on more practical uses for a digital camera.

Do you use a camera to save you money? If so, share how in the comments! Don't have a camera, and have no idea what to look for in one? Check out our digital camera buying guide.

This article is from Meg Favreau of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Random Things I Have Taught My Kids About Money

Julie Rains — Sun, 31 Aug 2008 22:29:57 +0000

I’d like to say that I have taught my kids everything they need to know about personal finance, from the basics of banking to the complexities of investing and portfolio management. I haven’t. When I was ready to inform and guide, they had no interest in learning. The financial education of my children has not been progressive or linear, but rather haphazard and unorganized. Imparting wisdom, then, has been the result of random events and conversations. So, with the understanding that life keeps happening whether you are ready or not, here are 6 things I have managed to teach my children about money.

1) Beware of fees for add-on services.

Both of my sons, newly equipped with cell phones, accessed the Mobile Web during out-of-town trips. When my oldest son went away to football camp, he got bored during his downtime and checked ESPN box scores. My youngest decided to check on updates for his favorite computer game during a family vacation. Neither realized that this service was not included in our flat monthly fee.

Now they know that easily accessible services are not always (hardly ever?) free.

2) Watch your expenses if you want to have a profitable business, but don’t be so cheap that you won’t have satisfied customers.

When my youngest decided he wanted to sell Yu-Gi-Oh! cards on eBay, we worked together to set up an account linked to my credit card and checking account, both of our emails, etc. Though he seemed to understand the revenue side of business, he had to learn about expenses. He carefully considered the cost of posting multiple photos, postage, and mailers. Would an extra photo help sell the cards or just increase the eBay fee? How much is postage? And should he use a rigid mailer, as I suggested, or a flexible bubble envelope, as he preferred, to get the best buyer feedback? (He shipped the cards using the bubble envelope and earned a “well-packaged” comment from his first buyer.)

Not only did my son figure the basics of controlling expenses, he also learned how to weigh business costs vs. benefits to the customer, made easier thanks to the feedback mechanism.

3) Be certain of a purchase before you make a commitment.

For the fourth year in a row, my son decided to attend a month-long summer enrichment program. Before I sent in the $350 fee, I confirmed his interest but never mentioned the amount.

Having spent the week just prior to start of the program at Boy Scout camp, walking several miles each day, he was tired, rather than energized, for the first day of activities. Adding to his troubles were 1) a new program site (he preferred the inner-city school of prior years); 2) more watchfulness and protection on the teachers’ part, limiting his perceived freedom; and 3) no long-time friends in any of his classes.

He wanted to quit after the first day but I felt troubled having paid the non-refundable program fees and more importantly, not having taught him the value of $350. We had a series of discussions in which I managed to explain to him that while I didn’t mind paying for the program, it bothered me tremendously to waste money. Also, I made clear that I had to forgo other opportunities to allow him to participate. Our first solution was for him to repay me (he had a couple of hundred dollars in unspent birthday cash that made a dent in his debt); though he said he didn't miss the money, he decided within a couple of days to go back (thus reclaiming his cash) and found the experience enjoyable.

We both learned to consider the cost of programs and other opportunities before making a big commitment.

4) Bring cash but don’t spend everything you have.

For many years, my oldest, a saver by nature, seemed to think that he should either spend all the cash I gave him for outings or keep all the change. I would give him money for a movie with a friend, for example, but he would ask his friend’s mom to pay his way and then try to keep my cash. After I clarified that he was to use our family's money, he then proceeded to spend as much as possible. I was surprised when my youngest, the spender, gave me change when he returned from scout camp; during the entire week, he bought just one root beer and a merit-badge handbook. About that time, my oldest also returned currency and coin from a parent-funded activity.

I am not sure how it happened but they managed to learn financial restraint.

5) Just because you can afford any one thing you want doesn’t mean you can afford everything you want.

In the past year or so, my teenage son’s appetite has gone from average to outrageous. During this time, he discovered Jersey Mike's and developed a preference for giant-sized sandwiches (currently Chipotle Cheese Steak) to the extent that he began to think that having a giant every day was a normal request. During the summer break, when I had trouble keeping his hunger abated, he kept asking for Jersey Mike's. When I expressed my frustration and told him that we couldn’t afford to eat out every day, he asked if we were poor.

I did convince him that limiting your appetite doesn’t mean you are poor but thrifty and wise.

6) Having money can save you money.

Now that I’ve realized that I should involve my sons in day-to-day financial decision-making, I took my youngest with me to get his band instrument for the upcoming school year. The local music stores have rental programs, making it easier to afford an instrument, but the one we visited had a combination of offers. We could 1) rent the instrument for a monthly fee, 2) rent the instrument and have the monthly amount go toward the purchase price so that at the end of a few years, we’d own the instrument or 3) buy the instrument at nearly a 50% discount and, if my son changed his mind about band, return the instrument for the purchase price less the monthly rental fee. After some consideration, we opted for the purchase with buy-back guarantee (the rental interest rate seemed about 25%).

He found, as Philip as mentioned in "On the Importance of Having Capital" that having enough to pay now can save money; or if he missed the nuance of the salesperson's presentation, he certainly learned that band instruments are expensive.

Do I hope to be more intentional in my financial education of my children in the future? Yes. But I'll take what I can give (in terms of personal finance) as it comes along.

This article is from Julie Rains of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: