Allowance

This is a post I am really excited to write. I get questions all the time about allowance. Also, being a teacher, I get excited about teaching my kids about the almighty dollar.

First, after talking to many people and reading books on allowance, we decided NOT to have allowance tied to chores. Our kids are expected to help around the house because they live here, not because they get paid to do them. Also, it only takes one time of them deciding they don't want allowance, and the chore thing goes out the window, and a fight ensues.

We also decided that for them to learn how to manage money, they had to have it in hand. Just like if you want them to read they need a book in hand. So we give them $1 per month for every year old they are. So DD1 now gets $8/mo., DD2 $6/mo., DD3 nothing (allowance doesn't start until Kindergarten. It also ends at age 12 when they are old enough to get babysitting jobs.) If they want to earn more money, there are extra chores they can do as well.

When do we do this? In a perfect world we would get to it the beginning of every month. However that doesn't always happen. In fact sometimes we miss a month entirely. HOWEVER, there are consequences for us as parents if we go past the 15th of the month. We PAY a late fee of $1. Our girls LOVE this. In fact they won't hound for allowance because they hope that we are late. We use this to teach them that it costs you more money if you are late paying your bills.

I also want to add in here that we do some things in extremes in this system - like paying a $1 late fee. That is a big percentage. We also match their savings by 100% - another big percentage. I think this helps them understand the concepts better and gets them excited about the rules of investing.

So HOW do we do this? They each have a little bank that we got from this link http://deseretbook.com/store/product/5007477. We start out by giving them in $1 bills their entire allowance. Then they give us back a dollar, we give them change so that they can pay tithing - 10% of their gross income. They put that into their slot. I am going to start to have them fill out their tithing slip right there so that it is sure to make it to church.

Next is savings. Same thing as for Tithing. They are required to save 10% and then we match it 100% as above. We show them as they put their money in their bank, that then we are putting in the same amount of money. Again the extreme, but we want them to learn that when you invest money, you make money. (I am thinking about upping this percentage to 20%. They both have quite a bit of money now, and I think they can manage this.)

Last is their fun money. This is what they get to spend. They love this and so do I. If they want a toy, great, if they can afford it, they can have it! No more fights in Target no more whining for other things either. It is also funny, they DON'T want to buy stuff at Target. They want to go to the thrift store or yard saling because they understand they get more for their money that way.

Also, they have a paper in their bank, where they keep track of their expenditures, investments, and tithing. This way it trains them to keep track - and be aware- of their spending.

What about borrowing? Sometimes, they don't have their money when they want something. Fine, they can borrow some money. However, if they don't pay me back RIGHT when we get home, they owe ME a late fee (just like a credit card). Their interest is $0.25. This is the same if they borrow money from each other.

Sometimes I borrow money/cash from them because I rarely carry cash. I then owe them the $0.25 borrowing fee. I LOVE that the rules go both ways. That means no whining about when things don't go your way. The rules apply to everyone.

If they borrow money because they are completely out of money, they would be charged a 100% fee for that. So if they want $5 for a movie, by the next Sat. they would be required to pay me $10. We haven't hit that yet, but I am sure we will someday. Again, an extreme, to make it hurt to borrow, and spend, money when you don't have it in the first place.

We do have some money charges tied into chores if they don't do them and I have to do them. They pay me a cleaning fee. But I will blog about that in my chore section.

I got most of these ideas from a book called The Parenting Breakthrough by Merrilee Boyack. It is written for an LDS audience, however no matter what faith you are, the ideas are easily transferrable. This woman is AMAZING at what her kids know by the time they are 18. Here is the link http://deseretbook.com/store/search?query=the+parenting+breakthrough. Both the tin and the book are from the same website so you can save on shipping. This book is in my permanent library of parenting books. I would pay twice the full price for this book. That is how much I LOVE it.

One other thing. How do the girls like this? They LOVE it. It is so fun to hear them say, "They want $10 for that? That is waaay to much. or I will just get one at the Thrift store." They understand that it costs a lot of money to eat out and if you run out of money you have to wait until the next pay period.

They are sooo money savvy it makes me laugh. The next step is teaching them about investments, but I need to learn more about them myself before we head into that territory :)

How to Lower Your Bills - Clothing

This is the next part of my reader's question, "How do I lower my bills?" Without knowing the specific bills you want to cut, I can only give general info on this one. (Please let me know specific bills you want to cut.)

There are two questions to ask your self when trying to lower a specific expense. 1. Is it possible or have I already slashed this as low as I can? 2. If it is possible, HOW can I do it?

The HOW is where you need to think about it from many different angles and be open to possibilities that aren't mainstream and some you may not be totally comfortable with at the beginning.

Also keep in mind the Three E Rule. Look at my older post at this link for the specifics. http://thecouponbinder.blogspot.com/2009/06/three-e-rule.html

Let's do an example...Clothing.

Most Americans buy their clothes from a department store of some kind. We'll call this retail. Now there are different levels of retail. Full price, sales price, and clearance rack. If you want to keep buying your clothes from a retailer, those are the levels you have to choose from. Each step down will take a little more patience to find the style and fit you want and work in terms of going to the store more often or going and not buying anything because it isn't in your price range, but your savings will increase with each step down.

You can also get an additional discount if you actually work at a specific store. This would also allow you to see the items on the clearance rack before the customers do and it will get you to the store everyday. So if you are REALLY into brand new clothes - especially a specific brand, this might be a good idea for you.

Now if I were at the retail level, let's even say the clearance rack level. I need to ask myself, "Is it possible to get this cheaper? If so, HOW?"

YES I can get clothes cheaper. HOW? By going the next tier down. Thrift Stores. This is a bit more work then retail, but again, the savings will increase. Here, there are no guarantees that you will find what you need at that moment. But if you don't have specifics in mind and are willing to wait to find the fit and style you want, this is a great option. Again, if you are into having many clothes to wear, you will need to go on a consistent basis. Or you can drop your expectations.

This is a step that a lot of people aren't comfortable with. I know I wasn't for a LONG time. I wasn't raised "Thriftin' " (a term my friends and I use). It took a good friend that I looked up to, to introduce me to this realm. Funny thing, she actually has more money than I do. I figured if she could do it, so could I.

We also turned it into a game. It was time we could spend together, shopping for our families, and when we found a good deal we both get excited. If something is over priced we say out loud across the store, "Really? $5 for this?!! Waaay overpriced!" We also laugh at the goofy stuff you find there. So there is an entertainment factor as well.

Now again the question, "Is it possible to do this cheaper? HOW?"

YES, cheaper is possible. Yard sales. It took another friend to get me to dive even deeper. I wasn't completely comfortable with this realm because you had to negotiate and I didn't know the market prices for yard sales. Again, there is a bit more work at this level as compared to the levels above it, but your savings increase again.

There is also fun in this because negotiating is SO MUCH FUN!! Many people (women especially) are afraid of it, but it is so empowering! And what better place to learn it when there are only a couple of dollars riding on it. Better to learn it here then when you want to buy a house or car.

So this level actually can give you skills to save money in other realms. Also, when you see how much things depreciate it turns you off to buying ANYTHING new ever again. (In the spring I will be posting more on yard sale tips so stay tuned for that.)

Now again the questions, "Is it possible to do this cheaper? HOW?"

FREE. HOW? People give us clothes for free and I LOVE this, so do my girls. I have a reputation for being super frugal - which is true. People know that we will accept all donations without feeling like we are a charity case. In fact we are VERY grateful and try to thank the giver profusely. When we wear a given item, we also make it a point to show the giver we are wearing it, (if it works out that way). Or I will make it a point to tell them how much we are enjoying it and how cute the girls look.

If someone is thinking about giving something to the thrift store, they will ask us first if we can use it. I will always say yes. It is better to go through a bunch of stuff, find a few items you can use, and then donate the rest. It also means I will make the thrift store run instead of the person who gave us the stuff, but I think that is a fair trade off. (I have to say with clothes we keep most of them.)

We don't have a lot of outfits that are the cutesy matching kind. But our oldest in is 2nd grade and the kids aren't really into fashion yet. I have been to her classroom and she looks just the same as everyone else.

Some people won't be comfortable with getting other people's cast offs and that is okay. However, try to do something that stretches you. I had to go through every step down this ladder one at a time. Each one stretched me and I learned great skills in all of them.

Now again the question, "Is it possible to do this cheaper? HOW?"

No, it is not possible to do this cheaper than FREE and this is where it ends. Merry Christmas!

A New Appreciation

So many of you know that I also run a small business on the side. www.TheCouponBinder.com. There I make and sell coupon binder kits. When I started this business I thought, "How hard can it be?" Well let me tell you, starting a business is HARD. It doesn't matter how big it is, there is a lot that goes into it.

So now I am at a cross-road. Should I keep it going or fold it? DH and I were doing the numbers and found that I am only clearing my materials costs. I am not even making enough money to pay for my web page and online store. This means that I am paying my money and spending a ton of time putting together binders for other people - not cool. The one question I have is, "How is my competition doing it?"

This has also spawned in me a new appreciation for people who can actually make a business work. Wow, it takes a ton of courage and know how, and a lot of savviness. If you know a small business owner, you should tell them congratulations for making it work.

**Did you know that statisitcally only 1 in 10 start up businesses succeed?

Theater $avings

One of my readers recently asked this question:

How do you cut money on experiences? Like, theater tickets or trips? How can you cut costs on bills? And I have lots of questions on coupons still. I clip them, but I don't really feel like I am saving a lot of money using them.

This is a series of great questions and I think each should get their own post. This post will address the specifics of saving money on theater tickets.

I did a little search on ehow.com and found an article with some great ideas. Here are their tips:

step 1
Buy a subscription. Season-long subscriptions are ten to thirty-five percent lower than individual tickets. Contact your local theater group and find out what kind of subscription programs they offer.

Step 2
Attend the previews. Discounted tickets to attend a performance before the show officially opens are available at some theaters. While this will not be the polished, final production they are often almost as ready as the opening night performances.

Step 3
Keep an eye open for rush tickets. Call the box office one or two hours before the shows performance and find out if there are many tickets left for that night's performance. Rush tickets are sold about thirty minutes before the curtain opens and cost about half the price of the regular ticket. A full house looks good to reviews and the performers.

Step 4
Ask if your favorite theater offers week-day (or matinee) performances. If they do, they might let you make a donation for your admission. Don't expect this on the weekends when theater goers flock to the shows, but week night performances don't fill as easily.A little determination can make a big difference. If you really want to attend a live performance, check into these methods for saving money at the theater.

Now, for some of my own ideas:

If you are going to Broadway, they sell standing room tickets for about $25 per ticket (We did this with Monte Python and the Holy Grail). Also, they have lottery tickets for some of the most popular venues like Wicked. You go at a certain time, put your name in a drawing. If they pull your name out, you win! You pay $26 for a front row ticket. Be ready with cash in hand for this as well. (I do have to say, your chances are slim of winning at the really big ones. it took us four tries to win the Wicked lottery. Finally all eight of our extended family put their names in at once. One of us won and gave the ticket to me and my DH.)

Check out the ameture theater. Here you will find professionals who are trying to beef up their resumes so they can go big. While we were in the San Fransisco area, we attended operas put on by the music conservatory there. Great production, fraction of the price. Also check out a local college or university.

If professional venues are still a little pricey, even with the above tips, think local theater. The theaters are often smaller so you get a great view. You get local talent which is fun to see, an the price tag is as least 50% of what you would pay for a big production. Also, you don't have to travel as far so the price of gas will go down, and parking will probably be free. (The cut travel time will also help with the sitter cost if you have one.)

Another way is to let your friends and relatives know that you are interested in going to the theater. Maybe you will get tickets for a birthday or Christmas present.

Also, you can split the cost of season tickets with a friend or a group of friends, or if you know someone who is a season ticket holder, let them know you would be interested in their tickets if they can't make it to a performance. (You can swap babysitting with the other people who share the tickets with you.)

I just checked craigslist.org and people sell tickets there. Also, my brother-in-law likes stubhub.com. However, I don't know how cheaply you can get tickets from there.

Thank you for the question. I hope this helped and stay tuned for my other answers.

Want to Cut Your Cleaning Time?

I am reading a book by Don Aslett titled, "How to Handle 1,000 Things at Once." (My neighbors got a kick out of that one.) Anyway, in it he said that you can cut your cleaning time by 40% just by decluttering! That is what I am starting today!! Goodwill, here I come.

My Pet Wants

ALL of us have wants. (In fact, I think that we all are born with a slot in our brains called the "Want Spot".) Some are big and some are small. We think that once we get it, we will be satisfied.

Funny thing though, once we get that "Want" there is a vacancy in that area of our brain. There are many things that are willing to fill that spot and before you know it, you have another "Want" that you are longing for.

Now, this is not easy on the pocket book, nor on ones nerves. These pet "Wants" take tending. They take brain power, work power (to earn the money), and then we must take care of that item once we bring it into our homes.

To combat these interesting little pets, I keep mine around for a while. Sometimes a LONG while. If I have a natural Want spot in my life, why not keep the same Want there. I do the same thing with it as I would a new one (dreaming about it) and then I don't spend my money or clutter my house with all of these little pets.

A funny thing happens though. If it is something I REALLY want or need. It will stay around for a long time. I turn it around and look at it from all angles. I ask myself, "Where would I put it? How would I take care of it? Can I really afford it? Will it save me time? Is this a want or a true need? Can I substitue something that is cheaper? Can I do this by myself?"

While I am thinking about it, I keep my eyes open for a deal on that pet. I look for a used one, or a killer sale. If it is something that isn't that important to me, it will fade away, and will let something else take it's place. Also, while I am waiting, I am also saving my money so that I can honestly afford it, if I decide to buy it.

It takes a bit of discipline to keep your current "Pet" locked up in your brain. (They want to get out and into your life.) But try it. It will be hard at first, then you will get better at it. Then, when you actually bring that pet into your life, you will be much more happy with the new addition to your family.

**True story, I "wanted" a new oven for three years. My old one worked fine, but I really wanted a new one. I would think about it EVERY TIME I cooked. I kept my eyes open and then when I saw the perfect one (used on craigslist) I pounced on it. This is how I got that perfect pet for 1/3 the normal retail price.

**One more thing, I treat both my big and small Wants the same way. In a buget, it isn't always the big things that kill you. It is the culmination of the little things that add up quickly. So make sure that you don't give in to all your little Wants as well.

Law of Diminishing Returns

Before I became a Home Economics major, I was a business major for 25% of my educational time. One of the things I learned about was the Law of Diminishing Returns. Simply put, there is a time when a system will peak in the returns you get with an investment. After that peak, if you put something in, you will get less back for it.

Simple example. Ice cream. That first spoon of ice cream tastes so good. It is worth the money and the calories to have it. The next bit is also good, and so is the next. However, there will be a point where if you put in more money, you won't get the same satisfaction out of the ice cream as you did before. In fact, there will come a time where even though you put money into ice cream you will not enjoy it at all because you are sick of it.

Now, let's look at it with Christmas. You buy your kids TONS of presents - this year is going to be the perfect Christmas. Christmas morning, they come down and scream at the piles of presents they see. They start ripping off the paper and are so excited for the first present.

However, they have 20 other presents to get to. So instead of enjoying that first present, they say a quick and asked for, "Thank you" and tear into the next one. This happens over and over. Pretty soon, you will notice that they are not very excited anymore. In fact, instead of being grateful, they start to complain about they aren't getting what they wanted. It isn't the right color, Johnny got something better, it doesn't fit, etc. etc. They start to complain and the whole day (and budget) is shot.

Now think of this. They come down to presents under the tree. They are still just as excited. They open their first one, and wait while Johnny opens his present so that they can all see what everyone else gets. After a few presents, I mean all of the presents, are open, they still have enough energy to enjoy what they got.

They have not peaked and ate enjoying each present. Also, their sensories aren't getting overloaded with so many things, and now they can actually focus,enjoy, and be grateful for the few things they got.

My frugal friend Eileen, also warned me not to get my kids used to getting lots of presents when they are little. Because as they grow up, they will expect Christmas to include mountains of presents. As they get older, those presents get more expensive.

Many of you may be wondering what will be under our tree this year. I did ALL of my Christmas shopping this summer at yard sales. We have also been given some great toys from friends that I am waiting to give the girls on Christmas (with tags from the friends of course :).

I do have to admit, I did a quick inventory the other day and got a little worried that we weren't going to have enough to make it "look good". (This is a journey for me too.) My DH reminded me that they are getting a Wii (bought used off of Craigslist) and that they will still get gifts from family members.

I am looking forward to a low key day, that will focus on family time, and less on presents. I hope that this post will help you "diminish the returns" that you have to make to the stores this year and enjoy your Christmas more.

I would love to hear how you are cutting your holiday bills this year.

Stay Tuned

This post is to let you know I am still here. I also want to let you know of some upcoming posts about allowance and chores. I will be blogging about what we do in our family, and I will have a guest blogger. Her name is Charity Wolf. She has 6 kids, 5 boys between 15 and 7 and an adorable baby girl. Her boys are amazing with money and work and I personally have been interested in how she does it. She is in the writing process now so stay tuned for these insights.

Want Something Cheap? - Take a Class

Okay, so I should be making cookies right now for a youth activity, but I had this point that I needed to get written down.

If you want to have a service done for cheap, take a class on how to do it. The instructor will be a professional in that field and may be willing to help you for free, beyond the tuition.

Case in point: I needed help decorating and arranging furniture in our house. I signed up for an interior decorating class at the local community college. I think the cost of tuition was about $40.

I found myself learning interior design principles from a woman that had been in the industry for decades, and was VERY successful. As part of the curriculum, she took the class to one of our homes to show us how the principles we were learning worked in real life. Well, she came to my house.

There were 14 people here to help move furniture and give feedback, all being led by this professional decorator. She took the meager pictures and furnishing I had and combined them so beautifully. This would have cost me HUNDREDS of dollars to hire out, but I got if for FREE as part of my class.

As with anything in life, if you want to save money on something, become educated about it, and you will find many people along the way willing to help out.