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.

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?

Financial concerns may be uppermost in your mind when you are laid off or retrenched. Do you have a contingency plan? If you do not have one, then it is recommended to plan one now. The areas you need to look into are:

1. Your debts
If you have debts, you may want to list them out and plan how to tackle them. If you had been planning to take out a new loan or do something that cost a lot (e.g. renovating the house, buying a second car, etc.), it is advisable to postpone the plan.

2. What are your important expenses?
Expenses that are considered “needs” must be given priority first like food and medical expenses. Being cautious and prudent with your spending is also wise until you can find another source of income to replace your old one. List down your essentials and non-essentials as well as recurring monthly bills.

If you have been tracking your expenses, then you would have an idea what is your monthly expenditure. If you need help in this area, get the free ebook entitled “The Wise Parents Money Strategies” for guidance. When you subscribe to the Wparent newsletter, you also get three spreadsheets to organize your personal and household finance.

3. Prepare to make changes in your lifestyle
When the family is dependent on one income only (if the other partner is working), expect some changes to your lifestyles. Logically, the family cannot expect to maintain the same lifestyle on less income.

You may have received some amount of compensation from your previous employment. However, unless you have a new job in the near future, this money is needed to see you and your family through during the gap period.

4. Temporary work
During your search for a suitable job, you may also consider to take on some temporary jobs or freelance work. One good thing about doing this is it prevents you from feeling down and instead it helps you to focus on the future. To learn about moneymaking ideas, read my previous article “Moneymaking Ideas For You“.

5. Life changing decisions
Where necessary, you may need to make life-changing decisions. For example, if you are unable to keep up with the house loan or mortgage payment, you may need to move the family to an affordable place or to move in with a kind relative temporarily. Another example is if the new employment is located at a different place, the entire family may need to relocate in order for you to take on the new job.

The above are only ideas to start you off thinking about your financial situation. People who have been laid off tend to sink down to depression. During this time, there is a tendency to avoid dealing with pressing personal, financial or family matters. Therefore, it helps to understand the emotional phases you would expect to go through. Read the previous article entitled “What Happens When You Are Laid Off?”

Do you have an advice to share on the above? Please feel free to voice it out.

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.