At the beginning of the month my budget to spend gets transferred into my savings account. That money has been taken out of my current account and is no longer available to spend.
Then I run a little list so that every time I am tempted to buy something I commit it to my list. In September the list looks something like this:
1. Magazine subscription
2. Mineral supplements
3. Green polo neck
4. Simplicity pattern
5. Seeds
6. Salad plants for winter
7. Book by Seth Godin
Despite decluttering there never seems to be an end to wanting things which is very much influenced by the media,and having been brought up in the post-war generation. Somehow adverts are expert at coming through to us and wanting us to purchase stuff and although my wish has been to become less of a consumer it constantly backfired.
At the end of the month I now sit down and analyse the list by asking the question : do I need it or is it nice to have?
What remains in the list is the salad plants for winter because that is time dependant as well as time critical. The remaining items are nice to have but not critical. Having decided to consciously spend money on the plants I transfer the money needed from my savings to my current account and gladly make my conscious purchase.
If you need a medical expense or your car tire bursts you will not be faced with not having enough money to replace it and gradually I began to realise that there is a lot of stuff I feel I need which in fact are items I want for one reason or another.
It is hard to not give in but sometimes I wonder what persuaded me to complete a purchase : it may be cheaper now and I may get the sense of getting a bargain yet there is a certain satisfaction in being able to spend when I really need to.
Food is excluded in as much that ingredients are a need but eating out may be a want.
Let me know how you get on.
Showing posts with label personal finance. Show all posts
Showing posts with label personal finance. Show all posts
Wednesday, September 09, 2015
The difference between needing and wanting
The strategy I use to spend less is as follows:
At the beginning of the month my budget to spend gets transferred into my savings account. That money has been taken out of my current account and is no longer available to spend.
Then I run a little list so that every time I am tempted to buy something I commit it to my list. In September the list looks something like this:
1. Magazine subscription
2. Mineral supplements
3. Green polo neck
4. Simplicity pattern
5. Seeds
6. Salad plants for winter
7. Book by Seth Godin
Despite decluttering there never seems to be an end to wanting things which is very much influenced by the media,and having been brought up in the post-war generation. Somehow adverts are expert at coming through to us and wanting us to purchase stuff and although my wish has been to become less of a consumer it constantly backfired.
At the end of the month I now sit down and analyse the list by asking the question : do I need it or is it nice to have?
What remains in the list is the salad plants for winter because that is time dependant as well as time critical. The remaining items are nice to have but not critical. Having decided to consciously spend money on the plants I transfer the money needed from my savings to my current account and gladly make my conscious purchase.
If you need a medical expense or your car tire bursts you will not be faced with not having enough money to replace it and gradually I began to realise that there is a lot of stuff I feel I need which in fact are items I want for one reason or another.
It is hard to not give in but sometimes I wonder what persuaded me to complete a purchase : it may be cheaper now and I may get the sense of getting a bargain yet there is a certain satisfaction in being able to spend when I really need to.
Food is excluded in as much that ingredients are a need but eating out may be a want.
Let me know how you get on.
At the beginning of the month my budget to spend gets transferred into my savings account. That money has been taken out of my current account and is no longer available to spend.
Then I run a little list so that every time I am tempted to buy something I commit it to my list. In September the list looks something like this:
1. Magazine subscription
2. Mineral supplements
3. Green polo neck
4. Simplicity pattern
5. Seeds
6. Salad plants for winter
7. Book by Seth Godin
Despite decluttering there never seems to be an end to wanting things which is very much influenced by the media,and having been brought up in the post-war generation. Somehow adverts are expert at coming through to us and wanting us to purchase stuff and although my wish has been to become less of a consumer it constantly backfired.
At the end of the month I now sit down and analyse the list by asking the question : do I need it or is it nice to have?
What remains in the list is the salad plants for winter because that is time dependant as well as time critical. The remaining items are nice to have but not critical. Having decided to consciously spend money on the plants I transfer the money needed from my savings to my current account and gladly make my conscious purchase.
If you need a medical expense or your car tire bursts you will not be faced with not having enough money to replace it and gradually I began to realise that there is a lot of stuff I feel I need which in fact are items I want for one reason or another.
It is hard to not give in but sometimes I wonder what persuaded me to complete a purchase : it may be cheaper now and I may get the sense of getting a bargain yet there is a certain satisfaction in being able to spend when I really need to.
Food is excluded in as much that ingredients are a need but eating out may be a want.
Let me know how you get on.
Friday, March 08, 2013
5 benefits to Living in a community
Living in a community demands that we reach out to people but in my experience that reaching out works both ways and provides an element of security.
When mentioning a life in a community it can be as intense as living as a member of the Amish Community in which the rules are set by each community such as no electricity, no cars, mobile phones etc to living in a particular place or joining an interest group online of like minded people.
In a time of economic downturn the equation between money and time shifts and my priorities in times of economic downturn shift too to spending more time investing in myself through reading, learning new skills and connecting with other people.
The 5 benefits of living in a community:
A sense of belonging
Many people feel isolated from the world by the fact they have no friends or relatives in their community. This can lead to loneliness and eventually depression. A community spirit can instil a sense of belonging in these individuals, they are no longer alone, and they lead healthier, happier lives.
Security
Living in a community protects the individual from the harshness of having to do everything.(The “every man for himself” mentality. ) It can help a person who falls on hard times if they are in a community to feel supported, rather than living a corporate lifestyle where a person is only as good as their latest contribution. Community living also means that most of the people know each other. A small town environment like that often means less crime and also less need for surveillance. Surveillance is a consequence of living amongst strangers.
The sharing of resources
Sharing resources can greatly reduce the cost of living. Many of the luxuries that people enjoy are not used 24/7, or even if they are used frequently, they can often be shared. The quality of items that can be afforded goes up while the cost goes down. You can live cheaper and better, and the only cost is being more social.
Resources can be shared through the LETS system and FREECYCLE groups.
The transition towns initiative are creating communities that prepare themselves for sustainability after peak oil.
Cooperation and Competition
It is natural for individuals to cooperate with each other. We are a tribal species. In fact, cooperation on an individual level is very beneficial, because generally each person is interested in and skilled at different tasks than their peers. As a result close knit groups of individuals whose skills and personalities complement each other can be particularly healthy, happy, and successful.
Employment and fulfillment
One of the greatest benefits of living in a community setting is that it gives us the freedom to care for our lives, our wealth, and often both at the same time. There is no reason for the community to resent individuals for participating in a way that does not directly benefit the bottom line. We can work together as business partners who share equally in the burden of maintaining the community economically. The needs of a community are numerous, and the avenues of occupations that could benefit a community are likewise numerous. Using local skills and expertise can benefit the individual member economically but also forges networks of professional relationships who have a sense of place and local solutions.There are many diverse ways in which an individual can contribute. By working within a community each individuals skills and abilities can be applied in a unique way, and no person need feel like a cog.
And community living is not just something for the countryside, there are areas in large cities that create hubs of community, where a local cafe becomes a meeting place, a place to relax and cultivate the relationships that bind us together as human beings.
When mentioning a life in a community it can be as intense as living as a member of the Amish Community in which the rules are set by each community such as no electricity, no cars, mobile phones etc to living in a particular place or joining an interest group online of like minded people.
In a time of economic downturn the equation between money and time shifts and my priorities in times of economic downturn shift too to spending more time investing in myself through reading, learning new skills and connecting with other people.
The 5 benefits of living in a community:
A sense of belonging
Many people feel isolated from the world by the fact they have no friends or relatives in their community. This can lead to loneliness and eventually depression. A community spirit can instil a sense of belonging in these individuals, they are no longer alone, and they lead healthier, happier lives.
Security
Living in a community protects the individual from the harshness of having to do everything.(The “every man for himself” mentality. ) It can help a person who falls on hard times if they are in a community to feel supported, rather than living a corporate lifestyle where a person is only as good as their latest contribution. Community living also means that most of the people know each other. A small town environment like that often means less crime and also less need for surveillance. Surveillance is a consequence of living amongst strangers.
The sharing of resources
Sharing resources can greatly reduce the cost of living. Many of the luxuries that people enjoy are not used 24/7, or even if they are used frequently, they can often be shared. The quality of items that can be afforded goes up while the cost goes down. You can live cheaper and better, and the only cost is being more social.
Resources can be shared through the LETS system and FREECYCLE groups.
The transition towns initiative are creating communities that prepare themselves for sustainability after peak oil.
Cooperation and Competition
It is natural for individuals to cooperate with each other. We are a tribal species. In fact, cooperation on an individual level is very beneficial, because generally each person is interested in and skilled at different tasks than their peers. As a result close knit groups of individuals whose skills and personalities complement each other can be particularly healthy, happy, and successful.
Employment and fulfillment
One of the greatest benefits of living in a community setting is that it gives us the freedom to care for our lives, our wealth, and often both at the same time. There is no reason for the community to resent individuals for participating in a way that does not directly benefit the bottom line. We can work together as business partners who share equally in the burden of maintaining the community economically. The needs of a community are numerous, and the avenues of occupations that could benefit a community are likewise numerous. Using local skills and expertise can benefit the individual member economically but also forges networks of professional relationships who have a sense of place and local solutions.There are many diverse ways in which an individual can contribute. By working within a community each individuals skills and abilities can be applied in a unique way, and no person need feel like a cog.
And community living is not just something for the countryside, there are areas in large cities that create hubs of community, where a local cafe becomes a meeting place, a place to relax and cultivate the relationships that bind us together as human beings.
Friday, February 22, 2013
How to reduce paper clutter
The last few weeks I have been looking at the amount of resources used made of paper and how these could best be dealt with. Despite best efforts to stop junk mail and catalogues it became apparent that it still streams in the house.
- Mail gets opened near the paper recycling box and generally there is very little actual communication that needs a response.
- Inbox- I have set up rules for incoming emails so the important ones get directed to their named inbox and junk box. It means being less overwhelmed by the amount of messages in the IN box. Turned off the 'ping' when an email comes in so I am not tempted to an immediate response.
- Unsubscribe from emails you are not interested in.
- Do not create accounts when purchasing items online and do not give out your email address when asked in shops or create an alias email for that purpose which redirects immediately to junk email.
GOING PAPERLESS ON BILLS
- Bank statements and utility bills can now be received digitally as opposed to a paper copy.
- Try to find out which companies offer paperless billing and choose that option. It will reduce the mail being opened and also saves the company money.
- Set up a reminder monthly to check the digital bills and keep a copy on your computer. Mine are divided into business and private bills and accessible anytime.
LETTERS,RECEIPTS,OFFICIAL PAPERWORK
- Letters from Government agencies, receipts and official letters are quite often kept in a folder and in any case should be accessible for 7 years.
- To save them on a computer you will need a scanner. I save information in 3 places : computer, backup locally and a folder facility in the cloud.
- I am a fan of Evernote as my back up because since having a stroke I have difficulty finding things and the notes saved on Evernote allow them to be searched by any word, as well as being available on mobile phones so in essence you carry the ability to carry vital information with you wherever you are.
- Simple Life Together has a podcast episode six,dedicated to going paperless and Brooks Duncan has a whole website dedicated to going paperless.
- Vanessa Hayes has a big range of videos to help organize anything in your home but in particular an action file.
BOOKS AND MAGAZINES
- Books are available digitally as a direct download to an e reader or often as e-books which reduces the amount of book shelving space you need in your home.
- I like that idea a lot but often there are books I will refer to often and those I still like to have in a hard copy on the shelf.
- As far as magazines go, I am gradually changing any subscriptions to digital ones. Zinio have a great range of magazines and if you have an Ipad you carry with you a great amount of reading material.
- Cookery books and Craft Magazines are being revisited and the articles and recipes that are of interest are scanned in, using Evernote I can search for the recipe anytime. Many cookery books tell a story and are good companions for cooking seasonally.
Tuesday, February 05, 2013
Instant gratification- I want it all
The New Year brought such an impetus of things I wanted to do to simplify my life even further so I thought I would write out those resolutions and got a bit overwhelmed with all the changes I intended to make.
January was used to look at those and I chose the sustainable wardrobe as my major project and then there was the garden, locally sourced produce in season, work goals, health, relationship, financial, energy efficient goals etc. Knowing full well the energy to achieve all of those would exhaust me and make life less simple to begin with. Some of these goals warranted investigating.
Lets say your goal is to go and ski. Skiing happens at a certain moment when snow is available, so is time limited. This means travel and staying somewhere other than home. Requires a passport , special gear, toiletries and is going to make a dent in your budget. Now if its is in alignment with your authentic self( a need) you will go and find a way and have the satisfaction you have achieved something important with meaning. If however you go because you need a break from the rat race or the impulse came from a glossy brochure or advert, you may feel very discontented at the outcome.
Despite wanting to live a simpler life a downshifting path to simplicity the inflow of information we get every day to flex those consumer muscles is so great that our brains get more hits for consumerism than to simplify life.
In my goal setting I found that although I thought I had mastered the skill of differentiating between what is an important task and what is a want in my buying habits, this had not followed through in my personal life. And the most important habit to break is that of instant gratification so deeply engrained sometimes we are not aware of it.
To reduce the impact of consumer messages we have a system to deal with the post, reducing the amount of junk mail, recycling the paper as the post comes in and ending up with the important mail that requires a response.Those pieces of paper then get devided into home or business and get dealt with when I give the home or business folder allocated time and attention. It can wait.
If only it were as simple as the post. We are regularly receiving
Every time you buy something in the high street or online, it triggers a marketing campaign sending you emails whenever your profile shows up as a potential customer. You get asked for your postcode and what number you live in and there you are added to a mailing list. Every time you buy something the messages enticing you to buy increase. Companies are fighting for your buying power especially in a challenged consumer environment as where most people are tightening their belts after the spending spree for Christmas or for fear of losing their job. I know its a controversial issue because at the heart of it, we are asked to consume to create and keep jobs.
To counteract that we simply physically stop shopping but then turn online for our shopping needs. The consequences of shopping online brings you boxes and materials to recycle as well as the item you ordered plus a daily amount of emails which thankfully are easier to unsubscribe from and delete virtually. Many a purchase asks you to set up an account which when you do means another password to remember and more email messages for account holders.( including special offers just for you)
A few years ago my son was waxing lyrical about the benefits of a certain washing powder, how it would fulfill my need etc. We are open to receiving these buying impulses and clever though they are they diminish our personal power to make decisions about what we need and want. Add to that the trigger of instant gratification, and we impulse buy because we want it, and we want it now.
This was brought home to me while testing a new organizational app called The Habit Factor which as it happens accompanies a book , available tomorrow in hardback or instantly to a kindle and enabled me to list all my goals and then told me I could only concentrate on 3 of those goals. Three? The question I pondered this weekend was whose decision I follow when I want to achieve a goal, my own need or did the thought for that need originate as a marketing ploy?
Therein lies the differential and unhappiness between the goals our authentic self chooses and the ones we often pursue implanted by a clever marketing campaign.
Another app that brought me some insight was Astrid which enabled me to transfer those goals into steps I needed to take to achieve the goal and then allocated time in my schedule to do the tasks necessary. Three goals are sufficient to fill a whole diary and both these tools have been instrumental in helping me choose my three most important goal allocated to the three most important roles. By the time I consider my health, family and work I have my three major areas of goal-setting.
I am not proud of the fact that I still want it and want it now as an impulse, knowing that consciously means I can set myself the task to wait, 24 hours, one week etc. A wishlist is a great tool as it gives me the instant gratification of acknowledging I want it now, but tomorrow I can delete the item knowing I really don't need it,
What drives your life?
January was used to look at those and I chose the sustainable wardrobe as my major project and then there was the garden, locally sourced produce in season, work goals, health, relationship, financial, energy efficient goals etc. Knowing full well the energy to achieve all of those would exhaust me and make life less simple to begin with. Some of these goals warranted investigating.
- Why did I choose this goal
- Is it aligned with what I believe is important
- Am I willing to commit time to it and if so how much
- What are the consequences of this decision.
- Is it in line with my major life goals or a distraction?
Lets say your goal is to go and ski. Skiing happens at a certain moment when snow is available, so is time limited. This means travel and staying somewhere other than home. Requires a passport , special gear, toiletries and is going to make a dent in your budget. Now if its is in alignment with your authentic self( a need) you will go and find a way and have the satisfaction you have achieved something important with meaning. If however you go because you need a break from the rat race or the impulse came from a glossy brochure or advert, you may feel very discontented at the outcome.
Despite wanting to live a simpler life a downshifting path to simplicity the inflow of information we get every day to flex those consumer muscles is so great that our brains get more hits for consumerism than to simplify life.
In my goal setting I found that although I thought I had mastered the skill of differentiating between what is an important task and what is a want in my buying habits, this had not followed through in my personal life. And the most important habit to break is that of instant gratification so deeply engrained sometimes we are not aware of it.
To reduce the impact of consumer messages we have a system to deal with the post, reducing the amount of junk mail, recycling the paper as the post comes in and ending up with the important mail that requires a response.Those pieces of paper then get devided into home or business and get dealt with when I give the home or business folder allocated time and attention. It can wait.
If only it were as simple as the post. We are regularly receiving
- post
- email messages
- twitter messages
- facebook messages
- adverts
Every time you buy something in the high street or online, it triggers a marketing campaign sending you emails whenever your profile shows up as a potential customer. You get asked for your postcode and what number you live in and there you are added to a mailing list. Every time you buy something the messages enticing you to buy increase. Companies are fighting for your buying power especially in a challenged consumer environment as where most people are tightening their belts after the spending spree for Christmas or for fear of losing their job. I know its a controversial issue because at the heart of it, we are asked to consume to create and keep jobs.
To counteract that we simply physically stop shopping but then turn online for our shopping needs. The consequences of shopping online brings you boxes and materials to recycle as well as the item you ordered plus a daily amount of emails which thankfully are easier to unsubscribe from and delete virtually. Many a purchase asks you to set up an account which when you do means another password to remember and more email messages for account holders.( including special offers just for you)
A few years ago my son was waxing lyrical about the benefits of a certain washing powder, how it would fulfill my need etc. We are open to receiving these buying impulses and clever though they are they diminish our personal power to make decisions about what we need and want. Add to that the trigger of instant gratification, and we impulse buy because we want it, and we want it now.
This was brought home to me while testing a new organizational app called The Habit Factor which as it happens accompanies a book , available tomorrow in hardback or instantly to a kindle and enabled me to list all my goals and then told me I could only concentrate on 3 of those goals. Three? The question I pondered this weekend was whose decision I follow when I want to achieve a goal, my own need or did the thought for that need originate as a marketing ploy?
Therein lies the differential and unhappiness between the goals our authentic self chooses and the ones we often pursue implanted by a clever marketing campaign.
Another app that brought me some insight was Astrid which enabled me to transfer those goals into steps I needed to take to achieve the goal and then allocated time in my schedule to do the tasks necessary. Three goals are sufficient to fill a whole diary and both these tools have been instrumental in helping me choose my three most important goal allocated to the three most important roles. By the time I consider my health, family and work I have my three major areas of goal-setting.
I am not proud of the fact that I still want it and want it now as an impulse, knowing that consciously means I can set myself the task to wait, 24 hours, one week etc. A wishlist is a great tool as it gives me the instant gratification of acknowledging I want it now, but tomorrow I can delete the item knowing I really don't need it,
What drives your life?
Saturday, January 30, 2010
Teaching children financial responsibility
This article is in response to Jenny's email about how to introduce personal finance principles to children
From birth children are dependent on their parents. Gradually from fulfilling all their needs we teach them to take care of themselves, to eat sensibly, to exercise, we provide them with an education yet seldom do we teach them how to be financially responsible.
When I was a child I was often told to clean my room and yet it took me a while to realise that although given the instruction, I was not told how to clean it and what tools to use. Subsequently I would be proud of my efforts in a 'clean room' to be told that actually it did not conform to my parents idea of ' clean room'. Thus I learnt that people's expectations are different and levels of comfort are different. So how can we expect our children to be financially responsible in the future if we do not give them the tools and provide opportunities to learn the necessary skills within a safe environment.
Money is a tool, it is a major component in our society, it is complicated to comprehend only because it has been made invisible.
As a family we gradually prepare our children from childhood to look at what money does, how you get some, how you spend it, save it and work with it and how you get by without any.
Most children in today's society have a lesson on coins at school as part of the mathematics curriculum but do not have any practice in using real money to purchase items with. Most families would shop at supermarkets, take what they want from shelves, put a card in the reader and voila, shopping done. This reinforces children's knowledge that yes everything you want is provided for by parents and food and other items can be obtained by putting a card in the reader. Easy as pie.If that is their only exposure to finance and money then it would follow that when they leave home at 18 their expectation will be that a) parents will provide everything you want and b) that a card in the reader does pay for everything. Add to that credit cards, student loans and the relationship with money is easily lost.
There are pitfalls as parents in letting go of some of the control by giving your child money to spend but if handled in a progressive way, children do learn from their mistakes and learn to find solutions that work for them. It can be an empowering learning path for everyone involved.
Our basic progression is as follows :( not really age related but progress when stage satisfactory negotiated)
age 5 to 10 - give your child opportunities to buy items with real money and opportunities to earn pocket money, save for special items and donate small amounts to charity. In the shop we encourage our young shoppers by helping them make a connection between the coins in their hand and the items they can purchase. Its mostly sweets and treats at this age but it is an important step.
age 7 to 10 - we set up a savings account in the child's name with a book in which each transaction is recorded. This provides ownership of money as a tool and the opportunity to save, withdraw and spend money as they wish. Money is still used for items they mainly want at this age and can give an insight into your child's priorities.
age 11- the savings book is changed to a card account and the child has some autonomy over the transactions. A small amount is paid into this account to finance personal spending. At the same time, we withdraw money from our account by card as a budget when planning purchases such as clothes and give the child opportunities to choose and buy within the money they have to hand. If they find a cheaper item they get to keep the rest. This encourages them to shop for best value and rewards careful consuming.( best value does not always mean lowest price) Our children soon figured that if you did a bit of research your basics could be provided for and then you had extra for all those treats you wanted.
age 12 - We make a list of all clothing requirements to ensure that the child starts off with all its needs catered for. After this shopping experience we discuss an allowance which is to provide funds for clothes, shoes, entertainment, gifts, hair cuts i.e all the items shopped with previously in cash as part of their budget. We ask the children based on their experience what they need and if we believe it is not sufficient we give them more, if too much is asked for we ask them to justify their budget. This helps them negotiate. In our experience they underestimate what they need and quote a ridiculous low figure. We agree the boundaries of the allowance( i.e. we pay for educational expenses), interest rates for loans and opportunities to ' earn' money and agree that we will pay a certain amount into their account monthly and they agree that they will manage their money as they see fit and come and speak when they experience difficulties. Loan rates are offered so they know they can borrow money too. We as 'parent bank', are quite flexible and agree not to criticise their buying decisions, merely be available to help them find solutions should they have difficulty. This crucial period provides them with complete control over their finances without in fact lacking in anything.
As a parent this is the most interesting time. It is hard to see your child spending money on what they perceive as their necessities and the firm boundary needs to remain in place.( often I deliberately stay silent on my opinions but listen as they tell me about their exciting purchase) So if for instance there is no money to go on that cinema trip with your friend because you have spent it all on comics, well then maybe that acts as a lesson to leave some money aside for going to the cinema. It is hard on parents. Its hard on children but a useful step towards independence.
As the years go by, the children establish their areas of budget and some for instance spend more on image and others more on gadgets it depends entirely on what their expectations and interests are as well as the effects of advertising and peer pressure. When the money does not stretch they have to find ways to for instance, delay,borrow, buy secondhand, do without, barter or find opportunities to earn more just like adults. It provides useful discussions as to why the amounts suddenly do not meet their needs. They create their own ideas, purchase their own stuff and are asked to deal with their own stuff and its consequences. ( i.e. new game station = more expensive games)
At age 16, we do not clean nor tidy rooms, we do not wash clothes and watch the children as they gradually gain confidence ( and do not buy red tshirts that they wash with white ones). We discuss the allowance each year and check that it meets their needs ( not always their wants) and so on. We discuss safety of internet banking and personal safety. Be prepared to deal with anxious children who lose their card and enable them to make the call and answer all security questions.Stand by if help is needed. By paying money into their account you should have at least the account number available as odds are they have no idea. Once a hurdle has been overcome they learn how to deal with mistakes and difficulties. Teenagers rarely have any money in their account to worry about....
At age 17 and 18 we listen to their plans for the future and offer ideas on costs involved. We introduce the idea of real living expenses, transport, taxation. etc. ( we levy a tax on their earnings of 10% which is to be paid into the family account and discuss taxi fees). Expect as a parent to be challenged on this issue and show evidence of electricity use, phone bills, transport costs etc.
As an adult we will ask our young adult to contribute a proportionate cost of earnings to living at home at a fair percentage of overall costs.
This would be an ideal progression and there are likely to be unique challenges with your unique child. We try to keep calm, encourage them to come and see us if they have a difficulty and offer possible solutions : the actions that they need to take to solve the problem need to be taken by them and is their decision. So delaying telling the bank that you have lost your card for 3 months means you cannot access any money.
As they reach adulthood and earn money, the allowance is reduced as they gradually earn their own money. Should you be faced with a child that refuses to work, an allowance can easily be reduced until it is stopped. Nothing focusses the mind of a young adult without money.
One of our children has reached adulthood and found it a worthwhile experience( we think), maybe a unique way to be taught about money but is and has been for many years financially independent. ( leave a comment if you want, well done, you graduated!)
So far we have an 11 year old who has his first bank card and it has proven to be a real temptation to use it, a 14 year old who finds that the way he spends in fact does not actually make him happy and he is without certain items and a 16 year old who compromises on clothing to upgrade his gadgets. Each has their own way of managing their money, some better than others but they work together to find solutions. So far only 1 child has asked to borrow from the parent bank and did not take out the loan as apparently the interest rate was too high and saving for 3 months would cost less. ( at that point you smile inwardly!)
Simply because we as parents chose a frugal life following the principles of voluntary simplicity does not in fact guarantee that our children will follow the same path. It does however provide opportunities for discussion, mutual respect and personal development all around.
The above plan encapsulates the three basics of life,food ( as well as treats), warmth ( clothing) and shelter( living costs).
It is a journey with pitfalls, mistakes, joys and scary rides for parents but we know that they have the opportunity to make mistakes with the ' parent bank' and that when it comes to negotiating their money as a tool, they should in principle be money wise.
As parents you gain boundaries on your children's budget, you learn from them and will be able to see some who spend, some who save ,some who live above their means, and some who are minimalist, in fact a cross representation of every adult.
From birth children are dependent on their parents. Gradually from fulfilling all their needs we teach them to take care of themselves, to eat sensibly, to exercise, we provide them with an education yet seldom do we teach them how to be financially responsible.
When I was a child I was often told to clean my room and yet it took me a while to realise that although given the instruction, I was not told how to clean it and what tools to use. Subsequently I would be proud of my efforts in a 'clean room' to be told that actually it did not conform to my parents idea of ' clean room'. Thus I learnt that people's expectations are different and levels of comfort are different. So how can we expect our children to be financially responsible in the future if we do not give them the tools and provide opportunities to learn the necessary skills within a safe environment.
Money is a tool, it is a major component in our society, it is complicated to comprehend only because it has been made invisible.
As a family we gradually prepare our children from childhood to look at what money does, how you get some, how you spend it, save it and work with it and how you get by without any.
Most children in today's society have a lesson on coins at school as part of the mathematics curriculum but do not have any practice in using real money to purchase items with. Most families would shop at supermarkets, take what they want from shelves, put a card in the reader and voila, shopping done. This reinforces children's knowledge that yes everything you want is provided for by parents and food and other items can be obtained by putting a card in the reader. Easy as pie.If that is their only exposure to finance and money then it would follow that when they leave home at 18 their expectation will be that a) parents will provide everything you want and b) that a card in the reader does pay for everything. Add to that credit cards, student loans and the relationship with money is easily lost.
There are pitfalls as parents in letting go of some of the control by giving your child money to spend but if handled in a progressive way, children do learn from their mistakes and learn to find solutions that work for them. It can be an empowering learning path for everyone involved.
Our basic progression is as follows :( not really age related but progress when stage satisfactory negotiated)
age 5 to 10 - give your child opportunities to buy items with real money and opportunities to earn pocket money, save for special items and donate small amounts to charity. In the shop we encourage our young shoppers by helping them make a connection between the coins in their hand and the items they can purchase. Its mostly sweets and treats at this age but it is an important step.
age 7 to 10 - we set up a savings account in the child's name with a book in which each transaction is recorded. This provides ownership of money as a tool and the opportunity to save, withdraw and spend money as they wish. Money is still used for items they mainly want at this age and can give an insight into your child's priorities.
age 11- the savings book is changed to a card account and the child has some autonomy over the transactions. A small amount is paid into this account to finance personal spending. At the same time, we withdraw money from our account by card as a budget when planning purchases such as clothes and give the child opportunities to choose and buy within the money they have to hand. If they find a cheaper item they get to keep the rest. This encourages them to shop for best value and rewards careful consuming.( best value does not always mean lowest price) Our children soon figured that if you did a bit of research your basics could be provided for and then you had extra for all those treats you wanted.
age 12 - We make a list of all clothing requirements to ensure that the child starts off with all its needs catered for. After this shopping experience we discuss an allowance which is to provide funds for clothes, shoes, entertainment, gifts, hair cuts i.e all the items shopped with previously in cash as part of their budget. We ask the children based on their experience what they need and if we believe it is not sufficient we give them more, if too much is asked for we ask them to justify their budget. This helps them negotiate. In our experience they underestimate what they need and quote a ridiculous low figure. We agree the boundaries of the allowance( i.e. we pay for educational expenses), interest rates for loans and opportunities to ' earn' money and agree that we will pay a certain amount into their account monthly and they agree that they will manage their money as they see fit and come and speak when they experience difficulties. Loan rates are offered so they know they can borrow money too. We as 'parent bank', are quite flexible and agree not to criticise their buying decisions, merely be available to help them find solutions should they have difficulty. This crucial period provides them with complete control over their finances without in fact lacking in anything.
As a parent this is the most interesting time. It is hard to see your child spending money on what they perceive as their necessities and the firm boundary needs to remain in place.( often I deliberately stay silent on my opinions but listen as they tell me about their exciting purchase) So if for instance there is no money to go on that cinema trip with your friend because you have spent it all on comics, well then maybe that acts as a lesson to leave some money aside for going to the cinema. It is hard on parents. Its hard on children but a useful step towards independence.
As the years go by, the children establish their areas of budget and some for instance spend more on image and others more on gadgets it depends entirely on what their expectations and interests are as well as the effects of advertising and peer pressure. When the money does not stretch they have to find ways to for instance, delay,borrow, buy secondhand, do without, barter or find opportunities to earn more just like adults. It provides useful discussions as to why the amounts suddenly do not meet their needs. They create their own ideas, purchase their own stuff and are asked to deal with their own stuff and its consequences. ( i.e. new game station = more expensive games)
At age 16, we do not clean nor tidy rooms, we do not wash clothes and watch the children as they gradually gain confidence ( and do not buy red tshirts that they wash with white ones). We discuss the allowance each year and check that it meets their needs ( not always their wants) and so on. We discuss safety of internet banking and personal safety. Be prepared to deal with anxious children who lose their card and enable them to make the call and answer all security questions.Stand by if help is needed. By paying money into their account you should have at least the account number available as odds are they have no idea. Once a hurdle has been overcome they learn how to deal with mistakes and difficulties. Teenagers rarely have any money in their account to worry about....
At age 17 and 18 we listen to their plans for the future and offer ideas on costs involved. We introduce the idea of real living expenses, transport, taxation. etc. ( we levy a tax on their earnings of 10% which is to be paid into the family account and discuss taxi fees). Expect as a parent to be challenged on this issue and show evidence of electricity use, phone bills, transport costs etc.
As an adult we will ask our young adult to contribute a proportionate cost of earnings to living at home at a fair percentage of overall costs.
This would be an ideal progression and there are likely to be unique challenges with your unique child. We try to keep calm, encourage them to come and see us if they have a difficulty and offer possible solutions : the actions that they need to take to solve the problem need to be taken by them and is their decision. So delaying telling the bank that you have lost your card for 3 months means you cannot access any money.
As they reach adulthood and earn money, the allowance is reduced as they gradually earn their own money. Should you be faced with a child that refuses to work, an allowance can easily be reduced until it is stopped. Nothing focusses the mind of a young adult without money.
One of our children has reached adulthood and found it a worthwhile experience( we think), maybe a unique way to be taught about money but is and has been for many years financially independent. ( leave a comment if you want, well done, you graduated!)
So far we have an 11 year old who has his first bank card and it has proven to be a real temptation to use it, a 14 year old who finds that the way he spends in fact does not actually make him happy and he is without certain items and a 16 year old who compromises on clothing to upgrade his gadgets. Each has their own way of managing their money, some better than others but they work together to find solutions. So far only 1 child has asked to borrow from the parent bank and did not take out the loan as apparently the interest rate was too high and saving for 3 months would cost less. ( at that point you smile inwardly!)
Simply because we as parents chose a frugal life following the principles of voluntary simplicity does not in fact guarantee that our children will follow the same path. It does however provide opportunities for discussion, mutual respect and personal development all around.
The above plan encapsulates the three basics of life,food ( as well as treats), warmth ( clothing) and shelter( living costs).
It is a journey with pitfalls, mistakes, joys and scary rides for parents but we know that they have the opportunity to make mistakes with the ' parent bank' and that when it comes to negotiating their money as a tool, they should in principle be money wise.
As parents you gain boundaries on your children's budget, you learn from them and will be able to see some who spend, some who save ,some who live above their means, and some who are minimalist, in fact a cross representation of every adult.
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