Archives For Finances

Helping a Spender Learn to Save

As our children grow, it has been such a joy watching their personalities develop. It’s amazing how children who have the same parents, live in the same home and spend almost every day together can be so different. Our boys are complete opposites, especially when it comes to money.

Paxton (6 years old) is a natural spender. If he earns or receives a money, he wants to spend it. Over the past year, he’s purchased several small Lego sets, random items at thrift stores and even vending machine stickers. Saving his money for a larger purchase is not something he’s naturally drawn to.

Our Weston (4 years old) is a natural saver. If he earns or receives money, he wants to save it. He’s such a simple boy, he has very few wants and rarely purchases anything. Most of the items he has purchased he has saved for or he has found an animal to go with his farm. Lately when he gets money, he tells us to just put it in savings (referring to his savings account) because he’s saving up to buy a farm and a tractor. He’s thinking about the future and not worried about material things in the present!

We want to raise our children to be wise when it comes to finances so they hopefully will be financially free their entire lives. And, we also know that just because a person has a natural tendency, such as the tendency to spend, it doesn’t mean that they cannot learn to change their ways.

Around Christmas, Paxton found a Star Wars Lego set that he really liked but it was way out of his spending money price range at $59.99. He talked about it for several weeks and pointed it out when we would look at toys.

We thought it would be a great item to set a savings goal for and encouraged him to save his spending money to purchase the Lego set.
Lego Savings Goal

We created a savings goal chart as a visual that we hung up in his room so he could glance at it and see how far he was progressing towards reaching his goal.

We set a goal of saving $70 to cover the Lego set and taxes. Each row on his chart represented $2 but we also allowed him to fill in half a row when he put $1 into his Lego Savings jar.

He had some Christmas money that he decided to go ahead and put towards the goal so he started out with $22 which was a great jump start towards such a lofty goal for a 6-year-old.

At the beginning, he started out slow, putting just a little bit of the money he’d earn or receive into his savings. He preferred putting more of his money into his wallet for spending. Every time he decided he wanted to spend money, we would remind him that he could use that amount of money, even if it was only $1, towards his Lego savings and get closer to his goal. Then, we’d let him make up his mind if he wanted to spend his money or not.

He chose to purchase several small things over the first few months and then he started to get more serious. He received some money from grandparents and great grandparents for Valentines Day and put all of that into his Lego savings. Then he earned some money when he, his daddy and brother helped our neighbor with some farm work and put all of that money (minus his giving) into his savings. After earning that money, he started asking about ways he could make money and we gave him some odd jobs to do to earn a little money.

As his savings grew, his spending decreased and he starting putting more and more of his money towards his savings. With his birthday money, he was able to reach his goal of $70 and he was so excited to finally be able to purchase his Lego set.

Paxton's Legos

We completed the chart and then starting looking for the best deal we could find. We knew the Lego set was $59.99 at WalMart and ToysRUs but we wanted to shop around. We first checked out Craigslist, hoping to find a used set (we always try to buy things used instead of new), then we looked on eBay. With no luck there, we saw that Amazon had the best price online at $54 (it was around $57.50 after tax).

I told him that we could go to WalMart that day and purchase the Lego set for $59.99 plus tax or we could order it on Amazon. By ordering it on Amazon, he’d have to wait 2 days but would save around $6. He decided to order online, save the money and patiently wait. We were a little surprised and very proud that he chose to delay gratification!

We placed the order together and he handed over all that cash. Then we counted up what remained and he had $12.50 that he can apply towards his next savings goal (which we’re not quite sure of at this point).

Opening Legos

Paxton was so excited while waiting for his package to arrive. The day that it arrived, the mail ran very early and we were in the middle of our lessons. That was motivation, he’s never done his math faster! He was so excited to open up his Legos and start building.

This was the biggest set that he has received or purchased and it took him a while to get it all together. I sat with him and helped him build for awhile (and he loves when I play Legos with him since his love language is quality time!)

We hope reaching this financial goal will be remembered in the years to come and that he has learned a little bit about the value of saving.

Related Posts:

Teaching Kids About Money

Teaching Preschoolers About Money

Teaching Kids About Money

One of our desires for our children is for them to become financially wise. We hope by being honest about our finances and teaching them about how we manage our money that they will have a desire to stay out of debt and use their money wisely.

At 4 and 5, our boys know that we follow a budget and that our budget helps direct our spending.

We started talking about money and giving them small amounts of money at very young ages. We also try to point out how we save money by buying things used over buying them new.

Both boys were given some money for Christmas this year. We put some of it in savings but they both ended up with about $12 in their wallets. Money in their wallets is their spending money that they can spend, pretty much however they choose.

Our 5 year old, Paxton, is a spender and our 4 year old, Weston, is a saver. When Paxton has money, he starts thinking of ways he can use it. Weston prefers socking his money away in his piggy bank and lately has been telling us that he’s saving his money so he can buy a tractor when he grows up. (The saver in me LOVES this!)

On New Years Eve, while we were out eating Chinese food, our 5 year old discovered the wall of vending machines full of candy, toys and stickers. He saw that one of these machines contained NFL stickers (he loves football) and he had to have one. We explained that we thought spending $.50 for one sticker when you didn’t even know which team you were going to get seemed like a waste of money to us. Then we told him that it was his money and he could buy a sticker if he wanted to.

He chose to buy the sticker and was satisfied with the team he got.

Then, he tried to talk his brother into buying a sticker too! Weston stood firm in his resolve not to spend anything.

With money still left in his wallet, Paxton was itching to spend more so he started asking to go shopping. He finally asked, ‘can we go thrifting for jerseys?’ (I love that he appreciates thrifting!)

One afternoon this week, we went to Salvation Army and started looking for jerseys in the kids section. We found a red Georgia Nike jersey in size 6 that fit him and he liked it pretty well. We browsed around the store and came back to the kids section to double check and then Paxton spotted a black Georgia Nike jersey in size 7. He got really excited about this black jersey and we were starting to hang the red one back up when Weston asked if he could buy the red one.

We stood in line and they both purchased their jerseys, pulling their $3.20 out of their wallets, excitedly handing the money over and then proudly walking out with their jerseys that they purchased with their own money.

I was tickled that we had such good thrifting luck and they both found something they wanted.

Once we got home, I showed them that similar jerseys were selling for $40+ each online and that they could not have purchased those jerseys brand new with the amount of spending money they have.

We hope that talking with them through their spending and making wise purchases as children helps them become financially independent adults.

Georgia Jerseys

Paxton was beyond thrilled that his jersey has a Capital One Bowl game patch sewn on it!

And, it should be noted that John David and I are Tennessee fans. Paxton likes Tennessee and Georgia college football, he says ‘I was born in Tennessee and live in Georgia so I can like both.’ And, we’re not sure where Weston’s allegiance lies just yet. (Now, we’ve got to thrift a couple UT jerseys to even things up!)

Big Goals

When it comes to setting goals, it’s easy to simply dream about things you would like to do or achieve.

If you don’t make the goals realistic or manageable, they just stay dreams.

I’ve always set SMART goals to turn dreams into reality.

SMART goals are:

Specific

Measurable

Attainable

Relevant

Time Bound

In May of this year, we set a big goal to pay off our mortgage in 5 years (by May 2020).

This goal fit with the SMART goals formula:

Specific – We want to pay off our mortgage in 5 years.

Measurable – Pay off the balance of the mortgage.

Attainable – We knew discipline, frugality and a bit of creativity, this was a realistic goal for our family.

Relevant – We feel like this is a very relevant goal since our mortgage is our only debt and we want to be completely debt free.

Time Bound – We want to do this by May 2020.

We started out very excited and felt like we were working towards an achievable goal. However, since it was such a big goal (knocking out thousands and thousands of dollars in debt), it felt like we weren’t making any progress.

So, we broke the goal down further. In July (2 months into the process),  I divided the amount we owed on our home by 58 months (the time remaining until May 2020). This gave us a monthly goal to work towards.

Having the monthly goal makes our big goal very doable. Each month, we have a specific amount we’re working towards paying off. Reaching this amount each month is still a bit of a stretch but we hit the monthly goal in July, August, September and October!

Working towards the monthly goal keeps the momentum going. Each month that we reach (and sometimes exceed) our goal, we are excited which encourages us to keep going. While it’s fun to see the big number go down, it still seems to move slowly so it’s more fun focusing on the monthly goal than on the total principal that we still owe.  

Do you have financial goals you want to achieve?

Maybe you want to pay off debt, save an emergency fund or start a college fund for your kids. Or maybe you need to finally sit down, create your budget and set financial goals.

 

 

Power and Water Budget
Nearly every household has monthly power and water bills. These are priority bills because if they’re not paid, you don’t have water or electricity!

For the first several years of our marriage, we budgeted monthly for these two bills.

During most of the year, our power and water bills were a little below the monthly budgeted amount and whatever excess was left in that category we’d use to cover any areas where we went over budget or just spend the excess.

Some months, like the middle of winter and the middle of summer, the power bill would be greater than the amount we had budgeted. When the bill was more than we had budgeted, we’d have to scramble, moving money around from other budget categories and occasionally dipping into savings to cover the deficit.

After years of this, it finally dawned on us that by saving the monthly excess during months that our bills were low, we wouldn’t have any stress when we received bills that were higher than what we budget.

We started putting our power and water budget money together and at the end of each month, whatever amount was left rolled over into the next months category. After several months of setting aside the excess, we had a nice sum built up which started to serve as a cushion for the months when the bill is greater than the amount we budget.

Currently, we keep $200 in the power/water category and budget $150 each month. At the beginning of the month, our power/water budget category has $350.

After our power and water bills are paid, whatever is left over $200 is used towards extra principal and we end the month with a $200 balance. If we have to dip into that $200 cushion, we just allow the next couple of months excess build back up until we get back to that $200 excess.

Example:

$200 balance
+ $150 monthly budget amount
________________________________
$350 in power/water budget at the beginning of the month

$25 water bill
– $115 electric bill
________________________________

$210* left after bills are paid

*$10 would go towards an extra principal payment and $200 would remain in the power/water category for the next month.

Carrying an excess in your power/water budget category serves as a mini emergency fund that keeps high bills from causing financial stress.

And, being intentional about wisely using the excess over your minimum amount can help you reach financial goals. You can use any excess towards paying down debt, putting money in your savings account, building up an emergency fund, saving for Christmas, paying extra on your mortgage or whatever goals you’re working towards. (Our big financial goal is to pay off our mortgage in 5 years so our excess in this category goes towards our mortgage principal!)

We have decided to keep a balance of $200 excess because that’s the amount we’re comfortable with but you can choose to keep a minimum balance of $100 or even $50 and probably have a decent amount of cushion built in!

 

Power & Water Budget