Build Your Savings Account – Make More, Spend Less

Build Your Savings Account – Make More, Spend Less

 

How to Save More MoneyHi Rich Mama – today we’re going back to the basics of financial planning.  It’s all about step one of your defensive plan for building a wealthy family. You have to save. You will never become wealthy – no matter how much you make – unless you are saving money! But so few actually have a regular plan for saving. That old adage that those who fail to plan, plan to fail, is never more true than where money is concerned.

 

Without a solid savings plan, chances are, you’ll never have enough money on hand to provide for your family in the event of a financial set-back. Reaching long-term financial dreams such as a secure retirement also depend on a savings plan.

 

The best way to protect your family from financial disasters is to have a plan in place to prepare for the future. Building a savings account requires learning to make more money and live on less. These two strategies will go far toward ensuring that – heaven forbid – a financial disaster strikes. Your family will be able to survive and more easily bounce back from the hardship with a firmly established savings account. A savings account will help you sleep better at night – much better than a garage worth of junk or a closet worth of shoes.

 

Let’s look at these two strategies that will help you build a savings account, and build financial security in the doing:

 

Make more money.

 

You can try and earn some extra money and put that in your savings account. Spend the rest of your money guilt free. If both you and your spouse work, this is a great test to see what would happen if one of you quit (or lost) your job. Try living only on one income.

If you’re already a one income family, you can try and earn a bit extra on the side and devote this to saving.

You can start a home-based business offering services such as lawn care, babysitting, tax preparation, sewing, baking, music lessons, or anything else you can do reasonably well. Start by talking to your friends, family, and neighbors about your new venture, then branch out when you get your business firmly established. DO NOT SPEND A LOT OF MONEY STARTING THIS BUSINESS. If your start small and only earn a hundred or two hundred bucks a month that you SAVE – pat yourself on the back.

If you like to sell, you can sign up with any number of direct sales companies. Some familiar ones are Avon, Stella and Dot,  Home Interiors, and Arbonne, just to name a few. There are hundreds more with products ranging from baby toys and books to weight loss assistance. Choose something you like, and that you believe in, and give it your best shot. Avoiding ones that have you buy a lot of inventory upfront.

 

Selling your own products or unwanted items is another way to make more money. If, like most of us, you have a garage, basement, or closets full of things you no longer want or need, turn those items into cash. Declutter your life and build a savings account at the same time. Explore online auction sites for ideas about what people are looking for and get on the bandwagon. Or just have a good old fashioned yard sale and make a commitment to put that money into your savings account.

 

You may enjoy crafting. Could you build an inventory and take those items to a local art fair or flea market? Perhaps setting up an online store would be more to your liking – try Etsy.com so you don’t have to go through the hassle of building a website from scratch.  As much as you enjoy creating things, there are even more people who enjoy buying things. Why not sell them YOUR things?

 

Spend less money.

 

Make spending less money a habit, even a challenge. See how many outfits you can make out of the clothes in the back of your closet; see how many meals you can get out of one whole chicken, etc. Put the money you would have normally spent into a savings account. Avoid eating out. One less take out dinner a week could mean a hundred dollars or more a month in your pocket – I mean savings account.

 

Coupons are an easy way to track how much money you save when you shop. Take the amount on the coupon and physically deposit that amount into a regular savings account. Nickels and dimes can add up quickly when this is done consistently.

 

Keep a small notebook and track every cent you spend. Within a week, you’ll notice a pattern of unnecessary expenditures. Eliminate that gourmet coffee on the way to work and replace it with a home-brewed alternative. Fill a reusable bottle with filtered water out of your own tap instead of buying bottled water. Make your lunch at home. Whatever you save over the weeks, take that money and stick it into your savings account.

 

Eliminate luxuries in order to build your savings even faster. Find a cheaper hair salon, go a little longer between cuts. Do you own nails.  Go to the library for books and moves.

Whatever you choose to do, however you choose to save, start today. Put aside a little money from every paycheck, spend less, and earn more so you can build a savings account to protect your family in the event of a financial disaster. You need a buffer against layoff, recession, depression, or long-term illness to ensure your family’s security.

Giving Your Child an Allowance

Should You Give Kids an Allowance?Giving Your Child an Allowance

Is anything in the world of finance and parenting more debated than this – should you give your kid an allowance? Will it turn them into lifelong moochers or teach them valuable budgeting skills. In the Rich Mama’s humble opinion an allowance is a good tool for younger kids, when used as a way to regulate the “I want that’s…” Since children this small really do have a hard time doing jobs to earn money, an allowance can be a great way for them to learn to save up for that pack of gum or special toy.

According to some financial experts, giving your child an allowance is one of the best ways to instill solid financial skills in their young brains. Compared with a “pay as you go” policy, where you pay for what your child wants when he or she wants it, a weekly allowance can help your child better understand that money must be earned before it can be spent. This is a lesson your child certainly needs as an adult.

In addition, older kids are more influenced by their peers, especially where spending habits are concerned. Don’t forget you also have to contend with television commercials, radio ads, and other forms of media selling, selling, and selling. Managing an allowance at a young age will help your child more quickly grow accustomed to spending limits and restrictions.

What’s important if you’re going to give an allowance is to discuss what’s covered by the allowance. In other words you might not expect your kids to pay for their whole back to school wardrobe with their allowance, but if they want to go to the movies with friends, this might be an allowance item. Just make sure you and your partner sit down and discuss what you think you should be paying for versus what your kids should pay for with their allowance.  And then when you and your spouse are on the same page, then go start to negotiate with your kids.

Chores, Smores

With older kids, there are some families who have them do chores in exchange for an allowance. On the one hand this teaches the principle of now worky…no pay-ey…On the other hand moms and dads do a lot of crap around the house without any expectation of allowance, and if you’re teaching your kids that if they make their bed and get a dollar, then what happens when they’re on their own – and no one is giving them a dollar.

With older kids I favor the approach of chores that need to get done no matter what, plus a base allowance, plus an opportunity for kids to earn money doing extra jobs around the house. For instance if there is a job you would outsource, then consider paying your child for it. It could even be cooking a meal a week if it stops you from ordering takeout.

 

How Much is Too Much

So, how much allowance should you give your child? You can determine the amount in a variety of ways. Some parents and financial experts suggest one dollar for every year of age. Others say to set the amount based on how you expect your child to use the allowance, providing enough money to put in a savings account, give to charity, and to spend. Still others suggest giving your child an amount based on what other kids receive around the same age.

Whatever you choose, give it some thought, talk to your spouse and your child about a realistic amount, and start low rather than high. It’s always easier to increase a child’s allowance than to give him less because you started out giving too much.

As your child grows and matures, an allowance will help teach money management skills and develop responsible spending habits. Simply buying what your child needs and wants doesn’t allow the same learning opportunity. Giving an allowance may be a trial and error process for your family, but it’s one that is well worth the effort and learning curve. It will teach lifelong skills that your child will need—and thank you for—when your child becomes an adult.