Teaching Your Children (and Yourselves) How To Live Within Your Means
The American population is revved up for the elections in a couple weeks and the economy is on everyone’s minds. While the candidates debate on how to best heal our economy, I thought it would be a good time to discuss our responsibility to ourselves, our families, and to our society to start living within our means. Our society has a “have it all-have it NOW” mentality and we are seeing firsthand what happens when individuals in our society and when our own government lives outside of their means.
Other than the good ole’ makin’-a-budget-and-stickin’-to-it plan, there are some small steps you can take to help yourself start living within your means. Not only can you use these ideas to help yourself to start living within your means, you can incorporate these philosophies into your parenting strategy. It is important for our children that we set an example of living within our means and that we teach them that they need to live within their own means.
Here are some philosophies we try to live out within our family:
“The Latte Factor”
- My husband discovered this term from one of the financial gurus he reads (I can’t tell you which one this phrase belongs to…). The basic idea is that it’s the “lattes” that get us in trouble financially. For some, it is literally the “lattes” (from Starbucks) that are making big dents in their budgets, but for others, “latte” is figurative for other little purchases made throughout the week. Most people don’t know where their money goes after they get paid and it’s usually these small purchases that is the culprit of this disappearing money. If you spend $1.18 a day on a diet coke (guilty as charged), that is $36 every month. I’m not saying you should stop buying your diet cokes each day, however those small dollar purchases can really impact your monthly budget. My husband is constantly grilling me about “the latte factor” and while it can be irritating at times, I appreciate that we are aware of where our money goes each month because we are paying attention to all of the transactions we are making.
- Parenting Tip: Encourage your children to keep a record of how they spend their allowance. If you know they are really anxious to buy the new Guitar Hero game, you can help remind them that when they buy bubblegum from the machine, they are delaying their coveted purchase that much longer.
“Do I really need it?” and “Can I afford it?”
- Do you really need 1,000 minutes and unlimited texting on your cell phone? Do you really need 150 channels on your television? Do you really need that gym membership that you’re not using? The answer will be “no” in most of the circumstances you ask yourself “do I really need this?”, however the follow-up question must always be “can I afford it?” I’m not suggesting you live a life of eating rice and beans every night and I’m not suggesting you get rid of your internet and use the library computer, however if you can’t afford something, you can’t afford it. There are many fabulous luxuries in our society, however there’s a lot of empty money spent on channels never watched, gyms never visited, and furniture never sat in. In order to live within your means, you have to be able to tell yourself “no” at times.
- Parenting Tip: Be honest with your children about your family budget and explain to them that if you add an expense, you will have to take away another expense. Explain to them that in order for your family to increase their cable channels, you will have to have dial up internet. Allow them to share their thoughts and play a role in your family’s budget.
Keeping up with the Jones’
- Right now, the Jones’ are facing foreclosure because the Jones’ were not wise with their money. Being the Jones’ may be fun for a while, but it will inevitably catch up to you. If you are unwise with your money because you are trying to have it all, you will eventually wind up not having anything.
- Parenting Tip: Remind your children that “stuff” is not what is important in this life. Volunteer as a family at the food bank or homeless shelter. Expose them to families who do not have very much. For Christmas, have your children give presents to children who are less fortunate than they are. Set an example to your children by not complaining about what you don’t have. Being around people who are less fortunate than you are will not only impact your children, but it will impact you and remind you of all of the things you have.
- There are some debts that I feel can be classified as investments. School loans, mortgages, etc… can be considered investments, when under control. Buying a house that you cannot afford or pulling out as much in school loans as you can are not wise investments and can easily put you in a place where you are living outside your means. However, the stinky debt I am referring to is stinky credit card debts. If you are using credit cards and not paying them off each month, you are not living within your means. There’s not much more to say about that, other than stop using your credit cards. If you can’t get by without using your credit cards, eliminate other expenses in your life (cable, cell phone, move into a smaller apartment, etc…) so you can afford your bills and not be consumed by the credit card monster.
- Parenting Tip: The best gift you can give to your children is your example. Explain to them how credit card debt works and how interest can consume your monthly payments. If they ask to borrow money in between their allowances, show them how interest works and charge them interest on that loan. The main thing is to teach them why credit card debt is so difficult and show them the freedom of a family not living in the chains of debt by not being consumed by it yourself.
- If you want to purchase something that is not a necessity, sleep on it. A lot of times you will not feel as urgent about purchasing that item the next day. Another great idea is to have those splurges be a reward for yourself. Set goals (financial, weight-loss, etc…) for yourself and promise yourself that you can buy that item once your goal is met. This practice of “delayed gratification” will not only help your wallets, it will also help you to be a more disciplined person in general. However, if you cannot afford to purchase a non-necessity, then you have to tell yourself to wait until you can afford it.
- Parenting Tip: If there are things your children really want, tell them to add it to their Christmas list or birthday list. This will not only make these celebrations more exciting, it will also help steer your children away from a “have it all, have it NOW” mentality. You can also use these items they want as rewards for them. Buying them whatever they want, whenever they want will not only be bad for your checkbook, your children will never learn how to live within their means or discipline.
These are just a few tips I have for you. What areas do you struggle with living outside of your means? What steps have you taken to help yourself live within your means? How are you teaching your children to live within their means?