Updated from original publication on October 14, 2015, as part of the series called 31 Days of Methods In Madness. To read all the articles in the series click here.
Some would call money a necessary evil. It is a definite in our society and is needed to provide for our families. It also creates conflicts and tensions when not managed wisely. There are numerous books on finance, getting out of debt, saving for the future…the list goes on. Why? Because so many families are in a financial crisis.
I’m going to highlight some key factors in managing money wisely, and how to teach our children to do the same; some of it may seem repetitive of other how-to articles circulating the internet; remember though, repetition is the mother of retention. 🙂 And hopefully, I can provide a fresh perspective on this touchy subject.
Plan Ahead, Budget & Communicate
People plan their days, hours, and weeks. People plan their vacations. They plan their education. They even plan ahead what to get at the grocery store (usually). All of these take money. So it stands to reason that our life will operate more smoothly, more efficiently if we plan ahead or budget our money.
I remember as a single person living on my own, I successfully used the envelope method. I had an envelope for every category, including recreation. I made sure the rent and other such necessary expenses were paid first. I limited my spending on the non-essentials while still making sure I budgeted for the “frivolous”. At the end of the month, if I had money left over, I’d decide to spend or save. If I had a deficit, I first pulled from the recreation funds for the following month to try and balance out my debt to income ratio.
A similar method can work for couples as well. Discuss financial goals and set money aside accordingly. Discuss what to do with any money left over at the end of every month. If there is a deficit discuss how to realistically resolve it. It may be as simple as eating out less, buying less Starbucks 🙁 or buying a different brand of diapers for the little one.
Whatever your method, as long as you have some sort of system of checks and balances for your money, putting the priority on necessities, you can control or limit your spending. Knowing your income, your true expense or necessities, and your extra spending or wants will help a person to avoid going into debt.
Certain life principles will help in managing money wisely. We live in a society trained to get the latest and greatest NOW! That mentality does not promote wise money management. Rather, if we learn contentment with what we have, stop comparing ourselves with others, and patiently save up for what we want, we are then in control of our money. Don’t forget the added price tag that goes with purchases made by credit card – if balances aren’t paid in full every month, you’ll need to tack on high-interest rates. I heard it said that spending money irrationally is like driving a car blind, you’re unaware of the consequences of your actions.
It may seem trite to say, but how much money do we really need? Money can make life easier to a point. But money is not more important than marriage or family. If we get into debt and have to work longer hours to get out of debt, our family does not really benefit in the long run.
Teaching Our Children
If we teach our children the life principles mentioned above, and the skills for managing money mentioned at the outset – we may be able to help them avoid debt in the future, and this can help them lead a happier life.
Here’s a couple of suggestions:
It is what you do, not what you say – show them how to spend and save wisely.
Communicate how much you as the parent can spend for them or how much allowance they’ll receive. Learn to say No to certain requests and teach them to limit their own spending through practice, trial & error – with your oversight.
Teach them to give to others rather than thinking of their own wants, this can also engender the ability to save so that they can give to someone else.
P.S. How Do You Manage Your Money?