12 Great Financial Tips for Stay-at-Home Moms

by Elisabeth Donati | Mar 12, 2008 | Financial Literacy Articles for Parents, Uncategorized

1. Accountability – You must plan finances together with your spouse. This way, no one gets to play the ‘blame game’ when things go wrong. When both spouses work on finances on a weekly basis, overspending by either spouse will become apparent. You will also get the chance to congratulate each other on your successes. You are in this together. We all know that money is a huge cause for stress in relationships, and working together will help prevent years of financial stress. This may also help you both learn self-discipline and how to live on less. Remember the commercial where the guy owns everything and he says, “How did I do it? I am in debt up to my eyeballs!” Accountability helps you not be that guy.

2. Keep depositing money in your IRA – Even though you may not be earning an income. Women are poorer in retirement than men are because they earn less, live longer (79 compared to 72), take time out for child rearing without contributing to retirement accounts, and receive less in Social Security benefits because of the time-out for child rearing and lower earnings. This is statistically even more important for women in minority groups. To learn more about the financial challenges unique to women, see eFinplan.com Women and Financial Planning article.

3. Budgeting, Debt Reduction and Saving – Proper budgeting and debt reduction will help you meet your goals of being able to live on one income. Some women are naturals at budgeting, but if you are not one of them, a budget is simply a spending plan that helps you keep track of regular monthly expenses and savings for planned purchases and the future. If you have never created a budget, you may consider using software, an Excel spreadsheet, or simply paper and pencil. You will be spending a lot of time with it, so use whatever makes you comfortable. Put your debt reduction plan into your budget. For great information on reducing your debt, see our affiliate, Mary Hunt’s website Debt Proof Living.com.

4. Fifty Dollar Limit – Or any amount you both decide on together. This tip has saved us many unnecessary purchases because spouses must communicate about a purchase before spending over the limit. (This does not apply to the weekly bills like grocery or utilities.) At times, this rule may seem too restrictive, but we have found it to be a huge budget saver. It also helps to get a second opinion. Recently, I called my husband from the check out line about purchasing an item, and I was reminded that we already own one!

5. Understand marital financial mindsets – What happens when opposites attract? They get married, then begin to fight about money! Consider the following ways people view their finances: There are optimists, pessimists, spenders, savers, planners, procrastinators, and any combination of these. Perhaps his parents were well off financially and she was raised in poverty. On the other hand, perhaps her parents taught her sound financial principles and his parents kept their finances a secret, or worse, he has copied their example of bad financial habits. Open and honest communication about both of your mindsets may help you work through any pre-conceived views or bad financial habits. Remember that this must be done without finger pointing and with the goal of financial harmony. Perhaps reading a good book together about marriage and money would be helpful.

6. Houses and Cars – These are the biggest expenses for most marriage partners. Ideally, if you can plan to have your mortgage paid off before your first child goes to college, you will feel less stressed about paying tuition. Another great way to save money is to buy great low-maintenance cars and drive them for a long time. There is no freedom like driving a car that is ‘paid for’. Many experts recommend that you put the amount of your payment into savings after you have paid the car off to save for the next one. From personal experience, we also recommend planning for what kind of car you will need several years from now. In other words, do not buy a two-seater if you plan on having children in two years. Also, do not sell the minivan after middle school because the kids are not in sports anymore. You may need it to haul your child’s belongings to college.

7. Get Organized – Buy a file cabinet for financial and other important papers. This central location will allow you both to understand where anything important belongs. You can avoid many financial mistakes by keeping papers and bills well organized.

8. Understand your Health Insurance – Health insurance costs have risen for everyone. If you have employer-provided health insurance, take the extra time to understand your coverage, especially during enrollment time. Understanding your coverage may help you save a lot of money. Figure out which policy is best for your family. For instance, if you have a high monthly prescription expense you may research which plan pays the most for prescriptions. If your medical and/or dental expenses are very high, you may be able to deduct them (7.5) of your adjusted gross income. Keep track of your mileage to doctor appointments (20 cents per mile). See your tax advisor regarding your specific situation and see www.irs.gov, Publication 502.

9. Set long and short-term goals together – Creating goals together is a wonderful marital exercise. You will learn what each partner finds most important both now and in the future. Consider creating your eFinPLAN financial plan together. It is amazing how current wants can be dismissed when they are compared with the goals on a written plan.

10. Determine areas of overspending – Each month as you both check your budgeting progress, watch for recurring overspending in any categories. You will probably find one or two areas that go over each month. If you are within your overall monthly budget, you may want to raise your budget amount in those areas or find ways to lower your spending. Many busy families find that eating out regularly exceeds their budgeted amount. This one requires extra self-discipline to plan ahead and create freezer meals that you can fix in a matter of minutes. Tired moms will hate this suggestion at first, but it really can save hundreds of dollars.

11. Do not let grocery shopping be a budget buster – A penny saved really is a penny earned when it comes to grocery shopping. For decades, women have come up with creative ways to save on groceries. I remember my mother-in-law saying that any money she saved from groceries went toward birthday and Christmas gifts. Somehow, through hard work she was able to feed three growing boys and still have money left over! My family preserved produce from a large garden and from local fruit growers. Others use coupons, shop for sales at multiple stores, or plan meals around sale items. All of these ways are wonderful – do whatever works for you. I recently read a huge stack of books from the library about saving money and discovered one recurring theme about grocery shopping. Most books recommended keeping a book of regular prices for each item you usually purchase. That way you can see if it is really a great sale price, or if they simply put it in the grocery flyer at the regular price. If that sounds like a lot of work to you, visit The Grocery Game. After entering your zip code and your local grocery store, you will be able to access a computerized list of best deals at your store that week. After only three weeks, we have saved about $200, and we have begun a stockpile of groceries in the pantry.

12. Judge the long-term benefit of purchases. Our children are teenagers, so we have had a chance to learn from our mistakes and wish we had done some things differently. One of our regrets is overspending on toys, and watching the toys be neglected, eventually ending up in a garage sale. Since we have begun paying for our oldest child’s college tuition, it is painful to think of how much money we could have put into a college savings account had we not purchased those toys. Another example of this is purchasing children’s furniture, which will have to be replaced as the child grows. An inexpensive bed rail can make an adult-sized bed usable from toddler age to adulthood.

Laura D. Irwin is CFO and co-founder of eFinplan, LLC. She has a degree in Communication, but her life’s joy has been raising her two children. She can be reached at lirwin@efinplan.com.

Copyright © 2008 eFinPLAN, LLC. All Rights Reserved.

Financial Freedom and Finding Your Purpose

by Elisabeth Donati | Feb 12, 2008 | Financial Literacy Articles for Parents, Uncategorized

For many people, there is a huge connection between life and finding one’s purpose. And for many of these people, the connection extends to their pocketbooks.

Over the last few decades, the idea that you should, “find your purpose in life in order to be happy and fulfilled,” has been brought to the forefront of the personal growth industry. If you think you need to read tons of self-help books or attend seminars and workshops to learn how to find your purpose, you have permission to simply say good-bye to this silly notion. And if you’ve suggested to your child that they will eventually find their own purpose, all the while perhaps still trying to find your own, please reconsider this suggestion.

Who said human beings are born with a single purpose? We do have a single purpose, but it’s not what most people think of when they think of ‘your purpose’ in life. Like all animals, our single purpose is to survive. What makes us think we’re any different from other animals is that we have brains that ‘apply meaning’ to things were there is no meaning.

“What do you mean, there’s no meaning?” Well, it’s not that things have no meaning; it’s that the meaning everything has comes from the meaning we give everything. We each apply our own meaning to the things that make up our lives. It’s easy to reason that if ten people make one thing mean ten different things, there’s either no meaning or any number of meanings.

How does this relate to each human being having a purpose? And how does having a purpose have to do with money? Simple. Many people believe the notion that they are here on Earth to serve a purpose and they spend countless hours, days, months or years searching for that purpose.

If they are lucky, they come to the realization that the key to being happy and feeling fulfilled is to live ‘on purpose,’ meaning that they do the things they do with a purpose in mind.  In addition, the more the things people do serves others in some way, the happier and more fulfilled they feel.

What does this have to do with kids and money? Well, it’s important that we help our children find their place in life, if that’s possible. And growing up with the preconceived notion that they have to find their purpose for living, on top of everything else, is just too much pressure.

Especially if you suggest to them that in order to be truly happy and fulfilled, they should be doing for a living something that involves ‘their purpose in life.’ Kids have enough pressure just to grow up, fit in, figure it out, etc. We don’t need to add the pressure of having to find their purpose and make money doing it on top of everything else. It’s a grand idea, yes, but it’s not necessarily the best way to create adults who take responsibility for themselves financially

Instead, suggest that they do what they do on purpose. In the area of money, this means that they spend their money on purpose, i.e., they think through what they want to spend their money on before they spend it. They invest their money on purpose, meaning they do their research and make sound decisions based on fact, history, numbers and expert advice. They donate a portion of their financial resources on purpose by researching charities and other avenues for helping others to make sure their donation dollars will be spent wisely.

Teaching children to take care of their money by teaching them to use it ‘on purpose’ will create adults who contemplate their earning, spending, saving, investing and donating decisions and they will be less likely to have second thoughts about these decisions.

Again, what does the connection between finding your purpose and being on purpose have to do with money? Hundreds of thousands of individuals have spent millions of dollars on books, seminars, workshops, life coaches, teleseminars, DVDs and CDs trying to find this illusive purpose they are supposed to be on earth for. Imagine for a second what that money would be worth if it had been invested instead. Now that’s a whole lot of money to do something with on purpose!

Here’s a few ways to help your kids, and you, think in terms of using your money on purpose:

• Before you buy anything, ask yourself the simple need vs. want question. If you really do need it, are there ways that you could get it by trading your time or energy for it (bartering)? Can you simply delay the purchase? If you only want it, ask yourself, “Can I do without it today?” This one question can keep you from wasting hundreds of thousands of dollars over the course of a lifetime.

• Ask yourself, “What would this money (that I am about to spend) be worth if I invested it at 10% for 20 years instead?” Often, when we realize the true potential of the money we’re about to spend, we realize we really don’t want or need the thing as badly as we thought.
• Find a way to buy or acquire the thing you want cheaper. Look for discounts, coupons, go to Craigslist, Ebay, look in your local papers, go to thrift stores, garage and yard sales. You’d be surprised at how much less you can purchase something if you really do your research.
• Ask yourself how your donation dollars could be put to greater use? Is there some way to leverage the money so that it serves more people? What if you wanted to donate $100 to a homeless shelter but instead, attended a local college basketball game with 4000 loyal fans, set up a table and sold 200 raffle tickets for $5 each for the $100 prize? You can now donate $1000 to the homeless shelter instead!

Bottom line, to be more financially savvy, learn to handle your money on purpose. There’s many ways to do this, but simply being aware of what you’re doing with every dollar that passes through your life is a great start.

Just something to think about!

Why Allowances Do Work

by Elisabeth Donati | Feb 12, 2008 | Financial Literacy Articles for Parents, Uncategorized

You may be thinking to yourself, “Is there something I can do to make sure my kids don’t move home after they move out?” In other words, you want a way to make sure they grow up to be financially self-reliant.

I’m here to say, ‘Yes, there are some relatively simple steps you can take to ensure that your kids leave home knowing what to do with that green stuff they will be in charge of making, managing and multiplying in the future.

More young adults are not only leaving college these days because of financial problems (student loan and credit card debt) but they are also moving back home after they graduate because they simply don’t make enough money to go it on their own.

The primary cause is simply that kids don’t have a clue what to do with their money, or anyone else’s for that matter. Most of them are very good at spending money, but it’s a rare 20-something that understands the dangers of credit card abuse or the power of saving and investing. Heck, for that matter, most adults don’t understand these concepts either.

Imagine this scenario…

Your son (or daughter) comes to you one day and says, “Mom, I have decided I really want to grow up and become a major league ball player.” You say, “Wow, that’s cool. Good for you.” And you go back to doing what you were doing.

Your child looks at you and asks, “So, would you get me a ball so I can learn how to throw it?” You say, “Maybe later.” He says, “What about a glove and a bat?” You respond, “Nah, I don’t think so.” He’s a frustrated at this point and asks, “OK, but will you at least teach me the rules?” You say, “Oh, you can learn the rules later.”

Now he is really angry; he’s fuming inside and feels stuck.

Finally he gets really mad and yells, “But MOM, how am I ever going to become a great ball player if I don’t have a ball, bat or glove to practice with and I don’t know the rules?”

This is what parents do, most unknowingly, to their children everyday in regard to money. We grow them into adults but rarely give them the equipment or rules to practice, and get good at, The Money Game!

Let’s look at three simple steps you can take to empower your children with the tools, knowledge and practice they need to grow up financially free.

FIRST, you must set the best example you can for your child. Since human beings learn best by example, it is critical that you first examine what you’re teaching your children through your actions because they really do speak louder than words. How can you expect your child to save and invest if you don’t? How can you expect your child to grow up with a healthy understanding of money if you don’t have a healthy understanding of money? How can you expect your children not to use credit cards if the only way they see you buy things is with a credit card?

The important thing to remember is that children learn from us three ways: by what they see us do, by what they hear us say and through the experiences they have with money. J know that they are always watching and learning from you in ways you probably aren’t even aware of.

If you’re like many adults who don’t understand money, you’re not alone.  You weren’t taught when you were young either, however, now’s the time to make a commitment to educate yourself. There are books and seminars everywhere. A great place to start is a program called the Millionaire Mind Intensive. For more information, visit http://www.peakpotentials.com/a/tofreedomandbeyond.

If you’re doing well financially, good job. Keep asking yourself how you might ‘show’ your kids about money with your daily routine and include your kid’s friends. Kids often learn better from people other than their parents so look for opportunities to influence all the kids in your circle.

SECONDLY, talk to your kids about money. Take every opportunity you can to open up a line of conversation about family expenses, credit cards, debt, interest, investing, business, real estate, the stock market, financial beliefs, etc. Some examples of when to talk to your kids about money are:

• When you take money out of the ATM, talk about where the money comes from, why you can only take out so much, etc.
• When you pay for the groceries with a credit card to get points so the whole family can go on vacation, make sure they understand the importance of paying the bill off EVERY SINGLE MONTH!
• When you pay bills, let them help you write checks or pay the bills online. Teach them how to check the accuracy of each bill.
• When you deposit money into your bank, visit your investment advisor or accountant, take your child along.

The worst thing you can do is assume that someone else is teaching your child about money. What children learn from parents who don’t talk about money is that talking about money isn’t OK. A healthier way to look at money is simply as a tool to reach your dreams (a Creative Wealth Principle); it doesn’t mean we’re better or thinner or smarter than others. It’s simply a tool.

THIRDLY, consider giving your child an allowance, but not the kind you may be thinking of. In my book, The Ultimate Allowance, I teach you how to take the money you already spend ON your child and run the money THROUGH them instead. I’ve read that it takes an average of $275,000 to raise a child through age 17. If you run even a portion of that money through your child, imagine the practice he or she is going to get. By making plenty of financial choices—good and bad— they learn the ins and outs of money management before the consequences aren’t so damaging.

In summary, remember that human beings learn best by example. Your children are watching everything you do with your money, listening to everything you say about money and internalizing all the experiences they are having with money, so pay attention to the example you are setting.

And finally, please talk to them about everything financial. It’s the best investment you can make in your child’s financial future and we promise it will ‘pay off’ in the end!

For more information on all of our unique financial literacy products and programs, please visit The Ultimate Allowance and Creative Wealth International or give us a call at 805-957-1024.