Question of the week #32
I love a budget. I particularly like fixed costs. Using a budget has worked well for our family and quite frankly our marriage. There are no surprises if you stick to the budget. With that being said, here is the question of the week.
You've mentioned how you've always
used a budget to track your household finances, as well as to teach your
kids good money habits. What software do you use? How much time do
you spend tracking expenditures? Can you provide more details?
At the beginning tracking expenses was purely done on spread sheets. Then a couple of companies built products such as Mint and Wasabe that would integrate with your bank. Since Wasabe was a USV investment we used that. It wasn't great and they never moved forward past the first product which was really unfortunate so I made up my own.
The tracking is simple. A certain amount of cash goes into each kids debit account on the first of the month. Then they have a budgeted amount that they can use on the credit card. If they run out of cash I hear about it so no need to track that. I get the credit card bill every month and look at what they spent and deduct it from the allotted monthly amount. They can carry over the money from month to month to build up a reserve but they can not overspend. I do the same thing for myself.
What is more important is the results of doing this for the kids now for several years. Jessica has been on a complete budget since she began college. High School was only cash. The added credit did not come until college when they needed to buy their own stuff. There were definitely some bumps along the road with Jessica and Emily but eventually there were none because they understood the rules and tracked their own spending. They have access to the amount they spend on the credit card and they have access to their debit account.
During the last few months, particularly when Sandy disrupted our lives, I was remiss in tracking their accounts. I finally got around to it after a few months and I was thrilled to see that each month they were both on budget. They learned exactly what we set out to do. Learn how to live within your means. When there are defined limitations you live with in them. When you can do whatever you want then there are no lessons to be learned at an early age. As adults everyone has to learn to live within their means and it appears that our kids have at early on.
One hack I’ve developed of late is to live off your previous salary. That way, you always budget with the previous salary in mind and thereby not jumping on the “hedonic treadmill.”
That’s a great idea Rohan.I have a few years to figure it out with my girls, but from observation,I think it’s important for kids to be spending on budgets that correlate to what they would be making when they become independent (or at least to understand the concept).For example, it’s great if you can and choose to give your kids a luxury car in high school or college, but if you do they should understand that this is not the real world when they are starting off on their own.Otherwise, the jolt into the real world will be unnecessarily harsh.Just my two cents 🙂
Ah. Nice Ketan.My domain expertise on raising kids is 0 at the moment so will leave it to Joanne to comment on that. 😉
haha – my domain “expertise” is 0 + 4.5 months right now, so I have a bit to learn as well!
another hack – automate your saving deposit every month. If is already there, you can’t spend it easily
.Perfect responsible Mom-ing. Well played.JLM.