Tag Archives: saving

Feb 23 2012

Encourage Saving

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Matching Contributions When Your GrandKids Save

I am always on the lookout for great ideas that help encourage my gradchildren to start (and keep) saving.  I recently heard about some parents providing a matching contributions to their children’s savings accounts and thought – Brilliance!  As many of you are aware,  part of leading your grandchildren into having great money habits is helping to steward your Grandchild’s saving.

The way this idea works is very simple: YOU provide matching contributions when your grandchildren decide to put money in a savings account.

How Much Should you Match?

At the most basic level, you can match the contribution, dollar for dollar, when they set their money aside for the future.

You may decide to offer a 50% match, so that if the child decides to put $3 in savings, you contribute another $1.50, to bring the total to $4.50.

Another option is to offer a sliding scale. If your grandchild sets aside 20% of his or her income from a job or allowance, you can match it dollar for dollar. If he sets aside 10%, you can reduce it to 0.5o cents on the dollar, and then at 5%, you can match with 0.25 cents on the dollar. This will encourage some children to set more aside.

Why Match?

Just like a contribution to a 401K, with a matching contribution, your grandchildren can see their money add up quicker. This can get them excited about saving, so that they can watch the bank balance grow.

Also, this practice can provide kids with a foundation that will lead them to take advantage of 401k match opportunities in the workplace. Plus, it will help build a nest egg sooner, and you only have to do some of the heavy lifting… think ipad, car, college. What big gift would you give if you could?  Now here is a great way to start contributing and give your grandchild stake in their own future as well.

Any Twists?

Of course you can shape this anyway you want to. On top of providing a matching contribution, you can also have a “vesting” period. With most employer-sponsored retirement account matching programs, there is a vesting period. Before you can consider the money contributed by the employer as truly yours, you have to be an employee for a certain number of years. You can set up a similar program with your grandchildren: they can’t withdraw money from the savings account until at least a certain amount of time has passed.

Requiring a vesting period is a good way to help your child delay withdrawing the money. Plus, if your child gets the matching contribution from you, and then withdraws the money two days later, the purpose of the lesson has been defeated. However, if you are consistent in your efforts, and you provide a reward that your children can see grow, there is a stronger likelihood of the lesson sinking in.

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Feb 20 2012

Creative Savings Create a Balance

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Week Three: Create A Balance

Capping off my resolution to budget, budget, budget, and meet my financial goals, I have decided the most realistic course is to attempt to adopt a new attitude of thriftiness and simplified living. This will mean that I will have to make some cuts in my personal discretionary spending and also make some concerted effort to change how I approach each day.

Behavior changes are easier if they are taken one day at a time, so I am laying out a plan to approach this upcoming week that will hopefully equate to a Creative Savings Lifestyle Change… A change that allows me to still live rich, but also spend less.

This week I am going to focus on the art of using my own ingenuity and inventiveness in the effort to economize. To keep living rich though, it is not merely saving for the sake of saving; but is making a game of getting the most for the least outlay of cash.

To get started in the right direction (or to help refocus if you’re already headed down the frugal pathway), here is the first weeks’ worth of challenges to stretch the ability to think and act in creative but frugal ways:

Sunday For the next seven days, don’t spend any money on entertainment. Brainstorm with your family to come up with things you can do that are free: visit a library, do some mall-walking, or read some good books.

Monday Try not to purchase anything this week at full price. Use coupons, buy on sale, or simply delay your purchase until you can get the item at a discount. When you do spend, put yourself on a “cash only” system. Give your credit cards and even your checkbook a rest by buying only what you can pay for with cash.

Tuesday Today challenge yourself not to spend any money on anything. Enjoy the feeling of keeping your cash in your wallet.

Wednesday Put off a trip to the grocery store as long as you can this week. Be creative in using up what you already have in your pantry.

Thursday – Surf the Internet for new ways to save money. Sign up for a free e-mail newsletter, blog, or discussion list that will provide ideas and encouragement.

Friday Explore your cabinets for everyday items that can be “re-purposed” for things you believe you need: empty food boxes from Costco can be covered with construction paper and glue to make stackable toy containers or book nooks; sheets or pillowcases that are dingy and no longer used for beds can be trimmed and edged into doll blankets. Think to yourself: when I was in college and had no spare cash, what would I have done?

Saturday Look for ways to save gas and give your car a break this upcoming week and write out your plan. Combine errands, do business online or get some exercise by walking to places that are within walking distance.

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Jan 26 2012

Financial Advice For Your Grandchildren

Financial advice is simple on the surface. Save your pennies. Don’t buy without shopping around.  Do your homework. Don’t spend more than you earn.

The details surrounding the financial basics, though, are always changing, and therefore require some knowledge and training to navigate.

I have spent some time examining how financial experts advise their own grandchildren, and the secrets necessary to teach your “accounting students” are actually quite simple.

Start Them Early

Good financial habits are so important, you should take action to instill in them your grandchildren as early as possible. Spontaneous lessons as opportunity arrives are just as important as deliberate money-management planning strategies such as maintaining a budget and having a savings.

Help Them Choose Wisely

Laying a foundation of money management skills can start with simple lessons.

Two year old Jax wants everything when I walk into a store with him. Setting limits and expectations early is an important lesson, so sometimes I will say no, and talk about the importance of staying within our family budget. Or I will force him to choose one item under a certain dollar amount using a brief explanation about staying within our means or not dipping into savings for things we want.

Discussions on wants versus needs can occur everywhere: the grocery store, the mall, even at the playground, when you grandchild says she “needs” and extra five minutes of playtime.  

Conversations on the value of their time (using the “time is money” statement), and how much of it to dedicate to one activity over another can occur anywhere around the house.

Teach them to Save & Spend Smart

Your grandchildren can’t save much if they aren’t spending their money shrewdly. Helping them plan specific financial goals, knowing what amount of money is required to fund them can start at any age.

Joe Kovac, a former CFO and founder of JTK Consulting, suggests starting off with a modest allowance: “Have your grandchildren accept responsibility for some of their own expenses, even at five years old they can learn to spend carefully. Instead of buying them a treat at the grocery store, have them purchase it.  This teaches them how far a dollar really goes, and helps them learn to make choices.”  If you cringe at not spoiling your grandchildren, you can provide the allowance – and the lesson. In addition, he advocates having children save fifty percent of their allowance a week, starting immediately.

“I use a 50%, 30%, 20% model.  My grandchildren can immediately spend 50% of their allowance on anything they want, place 30% into what we call ‘short term savings’ for bigger items they want, like a toy or a doll that may take three or four weeks to save for, and 20% into what we call ‘long term savings’.  Long term savings are for special occasions, like free spending on a summer vacation.  I use the words ‘long term’ relatively, three months is an absolute eternity for a five year old, but a year is reasonable if your grandchild is ten”.

Set the Example

The most influential financial advisor isn’t the one your grandchildren will hire — it’s you, according to John Brown, the author of How to Run Your Business So You Can Leave it in Style (Amacom Books, 1993) and founder of the Golden, Colorado-based Business Enterprise Institute, an organization that helps business owners sell their companies or leave them to the next generation.

His advice, regardless of what your child does for their career:  “You have to be consistent. If you’re telling them not to spend a lot, but you do the opposite, it’s not very effective.”

 

Steer them Away From Unnecessary Risk

It is hard not to become attracted to credit cards. They are so readily available and allow them to attain more now and pay later, so it’s easy to understand why your grandchildren may be pulled into purchasing more than they can really afford.

Teach your grandchildren about the importance of living within their means and finding creative inexpensive solutions to satisfy their needs.

Investing Wisely

Some debt is good. It is possible to intelligently balance borrowing with investment returns. For example, rather than prepaying a tax-deductible 6 percent mortgage, the extra cash could be used to contribute to a retirement plan that could earn a tax-deferred 8 percent average rate of return.

You can teach your grandchildren to write out a financial plan, including their goals, starting at a very young age, and have them practice thinking through all of their options before making financial decisions.

You can’t stress enough to your grandchildren to start investing as early as possible. Those who start saving at age 25 have, on average, 40 percent more money when they retire than someone who begins at age 35, because the money has more time to grow.

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Jan 24 2012

Raising Grandchildren

According to recently released census figures, eight percent of American children lived at a grandparent’s home in 2010. That’s a record high for at least the last 40 years, and almost four times the rate in 1970. And to put that into perspective for you, only 13 percent of us have reached retirement age!  Demographers attribute that increase to a growing number of unemployed young parents who are relying on the older generation for help.

In the past, grandparent-led households were seen disproportionately among certain groups, like African American grandmothers. But now, with the widespread impact of the recession, active grand-parenting is increasing across the board.

The financial plans that you may have made based upon traditional frameworks: taking care of each other, your home, vacationing, just being your average, retired older couple, are likely now being redefined.  Many people who relied on pensions and government plans, like social security, or saw their investments dwindle by 40%, are finding that the dollar just doesn’t go quite as far when there are additions to the household.

Setting new expectations for retirement is key to achieving financial security and happiness.  It is important to start with knowing what you will do – With grandchildren in your house you are Retiring TO Something… not away from something.

1. Start by Making  Goals

What is it that you want to accomplish in your retirement?  Do you want more time with your family?  Have you always wanted to volunteer your time to a cause you believe in?  Do you want to wake up every morning and have a quiet cup of coffee?  Your goals are as unique as you, and no two people will have the same ideas, start your retirement off by defining yours!  Then figure out how to work your grandchildren into them, most charities can always use extra hands, even if they are small.  Coffee can be just as enjoyable fifteen minutes before everyone else wakes up, and perhaps a tea party with Teddy can substitute if you have very early risers.  A little planning and you can have your cake and eat it too!

2. List Your Likes and Dislikes

Everyone has things they like to do, and things they do not like to do.  List them out.  Teach your grandchildren about the things you enjoy doing so you can spend your time together on those activities.  I taught my then-ten year old grandson to crochet. He loved having his younger cousins use the blankets or wear the hats he made with my extra yarn. 

3. Know Your Expertise

Are you an expert salsa dancer or do you know your fine arts? Can you make technology hum like Steve Jobs?  Are you a financial wiz?  Share what you are great at with your grandchildren.  School can only teach the basics, it is the adults that surround them that they learn from.

4. Stay Active

Kids are a sure fire way to keep us moving!  And exercise and activity are important for staying healthy long into your retirement.  Take advantage of toting that six month old, shifting her from left to right arm to maintain equal balance.  Get up and play kick with your toddler, it improves their hand eye coordination and provides you with cardiovascular benefits.  Sure, it might make you want to take a nap when they go down, but hey, why not? You’re retired!

5. Do Your “Homework” Every Week

A tip often repeated by single mothers everywhere is plan out your week in advance like it is a job. Then you will know what you have to accomplish and how much to budget for it, and you can adjust if you are lean on time or money in advance.   Know when you will have the grandkids, and what you are going to do each day you have them.  Is this week Cinderella’s Adventures, and everyday your princess troupe is going to read stories and watch movies about Cinderella, make up new stories of their own about what happens next, make crowns out of construction paper, and put on mouse noses or bird beaks during clean up time?  Make every day special by taking the time to think though how you can show your grandchildren you love having them with you.

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Jan 20 2012

Save Big at The Grocery Store and Spend Big on the Kids!

Fruit and berries in a grocery store, Paris, F...

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Being retired, I have found that the very same tricks that helped me manage the family grocery budget with a household of six also helps me to manage a home full of grandchildren!

There are so many ways of cutting financial corners, Groceries are just the tip of the iceberg.  You will be surprised how fast an extra $20.00 will find you.  And since that will allow you to spend extra money as well as extra time, you can plan a great adventure with your grandkids, so stay posted for my upcoming article… Grandchild Adventures on $20.00!

  1. Plan Ahead: Do you use time and gas making extra trips to get a forgotten item? I use Sundays to plan out my errands for the week so I can maximize my gas dollar.  Of course, the best laid plans can sometimes be foiled by an unexpected surprise mid-week or an emergency, but coordinating the most efficient route for errands can save you not just hours, but miles.  The current tax reimbursement rate per mile traveled is $0.55, so even cutting 20 miles per week out of one regular day will save you almost $600.00 per year!
  2. Food:  Eliminate the waste by taking the time to clean your fridge regularly each week and have a special shelf for leftovers. For bread, leave out only what you will eat before it molds and freeze the rest. For canned items, write enlarged expiration dates on cans with a sharpie so they are easily visible. Rotate cans and put the ones that expire first in the front. Plan meals around items that need to be used. You aren’t saving money if food ends up being thrown out.
  3. Coupons: Have you ever gone shopping and forgotten to give the cashier your coupons? Find a system that helps you to remember to redeem coupons. I put a note on my grocery list, but I also have friends who have a dedicated shopping wallet: it contains their list of must get items, grocery money for the week, and their coupons. When they go to the store, they take that wallet instead of their every-day one.
  4. Grocery/Club Cards: Some stores offer club cards that offer members reduced prices. In exchange they usually ask for your contact information and some personal information so they can market to you.  You do not have to give “real” information, they do not check!  Just make sure to use your card to get the proper discount. If you try the grocery wallet trick, you can keep these cards there.
  5. Know What Stores Offer Matching: In my neighborhood, some stores will double or triple coupons, that is great, but it isn’t always the best deal.  The best deal is when I can make one trip, get what I need and get out and start having fun!  I have found some stores, like Walmart Marketplace, do not advertise, but they quietly offer price matching on all local stores ads.  So all I have to do is go through the weekly ads, compile the list of best prices and bring the ads when I shop.  I get the best deals and I maximize my gas dollar.
  6. Buy the Right Size and Amount: One grocery store had a special going where if you bought five items, you got five dollars off. It was cheaper to buy five than to buy two or three during these sales. There are also times when the larger item may be less expensive per unit, and if it won’t expire and you have the room, it may be worth buying more.  Check to make sure you have the right size and number of items so you the bargain price.
  7. Reusable Bags: Some stores offer incentives (up to 25 cents per bag of items purchased) for bringing in your own bag. You also help the environment. You can find out with a quick internet search if your local grocery store participates.
  8. Rebates: Many stores and companies offer rebates when you buy their merchandise. Be prompt in mailing in rebates or you may lose the opportunity.
  9. Shop the Outskirts: Most grocery stores keep their fresh food on the outskirt of the store, produce to one side, meat and dairy in the back, and fresh bakery to the other side. Not only does shopping the outskirts keep you away from processed foods that contain hormones, preservatives, and dyes that are not as healthy for you or your grandkids as fresh foods are, but those pre-prepared items cost more too!  Except vegetables, which can be much less expensive if you buy frozen than fresh, most of the food that you can use to prepare healthy snacks and meals can be bought at the outskirts of the store at a tremendous savings!
  10. Beware Organics:Organic is a food label used to play on your emotions as a grandparent.  It is not a word that means anything, it is like saying something is “magical”.  I actually saw the word organic on a gummy fruit snack the other day!  How a gummy chew qualifies as organic is beyond me, but the price of that gummy snack was an entire dollar more than the non-organic version. Save you spare dollars and look at the labels.  Pesticide free, dye free, hormone free, preservative free foods are without argument healthier: but you can remove any residual pesticide from your apple by the simple act of washing it, and by paying $0.40 less for every apple you buy, you can easily save $60.00 a year.
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