Monday, June 2, 2008

Teaching Kids to Save

Many times, parents forget to teach kids important skills that they will need when they leave home. We are great for making sure that they know all the things they will need to know while they are still living at home - how to respect those in authority over them, how to tie their shoes, how to communicate effectively with peers - but in many cases, kids are never taught how to save money. This does not have to be boring. You know what your kids enjoy, so be creative and make it fun! Here are a few suggestions to get you started.

As soon as kids start earning money, they should start saving some. One way to do that is to set aside a certain amount. In my son's case, I decided how much he would save because he is still pretty young, but if your child is old enough to make an educated choice, let him decide for himself. The more choices you let you child make, the more he will enjoy the process.

When they have enough money to open up a bank account, teach them a few terms that they will need to know to pick out a bank and bank account. I will talk even more about that in next weeks' posts. Let you child do the work when she goes in to make deposits. When she can write well, let her fill out her deposit slips and talk to the teller. Make sure she knows that she is responsible for knowing how much is in her account and reconciling the statements. There may not be a way to make that part fun, but reconciling bank statements is just one of those things that everyone needs to do.

If you have the space, set up a "writing center" in your child's room where he can crunch numbers. One of the most fun aspects of saving money is watching it grow, especially when you factor in interest - extra money that he didn't even have to earn that he gets to add into his savings.

If she is old enough, let your child decide what the money will be for. I encourage you to make sure that it is for something worthwhile, not a toy that she will tire of in a month. I told my son that I he can decide what to use his savings for, but it has to be a major purchase - college, a down payment on his first house, his first car, etc. Money for toys has to come from his toy budget, even when he has to save up. In fact, I intentionally chose to pay him small amounts so that he would have to save his toy money.

I know it sounds dull and uninteresting to talk about from a kid's perspective, but something about earning your own money and watching it grow just grabs their attention and excites them. One day, they will be incredibly grateful that you took the time to teach them these important skills so that they can be intelligent and responsible in their financial decisions as adults.

Sunday, June 1, 2008

Why Save?

For many people, saving is something that you do at the end of the month with whatever money is left over. Some people can still save like that, but for most, this line of thinking leads to living month-to-month without a back-up plan. It is imperative that you pay yourself first. Saving is not optional. If you struggle to see the merits of saving, or struggle just to get that money into the bank and keep it there, you are not alone. But through good monetary strategies, you can overcome those obstacles. First, we are going to go over some reasons to save.

Save for emergencies. Life happens. Someone in your family may need medical attention. Your car could break down. Your home could be robbed. There is no guaruntee in life that bad things won't happen. If anything, there is a guarantee that bad things will happen. It is your responsibility to your family to be prepared for these things. Unexpectedly having to buy a new car should not mean that you suddenly can't pay your house payments. You should have three to six months worth the expenses saved up in an emergency fund at all times. At the very least, you would be able to buy an ugly car that gets you from point A to point B without missing a beat. When you use money from your emergency fund, you are, of course, responsible for saving to put it back.

Save for retirement. For some of us, this can be difficult to think about now. When we are in our twenties and thirties, we don't think about preparing for life after 55. But the reality is that as soon as we start working, we should be socking money away, preparing for the big day. I haven't even started what I would consider my career yet. I am twenty-three years old. My income is considered under the poverty line. I have a retirement account that I put $25 into every month. You can do this!

Save for all of your wants. Your "wants" may include a newer car, college educations for your children, a family pet, new clothes, or a bigger house. These are all things that you need to set aside money for. They are certainly not impulsive buys. If it is a purchase that requires thought and shopping around, then it is something you should set aside money for. Decide how much you want to spend on it, and start setting aside a certain amount every month.

The best way to start saving more money is to start to track your spending. You will be surprised at what you are spending your money on. When I started doing this, I thought that I was spending $150 per month on groceries. I soon found out that it was more like $250 or $300. Eating out is a big expense that creeps up on us. By the time we get our food and drinks and tip the server, you can spend $20 per person in a reasonably priced restaurant. Once you know what you are spending your money on, you can better control it.

Sunday, May 25, 2008

Teaching Kids about Money

There are a lot of different ways to teach kids about money. Do not choose the method that you like. Choose the strategies that resonate with your unique child. How do you know what will be effective with your child? Well, the best way to know is to try them out, but we can look at your child's characteristics and try to guess what he would enjoy. Most kids learn better by hands-on activities. Don't lecture them. Let it be fun. Take your child's age and abilities into consideration when deciding what to try. Also, remember not to pressure them to understand or pay attention as long as they are still being respectful. They will get it when they get it.

One way to teach them is to pay them allowance. This way, you can sit down with them and have them help you write a budget. The amount that you pay them should depend on their age and how much they help you around the house. The point of doing this is to give them a watered-down idea of what it is like to manage money as an adult, so they need to be working for their money. My son, who is four, mops, feeds our pets, changes their litter and bedding, and takes out the trash and gets paid five dollars each week. When I feel that he can do all that easily and still have free time to play, I will give him a "promotion" and a raise. He will have more responsibility, but get paid more money.

When they write their budget, they should not get to spend all the money that they get paid. My son, for example, has three jars to put his money in. Every week he puts one dollar aside to give away, one dollar to save, and one dollar towards the bills of the house. Then, he puts the remaining two dollars in his wallet to spend on toys or whatever he wants. The money that he gives away can be to buy a present or card for someone, give to charity, give to a person, or give in church. He gets to decide. The money that he is saving is going to go into a bank account as soon as he has enough saved to open one up. The money in the bills jar usually goes to buy pet food. When we spend the money, I always let him make all the purchases. He counts out the money and hands it to the cashier.

We also have a notebook with a list of his "accounts" (savings account, giving account, bills account, and petty cash). He is beginning to understand simple math so we count on our fingers to do the addition and subtraction for the dollars, and I do the math for the change. This way, we are beginning to use the skills necessary to balance a checkbook. If your child is older, then you can try other more complicated approaches.

A child in third grade or older can pay the bills and record it in your checkbook. This way they can see where all the money goes every month. Be sure that you are with them while they are writing checks to answer any questions they have and be certain that they are doing it correctly before mailing them. Also, you will have to be the one to sign the checks. In the beginning, this may be a little more work for you, but soon you will be able to do other things around the house while she pays the bills. This is a good Saturday morning activity she can do before she goes out to play.

Teenagers can get jobs and keep a budget similarly to the allowance example. Remember, the point of these tasks is to prepare them for the real world. One day they will have to do this on their own and the more experience we give them now, the better they will do later. If you start early, properly managing money will be second nature to them by the time they are in college or in a career.

Be open and honest with your kids about the money situation in your household. If money is tight, they should know that and your spending habits should reflect that. If you are financially secure, you can explain to them that you work hard to manage your money well so that they can have nice things. Let them in on the action so they can see and understand what you are talking about. Your kids will stop and listen to you when they understand through experience that you know what you are talking about.

Not only are you preparing them to take care of themselves, but you are also teaching them to respect the hard work you put into supporting them financially.

Finances for Beginners: Let's get started!

Anytime you are going through a life change like beginning to manage you money more effectively the first step is always to Get Organized. This can mean different things for different people depending on where you are in life.

Maybe you are the kind of person who spends impulsively and is left at the end of the month with lots of bills an no money to pay them. Or perhaps you just can't make ends meet in your current job, and you need some help getting your bills to a manageable level. For you, the first step in getting organized is writing a list of all the money you will need in the next two weeks. Include money for food, transportation, and other miscellaneous expenses. Once you have your list, prioritize it. Rewrite it in order of importance from most to least. Put this list somewhere you will see it whenever you spend money. Some good places are the table where you sit to pay your bills, your wallet or purse, or in your checkbook. When you see this list, it will help you avoid impulsive spending by reminding you of your money's other obligations.

If you are in a dead-end job that just can't pay the bills, it sounds like it's time to look for another one. It can be hard getting a job for a single parent. Sick kids, parent-teacher conferences, and field trips can cause us to miss a lot of work days, and some employers just aren't willing to accommodate that. Also, childcare for your children and afterschool care for older kids can be very expensive. Your best defense is a strong support system. If you don't have family and close friends nearby to help you, try getting involved in a local church. Look for a loving church that honors God and accepts you and your family for who you are. You could also start a moms group. Ask other moms that you know to come to your home or meet in a local park. Tell them to bring their friends, and soon you will be meeting regularly and bonding together. One important thing to remember is that you must be willing to help each other when you can. You are not supporting each other if you just get together to let the kids play once a week and don't contact each other any other time.

If you aren't in a tight spot with your money and you get your bills paid every month but just don't know where all that money goes, you can start here. Make a budget. Start by writing out your monthly expenses. Don't forget food, transportation, and other miscellaneous expenses like diapers or medication. Also remember to set aside money each month for bills that come less often. For example, in some cities the water/trash pick-up bill is only sent out every three months, or maybe you pay your car insurance every six months. That way these bills won't sneak up on you and ruin your plans for your money. Also, determine how much money you can afford to save each month.

Next, rewrite you list of expenses in order of the date due by. If you don't know for some bills, it can be found on the bill. It is usually the same date every month. Don't forget to write the money that you are planning to save at the top of the list. Always pay yourself first! This way that money you were planning on saving won't end up going to those really cute shoes on clearance that you don't need. But also remember to set aside some money for you to spend on whatever you want. This is the money for taking the kids out to eat or buying the new shoes. Remember: once you spend all the money you budgeted, that's it! Don't give yourself anymore! Force yourself to spend it gradually throughout the month rather than all at once.

To figure out how much to budget for food or other expenses that you don't receive a bill for, save all your receipts for a month. You might be surprised at how much you are spending. Save money and set goals. Try to spend ten or twenty dollars less every month until you are at a spending level that you are comfortable with. Look at ads in the newspaper to see how has the best prices on what your family eats and clip coupons on things that you already buy. If you decide to try something new because you have a coupon, the new item must be a healthy replacement for something on your list with the same price or higher.

Well, that should be some good information to get you started. No matter what your financial situation is, managing money can be a daunting task. One of our goals as parents should be to create a better future for our children, so in the next post I am going to talk about applying everything you learned today to your kids in order to begin teaching them money management skills at an early age. Know that your families are in my prayers every day!

Saturday, May 24, 2008

Nice to meet you!

My name is Jennifer Klaiber, and I am a single mom of a currently four-year-old boy named Logan. I am a college student studying Early Child Care, a preschool teacher for two-year-olds, and a nanny of a two year old boy and a four year old boy.

I got pregnant with my son when I was seventeen, and gave birth to him when I was eighteen. Thankfully, although Logan's dad and I are no longer together, he is still in the picture. They get to spend time together every weekend, which I believe is very important.

When I was nineteen, I turned my life around and began living for God rather than my own selfish ambitions. I changed majors from business to early child care with the intention of helping other single parents and teen parents who feel trapped in their circumstances. I believe that the key is to turn their eyes from their problems, and look to God for solutions. I have seen first hand that through his love and mercy God has a plan for each and every one of us and our children!

I decided to make this blog in order to organize my thoughts and share them with others. My ultimate mission is to write parenting books that help single parents and teen parents reprioritize their life and goals in order to parent holistically and effectively. I hope that I will be able to help parents brainstorm strategies to improve their children's futures by starting within themselves and moving outward.

To kick things off, I am going to start talking about money management. I hope that the wisdom God has given me will bless you as much as it has blessed me!