How to Teach Your Kids About Money

May 04, 2016

A recent survey on kids and money revealed that 4 out of 5 Americans believe that an allowance helps to teach children the value of money and financial responsibility but only 68% actually pay an allowance. With student loan debt growing at an average of over $2,700 PER SECOND, it’s essential that kids enter college with a baseline of knowledge so they know what they’re getting into with this debt. If you’re not modeling good behavior for your kids, you may be setting them up for financial stress down the road. I don’t have kids yet, but I have a lot of plans for how we will ensure that they set themselves up for financial success. Here are some ways to teach your kids (or nieces and nephews) about money before they have to start making important decisions on their own:

Start early: As soon as kids learn how to ask for things (or start throwing themselves screaming on the floor of the grocery store because you won’t buy candy), they can understand the concept that they have to wait to buy something by saving up for it. Instant gratification is a problem that plagues humans for life, but teaching kids how to delay it is a predictor of future success. Whenever your child receives money, have them add it to a jar or piggy bank and consider keeping a paper record to instill banking knowledge as well. Every so often, help her count to see how close she is to her goal. Help keep her eye on the prize by explaining how much closer she is to reaching the goal with each addition.

Explain trade-offs: Once your child enters school, he is ready to learn that when you spend money on one thing, you’ll have less to spend on another. Use grocery shopping as a way to demonstrate this. Give him a budget for his own treats, and then as he’s making his selection, explain how buying expensive yogurt might not allow him enough to also buy his favorite juice boxes. Share your own financial decision making as you’re shopping for the household as well.

There are also a bevy of free web-based money games out there. Try the Great Piglet Challenge or Kids.gov for a variety of fun games. Heck, try them yourself. (I’ve yet to conquer the Great Piglet Challenge!)

Consider an allowance: Whether or not you think kids should “earn” money through household chores or if you consider pitching in to be a part of family life, an allowance is a great way for kids to learn how to spend and save. You can also explain how compound interest works once kids reach the “tweens” stage. Use real numbers and say, “If you save $1 per day starting now, you could have over $26,000 by age 65. But if you wait to save until you’re 30, you’ll only have about $15,000.” This may make it easier to talk your tween out of buying a daily sugary snack at school and instead save the money toward a new video game.

Consider college costs: Whether or not you’ll be able to afford to send your kids to the college of their choice, discuss how their decision will affect you financially. If your child will require financial aid in order to pay for school, share your own struggles with debt as a way to explain the consequences of student loans. And don’t shy away from having them take a part-time job to save toward spending money in college. Understanding how hard it is to earn money will make them appreciate the value and think twice about blowing it all on beer and pizza…just most of it.

Drive their own decisions: Once your teen is ready to start driving, instead of just handing her the keys and crossing your fingers that she’ll drive safely, put some of her skin in the game too. My parents had me take care of my own car insurance when I got my first car, which was a great way for me to learn several money lessons. Instead of doing it for me, my mom had me call their insurance contact to ask to be added to the policy. The agent walked me through the additional costs and I handed over money to my dad each month to pay my share.

If I was late or short paying, my car was parked until I paid up. I not only learned how to budget for my bill, I was empowered to take responsibility and when it came time for me to get my own solo insurance policy, I knew what I was doing. Thanks, Mom and Dad!

Most importantly, it’s vital to model good money habits for your kids. We all have our own money stories – our personal frame of reference based on our own experiences growing up around money. For most of us, the biggest influence in our stories came from our parents. Set your kids up for success by rewriting your own story to one of success and financial security.

 

11 Easy Ways to Save Money Without Changing Your Lifestyle

May 02, 2016

Does saving more money mean you have to make big sacrifices? If you are trying to find wiggle room in your budget to apply towards important goals like retirement or paying off debt, the first place to look is at the easy hacks. Where can you cut expenditures without drastically altering your lifestyle? Here are some ideas, all of which I have personally tried:

Spend less on hair and nails. I live in NJ, where big hair and gel manicures aren’t just something you see on reality TV shows. That kind of primping at the hair or nail salon is expensive.

Switch from coloring your hair to less frequent highlights and you can save $100 per month.  Doing your nails at home can save another $40-$50. For guys, switching from a salon stylist to a barber can save you another $40.

Give up restaurant beverages. Drink water instead of soda or alcohol and you can save 10-20% on the cost of eating out. If you eat out frequently, including lunch at work, you don’t even have to do this all the time, just most of the time, to see big savings. Your employer doesn’t provide beverages at work? Bring your own from home instead of using the vending machine or corner convenience store.

Join the library. I once had a Very Serious Book Habit. I adore book stores, read voraciously, and could easily spend $150 per month or more on new books and magazines. If I didn’t like the book enough to keep it, I’d trade it in for store credit after I was finished reading it.

I reduced my book buying habit reluctantly. First, I gave up magazines in favor of the library copies and then I made a concerted effort to also read library copies of those books I was pretty sure I didn’t want to own. I now use an e-reader and buy fewer printed books, which has cut my book buying considerably.

Go from two cars to one or even none. Do you really need two cars?  Maybe, but maybe you don’t.

Try living with one car for two weeks and see how you do. Can you take public transportation, carpool or catch a ride to work from your spouse? You may find it’s less painful than you expected. Giving up a car can save you as much as $700-900 per month. I know because I did it myself.

Shop for insurance. You may be able to save by changing your home and auto insurance. Every few years, shop around to compare coverage and prices. The right coverage could save you $100-$200 per month.

Host a swap party. Clothes, accessories, toys, holiday cookies, unopened gifts, books – almost anything could be swapped! What is unwanted to you could be valuable to someone else and vice versa. For more tips on hosting a clothing swap party, see this article.  The same principles can be applied to any swap or exchange party.

Share babysitting. A reliable babysitter can cost $10-15 per hour in my area. Babysitting during a night out with your spouse adds $40–$90 to the total cost of the evening.

What can you do if you don’t have family to help? Form a babysitting club to trade nights out with your friends. You watch their kids one time and then they watch yours the next.  Some friends I know took it a step further, forming a neighborhood group. Once a month, one family hosts a pizza/movie night at their home, while all the other parents get a night on the town.

Fill up at the cheapest gas station. Our neighborhood suffers from zip code inflation in gas prices. A favorite hack of my husband, Steve, is to take a certain route home from work that passes a less expensive station and fill up there. The result? He spends 30 cents less per gallon.

Quit the gym and mow the lawn. Another one of Steve’s hacks is that he thinks of yard work as his personal exercise program. Instead of paying a gym membership, he mows the lawn and chops wood, doing something every day as his workout.

He decided he wanted to do this on purpose, even though we planned for landscaping in our budget. Did I mention we live on top of a hill and have three acres and abundant trees? Needless to say, he is very fit, and our bank account is fatter.

Stock a snack box. How many times a week do you pick up a snack at a coffee shop or store? Those lattes and muffins can easily add up to $3-10 per day. Add in kids, and a quick trip to Starbucks is twice as much. Keep a well-stocked box in your car and your office with easy snacks.

Not ready to give up the coffee shop coffee? I don’t blame you. (I am a fan.) Consider ordering a less expensive version, such as an iced coffee instead of a fancy coffee drink. You can save 50-60% on each cup.

Fill a gift closet. If you have kids, you know that birthday party gifts can cost upwards of $100 per month. Plus there are always hostess gifts, teacher gifts, office gifts, etc. It’s easy to forget those expenses, but they can really eat into a monthly budget.

Set a maximum amount you’ll spend on them for the year and then shop in advance. We recently bought 8 ultra cool birthday presents on Woot.com for only $80! Stock up on inexpensive small house presents and interesting wines when you see them on sale so you’ll always have something to bring when you have dinner with friends. Better yet, shop for holiday gifts right after the holiday season has ended, often for 75-85% off.

Do you have an easy way to save money without changing your lifestyle? Please email me at [email protected]. You can also follow me on Twitter at @cynthiameyer_FF.

 

 

5 Songs That Could Ruin Your Finances

April 13, 2016

I love how music can pump you up, calm you down, soothe a broken heart, bring back old memories and generally set the tone in any situation. Ever notice yourself singing along while grocery shopping? That’s not on accident. Those songs are strategically selected to make you stay longer and buy more.

There are lots of great songs out there that have positive money messages (here are 5), but there are also plenty that send the wrong idea to listeners. At the risk of sounding like a boring fuddy duddy, I came up with some financial guidance to help solve these artists’ money blues. Try not to make these mistakes with your money:

Last Friday Night – Katy Perry: There are plenty of things mentioned in this song that moms everywhere wouldn’t approve of, but the part about maxing out your credit cards is what gets me. First of all, you don’t have to max out your cards to have fun and second, you definitely won’t be doing it all again next Friday without some serious financial discipline during the week to pay down the balance. Just in case, here’s our Debt Blaster calculator to help reign in that debt, Katy.

Time Of Our Lives – Pitbull: I actually understand what it’s like to take a look at your bank account balance and know that there’s not enough in there to cover upcoming bills. What I’m not a fan of is going out to “get up in this club” and blowing what money you do have when you know your rent is going to be late. If Pitbull just used the No-Tracking Budget to make sure he has enough set aside to cover bills, I bet he could pay his rent on time AND still have a good time.

Mo Money Mo Problems – Notorious BIG: I said this phrase to a friend in jest once, and he shot back with, “I bet the panhandler down the street would disagree.” That really made me think. It’s true that lottery winners and other people who strike it rich tend to have people coming out of the woodwork asking for money, and the whole idea is that we wouldn’t have these problems if we didn’t have money, but let’s not confuse that with thinking if you didn’t have money, you would have fewer problems. They’d just be different problems.

One of my favorite bits of wisdom to share is that if we all threw our problems in a big pile and could pick any ones we wanted, we’d all take our own back. Remember that the next time you get stressed about your finances (even if it IS a lack of having enough) and remember that it could always be worse. Shift your focus to what you DO have and you just might be surprised at how you begin to see more of those good things in your life.

If I Had A Million Dollars – Barenaked Ladies: So if you actually had a million dollars, you probably shouldn’t buy a llama or an emu. Here are some things you could do though: pay off debt, establish your emergency fund, max out your 401(k), or do something fun and then save the rest for the future. DON’T quit your job unless you’re pretty close to retiring already.

Just Got Paid – ‘N SYNC: One thing I could conclude about this is that Friday night is a bad night for your finances! Seriously though, I know plenty of people who celebrate “Paycheck Friday” with a “treat yo’self!” attitude and then spend the rest of the week complaining that they’re broke. It’s fine to cut loose and celebrate the weekend. Just make sure you’re putting something aside for the future, paying your bills and saving for budget-breaking expenses before blowing the rest on Friday night.

What about you? What are your favorite money songs? Share them with me on our Facebook page or email me and I’ll include them in a future post.

 

 

How to Trick Yourself Into Better Financial Behavior

March 29, 2016

A friend of mine once told me that any goal you want to achieve is about 80% behavior and about 20% head knowledge. We all know what to do to take control of our finances – spend less, dump consumer debt, and save more. However, as simple as it all sounds, it is not easy. Life and our emotions can get in the way of your goals.

I say if you can’t beat it, trick it. With April Fool’s Day just days away, take the following steps to trick yourself into better financial behavior: (Some may sound crazy but they work.)

1 . Can’t get the ball rolling on saving? Consider saving by setting up a payroll deduction into a savings account. That way you save it before you even have a chance to spend it.

2. Struggling to keep your hands off your savings? Try to use the hide feature on your online account to hide your savings account. If it is out of sight, it might be out of mind.

3. Still feel like you can’t trust yourself if the savings is at the same bank with your checking account? Consider moving your savings account to a different bank where you do not have immediate access to funds. Just don’t forget it’s there for when you do need the money.

4. Do you have a budget but have a hard time actually following it? Consider identifying areas where you overspend (eating out, groceries, clothes, etc) and using cash for those items. It makes you more mindful of your spending and it creates an automatic boundary.

5. Do you want to increase your retirement plan contributions but feel nervous about the increase? Consider contacting your retirement plan provider about a feature called auto-escalation. This gives  you the option to automatically increase your contributions annually, in many cases by as little as 1%. Tip: If you typically get an annual pay increase, consider timing the automatic increases a month after your pay increases so you won’t feel the difference.

A lot of times, we know what we need to do with our finances. The hard part is actually doing it. These steps may seem simple but they could be just the boost you need to help you reach your financial goals.

 

 

 

Here’s Why You Need to Stop Measuring Your Financial Progress Against Your Income

March 23, 2016

Did you find yourself looking at the total income amount on your tax return for last year and thinking to yourself, “Well, I certainly don’t FEEL like I make that amount of money?” You’re not alone. One of the most self-destructive financial beliefs that I see as a financial planner is people justifying living outside their means because they have the idea that someone who makes what they do should be able to have the things that they want. Here’s the thing: they were already living like they made this amount of money before they got there.

They find themselves in debt because they just couldn’t wait to have the new house with the furniture and that amazing vacation to Italy. Then they had kids who now have all the gadgets (and of course, they need a comfortable, stylish car to drive them around in). Sound familiar? Welcome to the club!

So now that they’re here, stuck paying off the stuff they bought when they borrowed against this higher income they knew they’d eventually make, they find themselves struggling to prioritize paying off that debt versus saving for college, a bigger home for their growing family and retirement. And as they struggle, they keep up the cycle of revolving debt, postponing taking care of the stuff that seems so far off. (Perhaps the first 15 seconds of this classic Queen song will help explain.)

So here’s the thing. In order to get on track and really start to feel like you’re making the better income level you’ve achieved, you need to spend a couple of years living like you’re making less to pay off that debt. It’ll be tough, but it’s doable. The blogosphere is packed with people who paid off tens of thousands of dollars in debt and they can’t wait to tell you about it. I’ll save you the reading and break it down into these three non-negotiables:

Non-negotiable #1: GET THE MATCH. If your employer has a 401(k_ match, you should save at least enough to capture the match even if you could potentially lose it if you leave the company before it vests. Worst case scenario: you leave the job and lose the match, but you still get to keep the money you saved for retirement. Future you thanks you profusely and compound interest is excited to get to work for you.

Non-negotiable #2: STOP USING CREDIT CARDS UNTIL THEY’RE PAID OFF. I’ve seen too many people try to juggle paying off the new charges while also paying down balances and end up getting deeper and deeper in debt until they had to enter a formal debt management plan to get out of it. This could mean a few months of pain while you adjust to only spending the cash you have on hand, but it’s the only way you’ll see the light at the end of the tunnel. Make your credit card payment a fixed amount, then use the Debt Blaster calculator to pay it off. Once the debt is gone, you’ll already be used to not spending that amount of money, so you can use it to turbo-charge other savings goals.

Non-negotiable #3: GET A LITTLE NEST EGG SET ASIDE. There are personal finance celebrities who would say differently, but you need to have some savings set aside while you pay off debt or you risk sliding right back down the next time something unexpected pops up. When I started digging out of my debt hole in my 20’s, I also started saving $25 per paycheck into a separate savings account. I used that money if my only alternative was credit cards (read: a real emergency like having to buy a plane ticket for your grandma’s funeral, not a sale on your favorite Lulu® pants).

It won’t be easy, but it will be worth it. And keep these Jedi money mind tricks in mind to keep you from straying from the plan. I’m always interested in what money tips and tricks work for others, so please share. You can let me know in the comments or send me a tweet at @kclmoneycoach.

 

Living Paycheck to Paycheck? Here Are 4 Places to Find Money

March 02, 2016

One of the things I love the most about living in a big city is that we are the first ones to have access to innovative products and services like Uber, Instacart and Flywheel. Whenever I start to daydream about moving back to the quiet of a small town like the one I grew up in, I have to remind myself that I’d be giving up things like the option of having my groceries delivered from Trader Joe’s or the variety of workout options I can choose from each week. (I currently teach BODYPUMPTM and have credits at Zen Yoga Garage and Flywheel.) If I want to live where you can hear the grass grow and the need to carry Mace is laughable, I won’t be able to be so picky about where and how I get my sweat on. Continue reading “Living Paycheck to Paycheck? Here Are 4 Places to Find Money”

5 Reasons You Shouldn’t Use Your Phone to Manage Your Money

January 27, 2016

A common request from users of our Financial Helpline is for money management app recommendations. I haven’t found one yet that I love, so I’m always on the lookout for new ways to make it simple and painless to track expenses, stick to a budget and save more money. In other words, I’m in search of the My Fitness Pal for money.

Continue reading “5 Reasons You Shouldn’t Use Your Phone to Manage Your Money”

Thinking of Adopting a Pet? Read This First

January 13, 2016

If you’re thinking that it’s time to give in to your kids’ begging or your inner Dr. Doolittle and join the ranks of pet parents, make sure you’re prepared financially to deal with your new fur baby. There are ongoing costs and other things to consider. The cost of a pet, particularly a dog or cat, extends well beyond the adoption fee, which is relatively small when you add up all the other costs that come along with pet ownership.

Continue reading “Thinking of Adopting a Pet? Read This First”

Take Your Own Baby Steps

December 29, 2015

I am a huge fan of the movie “What About Bob?” starring Bill Murray and Richard Dreyfus. Bill Murray’s character was so overwhelmed by life that he went to see a psychologist (Richard Dreyfus’ character) for help. The psychologist introduced him to the concept of “Baby Steps,” which suggests taking small steps to achieve your goal. In the movie, Bill Murray took baby steps, literally, but the steps were baby steps based on Bill Murray’s mental state, not someone else’s mental state. Continue reading “Take Your Own Baby Steps”

From Single to Married With a Baby

December 15, 2015

My friends often laugh at how quickly my life changed within about 18 months. I was happily single with plans to be a working woman with no husband and no kids. A friend of mine told me that I needed a life and suggested I check out a dating website. I said “never” but was intrigued… Continue reading “From Single to Married With a Baby”

Don’t Let An Old Rule Drive You Broke

October 30, 2015

Within the last several months, I’ve been contemplating the purchase of a home and my sons are a big part of that contemplation. My ex-wife and I split up about 8-9 years ago and I have lived in a few places since the separation/divorce. I’m currently about 15 minutes from my old house (that she still owns) and it’s a quick, easy drive but with two teen boys with active social lives, it seems like that 15 minutes is resulting in 30, 60, 90 or 120 minutes on the Beltway (our version of a highway) on a regular basis.  Continue reading “Don’t Let An Old Rule Drive You Broke”

How This Married 37-Year Old CPA and Financial Planner in Chicago Spends Her Money

October 14, 2015

When my colleagues, Scott and Tania, joined this Last 10 Buys Challenge on Forbes, I took a look at my spending and initially thought, “No way…this looks BAD!” But then I thought about how I actually like it when my instructor at the gym confesses to struggling with her diet so I figured I should bare it all with thoughts on how I could have done better. Here are the last 10 things I spent money on this week:

Continue reading “How This Married 37-Year Old CPA and Financial Planner in Chicago Spends Her Money”

How Far Would You Go To Get Rid Of Student Loan Debt?

September 17, 2015

A colleague of mine recently shared this article titled “How Far Would You Go to Get Rid of Your Student Debt?” that focused on the extreme lengths many people were willing to go to get rid of their student loans. It’s not surprising when you consider that the average college student graduated this year with over $35k in loans. If they pay just the 4.66% interest rate on federal student loans for undergrads, they’ll pay almost $9k in interest by the time they pay it off in 10 years. But if they can put an extra $300 a month towards their debt, they’ll pay it off in under 5 years and save more than half the interest. They can then put those payments towards buying a home or becoming financially independent. Continue reading “How Far Would You Go To Get Rid Of Student Loan Debt?”

The 8 Step DIY Financial Plan for Newlyweds

September 16, 2015

 

As newlyweds, my husband and I are just getting started on our money journey. To get and stay on the same page, we have a bi-weekly money meeting where we dig into our finances, which saves us from money fights and also keeps us accountable to completing tasks needed to get us to our goals. One thing we’re working on is creating our family financial plan to make sure we are fully aligned on money going forward, using these 8 steps. Even if you’re not a newlywed, you can follow these steps to get a plan in place for your family. Continue reading “The 8 Step DIY Financial Plan for Newlyweds”

Using Rewards Cards The Right Way

September 02, 2015

Using credit cards that allow you to accumulate rewards or cash back is a great way to get more bang for your buck. It totally works as long as you start out with no credit card debt and stay that way. But this is also how many people end up in debt in the first place. (There’s a reason that card companies offer those plush rewards.)

Continue reading “Using Rewards Cards The Right Way”

How To Swallow An Elephant

August 25, 2015

How do you swallow an elephant? One bite at a time. The first time I heard this statement my first thought was: “Yuck! Can we come up an analogy that involves eating an over-sized sundae instead of an elephant?” Once I understood the concept, it became my mantra. Whenever something feels overwhelming, especially something that does not seem like fun, I automatically think, “one bite at a time.” Continue reading “How To Swallow An Elephant”

Is Your Financial Plan Too Complicated?

August 17, 2015

I am a big fan of the KISS principle when it comes to having a written financial plan.No, I don’t mean the Paul Stanley and Gene Simmons version of KISS. (Although I’m a big fan of Rock & Brews every time I’m out in El Segundo, California.) I mean Keep It Simple Stupid (or keep it simple smarty-pants if the word “stupid” is deemed offensive in your household). Continue reading “Is Your Financial Plan Too Complicated?”