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.

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: paul goyette

Planning to have a baby entails a lot of preparation. A major part of the preparation should involve financial planning. The parents to be may want to ask the following questions:

1. Do we have the budget for a new baby?

Budgeting for a new baby means getting prepared financially. This will make financial decisions clear and easy to handle and may save the parents a bundle in the long run. After all, a budget means allocating money for some specific purpose. Therefore, no budget means no money, no purchase and end of plans.

2. What are the things needed and how much do they cost?

Parents are advice to make a list of the things they will need to purchase. Parents need to be careful with their money now as having a baby means on-going expenses for many years to come. The budget above should help to set limits and hence it is important not to waste money on unimportant things.

3. Does one spouse has to stop working to stay home? Can the family survive on one income?

This is a major decision and parents should list down all the pros and cons. The loss of one income means the budget may be insufficient to meet the family’s needs.

4. If both parents plan to work, what is the child-care cost?

If both parents are working, there is a high chance that the baby will be sent to a child-care center. Investigate the cost of doing so and include it in the plan budget.

5. Do you need to consider increasing your life insurance to protect against potential loss of income? Will planning may also be necessary.

In order to protect your child’s future, the parents have to obtain life and disability insurance. If something happens to the income earner, the insurance helps to replace part of the loss of income. Drawing up a Will ensures your child will be taken care off by someone you trust (the appointed guardian). All these go to protect your child’s future.

Do you have other suggestions to include with the above? Please share your comments.

photo credit: pfala

The Wise Parent Guide to Save Money

During these hard times, a lot of people are preoccupied with thoughts on how to save money. Why save money? Well, first and foremost it is within your personal control. Nobody can save money for you but yourself. In addition, it is your own responsibility to do it. It is even more important if you are a parent with a family to support.

The ideas in this article are extracted from the free ebook entitled “The Wise Parent Money Strategies”, offered to subscribers of Wparent.com. To begin with, you have to determine whether you have money to save by tracking all your income and expenditures. One way to ensure that you have money to save is by creating a budget and allocating a portion of your income to your savings fund. For those who have accumulated a lot of debt, a portion of your income must go towards debt repayment. For more ideas on tackling debt, read this article http://wparent.com/debt/

Practical money tips

* Save on eating out
A lot of families have taken to eating out to save time on food preparation and doing kitchen chores. However, eating out is also not cheap especially when the whole family does it a few times a week. To save money, eating at home is recommended as it is much cheaper and healthier. Get the entire family to put in efforts to help with kitchen chores and food preparation.
* Save on electricity bills
In the long run, using energy efficient lights can save money. At the same time, everyone must be reminded to switch off the lights or air-conditioning when not in used. It does not take much effort to remember this rule.
* Save on baby expenses
Having kids are normally part of family life. However, they come with a huge price tag. Starting from babies, parents have to fork out a lot of money in preparation for the arrival of a new baby. Learn budgeting tips from this article http://wparent.com/budget-baby/
* Save on unnecessary expenditures or credit card debt
This area takes some discipline and planning ahead to make it work. Personal expenditures like unnecessary trips to the department stores have to be taken under control. Credit card usage should not be abused and the balance must be cleared every month.
* Save on vacation or holidays
When you are trying to save money and cut down on expenses, a vacation or holiday should be the last thing on your priority list. Discuss with your family on the various options that are agreeable to substitute for a vacation. It could be picnics at the park, visits to the museum, barbecues at the beach, etc.
* Save on housing mortgage or loan repayment
Loan repayments especially on car loans and housing loan or mortgage have to be properly calculated and planned. If you cannot afford it, postponed the idea or get a cheaper version.

photo credit: Jeff Keen

Practical money advice

• Live like a college student: A lot of people got themselves through college by working part-time as well as by keeping a tight budget. Most of the times, material things were the least important compared to getting through college and graduating.
• If you can’t afford it, don’t spend that money: This is a very straightforward idea but easily overlooked. Some people tend to spend without thinking of the consequences. Then they accumulate debts, which they do not have the money to repay with. Stick to your budget and make allocations first if you need to purchase something. Practice delayed gratification all the time before making any buying decisions.
• If you are in a debt hole, stop digging: This is the consequences of not facing up to your actions. If you have debts, then it is imperative that you settle them quickly. At the same time, do not accumulate or create any new debts or you will be buried in too deep.
• Don’t misuse your credit card: Treat your credit card with respect. Owning several cards does not give you the license to spend money freely. The main purpose is for convenience only and if you follow by the rules, you don’t have to worry about the consequences.
• Don’t go shopping: When people are stressed out, feeling down or depressed, retail therapy seems the way to go. However, these people get more depressed once they see their debts piling up. Think of other ways to make yourself happy like have a social gathering with like minded friends. Above all, try not to do something that involves the need to fork out a lot of money.
• Money education for your children: Children are considered both as an asset and also a liability. Teach your children early about money. Parents have to shoulder the financial responsibility of supporting the family and also educating their children to respect money. If the parents are doing cost cutting to save money, it helps if the children understand and also get involved. When the children grow older, the parents need not worry so much as their kids already have a good basic foundation on money handling.

As you can see, the ideas above are very easy and clear-cut. The hardest part maybe is to be disciplined enough to follow or apply them one by one. If you view them positively as a way to improve your financial situation, then the ideas will be easier to implement. However if you see them as having a negative effect on your lifestyle, then you will hesitate or procrastinate from taking any actions. If you want to live in self-denial, then nobody can help you. Therefore, think of the positive consequences even though you may have to live without for a certain period. Making sacrifices now may be necessary to ensure a better future.

If you wish for more money saving ideas, there is also another section contained in the free ebook entitled “The Top 10 Money Mistakes to Avoid to Become and Stay Rich”. There are three spreadsheets included with the free ebook for organizing your personal and household budget and expenditures.

Wparent.com invites you to give your best tips on saving money. What method works well for you?

Visit the recent carnival at Solid Planning where you can get more money tips.

photo credit: pfala

In my previous article “The Top 10 Criteria to be a Wise & Successful Parent”, I mentioned that some of the criteria are to be able to provide the necessities in life (material needs), i.e. food, shelter and clothing and to provide a stable and comfortable home for your children.

Well in order to be able to fulfill that requirement, the parents have to be financially stable. One way to ensure stability is by controlling your finances, i.e. keeping track of your spending, eliminating your debts and building up your savings. Money that has been spent is gone and debts will take more of your money away due to the interest payments.

Money issues

It is a common fact that married couples with or without children argue about money or finances at one time or another. It is no secret that it is one of the sensitive issues for married couples and one of the top causes for couples to break-up or get a divorce.

As a wise parent, you know that it is your responsibility to ensure that the family’s finances are in good order. However, it is difficult to ensure this if both parents do not openly talk about it, do not want to acknowledge their financial problems or if only one parent is handling the finances or they just do not know where to begin.

Where to start?

If you have no idea where to begin, then I suggest that you watch the TV show “Til Debt Do Us Part”, hosted by a woman named Gail Vaz Oxlade who is a Canadian financial writer. In the show, she works with married couples that are facing financial problems and helps them to get their finances back on-track. She normally starts off by touring the couple’s home to see how well they live. She does a detail check on their actual spending and most of the time, the couples are caught spending way above their income, in other words, living beyond their means. It is not surprising then to see the high debt accumulation.

To help the couples, Gail will give them a few challenges or assignments that address the root cause of their problem. The goal of course is to improve their financial situation. To begin with, the couples are requested to live on a strictly cash budget and to record down all their spending. This is to encourage the couples to keep track of their spending and is aware where their money is going. The cash money is kept in jars allocated for various purposes like food, transportation, entertainment, clothing and gifts. Earlier on, she had confiscated the couple’s credit cards to ensure that there is no more debt accumulation. In one show, she actually freezes the cards in a container of water.

The are weekly challenges to be completed such as the ‘Life Lesson Challenge’, the ‘Budget Booster Challenge‘, the ‘Future Plan Challenge‘ and the ‘Relationship Rescue Challenge’. In one show, the couples are requested to move to a cheaper abode as their financial situation does not allow them to stay at their current home. In another show, the couple is requested to find ways to increase or boost up their income. In the relationship rescue assignment, the couple must work together and communicate with each other to complete the task given. At the end, the important thing for the couple is that they learn about their money mistakes and take control of their finances. Most importantly, they work together as a couple to address their problems and hence in the process become a better parent.

Successful ending

Finally at the end of the show, the couple will be rewarded with $5000 for successfully completing the challenges or assignments, which is used to help them pay down their debts. I have seen couples that only get partial of that amount when they were unsuccessful during the challenges. Overall, the couples would have learned to control their spending, to do budgeting, to have a debt repayment plan in placed and to have a long-term savings plan.

So if you want to be a wise parent and ensure your family’s finances are in order, you might benefit from watching this TV show. You can watch it on Channel 733 on Discovery Home & Health by the satellite TV provider, ASTRO (Malaysia). You may also check out Gail Vaz Oxlade’s website at http://gailvazoxlade.com where she answers questions from the public about money and finances.

Wise parents would want to teach their children about money, where it comes from, the usage and so on. This article is written with your child as the reader in mind. It is meant to be a guide on money and to be read by both the parent and child together. The parent’s job is to elaborate more on the ideas mentioned in this article. The purpose is to give your child an introduction and a general idea about the function of money.

How did money begin?

A long, long time ago, bartering or the exchange of things or goods was carried out, as money did not exist yet. People traded the things they possess for other things that they do not have. They traded animals like cows, pigs and sheep. Grains and salt were also common as were tea, tobacco, rubber, beads and animal furs.

photo credit: Jarosław Pocztarski

In addition, metal items made of copper, gold, silver, tin and lead were also popular in the form of pots, tools, weapon and jewelry. Eventually, metal was chosen to be the most convenient and the best choice to barter with and coins were produced. However, coins were too heavy in big quantity and paper money was introduced. Today, both coins and paper money are so commonplace all over the world.

photo credit: tao_zhyn

Why do people need money?

People use money for a lot of different reasons. Some of which are:
• To buy things that they want
• To buy things that they need
• To help fulfill or meet some of their dreams or goals. For example, to go on a trip or to learn something or to pick up a skill.
• To make it possible for them to assist other people. For example, by donating some of their money to an organization or to the church.

photo credit: Eleventh Earl of Mar

Where do you get the money?

Your parents may give you some money as an allowance or you may have earned that allowance by doing some chores or work around the house. On special occasions like your birthday, you may also receive money instead of a present. If you sell something to another person like toys or books, that person will normally pay you with money.

You will also get or make money if you provide your services. For example, by cutting the grass, by washing the car, by doing babysitting work, by giving tuition to a younger child, by doing housecleaning and by running errands. The money that you get from your allowance and from doing chores or providing services is called an “income”.

photo credit: jermudgeon

What do you do with the money?

You can decide to save the money, spend the money or give it away. Saving money for example, in a piggy bank is for the purpose of saving it for future use. You can ask your parents to open a savings account for you in a bank where it is much safer.

photo credit: ken +

You may also decide to give away or donate some of your money for a good cause. The money can also be spent, as you like. It is important to spend wisely so that you do not use up all of your money. Some money can be used to buy things that are really important (needs) and other things that are fun (wants).

A way of keeping track of your money is to make a list first of what you want to buy (expenses) and the money you have (income). This is called budgeting. Always remember to save part of your money and not to overspend. You will never run out of money if your income is always higher than your expenses. If you keep this up over time, your money will continue to grow more and may be useful to you in the future.

For more great ideas on money, refer to the Carnival of Investing Strategies.