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Teaching Your Children (and Yourselves) How To Live Within Your Means

by McKenna on October 21, 2008
category: 3 – 5 years (preschooler),5 – 12 years (kid),Finances,Practical Tips

1053866_home_1.jpg 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.

Stinky debt

  • 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.

Delayed Gratification

  • 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?

8 Responses to Teaching Your Children (and Yourselves) How To Live Within Your Means

  • Comment by Amanda
    October 21, 2008 @ 9:32 pm

    These are great ideas, McKenna. We plan on using Dave Ramsey’s Financial Peace Jr. with our little ones. It is based on a commission for chores, rather than allowance.

    My husband and I have discussions about school loans for our kids. We hope to contribute to a college fund for them, but it may not be enough. My husband now believes that if our kid can’t afford school, then they need to work to save for it and not take out a loan. So this is something we think about. The last debt we have to pay off is his school loan, so we are still feeling the sting of a school loan from a college that he didn’t even graduate from. We both want to teach our kids how to use money wisely and it starts with us learning how to do it first.

  • Comment by Sharon M
    October 22, 2008 @ 10:39 am

    I think school loans in moderation are fine, but you’re right McKenna, it’s so easy to just pull out more and more money for school and end up with tens of THOUSANDS of dollars in school debt. Ouch!
    There is also a flip-side to the “Latte Factor:” clipping coupons every week can end up saving big $$ on the grocery bill. My mom has been a coupon-clipper for years, and now, even though most of us are out of the house and my dad has a really well-paying job, she still clips coupons all the time. Once you get a system down (she has a little “mini-filer”to save them), it takes maybe 10-15 minutes of your time on a Sunday evening.

  • Comment by Dawn
    October 22, 2008 @ 12:45 pm

    Just a note about the coupons: I am all for them; however, it seems most of them tend to entice me to buy things I wouldn’t normally buy. Sometimes this is okay – a little variety in dinner doesn’t hurt anything – however, it’d be nice if there were better coupons for basics, like milk, cheese & bread.

    A big help with college loans is to stay home and attend a local university. That’s what I did, and I hardly had to take out a single loan. (We’ll be paying off hubby’s private school loan forever, though.) I know it is almost unheard of in many parts of the country nowadays to stay home for college – but a degree is a degree. I am flabbergasted when I hear people talk about how expensive college is and how having their child stay home is not even an option. (Since when?)

  • Comment by Sharon M
    October 23, 2008 @ 10:53 am

    @Dawn — I did the same thing and graduated without a single loan! It was so nice to have that freedom. And as far as coupons go, I, too, wish that we could have them for basic stuff. I guess that’s what WIC is for. But there are usually coupons for other staples; I’m also thinking about things like diapers, wipes, toiletries, etc. And, of course, ice cream (which is considered a staple in our house) :)

  • Gravatar
    Comment by Smalltowngirl
    October 27, 2008 @ 10:14 pm

    This is a great discussion. We have been living on a “budget” since before we had children and I can tell it is good for them. While they still want things, they are used to not walking out of a store with purchases in hand. This is harder for my younger one but we stick to it! I think these are great lessons for children to learn at an early age. Very good advice. Thank you!

  • Gravatar
    Comment by Amy
    October 28, 2008 @ 9:49 pm

    We had never budgeted before. I had no idea how much we spent on bills a month, then what we actually had left over for fun stuff. Found out that’s why we’re in credit card debt. We were living beyond our means by charging it.

    Things are now changing!

  • Comment by Amanda
    October 28, 2008 @ 10:17 pm

    @Amy – Hooray for you figuring out a budget!! Remember it takes a few months before you figure out what works for you. Taking that first step to see where your money is going and recognizing that credit card debt isn’t great are huge first steps. This kind of thing gets me excited. Amazingly, there is freedom when you start telling your money where to go, rather than being tossed around by it. Keep it up! :)

  • Gravatar November 6, 2008 @ 11:35 am

    [...] at The Mom Crowd recently wrote Teaching Your Children (and Yourselves) How To Live Within Your Means and while it doesn’t necessarily have tips for how to cut back expenses, it does have some [...]

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