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5 Tips for Money-Smart Back to School Shopping

By Bob Masterson

Did you realize the average parent spends $603.63 to get each of their children ready for the upcoming school year? That’s for clothing, supplies and electronics. According to the National Retail Foundation, this is down slightly from last year as more and more families are sticking to tighter budgets. Budgeting is becoming even more crucial as schools are looking to parents to pick up more of the burden for extracurricular activities at school such as sports and band – things that used to be free. But no worries! Here are 5 really simple ways your kids can help you cut down on back to school costs.

First and foremost, check existing inventory. A good pre-fall clean up can help here. As you clean up and sort out rooms, gather up all pencils, pens, notebooks and other miscellaneous supplies and sort and inventory these items. Make a list of the items needed. This goes for clothing as well. Sort out and try on to see what fits and what doesn’t. For those good condition items that don’t fit, hand them down. If there are no younger siblings, offer them to friends that might be able to use them. This is a good opportunity to get hand me down items from friends and family. Hand me downs may not be as cool to your own kids as new duds, but can sure save a fortune, and nobody outside the family will be the wiser.
Create a budget. Now that you know what you need, create an overall budget that you want to stick within and then break that budget down for each child. Break items into categories, (i.e. clothing, books, misc. supplies) and assign an amount to each. This helps the kids see the big picture and how their budget fits in. Now here begins the fun part. Challenge each child to meet or beat the budget. If they are under budget they get to keep the difference and if they go over, it comes out of their pockets.
Buy in bulk. Pool your list with friends and family and then shop at bulk stores. Split the costs and save the difference. This can save a lot of money. This works on many other items besides school supplies.
Buy refurbished. With more schools expecting kids to have laptops in class, refurbished is the way to go to save on expensive electronic items. All computer manufacturers sell refurbished computers and laptops through their outlet centers and you can easily save 25 to 50% or more off the price of a new computer. That’s cash in the bank! You can also find many refurbished electronics at Amazon.com and through eBay.
Be thrifty. Thrift stores like Salvation Army or garage sales are great places to pick up slightly used clothing, back packs, desks, chairs, lamps along with many other needed back to school items. You’re looking at 70% or more in savings over buying these items new and giving back to the community at the same time.

The key to making this a learning experience for the kids is getting them involved in the whole process and giving them spending responsibilities appropriate to their age. The best way to learn is by doing and making small mistakes now can help prevent larger mistakes later down the road.

The Envelope System Made Easy

By Jeff Eusebio

The Envelope System is a popular method of budgeting, and for good reason. The process is dead-simple. Create one envelope for each major category of spending, fill each envelop up with the budgeted amount of cash at the beginning of the month, and when the money is gone, it’s gone. No more spending is allowed in that category until the next month.

One variation on the “fill-er-up” part of the process is to allocate a portion of your paycheck to each envelope each time you are paid. Keep one envelope for long term savings and allocate perhaps 10% of your paycheck to it, and you’ll quickly fill up that rainy day fund for inevitable unforeseen emergencies.

This method works to eliminate debt and improve savings because you make your spending decisions ahead of time and you spend less than you make. By setting aside money before you spend, you are better able to plan, and look to the future. It’s simple, but the key to make it happen is discipline and habit.

With FamilyMint’s Savings Plan feature, your kids can start forming this simple habit from day one. In a nutshell, each goal account acts as an envelope, and each deposit made through the Savings Plan will automatically flow into the pre-selected goals. Then, each time your child spends money, he or she deducts it from the appropriate goal account. When it’s gone, it’s gone!

Savings Plan is just like the old envelope system, but it’s automatic and it’s visual. Savings Plan turns FamilyMint into spending management system for kids.

What’s your experience? Have you tried the envelope system? What do you think of the Savings Plan?

The Personal Story of a FamilyMint Family

I met Dave & Jill Spieldenner last summer and we quickly found we shared a passion for kids and financial literacy. The Spieldenner’s have been coaches for organizations such as Crowne Financial and Veritas Financial. I found their personal story fascinating and the journey they’ve been on one to learn from. They’ve graciously agreed to share some of their story, perspective, and advice in the FamilyMint Blog and this is their first entry. – Jeff

Introduction to the Spieldenner Family

When Jeff Eusebio invited me to write on the FamilyMint blog, I immediately started to struggle with deciding which awesome tid-bit of wisdom I would share with my very first blog entry. What came after that was several months of writer’s block. The pressure was so great, and I had several starts with brilliant ideas that transformed into mediocrity that could not possibly represent my first blog entry. Today, I decided to do a simple introduction in order to break the ice.

My wife and I have been married for 13 years this August. Through most of our married life we have lived in Northwest Ohio, not too far from where we grew up and went to high school together. Our oldest son was born the October after our first wedding anniversary, and has been a rock of stability and justice within our family. He was followed by our second oldest a couple years later, who has always provided plenty of comic relief. Six years later, we adopted our little angel from China, and she has blessed our family with sweet giggles, tutus, nail polish and lots of pink. Finally our youngest son was born 2 months after we returned home from China, which made him and his sister always feel a lot like twins.

Having a family of 6 in today’s society means that being disciplined in managing family finances must be a priority. This realization, and ultimately a commitment to do something about it is what brought my family to FamilyMint. If you are reading this blog….your probably have a very similar story.

The event in our lives that is somewhat unique, and most significant in our journey of financial prudence was the adoption of our daughter. When we decided that the calling of adoption was in our future, we had a budget that was balanced (meaning we did not have any extra left over after paying our bills), a mountain of debt (in the form of school loans, car loans and a mortgage) and virtually no savings. We knew that the total cost of doing the adoption would be somewhere around twenty thousand dollars, so we had to make some changes and develop some discipline if we were going to be able to afford the adoption.

We started off by getting very serious about budgeting. We knew that we were going to have to start setting aside a few hundred dollars a month, and we had to have an accurate picture of our spending habits to identify a way to set aside this money. I consider myself fortunate to have the type of wife who is very good about logging our transactions on the computer, and she ultimately is the key to our budgeting success. We then became very frugal and eliminated any fixed expense that was not absolutely necessary, such as our newspaper subscription, cable, internet, eating out, etc…, which freed up enough cash for us to set aside $200 a month towards adoption.

We used a budgeting method known as envelopes. This means that we did not simply use a budget to track where our expenses were going, and compare that to the amount we planned to spend for the month. We distributed the money from my paycheck into virtual envelopes (very similar to the process FamilyMint uses to distribute allowance into goals), and when an envelope was empty, we would stop spending against that category until the next paycheck deposited more money into the envelope. If an envelope would go red (negative), we would have to take money from another envelope that was green (positive) to get the envelope back to zero. In one year, we went from living paycheck to paycheck, to actually having $800 in our checking account when we were cashing a paycheck. All along we continued to set aside $200 a month towards our adoption.

We also began focusing on reducing our unproductive debt, since we looked at those monthly payments as an opportunity to increase the amount of money we could set aside for the adoption. The first debt we were able to eliminate is our school loans. This meant that we could set aside an extra $150 per month towards our adoption. Then we paid off our minivan, and committed ourselves to driving it as long as we could, which allowed us to set aside another $300 per month. Before we knew it, we were setting aside $650 each month towards the adoption.

Though it did not feel fortunate at the time, the adoption that was supposed to take 9 months to complete ended up taking about 4 years. As our wait seemed to drag on, this was a “blessing in disguise”, as that delay in the process gave us more time to save. When the email finally arrived with the picture of our little Golden Flower (our daughter’s name in China), we had about $10,000 saved up, which was the amount we needed to finalize the process (we had already paid about $10,000 in fees over the 4 waiting years). Being able to finalize our adoption without incurring debt (and paying off all our other debt in the process) is more than we could have ever expected.

Looking back on that experience, I am so grateful that we were able to afford the adoption of our little girl, because she fits into our family so well! I am also very appreciative that this financial challenge has caused us to develop good spending and savings habits that will pay dividends to our family for many years to come.

Buying Your Teen’s First Car

By Rebekah Johnson

Everyone remembers their first car. Loving the freedom of the open road, getting your driver’s license, feeling in control, being behind the wheel by yourself for the first time. It’s an exciting feeling for the teen in your life, but how much should you spend on a car for your inexperienced driver? Here are some reasons to think twice before going out and buying your 16-year-old a new car:

1. New cars depreciate quickly. Buying a used car could be a better option. According to Dave Ramsey, most vehicles lose about 60% of their value in the first four years. Buying a used car is easier on your budget and will help save for more important things (i.e. college) for the future. Also, the type of car you purchase will have a direct impact on the cost of insurance. That cool red Trans-Am may not net the best rates from the insurance company. Consider that blue Civic. May not be the hippest car around, but will save a bundle in insurance and serves the purpose of getting from point A to point B.

2. Teach responsibility and work ethic by having the teen pay for or help pay for the car, the insurance, or the gas. Or a combination of all three. Because the cost of insuring teens is so high, it is a big motivator for your teens to understand the costs along with ways to help reduce the cost. Maintaining a high GPA is an example of a way to reduce their insurance costs. When your teen has personally invested in their own vehicle, they will be more likely to take better care of it. This also teaches teens about the importance of budgeting for high-ticket items like an automobile.

3. Teens are at a much higher rate for car crashes. In 2008, about 3,500 teens in the United States aged 15–19 were killed and more than 350,000 were treated in emergency departments for injuries suffered in motor-vehicle crashes. Young people ages 15-24 represent only 14% of the U.S. population, but they account for 30% ($19 billion) of the total costs of motor vehicle injuries among males and 28% ($7 billion) of the total costs of motor vehicle injuries among females (Centers for Disease Control and Prevention). Even minor accidents can cause insurance rates to skyrocket, so make sure your teen practices safe driving.

Whichever car you purchase, make sure it’s a safe one. A properly inspected used car can still be very safe, just make sure that the airbags and seatbelts still work. Have a used car inspected by a reputable dealer or mechanic to make sure it is in proper working order.

Once you’ve found “the” car, look for discounts on car insurance and teach your teen ways to save fuel costs. And above all, remind your teens to keep their eyes on the road and safe travels!

A Scary Thought – And How I Fixed It

By Jeff Eusebio

The biggest money lesson I am passing along to my kids is how I act on a daily basis.

This thought used to strike a bit of terror in me, especially when I saw how some of my kids’ money habits were turning out. They were watching and listening and forming their own habits unconsciously by what they were seeing me do every day. If I would impulsively purchase something because a deal was “too amazing to pass up” (and I love a good deal!), I would start to see that infectious and impulsive behavior come out in some of them. They look where I look, they act how I act, they save how I save, and they buy how I buy.

Some recent reader comments we’ve received have been along the lines of “my kids are too young to learn about money management… they really don’t have an interest yet… maybe when they are older”. The reality is it’s hardest to start when they are older. Wait until they are teens and most of their money habits will already be formed. It’s possible to change these habits of course, but it requires an even higher level of discipline, consistency, and planning on behalf of the parent or teacher. If they are old enough to count, they are old enough to start learning the basics.

FamilyMint helped me as a parent to be that good example for my kids. The FamilyMint app became a third party resource that helped me teach my kids the basics by forming new daily habits. With goal setting being front and center, my kids were quickly creating new goals and saving for them rather than asking me if they could have it “now”. It was instantly able to help them save along the way using the Matching feature to match deposits “dollar for dollar”, $.50 on the dollar, or any variation I’d like. The whining about “I want this, and I need that” also stopped right away once I redirected them to start setting and working toward their own goals.

Setting and working to achieve financial goals also inherently teaches the concepts of delayed gratification, prioritization, and self-confidence once the goals are reached. Make this the natural way that your kids manage their money and goals on a daily basis and so much will take care of itself.

Another amazing thing happened; the more I focused on forming these good behaviors and habits in my kids, the more I started to take them on as my own habits and behaviors. There are so many easy lessons that can be taught when kids are just old enough to count — and both kids and parents will benefit.

The good news is those scary habits that I mentioned earlier are almost gone now from my kids. Part of it is changing how they think about their own money by the habitual processes built into FamilyMint, but a good dose of it was me picking up these habits myself and making them my own.

Can’t Afford to Pay an Allowance? Maybe It’s Just How You Define It.

By Jayne Berkaw

A few weeks ago I wrote a post about paying allowances, noting that it is “one of the big conundrums of parenthood” and that “a lot of it is based on your own experience, your view of its place in parenting, your financial situation, etc.” One of our FamilyMint parents commented that paying allowances was difficult in light of her family’s limited “spending” money, so I wanted to touch on the topic again with that in mind.

There are lots of reasons to back away from paying an allowance to your child. Job loss, unplanned medical issues, home repairs, and other unexpected expenses can wreak havoc on family finances. But here’s the deal: as parents we simply have to teach our kids how to manage money so they can grow up to be financially responsible adults. We have to give them lots of opportunities to practice saving and using money, and we have to let them learn from their mistakes and applaud their successes.

The US Dept. of Agriculture estimates that it now costs an average middle-income American family $222,360 to raise a child from birth to 18. In their estimate they include things like housing, food, transportation, clothes, child care, health care and misc. things like haircuts, sports equipment, computers, and books. These are things you are likely already paying for, so they are also things you can consider letting your child control through an “allowance.”

This is an idea mentioned on many money sites as a way for families that can’t “afford” an allowance to actually pay one, reaping the benefits of loads of teaching moments and, importantly, building kids’ financial skill and confidence. It’s pretty easy too:

You and your child sit down and talk about what you spend on him/her during a week or month; things like clothes, school lunches, snacks, movies, sports, etc.
You talk about what items your child can be responsible for, being careful that choices are age appropriate, and that you discuss what a budget is and how to set priorities.
You pay your child the agreed upon funds, relieving yourself of those responsibilities, enabling your child to experience the responsibility and all that goes with it, and you become coach and mentor – hooray!

If the family is navigating rough financial waters, adjusting allowance teaches them that when times are tough, belts get tightened. Just be sure to explain what the financial pressures are, with assurances that when things stabilize, things will be readjusted.

I appreciate your comments, so keep them coming!

Self Control is the Real Lesson of Budgeting

By Jayne Berkaw

“Right now I have enough money to last me the rest of my life – unless I buy something”

- Humorist Jackie Mason

Anyone who can relate seriously to Jackie Mason’s quip has never been taught how to budget. As parents, we have a responsibility to build our children into adults who don’t just cope, but thrive. A lot of it boils down to teaching them self control in making good daily decisions, including how they manage themselves – and how they manage money.

Everyone has their own approach to parenthood, but there is no replacement for teaching your kids how to thrive by showing them how you yourselves thrive. Talk to them about the expenses you manage, like mortgage/rent payments, utility costs, phone bills, food and other regular expenses you must plan for each month. Then talk to them about the “things” you want to have and how you plan to save and pay for those variable expenses. If you’re saving for a 60” plasma TV, talk it over with your kids. Explain how much the TV costs, how much you are saving for it weekly and, at that rate, when you will have enough money to make the purchase.

Take the mystery out of the family finances by sharing the basics of the family budget with your kids. Talk to them when you’re in the store, at the dinner table, whenever a “teaching moment” presents itself. Then get them started on their own budget through an allowance.

With an allowance, you and your kids can set up fixed “costs” like savings and charitable giving, and variable costs like treats and snacks, toys and movies, etc. You can allot a percentage of their allowance to each budget item, and you can review progress regularly. With FamilyMint, you can break savings down into goals like college expenses, computer/technology wants and needs, or even savings for a new bike, video game or snow board. You can show them how saving a bit more each week will help them reach their goals earlier. They can move their funds around to make that happen in a colorful, fun virtual environment that will keep them coming back!

You want your children to have enough money to last the rest of their lives, so keep them grounded in the reality of financial limitations and responsibility.

Tips on Giving an Allowance

By Bob Masterson

An allowance is a great means to teach children how to manage money, develop budgeting skills and encourage independence. By giving an allowance and giving the child the responsibility to pay for the things they want and activities they like to do, it helps them see money is a limited resource and they must budget it wisely.

But an allowance should never be looked at as a salary or something a child is entitled to. Being part of a family means pitching in around the house and doing ones part to help out and an allowance should not be tied to this. Certain chores, though, can be assigned above and beyond their daily and weekly duties as a means for your child to earn extra money.

How much should you give as an allowance? As a general rule, allowance should be tied to what expenses you want your child to cover, leaving some room for savings and giving. In our house, we begin giving an allowance of 50 cents a week when a child turns six, as they are beginning to have a decent grasp of how money is used. 10 percent of their allowance goes towards charity, 30 percent towards college and 20 percent towards long term savings. The rest is up to them. They save for toys or games they want to buy, but if they want to get a treat of some kind, they are expected to pay for it themselves. This gives them the opportunity to see the cause and effect of their spending decisions.

As our children get older, their responsibility towards money and associated allowance grows along with the expenses for which they are responsible. For example, extra curricular activities such as Boyscout dues, camping trips and movies are the responsibility of our three older boys. They enjoy the responsibility of managing their own money and make adjustments to their finances as priorities or unexpected events happen just as we adults do.

In the end, allowance and the responsibility that goes with it is a means of preparing your child for adulthood.

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