Equifax Finance Blog » Family Money

Saving Money: Teaching Children the Value of Money

MMarquit — Mon, 07 May 2012 02:49:42 +0000

Most of us want our children to grow up to be responsible with money. Financial literacy is an important part of successful money management—if you start teaching your children basic lessons while they are young, they will have a firm financial foundation to build upon in the future. When brought up to know the value of money, children are more likely to exercise caution in their future dealings and be better at saving money.

Teaching basic money management concepts

Kids are visual learners, and it helps if they have something tangible to use when learning about money. Before my son actually began receiving an allowance, we had a system that allowed him to earn coupons that could be redeemed for TV time. Each DVD was labeled with a number indicating how many coupons each episode or movie required (single short episodes of a TV show cost only one coupon, while the longest movies cost four). He quickly learned that he could watch his favorite movie if he saved up his coupons for two or three days.

Basic systems like this translate quickly into an understanding of money handling. When we introduced an allowance, my son made the connection between coupons and money. However, he still needed to learn the value of money and how it was earned. I wanted him to earn money, but at the same time, I also wanted him to learn that some things are worth doing—even without pay.

Our compromise is to pay a small allowance that is not tied to chores (which he does because he’s part of the family) and to allow him opportunities to earn more money if he wants. As a result, he works hard to do well at 4-H projects to earn prize money, and he thinks of enterprises to undertake in order to earn more money. Allowing him to work for some of his money teaches him that it has value.

On top of this, I also teach my son basic money management concepts such as:

Long-term saving
Short-term saving
Charitable giving
Prioritizing

We use different jars and envelopes to teach these concepts so that he can see where his money is going. We also encourage him to rank the things he wants (sometimes using pictures he draws or cuts out of ads) so that he learns about priorities. He spends his money on the most important things first, and he forgoes the less important items.

Working with older children

As our son grows, we know that more lessons will need to be taught. If you begin when your kids are younger, it will be easier to teach more complex concepts later. One way to encourage pre-teens and teens to learn the value of money is to have them work for it. Jobs ranging from neighborhood babysitting and yard work to after-school employment at a local business can help kids learn the importance of work and provide them with money to manage.

It’s also possible to teach children concepts such as interest. Consider allowing your kids to borrow money from you if they ask for something they can’t afford. Explain that they will have to pay you back with interest—and that they can’t buy something else until the obligation is discharged. We tried this on my son, who didn’t want to save up money for a purchase. At first, he thought it was a great deal—until his money had to go to repaying us for the next three weeks and he saw that he had to pay extra back in interest.

You can also use the reverse to teach a lesson. Borrow money from your child and then repay it with interest. Show him or her that it is better to earn interest than to pay it. This can segue (for older children) into lessons on investing. There are a number of games online that can help pre-teens and teenagers learn about and practice concepts related to investing. These can help your child learn how to use money to make money.

Some additional ways to teach children money management skills include helping them open bank accounts, letting them make small mistakes with their money, and encouraging them to see that they can earn money on their own.

Miranda Marquit is a freelance writer and professional blogger specializing in personal finance, family finance and business topics. She writes for several online and offline publications. Miranda is the co-author of Community 101: How to Grow an Online Community, and the writer behind PlantingMoneySeeds.com.

Review: Equifax Complete™ Family Plan

MMarquit — Mon, 23 Apr 2012 02:49:33 +0000

One of the latest products launched by Equifax is the Equifax Complete™ Family Plan, which monitors the credit report for all the members of your family. (Disclosure: I was provided with a code that allows me access to the Family Plan — which costs $29.95 per month — for a year)

After trying it out, I can see how a family can benefit from this service. However, it is worth noting that it is possible to monitor your own credit situation for less – as long as you don’t mind taking the time necessary.

First of all, the Equifax Complete™ Family Plan is easy to use, and provides you with access to information about your credit report in a format that helps you visualize your situation. You can add your spouse and even up to four children to the plan. You can view each profile (although your spouse has to accept an invitation separately to be added to the plan), and you can receive credit alerts for each profile as well.

Your credit information, including information from all three major credit bureau reports, is displayed in an easy-to-see manner so that you can view your credit score from each bureau, as well as see how many of each type of account (installment loans, revolving credit, etc.) you have.

One of the features I do like about the Family Plan is that it creates an Equifax credit file for each child on the plan – and then locks it. Child identity theft is a growing problem. Thieves can use your child’s Social Security number to open an account, but you might not find out about it until your child comes of age and applies for his or her first credit card or auto loan. Automatically locking your child’s credit file makes it very difficult for his or her identity to be stolen.

Another thing I like about the Family Plan is the Lost Wallet feature. If your wallet is lost or stolen, you can use this feature to quickly assess the damage, and take action to cancel card numbers. The Lost Wallet service can even complete many of the necessary tasks for recovering or canceling the information on your behalf.

The Family Plan is a complete credit-monitoring product that helps you manage the credit profiles of everyone in your family. You receive alerts anytime new information appears in your credit reports, and Equifax scans the Internet for your personal information and alerts you if it is found on suspicious websites (providing you with warning that someone may be using or selling your information).

While you do have access to your Equifax information 24/7, and access to key changes in any of your major credit profiles, access to full credit scores and profiles from the other bureaus are only available once every 12 months.

The $29.95 per month price reflects a savings over what you would pay for enrolling two adults in the Equifax Complete Premier plan, and includes monitoring the child profiles. However, realize that you are entitled to a free credit report from each of the bureaus once a year from AnnualCreditReport.com, as well as a free report from the information-providing bureau when you are denied credit. Additionally, the actions you can undertake when your wallet is lost or stolen can be accomplished on your own for free.

What the Family Plan provides is active credit monitoring for your whole family on an on-going basis. It saves you time, while providing peace of mind. It’s true that you can perform all of the actions included on your own, and for possibly less on an annual basis, but it can be time-consuming. If you are interested in 24/7 monitoring for your whole family, and want the peace of mind that comes with knowing you have help if your information is compromised, the Family Plan isn’t a bad choice.

Saving Money while Traveling with your Family

TeriCettina — Fri, 13 Apr 2012 05:00:11 +0000

At first glance, the terms “travel” and “frugal” might not seem like they belong in the same sentence. If you’re tight with money, how could you possibly justify travel? You should be saving money!

In our family, and in many other families, it’s all about setting priorities. My husband and I feel that travel is important. We want our daughters to see that the world is much bigger than just our own city. We want them to see first-hand that people speak different languages and live differently in other parts of the world.

So to make room for travel in our budget, we are willing to cut back in other areas. For instance, we drive older cars. We eat out a little less. We take fewer “small vacations” locally so we can take a bigger vacation every couple of years.

And when we take a big trip, we research money-saving moves ahead of time. Here are some easy strategies that saved us big bucks. Could they work for you?

Shop for airfare bargains. According to a recent study by the Airlines Reporting Corporation, the ideal time to buy airline tickets—both domestically and internationally—is a mere six weeks before you travel, no earlier, no later. The study found that consumers who buy their tickets around 42 days before their trip save nearly 6 percent over average prices.

However, for a recent family trip to England, I was a little nervous about booking tickets so close to departure. Instead, I plugged our planned itinerary into the flight search engines at Bing Travel and Yapta.com. Their airfare predictors suggest whether it’s time to book your flight or whether they expect fares to drop. We followed the predictors for about a month, then bought our seats at the best price we’d seen all year. Alternatively, we also could have chosen to sign up for sale alerts from a site like airfarewatchdog.com or farecompare.com.

Don’t stay in a hotel. Rent out a condo or apartment instead. For our family’s England trip, we rented a cozy London flat—in a family-friendly neighborhood—for about half the price of a hotel. It gave us a little more space than a hotel room, and we had a little kitchen for making breakfast—another way to cut costs. We found our flat through airbnb.com. For other international locations, HomeAway.com is another option.

I’ve also had friends who’ve had good experiences with HomeExchange.com. Using this site, you can swap homes (at no cost) with another family during the same time period. However, you need to be a bit more flexible about when and where you travel to really make the exchange work well.

Make cheap international cell-phone calls. Unless your cell phone is a tri-band or quad-band phone, it may not work internationally—or it will cost you big bucks to use it. An easier option: Buy a cheap pay-as-you-go cell phone and SIM card in the country to which you’re traveling. We did this in England. We were able to refill minutes as needed, and our plan included a small number of international minutes for emergency calls home. If you don’t mind paying a little more, you can also buy an “unlocked world phone” on Amazon or eBay before you leave the United States. Then you can buy a local SIM card at a cell phone store when you arrive or purchase it ahead of time through sites like or Telestial.com or Cellularabroad.com.

Watch out for credit card fees. Many credit card issuers charge a foreign transaction fee of up to 3 percent every time you use your card outside the United States. That doesn’t sound like much, but those fees pile up quickly. If your card charges foreign transaction fees, do what we did: Apply for a new one that waives these fees. You might even be able to find a card that gives you some extra miles to book your plane tickets.

Happy—and frugal—travels!

Teri Cettina is a mom of two daughters and freelance writer who specializes in personal finance and parenting topics. She blogs at Your Family Money. Follow her on Twitter: @TeriCettina.

Spending Fast Can Help You Achieve Financial Health

Eve Becker — Fri, 23 Mar 2012 12:56:50 +0000

Have you ever reached that point in a diet when you’re eating all the right things and getting regular exercise, but your weight loss plateaus anyway? Changing up the way you think about your eating habits and trying something new can jumpstart your weight loss.

As we’ve talked about before, dieting techniques can be applied to money management. Like a short-term juice fast, where you lose a lot of weight initially and then follow it up with a longer-term dieting regimen, a month-long spending fast encourages short-term cuts followed by a renewed attention to savings for the future.

With a spending fast, you limit your spending only to necessities. That means no eating out. No going to the movies. It’s time to use up food in the pantry and spend gift cards that are gathering dust. At the end of the month, you’ll end up saving money, paying down debt, and truly understanding your needs versus your wants.

Some individuals have successfully embarked on a spending fast for an entire year or more, finding that frugality quickly becomes a money management habit. When you stop buying things you don’t need, the savings can become addictive, and a more limited lifestyle can become a reality.

A look at a successful spending fast: Anna Newell Jones

In 2010, Anna Newell Jones went on a spending fast for a year, spending money only on necessities in order to pay down her debt. When her spending fast started, she had $23,605 in debt. After strict money management with one year on a spending fast, she reduced her debt to $5,694, and in 15 months, by April 1, 2011, she reduced her debt to $0.

“I acquired my debt in my early 20s, like lots of others,” Newell Jones says on her blog, andthenshesaved.com. “I liked shopping and I liked thinking I could afford things I couldn’t. I was in complete denial and was overspending every month by at least $200 to $300. I was seduced by the thought of keeping things looking nice and perfect and looking like I succeeded even though I wasn’t there. I wanted to look like I had my life put together so others thought so too.”

We are used to a cycle of buying, not savings, says Newell Jones.

“Paying off my debt started to become fun,” Newell Jones says on her blog. “I started to get competitive with myself and I wanted to top the previous month’s numbers. I wanted to see how much more I could cut back, how much more money I could make, how much more I could send to the creditors.”

In an interview, Newell Jones elaborates on the hard parts and the successes of her spending fast.

“Common pitfalls that I experienced were wanting to go back to my old ways of buying what I wanted to buy, when I wanted to buy it. Being a spender is where my comfort zone is,” Newell Jones says. But after disciplining herself, she was able to enact change.

“I started to develop a habit of saying ‘no’ to myself. By doing this for an extended period of time I created a new history for myself,” she says.

Newell Jones’ spending fast was so successful that she has continued with it, going on a “spending diet” for 2011 and 2012. The diet is similar to a spending fast, but she allows herself $100 a month in discretionary spending.

To get started on your own spending fast, keep track of your spending, and your savings, using a spreadsheet, money management program, or free paper check registry that comes with a box of checks, as Newell Jones did. At the end of the month, take the money that is left over from spending only on your needs and apply it directly toward your debt.

Spending fast rules

Specify a start and end date for the spending fast. Set a goal for your savings.
Make list of needs, such as phone, food, utilities, mortgage/rent, and medical costs.
Eat from your pantry. Eat food from your cupboards, refrigerator, and freezer as much as possible, buying only the minimum fresh food to get by. Make every meal at home, including bag lunches for work.
Drive as little as possible, get better gas mileage, and walk or take public transportation when you can.
Be wise about utilities. Use as little water as possible. In the winter, set the thermostat to 68 degrees during the day and 65 degrees at night. Turn off lights and unplug unused appliances.
Use cash; banish your credit cards for a month.
Each day, write down any money spent and post a tracking sheet where you can see it.
Reuse and repurpose existing items. Also, barter, trade, and borrow new items.

What to eliminate during a spending fast

Coffee from coffee shops.
Movies.
New clothes and shoes. Instead, mend old ones.
New books and music.
Restaurant meals.
Home accessories.
Gifts. Try to give homemade crafts or sweets instead.

“Doing a spending fast/spending diet is hard and there are sacrifices that have to happen. Dynamics of some relationships might change,” Newell Jones says on her blog. “You also might have to not do some things in your getting-out-of-debt process. But just know that despite the occasional awkwardness, the hard times really do pay off in the long run.”

A Chicago-based writer and editor, Eve Becker writes about personal finance, health and other topics. She is a former managing editor of Tribune Media Services.

Great Mobile Apps to Help You Manage Your Finances

Ilyce Glink — Wed, 21 Mar 2012 12:56:30 +0000

Gone are the days of paper ledgers and tallying up your cancelled checks. With smartphones, people are emailing, making dinner reservations, destroying angry birds, and impressing friends with their words. Now, with advancing technology and increased security for mobile apps, smartphone users are also managing their finances safely and conveniently from the palms of their hands.

Here are some highly regarded apps that you can use to keep track of your finances:

Mint

Availability: iOS, Android
Cost: Free

Since launching in 2007, Mint has become one of the most popular money-management tools. In an informal Facebook poll for favorite mobile finance apps, Mint quickly gathered the most votes. Mint works by pulling information directly from bank, credit, investment, brokerage, and retirement accounts to show your entire financial picture. With all financial transactions stored in one account, you can easily monitor your spending, keep track of bills, and set savings goals. Mint is free to you, but it analyzes your finances to offer you new banking and credit card opportunities.

Share-a-bill

Availability: iOS
Cost: $3.99 for paid, free for lite version

If you’ve ever been out to eat or traveled with friends, you know the pain of splitting a bill. Someone always seems to end up paying more or less than his or her share. With Share-a-bill, you can enter in all your expenses and who paid what. The app keeps track of the running tally, and you can settle up at the end of a trip or night out. One iTunes reviewer said, “This app is a lifesaver. I used it on a vacation to New York with two friends. With this app, I was able to keep track of expenses without carrying around receipts.” Unfortunately, Share-a-bill is not available for the Android platform.

Square

Availability: iOS, Android
Cost: Free, including free card reader

Any self-employed businessperson needs the Square app. Sign up and the company will ship you a free card reader. Once you receive it, you’ll be set to swipe credit cards and accept payments everywhere. Square is incredibly easy for buyers to use (they can even have receipts emailed to them after the transaction is complete), and sellers trade 2.75 percent of the transaction for ease and security of using the app.

TurboTax SnapTax® and H&R Block at Home™

Availability: TurboTax: iOS, Android; H&R Block: iOS, Android
Cost: Free (You might have to pay to efile your taxes, just like on the regular sites.)

H&R Block and TurboTax, the two biggest self-tax-preparation companies, each have mobile apps from which you can directly efile your taxes. Which one you choose is probably dependent on which you used last year. Both apps are easy to use; simply take a picture of your W-2, answer a few questions, and efile away.

Wikinvest™

Availability: iOS, Android
Cost: Free

If you need a higher-level analysis of your investment accounts than the previous apps offer, check out Wikinvest. Wikinvest imports all of your investment and brokerage accounts into one view and updates them nightly. You can compare your performance to major indices and research your next investment with company charts, analysis, and news, right on the app. An iTunes reviewer said, “I’m very happy that I can consolidate all of my different brokerage accounts into one account and instantly learn their collective value in one centralized place.”

For more financial help and money management at your fingertips, download the free Equifax Mobile App for iOS and Android.

What’s on your smartphone? Leave your suggestions and recommendations in the comments.

Are Prepaid Debit Cards Good Money Management Tools?

MMarquit — Mon, 05 Mar 2012 14:56:18 +0000

Prepaid debit cards are popular with some parents because such cards provide the experience of paying with plastic without actually borrowing money and without the chance of overdrafting. Prepaid debit cards are touted as valuable aids in teaching teenagers about money management. However, the recent furor over some celebrity-endorsed prepaid debit cards has many re-examining their role.

Advantages of prepaid debit cards

Prepaid debit cards do come equipped with some advantages. Parents can easily load a teen’s allowance onto the debit card. Most prepaid debit cards also include a direct deposit option, so a paycheck from a part-time job can be deposited to the card. Some prepaid debit cards even encourage savings.

Prepaid debit cards are easy to use because they are emblazoned with credit card company logos, and they are therefore accepted everywhere credit cards are. Teenagers can learn how to manage small amounts of money before they start handling larger amounts. Encourage your teens to track their spending so that they know how much is left on the card and so that they can develop good habits early on.

Disadvantages of prepaid debit cards

The biggest downside to prepaid debit card usage is all of the fees. Some cards charge more fees than others, but some common fees charged include:

Fees to activate or “buy” the card.
Fees to reload the card.
Fees for monthly maintenance.
Fees to use an ATM (including to check the card balance).
Fees for access to customer service.
Fees attached to paying bills.
Fees to withdraw cash.

In some cases, card users may pay anywhere between $30 and $100 a year on fees—just to access their own money. You need to think about what kind of financial lesson you are teaching your child if you use a fee-ridden prepaid debit card as a money management tool.

Learning money management lessons

There are a few prepaid debit cards with much lower fees, and some prepaid debit cards have no fees at all. Teach your child a valuable lesson by having him or her help you comparison shop to look for the best deal. You will save money in fees and your teenager will participate in an important financial exercise.

You may want to start your search at your local bank or credit union. It might have a prepaid debit card geared toward teenage customers, or you can help your child open a checking account and a savings account instead. Depending on state law and the bank in question, you can probably open a joint account with your teenager. In some cases, your teenager might even be able to get a debit card in his or her name (more likely if your child is at least 16).

If you are concerned about overdrafts, you now have the ability to opt out of standard overdraft services. If you do opt out, your teen will be unable to withdraw money from an ATM or complete a purchase, if there isn’t enough money in the shared account to cover the transaction. You can limit some of the ability to overspend while still providing your teen with the means to become used to using plastic as a payment method.

Keep tabs on your teen’s spending. Encourage him or her to track expenses, and regularly review the account statements. Set ground rules and enforce them. In the end, using a joint bank account to teach these lessons—especially since you have access to the account and can monitor it at all times—may be more effective in teaching real world money lessons than a prepaid debit card.

Are You Paying Interest Or Saving Money?

MMarquit — Wed, 29 Feb 2012 14:11:36 +0000

The Two Sides of Interest: Are You Paying It or Are You Earning It?

When you hear the word “interest” in a financial context, what comes to mind? Credit card interest? Mortgage interest? Paying interest is certainly a reality for many, and knowing your interest rates is an important part of any plan to pay off debt. However, interest isn’t necessarily bad; the other side to interest is earning it.

What is interest?

At its most basic level, we usually think of interest as a fee paid to a lender for the privilege of borrowing money. However, there are additional meanings that can benefit you, including:

1. Ownership in a particular asset—including your own business.
2. A return received on an investment.

The truth is that interest is neither good nor evil. Like so many other terms you come across in personal finance, interest is a concept that can be advantageous or not, depending on how you make use of it.

The bad: Paying interest

Interest gets a bad rap because so many people have negative experiences with paying interest. Commonly, someone will carry a credit card balance and pay an annual percentage rate (APR) of anywhere between 11.99 percent and 29.99 percent. There are plenty of people who look at the interest they pay for homes and cars and on their credit cards and tote up what they could do with the money if it weren’t going into someone else’s pocket.

Paying interest represents a drain on your resources. When you pay interest, whether the debt in question is good or bad, you’re paying an outside organization for the privilege of using its money. Sometimes you can get a benefit on your taxes for paying student loan interest or mortgage interest, but that’s not the case with credit card debt. Essentially, the only real benefit from paying interest is the credit you are granted. In some cases, that access to capital can be justified, but only you can determine whether the price of interest is worth paying.

Even if you decide the interest is worth paying, you can maximize your financial resources if you pay off your debt as quickly as possible. The drain on your resources will stop, and you can begin using the money for your own benefit.

The good: Earning interest

There is a benefit in using credit to extend your buying power, get an education, or buy a home for your family, but there are also ways to earn interest. When you earn interest, your money works on your behalf. You earn an income at your job; interest is the way your money earns more money.

Some of the ways you can earn interest include:

Lending money to governments and businesses by buying bonds.
Investing in individual equities or in funds (including retirement account contributions).
Keeping your cash in an interest-bearing account, such as a savings account, CD account, rewards checking account. or money market account. (Keep an eye on minimum balances. You don’t want to spend all the interest you earn on bank fees.)
Starting a business that provides you with income and/or other returns.

Keep in mind, though, that even the good side of interest comes with risks. While cash products and many of the best-rated bonds aren’t likely to result in losses, you can lose money in investments and lending, as well as when you start a business. It’s important to measure your risk and attempt to earn interest prudently.

Bottom line

Interest itself is neither good nor evil. Its presence in your financial life, though, makes a difference. Even if you pay your credit card bill in full every month, you’ll likely have to pay interest at some point in your life for a car loan, student loan, or mortgage.

The way to make sure you get the best interest rates is by having a strong credit score. If you pay higher interest rates, you’re less likely to prosper. If you’re working to pay off debt and start earning interest, on the other hand, then there is a good chance that you are on the road to financial freedom.

Introducing Miranda Marquit: Covering Family Finance

MMarquit — Fri, 10 Feb 2012 14:56:04 +0000

My name is Miranda Marquit, and I’m a personal finance advice blogger. I have a passion for finance—especially as it relates to helping ordinary families build wealth and direct their resources according to their own values and priorities.

When I write about family finance, I like to focus on the ways you can use your financial resources to build the life you want for your family. For the most part, I believe that focusing on improving your ability to earn money, as well as making spending choices that reflect your own goals, can do this.

While I believe that saving money is important, and that you should get the best value for your dollar, I don’t often write about pinching pennies. I’m more about looking for ways to create the lifestyle you want by identifying your values and priorities and then allocating your money in a way that reflects what’s most important to you.

Identifying your goals and looking to the future

Whether your goals are to build a retirement nest egg, create passive income, dig out of a debt hole, pay for your children to attend college, save for a down payment on a new home, create a fully funded emergency account, or travel the world, only you can determine the life you want to live. There are strategies you can follow to ensure that you can afford the things that are most important to you at each of your family’s milestones.

This type of planning requires a long-term view, as well as the ability to honestly evaluate your current situation and identify your goals. I hope my posts will inspire you to create your own financial road map based on your family’s values. My posts will include some of the actions my family is taking right now, as well as actions we hope to take in the future.

Additionally, I will look at how your family relationships can affect the way you interact with money, and how you set priorities as a family—especially if you sometimes want different things or have different approaches to money.

Why should you read what I have to say?

I’ve made my share of mistakes in life when it comes to finances. I dug out from credit card debt amassed at college, and I’m still recovering, in some ways, from earlier financial missteps. However, 10 years after my marriage started with debt, I have a M.A. in journalism from Syracuse University, my husband has completed his Ph.D., and my family is able to meet all of our needs and most of our wants. I’ve learned tough financial lessons through experience.

On top of that, I’ve had the opportunity to research different financial and investing strategies as part of my career as a finance writer. I write for a variety of financial websites on subjects ranging from investing to business to personal and family finance. My work has appeared in, been mentioned by, and linked from major news websites, including The New York Times, The Washington Post, USA Today, The Consumerist, The Atlantic Wire, and The Huffington Post.

I am lucky to work from home doing something I love, and I’m excited to work with Equifax to help you find ways your family can work toward financial freedom.

Create a Spending Plan for Your Family

MMarquit — Fri, 10 Feb 2012 04:47:07 +0000

Financial success doesn’t just happen; you have to plan for it. A spending plan can help you allocate your money resources to the financial goals that will provide you with a secure future, as well as help you enjoy your life right now. When your family creates a spending plan, you take control of your financial destiny and play an active role in what happens to your family next.

Deciding on your values, priorities, and goals

The first thing to determine is what your shared values, priorities, and goals are, as a family. Your spending plan should help you to live the life you want, not to be a carbon copy of some other family’s life and priorities.

Talk about what you value as a family. This could be spending time together at home, going on the occasional vacation, giving to charity, performing service, supporting extracurricular activities, or buying a new big-screen TV. Realize that there are no wrong answers.

Decide what defines you as a family, and set goals together. Then, decide which goals should take priority. If your family wants to become obligation-free, then a plan to pay off debt should be the number-one priority. If you want to save up for a down payment on a house, set a timeframe and put your savings toward that goal.

Allocating your financial resources

Once you understand your family’s goals, it’s time to figure out how to allocate your resources. Of course, you will first need to cover expenses like housing payments, groceries, clothing, utilities, and insurance. Then, look at how much each month can realistically go toward helping your family accomplish its goals.

Prioritize your savings so you will be able to achieve your short-term and long-term goals. While you might want to start saving for retirement, your bigger priority might be paying down debt. Put more of your resources toward debt reduction for now, but don’t neglect the long-term goal of retirement savings. As you get rid of debt, you can shift your money toward funding retirement.

Prioritize your spending so that the most important items are paid for first. Knowing your priorities ahead of time makes it less painful to make budget cuts because you can start by cutting the items off the bottom of your list.

For example, your family might be saving money for a vacation. You determine that $150 a month needs to be set aside for the next 10 months, but you might not have enough money to do everything else you want. You might need to drop off some of the less important expenses, such as going to the movies or buying a new iPad.

Earning more

Your spending plan doesn’t just have to be about figuring out where to cut back on spending. Involve every member of the family in discussing what can be done to contribute to the accomplishment of family goals, whether it’s cutting back on less-important spending or doing odd jobs to help boost the family income.

Mark your progress toward your goals, and find ways to celebrate as you accomplish your objectives. And, as you achieve your current goals, remember to adjust your spending plan so that your newly freed financial resources can shift to fund the next adventure.

Steal These Dieting Tips to Trim Your Budget

TeriCettina — Fri, 03 Feb 2012 05:39:25 +0000

Not long ago, I joined a popular weight management program to help me shed some post-baby pounds. (No comment on the fact that my “babies” were almost entering their double-digit years!) As I started learning techniques for shedding extra weight, I noticed something interesting. As my weight went down, my husband’s and my savings balance started to ratchet up. Without really thinking about it, I had started applying my weight-loss lessons to my family’s budget.

I’m not the only person to make the connection between weight management and money management. Alice Wood of Naperville, Ill., joined the same weight-loss program I did to drop the extra 11 pounds that had crept slowly over her middle-aged body during a stressful time in her life. As the numbers on her scale went down, she noticed that her overwhelming credit card debt slimmed down, too. Wood even went on to write an interesting book, Wealth Watchers, based on her experience saving money.

The good news that both Alice and I learned: You can apply classic weight-loss techniques to your financial waste. Here are some examples:

It works for losing weight: Maintain daily and weekly goals of how much you can eat in order to lose weight. Stay accountable.
It works for saving money: Keep weekly or even daily goals for how much you can afford to spend in key budget categories. The big lesson here: Tracking your budget just once a month—particularly at the end of the month—is not enough.

In our family, we’ve broken our key spending categories (groceries, eating out, and so on) into weekly, instead of monthly, dollar goals. We review them every weekend (and periodically during the week when we’re thinking of making a purchase) to be sure we’re on track. We use a desktop version of Quicken software to manage our family budget, but other options include Mint.com, Mvelopes.com, and YouNeedaBudget.com. As you get more comfortable keeping a detailed budget, you’ll start to see places you can cut expenses. Extra money can go to savings, paying off debt, or other ways to boost your credit.

It works for losing weight: If you bite it, write it. Keep a daily food journal.
It works for saving money: If you spend it, write it. For several months, as you work on getting your family budget in line, keep an ongoing daily log of your spending. Just keep a little notebook in your purse or use the notes function on your smartphone. This simple practice helps you pay attention to how you’re using—or wasting—your money.

It works for losing weight: You can eat almost anything you want, as long as you budget the calories into your food plan.
It works for saving money: You can still buy your family’s favorite things, as long as you budget for them. Don’t be tempted to go cold turkey and cut out all fun spending. You and your spouse will end up feeling dissatisfied, which can lead to binge spending later.

Also, keep in mind that there is no such thing as a one-size-fits-all family budget. No one can or should tell you how to spend your own money. If you love your morning coffee from the corner espresso shop, you don’t have to give it up—no matter what money experts suggest. Instead, save money on something that’s less important to you than coffee. Take your lunch to work a few times a week instead of eating out daily. Or cut back a little on your coffee and lunches out if you’d rather pay for a haircut and coloring at a nice salon. It’s your call.

It works for losing weight: Spontaneity is out, at least for a while. Plan ahead when you eat away from home, deciding in advance how many calories or what food you’ll eat.
It works for saving money: Same deal: Spontaneous consumption of money (a.k.a. spending) is not your friend when you’re tuning up your budget.

Eating out is actually is a perfect example. Many weight-loss programs suggest checking the menu of your favorite restaurant and deciding in advance what you’ll eat so you can estimate calories. Our family has started doing the same thing. However, instead of just checking calories on a restaurant’s menu, we check prices. Then we estimate what our family might spend on meal, and decide if we can afford that particular dinner spot on our weekly budget.

We might also do a quick advance search for online coupons (a great place to check is Restaurant.com) for the restaurant we’re considering. We often give this Internet search task to our kids—they’re getting good at it! Finally, we decide in advance on some strategic cuts: If we all skip ordering sodas, we have room in our budget for dessert or pricier entrees. To be honest, it’s taking our kids a while to warm up to this part of our approach, but they’re learning.

What about your family? Are there any dieting techniques you could adapt to your family budget or debt-cutting plan? Share your ideas with us.

Teri Cettina is a mom of two daughters and freelance writer who specializes in personal finance and parenting topics. She blogs at Your Family Money. Follow her on Twitter: @TeriCettina.