Kids Need Life Skills Now More Than Ever: Personal Finance Management

Kids Need Life Skills Now More Than Ever: Personal Finance Management

I recently heard an interesting story from a business peer whose daughter started college in the fall. This mom was telling me that she received a call from her daughter thanking her for teaching her how to cook, clean and do her own laundry. She was pleasantly surprised that her daughter had thanked her for teaching these skills and she asked her daughter what had prompted the call. Her daughter relayed to her that she had been horrified when she discovered that her roommate didn’t know how to do any of those things.  

If your kids were to go away to college today, what kind of phone call do you think you’d receive?  

What life skills will your child know by college?

What skill sets do you want them to leave home with that will give you the peace of mind of knowing they can take care of themselves? With the right preparation, we can get our kids on the right track, so that they can each acquire these important life skills.

You may be thinking, what ‘life skills’ should I be teaching my kids? 

We’ve put together a four part series that will highlight different types of life skills all of our kids desperately need to learn before heading off into the world. Ultimately, as a parent, you get to choose which life skills are important to you and your family, but this series will give you a thorough overview of the areas I focus my time on with my kids.

First Up in our Life Skills Series – Let’s Chat Personal Finance Management.

Personal finance is one of the most essential life skills, that we don’t tend to teach the next generation. I guess we just assume they will just figure it out like we did. 

However, I think many of us (I’m raising my hand right now, too) took a bit longer to figure it out than necessary. I don’t know about you, but if I can help my kids now to avoid the mistakes I made later on down the line – I’m all for it. 

Because of that, I’ve already started on many of these lessons with my own kids.

HOW TO BUDGET

7 personal finance life skills Pinterest imageThe ability to budget and be financially responsible is absolutely vital to your life skillset. It’s a skill we can learn from a very young age and one we should build upon throughout our lives. Setting financial goals, taking care of your money and calculating expenses are an important part of budgeting.

HOW TO AVOID/GET OUT OF DEBT

Learning to live within your means is definitely a learned skill. Learning to slay your debt is about keeping your spending in check and managing a plan to pay off your debt quickly and efficiently. We refer to it as a war, slaying, tackling and fighting because it’s truly challenging. But, the amazing thing is, with a little practice, avoiding debt is a war that we can teach our kids to win.

HOW TO MAKE A MAJOR PURCHASE

Maybe your kids are about to buy their first car—or maybe just their first new jacket with their allowance money. Whatever it is, they should understand how to compare prices, how to do research via Consumer Reports, and how to make a smart, well informed, purchase.

BALANCING YOUR BANK ACCOUNT

How many of us just use our debit card without writing things down? How many of us pay bills online or have them set up to automatically be debited from our accounts and then sort of forget until they show up on our bank statement? 

Being able to record your expenses is a skill that keeps us in touch with your finances. It’s important that our children understand what it truly means to use their debit cards and actually physically subtract the money from their bank accounts. It keeps them immediately accountable for what they’re spending. Have them try committing to write things down for a month and see if you notice a difference in their spending patterns. 

HOW TO USE COUPONS

Learning how to use coupons can actually be fun for kids! My children love it and it’s really easy to get started. With a little organization and some practice, you’ll become a couponing queen (and you’ll rarely catch yourself or your kids paying full price for ANYTHING).

MONEY MANAGEMENT/INVESTING

Once they have saved a lot of money or have their debt paid off, understanding how to invest their money wisely is also a huge learning experience. Even people who have money to spare have trouble with investments and making that money grow. 

Really, there are very few ways to “get rich quick” aside from winning the lottery, and most investing and money management attempts have to be carefully vetted and researched. Show your kids how to research various areas of investment such as the stock market, real estate, or startups before they decide to let go of their hard-earned money.

EFFECTIVE NEGOTIATION

effective negotiation - life skills

Bargaining, bartering, negotiating—it’s a learned life skill many of us shy away from. Learning how to trade, make an offer, and be comfortable with asking for a better deal can save you money. It can also be a valuable skill when you’re faced with a tricky money situation (like asking for a raise) where negotiating is essential and expected. 

Teach your kids not to shy away from making a bargain. Challenge them to practice until they feel comfortable. That might mean saying, “Is that the best you can offer?” over their next big purchase or you could have them set up a swap with a friend to practice negotiating. This will help them learn to stop cringing whenever a negotiating opportunity presents itself.

Our kids need life skills now more than ever. Period. End of story. As their parents, it is our job to teach them. But, when we don’t know where to start – it can be overwhelming. My advice, start with personal finance management. Come back next week for part two where we’ll be chatting about cooking and cleaning. 

In the meantime, you can grab our completely FREE Family Chore and Money System Action Guide, here. You can also hop over to Facebook and watch me walk through how to use it, here. If you’d like even more support, let’s chat about 1:1 coaching and I’ll help you set up a systems and routines that will work for your unique family.⁠⠀

4 Signs Your Kids Need to Learn the Value of Money

4 Signs Your Kids Need to Learn the Value of Money

The day you realize your child or children have no concept of the value of money can be both jarring and eye opening. We all want to raise confident, empowered, educated, well prepared kids. But often times, our desire to give our kids the absolute best can lead to entitlement issues. 

In reality, the best gift we can give our kids is an education in life. One of the most important life skills for any kid to learn is the value of money. It’s not always an easy concept, especially for young kids or kids who’ve already established a pattern of being given everything they ask for. But, it’s also never too late to start and reverse old patterns that didn’t serve your family well. 

You might be wondering if it’s time to start talking to your kids about the value of money. If you’re wondering about it, I’m guessing you’re already beginning to see the signs below and that’s why it’s begun to weigh on you.

Here are 4 signs your kids need to learn the value of money

They say “I need” when it’s really a want. Pinterest image - 4 signs your kids need to learn the value of money

Teaching our kids the difference between a want and a need can be so difficult. While it is tricky to explain to littles and sometimes confusing for them to work out in their minds, it is so important. If they think they “need” things that are very clearly wants, this is a major red flag. 

They tell you to just put it on your credit card. 

The first time I told my child we weren’t getting something because I didn’t have cash on me and he responded with, “That’s okay mom, just put it on your credit card”, I actually froze in my spot. 

Kids see, hear, and absorb more than you might expect. Which means, they’re likely seeing and hearing ads for credit cards all over the place. 

If you don’t show them your cards or talk to them about credit, from what they see on TV, they may think credit cards are a magical flow of endless money in every adult’s pocket. If they can verbalize this – it’s time to talk to them about how credit really works.

They expect to get something whenever you’re out shopping.

I feel like this was one of my biggest mom fails for a long time. Every time we were out shopping ANYWHERE I would allow my kids to pick something. To me, it was worth the money to have them cooperate on the shopping trip. 

Boy was I wrong about what this habit was actually teaching my kids. The headaches it gave me down the road were far worse than simply having said “No” on the spot. Which leads us nicely to…

They throw a tantrum when you say “No” to a purchase in a store. 

Child throwing a tantrum in the store because she doesn't know the value of moneyEvery parent HATES being the one who’s kid is melting down in the store. So, many of us do whatever we can to avoid it. Like, letting them have whatever they want just to simply avoid the public embarrassment and shame that will come along with their tantrum. 

In reality, if they react this way to your saying no, it’s a definite sign that they need to learn about what can and can’t be bought and why. They need to learn how money works and when and where it should be spent. 

It’s never too early to start talking about money

Bottom line, it’s never too early to start talking to your kids about money and showing them the real value of money. The more kids see and are involved in your conversations about finances and budgeting, the better prepared they’ll be to handle their own finances as young adults. 

If you grew up with no concept of the value of money, you don’t have to repeat the pattern with your own children. 

Now that you know your child NEEDS to learn about money, what do you do?

First, you’ll need to know if they are cognitively ready to learn about money. Can they count? This is important. For more information on determining if they are cognitively ready to talk about money, check out this post

If you decide that they can handle the topic, next you need a plan. This is where we can help you! We’ve devised an action plan for establishing a chore system and budget WITH our kids. To completely understand the value of money, it’s so important that your kids be involved in the family budgeting process.

The Top 4 Values Kids Learn from a Family Chore System

The Top 4 Values Kids Learn from a Family Chore System

doing laundry with mom, part of a family chore systemDeciding whether or not to implement a chore system in your home can be tricky. There are many factors that may weigh on your decision as to if it is the right time for your family to get started with a chore system. Some things to consider are your kids ages, physical abilities, cognitive abilities, and ability to adjust to new routines.  

In our home, for our kids, we are in favor of establishing chore systems early. This is because of the multitude of positive values having a chore system has taught our children. Four particular values stand out to us as the most important. 

Here are the top 4 values your kids will learn when you begin to implement a chore system in your home:

Responsibilitykids doing chores according to their family chore system

Teaching kids about responsibility can be a little tricky because it’s multifaceted. There are multiple ways to approach responsibility – being responsible, acting responsibly, having responsibilities, and taking responsibility. The common thread is that they all relate to doing what is expected of us. 

Responsibility is an important trait to instill in our children because it opens their eyes to expectations. When children take on new responsibilities, it establishes rules, habits, and routines that form the basis for all future interactions. Assigning your child chores gives them something they can be responsible for and take ownership of. 

Establishing the value of responsibility leads to trust and freedom within your parent-child relationship. It also leads right into accountability, as this is what your child will need to acknowledge if they are not responsible, acting responsibly, or taking care of their responsibilities. 

Accountability

Once your kids understand responsibility, it becomes easier for them to grasp the concept of accountability, too. When your child takes responsibility for their actions, their items, or their mistakes – the idea of accountability grows clear. Accountability does not need to have a negative connotation. Accountability is owning up to something you’ve done wrong or failed to do and accepting the consequences. 

For kids, accountability is all about taking ownership of and following through with their responsibilities. The follow through is the sweet spot where your kids will see the results of their hard work and begin to feel pride in what they are doing. 

Our goal in establishing chore systems is to help our kids understand that being accountable for their actions and responsibilities means they are holding themselves to a high standard 

Habits and Routines

doing dishes as part of a family chore systemDeveloping habits and routines are an integral part of running any happy household. Kids thrive on routines. When kids develop positive habits and routines, they know what to expect, feel secure and supported, and release anxiety. 

There’s also positive benefits for the parents. For you, it will look like less nagging and reminding, you’ll be less stressed, and you’ll have more time together as a family.

Habits and routines in a home teach kids how to self-manage, work together as a family, and create a home environment that is full of positivity. Chore systems easily become a part of your family routine and habits. Kids know and expect they will be handling their assigned tasks and they welcome the comfort of this consistency. 

Independence

Our ultimate goal as parents is to set our kids up to be successful adults. Of course, we want to keep them safe – but we also want them to grow into independent, healthy, and happy adults. As a parent, there is a delicate balance between guiding our kids and letting them care for themselves, when the time comes. 

When you establish chore systems in your home, you will watch your children become more independent right in front of your eyes. As they take responsibility for their chores, accept accountability, and develop their routines – they will begin to need your support and guidance around these particular chores less and less. 

When children develop independence, they become equipped with necessary life skills, self sufficient, empowered, and confident. As parents, isn’t that what we all want for our children?

 

Are you ready to implement a family chore system in your home but you just don’t know how to get started or get yourself organized? We’ve got you covered! Grab our totally FREE Family Chore and Money System Action Guide and we will walk you through the step-by-step process of designing, implementing, and sticking to a plan that works for your family.

Creative Ways to Cut Expenses and Increase Your Monthly Income

Creative Ways to Cut Expenses and Increase Your Monthly Income

The new year is the perfect time for goal setting and dreaming big. For us, one thing that goes hand-in-hand with those two things is updating our monthly budget. My husband and I decided a while ago that talking openly and honestly about our finances is a must for our family. Sometimes this involves talking about how we can cut expenses or find creative ways to bring in more income. 

I think it’s safe to say, we’d all love to have a little extra spending money in our pockets. And for some of us, we need more money each month just to make ends meet. No matter which category you fall into, there are some truly genius tips and tricks out there to cut back on your monthly expenses and increase your income.

Here are our top creative ways to cut expenses and increase your monthly income:

Ideas to cut expenses

Bundle or eliminate monthly bills:

  • Cancel cable and opt for a few, cheaper streaming services. Hulu offers a lot of network programs the day after they air on cable. Disney+ will keep the kids happy for less than $6 a month. This combined with Hulu comes out to $12 a month as opposed to the average American cable bill which is $107 per month. 
  • Bundle your cable, internet, and phone bill. If you’re not ready to cancel your cable, consider combining it with your phone and internet into a single “Triple Play”. This type of offering can drop your combined costs to as low as $79.99. Another pro tip – if you purchase your own router and wireless modem you will eliminate some of the additional monthly fees you see on your cable bill.
  • Cancel your gym membership. If you aren’t using it, let it go. If you do use it, but only occasionally, think of creative ways to get in a workout without shelling out a monthly fee – like jogging, hiking, or cycling. 
  • Bundle your home and car insurance. Many insurance companies offer significant discounts for bundling your car and homeowners insurance. Shop around for the best offer you can find with maximum coverage for your protection. 

Groceries 

  • I know you’ve heard of couponing, but have you actually tried it? On average, shoppers using coupons can save $30-$50 a week. Additionally, make sure that you are signed up for the rewards and discount cards at whatever store you grocery shop at. 
  • Buy in bulk – Costco, BJs, Sam’s Club – they all offer bulk groceries at great prices. If your shopping for a small family, ask a friend to split the cost and the products.  
  • Shop at discount stores like Aldi. Just because you are looking to cut your expenses, doesn’t mean the quality of your groceries has to suffer. Aldi offers organic and local produce at an incredibly discounted rate. They sell the Simply Nature brand which is both high quality and organic. 
  • Buy store brand groceries. Often times, the quality and taste are virtually the same as their name brand counterparts. 

Spend Less on Food and Drinks

  • Don’t stop for coffee. Make it at home. Depending on if you get your morning brew at the gas station, Dunkin, or Starbucks, you could be saving yourself anywhere from $1 to $5 a day.  
  • Pack your lunch. This option will always be cheaper than eating out or ordering in. Just consider how different the cost would be to prepare and pack a salad from home vs. buying a pricey salad from a local lunch spot. 
  • Limit dinners out. Review your budget and decide exactly how much you can spend each month on eating out or ordering in. You’ll find this helpful in budgeting for your dining out expenses. 

Ditch your car (when you can)

Whenever you are able to opt to cycle, carpool, or walk instead of driving your car. The benefits here are huge. First, you’ll save on gas. You lower your likelihood of being involved in a costly automobile accident. You’ll lower the amount of pricey maintenance and wear and tear on your vehicle. And, remember that gym membership you cancelled? Well, use this as an opportunity to keep fit.

Ideas to bring in extra money

Teach Classes Online

With the growth of the internet, there are so many opportunities to teach online. If you happen to have a teaching license (from any US state) you can teach content at an online school like K12 or ESL at VIPKid

Check out Teachable or Udemy for vocational courses. I’ve recently seen course offerings on needle point, cake decorating, and scrap booking. With limited technological know-how, you can offer your own course based on your hobby in no time.

Freelance 

If you have a marketable skill, like, writing, graphic design, or web development, you can offer it as a freelancer. If you work full-time or part-time, consider picking up some clients on nights and weekends. If you’re a stay-at-home mom, you can always try doing some work early mornings, during nap time, or after the kiddos are in bed. Check out sites like Fiverr, UpWork, and The Mom Project

Sell Gently Used Items Online

There is a huge market for selling gently used items. My first stop is always Facebook Marketplace, but there are tons of apps for it, too. Check out Mercari and LetGo – they both come highly recommended. And, don’t rule out old standbys like Craigslist and Ebay

Sell a physical product

For us, it’s our PreparaKit first aid kits. As a nurse, encouraging safety in families is something that is tremendously important to me. 

However, you don’t need to start out with something this involved. With sites like Etsy, you can sell almost anything you make – jewelry, apparel, home decor, the possibilities are endless. 

Whether you need to cut expenses and bring in more income or you’d just like a little extra money each month for a safety net, I encourage you to check out our Free Family Monthly Action Plan. This Monthly Budgeting Action Plan offers step-by-step instructions to guide you through the exact steps you need to take to set up your own family budgeting plan. 

The 5 Phases of Overspending

The 5 Phases of Overspending

If you’re reading this, I’m guessing you fall into one of two categories. Either you’re on top of your finances but you’re a little curious to learn more about the five phases of overspending or you know you have some spending issues and you want to figure out where you fall within these five phases. 

If you want to get ahead of your finances, you absolutely need to be aware of these 5 phases of overspending. It’s crucial that understand the impact that moving through these phases will have on you and your family if you aren’t on top of it.

The 5 phases of overspending

I modeled my 5 phases of overspending to the 5 stages of grieving.

They are:

  1. Denial
  2. Frustration
  3. Bargaining
  4. Depression
  5. Acceptance

Let’s break it down and jump into each of these phases one-by-one.

Denial

Denial - the first phase of the 5 phases of overspendingThose who are in denial think, “If there’s money in the bank, spend it.” The denial phase is full of over spenders. If you are an over spender, it’s time to take a hard look at yourself in the mirror. You may be in denial.

People in this phase don’t have a care in the world about what they spend. They spend like crazy with no limits or worry. The denial phase is characterized by a buy now and deal with it later mentality. 

If you’re in this phase – you need to wake up! This is the worst place you could be. 

Frustration

Eventually, you get to the point where living paycheck-to-paycheck no longer works. There are bills to pay but you don’t have the money to pay them. You’re 2 days away from payday but you have a bill due now. So, you need to go to a check advancing place or you need to borrow money from friends and family. 

This is frustrating. It’s frustrating because you don’t have the money in your bank account but you know it’s coming.

You may cycle through the denial and frustration phases for a while because once you get the money and pay the bill, you will move right back into the denial phase. Something needs to give.

Bargaining

Here, you know you have cycled through denial and frustration for a while. Then payday comes around. Now you’re bargaining with yourself. You know you should pay back the money you owe or pay down your credit card debt, but you convince yourself that you need to spend the money on something. You convince yourself that you’ll pay everyone back with your next paycheck. You have the money and you really want to treat yourself so you do. You tell yourself it’s okay to spend the money because you have it. You can always pay off your debts later. 

Depression

Depression - the final phases of the 5 phases of overspendingAfter all of the denial, frustration, and bargaining, you’ve spent too many nights lying awake reflecting on your life and why your accounts are empty at the end of the month. The constant cycle has put a strain on your relationships because you are always fighting over money. You’re going to work to earn money but you aren’t happy. It isn’t paying enough.

This endless cycle continues every month and you ultimately start feeling the stress. You start feeling sad, helpless, and depressed about your financial situation and it starts to bleed into other areas of your life. This is not where you ever pictured you’d be and you hate the way it feels. 

Acceptance

Finally, you get to the acceptance phase. You accept the fact that you have money issues, that you need help and that you are ready to do something about it. You’re sick and tired of being frustrated and depressed about your money situation. You finally get to a point where you’re fed up with living paycheck-to-paycheck, having no money and/or being in debt. You’re now ready to make some drastic changes to get yourself out of the mess you’ve made. 

This is when you really begin to turn your life around. Stop living paycheck-to-paycheck. Pay off debt. End the constant rat race. 

For our family, it took hitting this stage to finally decide to take action to eliminate our debt through research and seeking help.

Be real with yourself and accept where you are at right now so that you can do something about it. If you’ve reached the acceptance stage and you’re ready to take action, check out our Free Family Monthly Action Plan. This Monthly Budgeting Action Plan, offers step-by-step instructions to guide you through the exact steps you need to take to set up your own family budgeting plan. 

Cash Envelopes vs. Digital Budgeting. Which is Right for You?

Cash Envelopes vs. Digital Budgeting. Which is Right for You?

Family Budgeting - Cash Envelopes vs Digital BudgetingAs moms and parents, there are so many decisions to make every day and if one of your New Year’s resolutions is budgeting, the question, cash envelopes vs digital budgeting, which will work better for you? Do you do better with a DIY approach to budgeting or should you seek technological assistance? 

So many choices, so many decisions, but at the end of the day you need to pick what works for you. Some people need to see the money and feel it, in order to truly understand its value.  Others just like the convenience of not having the cash physically in their hands, but having it conveniently located in the cloud or in apps that are more conducive to their busy lifestyle.

Compare Cash Envelopes vs Digital Budgeting:

Finance software can be convenient if the app or program lets you automate savings, or access and update your information on the go. If it doesn’t automatically input and categorize your purchases or it’s hard to use, it might not add much value.

For some, pen and paper is best or a chart method that you can keep on your refrigerator. Let’s face it, some of us do come from a generation when computers were not the norm and apps didn’t exist yet.  It has actually been proven that writing things down can help you retain information and feel connected to your budget. If you’re just not comfortable with the concept of linking your bank accounts to an electronic budgeting service, a physical method can save you worry, too.

The Pros of the Cash Envelope System:Cash Envelopes - Cash Envelopes vs Digital Budgeting

  1. It works! It can really keep you on track, because you are physically holding the money in your hands every day and keeping it in the envelopes. Sometimes touching and feeling the money, makes us feel it’s worth more than when it’s somewhere online or in the cloud.
  2. This cash envelope system truly forces us to be disciplined
  3. You will not have overdraft charges. We know how easy it is to overdraw your account, if some additional automatic payments go through that you were not expecting. 

The Cons of the Cash Envelope System:

  1. You need to carry a lot of cash. The traditional envelope system requires that you use cash most of the time for any additional purchases beyond paying bills online or with checks. If you’re forgetful this could be a potential problem when you want to buy your child an ice-cream cone or you need gas in your car.
  2. Envelope budgeting requires that you stick to a very strict budget with a small grocery budget and clothing budget. If you have a Type A personality this works great, but otherwise it can be really stressful.
  3. If you eliminate credit cards, you are unable to take advantage of credit card rewards. If you are the type of person who can be in control and not overspend, then credit cards have tremendous reward benefits like cash back and extra gas money.
  4. Sticking with different categories can be really hard. For instance, if you go to Target and your kids want to buy their weekly gift from their allowance money, but you also saw a coffee maker you need or a new shirt, then all of these purchases fall into different categories. You have to use different envelopes for each transaction, and this could be really frustrating not only to you but everyone else waiting in the line behind you.
  5. Using cash for envelope budgeting also increases the chance that you might accidentally lose money. 

For some of us, the cash system is outdated in a tech-savvy world filled with apps, credit cards, online spending and other tech-driven budgeting tools.

The Pros of the Digital Budgeting System:

  1. There are a variety of different apps at your disposal, that you can conveniently download to your phone or access Cash Envelopes vs Digital Budgetingonline to keep track of your spending. A popular app to try is Mint, which is one of the oldest and best-known budgeting apps. YNAB and Every Dollar are other helpful tools to build your budget based on your income and gives every dollar a job within your budget.
  2. You don’t have to worry about losing cash on hand, if you tend to be forgetful or disorganized.
  3. There is no need to write down balances or manually track your spending, because it is all done for you automatically within the apps.
  4. If you’re self-employed, digital budgeting software allows you to print off category lists of expenses that you can hand over to your accountant at tax time (this will make you a CPA’s dream client.)

The Cons of the Digital Budgeting System:

  1. Technology can be our best friend, and at times our worst enemy. If the app suddenly freezes, you lose your phone, or you drop your phone in a puddle and it no longer works, your digital budgeting strategy is thrown out the window. You will have to remember to write down the things you couldn’t update within your app, and remember to update it later in the digital budgeting app of your choice. You have to create positive habits to update your apps, so everything is current.
  2. Many people have concerns over the security level of apps and programs that integrate with our bank accounts, even though most of these programs use high-level security encrypting. A security breach is always a possibility, which could put your information at risk.
  3. As most of us know our virtual money, makes us less-inclined to see the real value of our money when it is being virtually withdrawn from our bank accounts for bills and other purchases. It makes it easier for us to buy an item online just by clicking a button, instead of actually counting out the cash and handing it over to make our purchase. We tend to spend less on frivolous items if we are seeing the actual transfer of cash.

There are advantages & disadvantages to both methods, so you have to decide what’s right for you. Unfortunately we’re not all fortune tellers by trade, and it’s hard to predict what may or may not happen when it comes to money management. We are now living in a digital age whether we like it or not. That’s not to say we can’t go back to tried and true methods that worked for generations before us…after all, Warren Buffet was a product of a former generation and learned to budget pretty nicely.

Decide what works best for you – cash envelopes vs digital budgeting. It’s your money, your budget, and your call. No matter the method you choose, the real goal is to save money and teach your family how to do the same by making you more prepared before you spend your hard-earned money.