Tag: Savings

A Savings Habit – Plan your meals

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In almost every case, a meal prepared at home cost less than the same meal in a restaurant, take-out, or delivery.  So, if you’re looking for a way to reduce your monthly food bill, choose homemade meals over eating out.

That’s easier said than done.  You come home from work and you’re tired and hungry.  Is this a moment when you’re going to start chopping carrots, peeling potatoes, and seasoning your meat?  And that’s assuming you even have all those ingredients in your refrigerator.  It’s hard to start a habit of home cooked meals, when the conditions aren’t in line with the goals.

To get the savings habit of homemade meals going, plan your meals ahead of time, perhaps on a weekly basis.  Choose a time – probably on the weekend – where you figure out what you will have for dinner on each of the days ahead.  Then, set yourself up for success by making sure you have what you need readily available.  That may call for grocery shopping and maybe some weekend “bulk” cooking, like preparing a lasagna or roasting a chicken.

“Failing to plan is planning to fail.”  (Alan Lakein, author on personal time management, including, “How to Get Control of Your Time and Your Life”)

A Savings Habit post.

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Prager U: How to Raise Kids who are Smart about Money

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In this Prager U video, narrator and personal finance expert, Rachel Cruze offers three principles for raising kids to be smart about money.  Very sound advice overall, although I would not dismiss the use of allowance as a money management teaching tool, as she does.  Cruze is correct that when children earn their own money, they will experience “accomplishment” with their purchases, rather than “entitlement” as when money is given to them to spend.  She views allowance as a form of giving money for “breathing” (i.e., for nothing).

When parents actively teach their children money management with the use of allowance, then it’s not for nothing.  Cruze suggests that children should “work” for their “pay” by doing age-appropriate chores around the house.

Allowance or payment for chores?  Which is the better money management teaching tool?  Parents will know the answer, because they know their children.

Charging Room & Board

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Parents who charge their grown-up children room and board are passing on a valuable life lesson as well as an important life skill.

The lesson is that things we want or need come at a price.  It is unrealistic to believe that we can find a place to live for free–especially a place where meals are provided.  Where better to learn this than in the nurturing safety of one’s family home.

And charging room and board teaches our adult children the mechanics of periodic savings.  It is not difficult to transfer the habit of putting aside a portion of income to the process of a monthly savings plan.  Some parents keep a separate account of the room and board receipts, with the intention of gifting back the accumulation on some special occasion such as wedding or first home purchase.  I like this gesture because it demonstrates quite concretely the benefits of savings, albeit forced savings.

Whether parents charge room and board to help meet household expenses, or to gift back at some future date, the benefits remain the same.  Their children learn about life and develop the skill of the savings process.

Teach Your Children to Save as if Their Lives Depended on it

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Our parents or grandparents who grew up during the Depression, learned to save as if their lives depended on it.  Reality is an effective teacher.  Yet the harsh lessons that scarcity taught have served this generation very well as many of today’s older seniors are self sufficient financially speaking.

But what if reality is deceiving us with its perception of plenty?  Statistics have shown that personal savings rates have been in a freefall since 1990, dipping to rates below zero by 2005.  Why?  Survey respondents report that saving is not a priority and readily admit to using debt for such spending as dining out, vacations and other impulse spending.  Car purchases typically top the spending list.  Such spenders are often in denial about their debt.

The problem for debt spenders is that any personal or economic event is devastating.  For examples, financial ruin can arise from interest rate increases, wage loss from disability or unemployment, and falling housing prices.

The best way to escape the debt trap is not to get into it in the first place.  Even in the midst of prosperity, teach your children to save 10 to 20 percent of what they earn.  Like the Depression-era generation, we should save as if our lives depend on it because, frankly, our lives do.

Saving is a Habit

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I believe that good financial habits are the foundation to happiness and success in life.  Furthermore, although they are best learned during childhood, it is never too late to acquire good financial habits .

Saving is a learned habit.  Allowance is a good tool to teach children how to manage money.  A rule of thumb is to give your child a weekly allowance equal to half his age.  So, for example, a ten-year-old would receive a weekly allowance of $5.00.  Stipulate that some portion must be saved or put aside for the future.