When a person is knee-deep in debts, he may choose to ignore his problems until it is too late. One reason may be due to ignorance. Another reason is he probably thinks he is doing just fine as his friends are also in the same situation. Are you in the same predicament?

Being in debt is no laughing matter especially if you are a parent supporting a family. What are the warning signs that signal debt is taking over your life?

• You cannot break off from a continuous debt cycle. You have not been debt free for ages.

• You borrow money to make ends meet.

If you identify with the situation above, then it is time to own up and develop a plan to pay off your debts.

photo credit: Casey Serin

Living within your means is a well worn advice given to adults who are perpetually struggling to get a handle on their finances. It is a greater challenge when you are a parent supporting a family.

Living within your means is actually easier said than done. It entails adjusting your lifestyle and being contented with what you have. There are times however when I feel tired of having to watch my spending and feeling guilty whenever I purchase something on impulse.

photo credit: memyni

Being human also means once in awhile, I do give in to feeling envious of others who are more well off than me. Thoughts of “If only I had more money”, tend to pop up now and again whenever I stick to living within my means. So, it is a constant personal battle.

To overcome the above, I practice feeling gratitude. I am grateful for everything in my life especially my loved ones and my good health. I also give thanks everyday for not having to worry about paying off debts or putting food on the table.

Set your own level of satisfaction

I have learned to be happy with what I have. There is also nothing wrong with wishing for better things (more material things) and being envious of other people who are richer. I allow myself to do that. I have set my own target for different stages of personal satisfaction, 10 being the highest. For example,

Combine Net worth with Spouse…………………………Level of Satisfaction

RM500,000……………………………………………………………………………. 4
RM750,000……………………………………………………………………………..5
RM1,000,000……………………………………………………………………………6
RM1,500,000……………………………………………………………………………7
RM2,000,000……………………………………………………………………………8
RM2,500,000……………………………………………………………………………9
>RM2,500,000…………………………………………………………………………10

The above is only an example and doing it means I know where I stand and not to worry when I see someone more wealthy. I only focus on my own goal and living within my means is one way to achieve my target.

As a parent, the added benefit is being a good role model to my children. So far, they have shown restrain when using their pocket money and do not simply spend unnecessarily or thoughtlessly. I want my children to learn that living within their means is an important part of managing their money successfully.

Teenagers are old enough to understand about money better compared to when they were younger. However, it would be too much to expect them to understand the entire workings of the family’s finances.

What to tell your teen?

Generally if the family’s finances are stable and under control, it is fine to tell your teenager that the family is comfortable enough without worrying about the next pay-check.

However, if the money situation is shaky and the future does not look bright, it is appropriate to tell your teen about the bad situation. For 12 years old and below, it is better not to say you have problems paying the bills as this may worry them excessively and have them feeling insecure.

For older teens of 13 years old and above, it is acceptable to tell them about the bad financial situation and the steps you are taking to solve the problem or find ways to improve the situation. You can also ask for your teen’s opinion on how to help you with the finances.

Older teens should be required to take some responsibility for certain money issues. For example, if your teen wants to buy something which exceeds his allowance, he should be encouraged to earn the extra money instead of just getting the money freely from you. If he has some savings, then he should use his savings to top up the balance.

If you discovered that your teen has been spending way too much of his allowance at the shopping mall, what do you do?

If you want your teen to learn the consequences of unnecessary spending, then you should not intervene. Let him discover the results of not saving part of his money. At the same time, he will learn the importance of saving for the future.

photo credit: AH!Photography

Should your teenager go out to work and experience first-hand what it is like to earn their own money? Should they get a taste of working life during the teenage years or wait until they have finished university to join the workplace?

In Malaysia, you do see teenagers doing simple but tiring work. For example, at department stores, coffee shops, fast food restaurants, etc. Doing part-time work during the school holidays teaches them a lot of valuable things. Among the things your teen will learn from the working experience are:

• Working as part of a team or a group

• Learning about discipline and commitment

The motivation to work will probably come from wanting to earn money or an income. Your teen will surely be excited to earn his own money through his own efforts. It will be different from just receiving a weekly or monthly allowance from the parents.

Managing the money

This is a good time to re-educate your teen about budgeting and saving his money for the future. Of course, he should be rewarded for his efforts but at the same time re-investing the money is also important.

As a parent, you can explain to him about the benefits of compounding his money and the earlier or younger he starts, the more rewarding it will be.

photo credit: lenifuzhead

Clothing for your child is a necessity. However, this is not an excuse for buying clothes every month. Clothing can last long when properly cleaned, washed and kept. Hence, the only time you actually need to shop for clothes is when your child has outgrown them or when they are too worn out.

I seldom buy clothes for my three kids. The younger ones would wear second hand or third hand clothing especially the baby clothes. Of course when the clothes are too worn out, it is necessary to get new ones. This happens to clothes that are frequently worn and washed. For example, school uniforms need to be replaced yearly as it is worn too frequently.

To save on clothing cost, below are some tips for you to consider:

• Maintain the condition of the clothes so that it can be re-used and passed down

• Teach your kids to take care of their clothes e.g. avoid getting stains on them

photo credit: markhillary

Teach your kids early so that when they reach their teens, they know how to keep the cost down and still look and feel good at the same time.

If you have a family to take care off, money may be one of your biggest concerns. Even if you are doing quite well at the present moment, there is no harm to find ways to save money for future used. You can use the extra money saved to start an education fund for your children.

Below are helpful ideas for families on how to save that extra dollar to be put away for the future.

• Plant vegetables and fruit trees

If you like gardening, why not grow some of your own food. This will help to cut cost on vegetables and fruits bought from the supermarket.

photo credit: woodleywonderworks

• Learn to do things yourself

If you outsource some chores like mowing the lawn or even hair-cutting, you can be adventurous and learn to do this yourself. The rest of the family members can pitch in as well. If you used to buy snacks from the store, go for a change and prepare them at home instead.

photo credit: TheGiantVermin

• Organize a carpool

This is an old idea but very workable. For example, my cousin’s kids carpooled to go school. After school and going home, the parents take turns doing this. Overall, it saves effort, time and gas.

• Share child-care duties

Instead of sending your child to a day-care center, you can share the duties with other parents. Parents can take turns to look after the children and save cost on day-care.

• Plan your weekly meals

Planning and making a list before you go shopping helps to cut down on unnecessary purchases. Buy groceries or food to include pack lunches as well to save on eating at restaurants. Shop for necessities or buy the required household things in bulk when there is a bargain sale.

photo credit: BruceTurner

• Drive less

Planning your outings mean going out less often and saving on gas or petrol cost. For example, go to the supermarket once a week only instead of two or three times a week.

• Choose a school near the home

Choose a school that is near so that you save on gas. Your teenage son or daughter can live at home instead of the dorm or college campus. They get to eat at home too and do not have to worry about food cost.

Every household has its own way of dealing with the family finances. Along the way, you may be telling your kids certain money messages that have become a daily habit. The following are four common money messages and the impact each one may have on your children.

#1: Mommy and daddy have to work to buy you things

This message is a common excuse to not spending time with your kids. It is always busy doing this or that to earn money in order to buy toys or clothes, etc. Actually a child will not understand why you are always not around to spend time with her. Your child will understand the message but she will notice that you are always unavailable. The advice here is to make a date with your child or schedule time together as often as possible.

#2: Mommy and daddy cannot afford that

Often, to avoid purchasing something for our child, we like to say we can’t afford it. This may give your child the message that she is greedy. It is good to analyze what we mean when we say it. Does it mean that we can’t afford it ever? Can’t afford it today but affordable in the future? Can afford but we do not want to waste the money? To avoid confusing your child, it is advisable to be specific when you give this message.

#3: Mommy and daddy will buy whatever you want

Some parents do indulge their children and buy things that are not necessary. Hence, the children can end up being spoiled. Later on when you refuse to buy them things, they will not take no for an answer. The damage has been done where the child will grow up thinking that the world owes her a living.

Loving your child does not mean having to meet all of her demands for material things. Teach your child to appreciate what she has and to practice delayed gratification. Avoid going to the store with your child if necessary or to warn her beforehand that you will only buy according to your shopping list.

photo credit: Svadilfari

#4: “So what if your friend has ten Barbie dolls”

After a play date with a certain friend, you are bound to hear this kind of messages. A whole room full of toys. A box full of electronic games. Parents tend to get defensive and start to lecture their kids on the evil of materialism which may cause the children to switch off. Pay attention to what your child really means when she talks or reports to you. She may only be telling you what she saw and that’s all. Always listen first and then give your advice. Your child will then continue to talk to you throughout her growing up years and appreciate your answers or advice.

Frugal parenting is about proper money management to ensure the family is well taken care off. It also includes proper planning that takes into account future expenditures and allocating the necessary funds for them. For example, if you have children, you may want to set up an education fund immediately right after they are born. Below is a family acquaintance (names have been changed) and this is a story on their lifestyle.

Meet the Tang family who are in their late 30’s. They own a house, which is partially paid for, and a car that is already settled in full. Both Mr. and Mrs. Tang are working where Mr. Tang is a teacher in a Chinese primary school and Mrs. Tang is a secretary in a private firm. They have 3 children, the eldest is an 11 year old boy, second is an 8 year old daughter and the youngest is a 5 year old boy. All the children go to the same Chinese school where Mr. Tang is teaching.

The Tangs’ combined salaries is RM3300, barely enough to cover their monthly household expenses. Mr. Tang supplements their income by giving tuition during the night time and over the weekend. By doing so, he is able to bring in an additional RM2000 per month. Mrs. Tang is talented in cake baking but having to work and take care of the household chores leaves her very little time to pursue her interest.

The busy lifestyle keeps the Tangs occupied most of the time and does not leave much time for leisure. Hence, they seldom go out to the shopping mall unless there is a necessity. Every weekend, Mrs. Tang goes to the wet market and supermarket to get her weekly supplies of groceries, vegetables, fish, chicken, etc.

The Tangs live quite near the market and place of work including the school and hence their petrol or fuel expenses are very low. The house location was their main consideration when they bought the house 5 years ago in addition to the affordability. However every other week, they do travel to Mrs. Tangs parents’ house which is located 60 KM away. The whole family enjoys this visit as they get to bring back local fruits that are in season like rambutans, mangos, pomeloes, durians, bananas and papayas from the family owned fruit orchard.

Their simple lifestyle enables the Tang to live comfortably on their income. Mr. Tang also manages to put aside some money each month for his children’s education fund. The children do not complaint much at this stage on the simple lifestyle as their parents continue to teach and remind them on the value of money. An earlier posting, “Simple Ways to Teach Your Child the Value of Money“, gives useful ideas on how to do this.

Wise parents ensure that they plan carefully in order to give their family a stable home and all the basic needs are met. Loving and caring for the children dos not mean giving them the best of everything and spending money unnecessarily. The cost of living is gradually rising and raising a family is no longer cheap. Hence, money management is important when you have a family to support.

The following is about a family living frugally on a single income. The Chan family has two young children to support (1 and 2.5 years old). Mrs. Chan is 32 years old and stays at home full time to take care of the children and the household responsibilities. Mr. Chan is 35 years old and works as an engineer earning roughly RM3500 per month.

They live in a bought apartment right after marriage and Mr. Chan had no problem paying for the loan then. However once the children arrived, Mr. Chan realized that his single income could barely support his family. He even had to trade in his Toyota Vios car to the more affordable Perodua Myvi. Mrs. Chan has to be very careful with the household spending and really plans her groceries for the week to ensure it stays within the budget. The budget must also cover milk powder and disposable nappies for the young children.

photo credit: Dan4th

The Chan has stopped going out to eat altogether and mostly eat at home. Mr. Chan even has to pack his lunch most of the time from home and the food outside is getting more expensive. He is worried whenever there is an emergency in the family. For example, if a member of the family falls sick or if the car breaks down. The small amount of money he puts aside each month will be used up then to meet the unexpected expenses. The Chan know that it is important to save some money now as when the children gets to school going age, there will be school expenses to worry about.

Mrs. Chan is already thinking of finding a job once the children go off to school. Her other option is to do a part-time job to help boost up the family’s income. The good thing about the Chan family is they do not have any other debts except for the mortgage and car loan. Although Mr. Chan has a credit card, he uses it sparingly ensuring that he clears the balance each and every month.

I will be posting similar stories in the future based on the idea of “Frugal Parenting”. You are welcome to post your comments about the subject.

photo credit: nDevilTV

For some people, doing a financial makeover can be a daunting task. Hence, they avoid doing it and their finances remain in bad condition. If you are one of these people, below are some ideas to get you started. The idea is to do each of the tasks one at a time, one tip per week.

So, breathe easily and do not force yourself to do more than what you are prepared to do.

#1: Rethink about your spending

For one entire week, do not buy anything on impulse. Whenever you pay for something, ensure that it is for essential things only. Focus doing this for one week. After one week of practice, the subsequent weeks become easier.

#2: Rethink about your financial goals

What makes you happy? Do you feel good when you save money? Do you feel guilty when you use all of your income? What is your target for the future? All these questions are samples only that you need to ask yourself. Think of it as conducting an interview with yourself on money goals. After the interview, reset your priorities regarding your financial situation.

#3: Rethink about the debts you have

What kind of debts do you have? One kind of debt is “planned debt”. These are debts that you actually plan to have like a home mortgage and a car loan. The other kind of debt is on uncontrolled spending where you do not keep track of where you money goes. A small sum spent here and there eventually adds up to become a mountain of debt.

#4: Rethink about your saving habit

If you find it difficult to consistently put aside some money from each paycheck, make it automatic. Find out about saving schemes or methods that allow auto debit from your savings or checking account. For example, unit trust investment.

The above is not hard to do when you tackle one idea or task at a time. At the end of one month, you would have covered all of them and put them into practice. Why don’t you start now?