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Debit cards. Credit cards. Prepaid cards. Apple pay. Google wallet. Paypal. Venmo. Bank transfers. Phone and mobile payments. Checks. Money orders. Has money taken on too many forms that the value of cash is diminishing? The idea that the next generation is losing the sense of what the true value of cash really is could very well be true. This theory is called financial abstraction, coined by Adam Carroll in a Tedx Talk.
This post originally was inspired by a Facebook post and I asked Heather if we could post it on my blog because I felt that the message was too important not to share! Read more about Heather’s way of teaching her daughter Ryley about budgeting to see if it also sparks unique ideas for you and your children to talk and learn more about budgeting together.
My brother recently sent me a YouTube video of a TEDx Talk about a man replacing his family’s Monopoly money with $10,000 cash to see if they would play the game differently using real money. Two out of the three children changed their game-winning strategies based on the new circumstances. His final point was simply that younger generations have no emotional connection to money, that it seems less real to them because technological advances have made physical cash-handling almost non-existent. Unfortunately, there are still very real consequences to functioning in life using what seems to be limitless “fake” money.
I remember one time when Ryley was small, she wanted something that I couldn’t afford, so I told her I didn’t have enough money. My beautiful innocent daughter replied in a very matter-of-fact way, “that’s ok, just use one of your cards!” That was the week I started taking her to make her own cash deposits into her bank account. Every birthday, holiday, or money-receiving opportunity following, we put some of it into her wallet for fun and some into her bank account. We discussed what types of big things she would like to save up for, and frequently used portions of her money in order to purchase them.
Years later, Ryley has now started babysitting for pay. We decided on a reasonable amount she would charge for her services, and some wiggle room for how much would still be worth working for if negotiations were required (aka her value). She keeps her cash and I have no stake in the money she earns. There was a high-priced item she wanted for Christmas but didn’t get, so I offered to cover a specific dollar amount against the total, and the rest would be her responsibility.
Realizing she has babysat enough evenings to purchase the item almost twice by now, I asked why we hadn’t gone to get it yet. Ryley then had to review her spending (fun foods at lunchtime instead of the free meal, movie snacks on a night out with friends, etc.) and acknowledge the importance of budgeting versus spending. We had to wait one more weekend to re-save enough money, then went to Best Buy.
It was on sale! Instead of the usual $99.95, the Sprocket price tag boasted $69.95. Great for us, since money saved means more in the pocket, or in this case the ability to purchase things that compliment the large item. I gave Ryley the option of keeping the difference, but pointed out that she might want more of the photo paper while it was also on sale (only 6.99 for 20 pieces), and she would still be spending less than the original amount. At the counter, she decided the warranty was a wise investment this time. Out the door with receipt in hand, Ryley wondered at the final cost versus the sale sign. Tax, warranty, add-on item purchase... it all adds up! And now she is left with the remaining money to begin saving for the next “want.”
About a month ago, I almost got her one of those kid-friendly credit cards. It would have been so convenient to me now that I’m not constantly carrying restaurant tips and don’t often have cash to hand her when she needs it. But there’s plenty of time for convenience in the future. First I need to help her learn the value of the actual money that comes and goes, especially since it rarely feels real anymore. I love being able to scan my Apple Watch at Starbucks or Venmo a hired musician as soon as the paper check I had to wait for clears. But I’m not doing Ryley any favors if I don’t help her learn how to be responsible for her choices. Same goes with household responsibilities, cooking from scratch, time management, commitments to others, etc.
That’s what parenting is about! I could throw her at the world at 18 and hope she doesn’t have to learn everything the hard way, become someone else’s unknowing burden, or even end up my responsibility again. Or I can attempt to build a foundation of independence and show her steps toward becoming a successful adult. Yes, she’ll still make mistakes (and boy do I constantly make them too!), but it’s still better than the alternative. Our kids need us to be their parents. They learn how to live, love, and help others by watching us. Let’s give them the best chance we can at having a bright, fruitful future in which they benefit society in some way. I’m cheering you on, yay parents, we got this! Now excuse me while I go order from postmates because I’m way too tired to cook tonight. . .
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Would you know the answer to the question: Do you live below your means?
Earlier this week I was listening to a podcast where they were talking about how it is culturally acceptable to spend, spend, spend! Buy that new widescreen/flat screen/3D Screen TV! Buy the newest car! Buy that new piece of electronics! Buy the latest and greatest fashion line! Living within this culture where we are conditioned to overspend beyond our means, will allow us to do just that with seemingly no repercussions. I truly believe it becomes very hard to live below your means when you are immersed in a society and culture where it is acceptable to live beyond your means.
As I see it, there are a few options available to you in order to start living below and within your means. Here are five ways you can choose today to start living below your means:
1. Stop spending money
First off, it is easier said than done, but just stop spending your money altogether. Stop going out to eat. Stop buying the latest and greatest car/electronic/clothing. Even if we stopped here, at this point, you could be on track for living below your means. With the pressure of this current culture, being status quo is seems to be no longer enough. Everyone wants to be the first person who, when it comes to their Instagram account, is posting about their greatest experiences, or the newest restaurant in town, or whatever new piece of electronics they recently got. It especially makes me nervous when people talk about always spending money. I always want to interject, and ask if they have a budget, or if they are saving for retirement. . .
2. Increase your income
If you have done everything you can to cut your spending, then the next step is to figure out a way increase your income! This may include asking for a raise from your employer. But, seriously, when was the last time you had a raise? I am sure you are a great employee that goes above and beyond. Build your case, and request the meeting with your boss. It could be as easy as that!
Increasing your income could also mean you are working a side hustle. Did you know that if you started a blog, you could eventually start making money off the blog? Increasing your income could also include going through your house and purging items that are no longer useful for you. Instead of donating those items to Goodwill use Facebook Marketplace to sell them; or, apps like Poshmark (download the app and use my code for a $5 credit: EDRINAJENETTE). Another option is to drive for Uber or Lyft on the weekends, instead of watching Netflix. These are just a few ideas and options available to you.
3. Create a budget
What it really comes down to, in my opinion, the true problem lies within not having a budget and sticking to it. When it comes to living below my means, my number one takeaway that ensures I am living within my means is my budget! So, simple, right? Well, come to find out, many people do not use a budget! Which is entirely unfortunate for them because this is the number one way to ensure you are living within your means! At the very core of creating a budget is the fact that you will need to start tracking every single transaction from your bank accounts and credit cards. Making sure you are comparing what you spend to the amount of income that you are bringing in for that time period (whether it be per pay period or per month). So that at the end of that time period you will be able to identify where the bulk of your spending is going, and perhaps even drill down into a potential spending problem. That is when you should really focus and hone in on what your next steps will be.
It is no longer enough to just have a conversation about a budget. You really need to put pen to paper and work through the numbers yourself. Heck, even let a professional do that for you! I remember when I was first going to college and I was writing down every expense that I had and all of my income to figure out how to make ends meet. I remember feeling like I did not have enough income to make a meaningful budget. This left me feeling a little defeated and I did not want to continue working on my budget. But I pressed on anyway, because that is what you have to do. You have to press on in order to meet your goals.
4. Make sacrifices
When all is said and done, living below your means will certainly take some sacrifices. For myself, I have made a point to not eat out all the time. I have made a point to stick to my grocery budget as much as possible during the month. But, also, there is zero shame in shopping at the Dollar Tree! Every month, I make a point to go to the Dollar Tree for my everyday items. This saves me SO much money. Lastly, I have made a point to stay in the apartment that I am living in. This third point is probably the hardest for me right now. I have been wanting to move into a two bedroom apartment so that I can have a dedicated office space, but it does not make sense to me financially right now. Rent these days is a little ridiculous and I cannot imagine myself paying as much as they are asking for a two-bedroom. I have given myself a limit as to what I feel is acceptable to spend on my housing each month, and everything that I have seen over the past year would mean that I would be living beyond my means!
These sacrifices that we make in order to live below our means may not be easy. The way my office space is currently sitting is in my living room, which pretty much cramps my living room space. For almost half the year, I have had my couch in front of a closet because if I had it any other way there would be no room to walk! But, it is these sacrifices that I deal with so that I can live below my means. These sacrifices are conscious decisions that I have to make every single day.
5. Enlist an accountability partner
If you already know that you are not the greatest when it comes to numbers, then find someone who knows the numbers and can help. It does not even have to be a professional. Perhaps you have a trusted friend that can offer insight with an outsider’s perspective. Enlist them to be your budget accountability partner. Offer to cook them dinner and have a budget check-in session together. I have known plenty people who are very smart and capable, but also want that extra set of eyes, or a perspective of an accounting professional that they do not have. I completely and entirely respect that in them, because whether or not we want to admit it we are all human and can also make mistakes. All that to say, I am certainly not perfect and am still on this journey alongside you.
So, together, we can make living below our means socially and culturally acceptable! Who’s with me?!
As we head into the holiday season (CRAZY, RIGHT?), now is the perfect time to think about charitable giving for 2018. This is the second post in my series of blog posts where I am featuring nonprofit organizations that I love, in the Los Angeles area! The next organization that I am featuring is Elizabeth House.
From their website, “Elizabeth House is the only 501(c)(3) non-profit organization in the San Gabriel Valley that specifically addresses the needs of pregnant women who also have small children and who lack adequate shelter and prenatal care.” The 501(c)(3) designation is specific to charitable organizations -- and the good news is, your cash donation is tax deductible.
Who is Elizabeth House?
Before this year I had never heard of Elizabeth House. In fact, when I started my research on them I realized their office was a place I had walked by on a number of occasions. Elizabeth House serves the Pasadena community as a residential shelter program for adult pregnant women and their children, for their own health and wellness.
A key factor is their programming. Elizabeth House accommodates six women and four children, and clients may stay between four to six months after their babies are born. “Each woman who enters Elizabeth House participates in our main programs: Case Management, Parent Education, Health Education, Financial Management, Job Skills Training, Therapeutic Services (individual counseling and group classes), and Spiritual/Emotional Health.”
How did I find out about them?
I was connected with Elizabeth House earlier this year, and I will speak more on that connection in a later blog post. Essentially, I have been working with Elizabeth House for the past several months as a financial consultant (skill-based volunteer). Since my professional expertise lies in the area of nonprofit organizations, I am partnering with the President and Director of Development to be their business partner in providing professional financial advice. I am honored and fortunate to be included in these conversations, to come alongside this organization during their season of growth, and knowing how much good they do makes things that much easier.
What do I like about them?
Teaming up with the leaders at Elizabeth House breathes life into me! They are the most gracious and loving humans to work with, which brings me hope. I know that their impact is far and wide, even though I am not directly involved with day-to-day operations. The beautiful thing that captures my attention about Elizabeth House is the mission of the organization, and their goal to house single women who are pregnant, and to provide an education for them during their time of need. Their office is a beautiful craftsman home in Pasadena that has a very welcoming environment.
How do I get involved?
Elizabeth House loves their volunteers, and have a wide variety of areas for you to volunteer. From office assistance, to childcare and babysitting, to transportation. Volunteers are needed for events as well as home repairs. If you decide that you would like to spend time with them in skills-based volunteering or hands-on in different areas that they have available, know that it will bless your heart. Some areas have specific requirements or prerequisites, so make sure to read the website thoroughly first before proceeding. They accept donations in various forms as well, like furniture and home decor. I would recommend connecting with Elizabeth House to understand what needs they have before donating any new items.
Additionally, if you would like to financially support them that would be the very best way you can help. This year is coming to a close rather quickly and to help meet their budget goals a monetary donation is of the utmost importance.
Additionally, they are having an annual fundraiser coming up! The Garden Party is October 21st. Visit Elizabeth House’s Facebook page to watch the video highlights from last year’s garden party. It looked like such a lovely time!
In last week’s blog post I talk about how I organize and plan out certain details in my life. If you have not read that you can do so here. The reason why I think it is important to have a basis of understanding of planning is so that we can move to our next topic at hand. I believe planning is an essential part of life! However, when it comes to financial planning I get the sense from many people that they are going through certain phases in life without a plan. This may seem trivial to some, but I cannot stress how important it is to have a financial plan. If creating a plan will set us up for success, then imagine what creating a financial plan will do for us!
I know that you, faithful readers, have a growing interest in financial planning; but maybe you are unaware of the why/what/how for this. In my line of work, I come across various types of people! Those who are afraid of spending money, those who are afraid of how much money they spend, and everywhere in between!
If you are afraid of spending money… make a plan.
If you are a crazy spender … make a plan.
If you are a moderate spender … make a plan.
Part of creating a financial plan is to figure out what your need is, plan for it, and then adjust accordingly. Focusing too much on one area may hold you back from moving forward. I feel at this time, it is important to state that this blog post is in no way trying to make you feel stressed, but to bring light to a topic I feel is important.
The What of Financial Planning
What sorts of things might you be planning for, you ask? Well, do you plan to get married? Do you plan to buy a home? Do you plan to have kids? These are all specific phases where you will definitely want to create a financial plan. You may even want to simply buy a new piece of furniture and in order for you to not get in debt over it, you will also need to create a financial plan to get there.
Implementing a Financial Plan
You might be wondering how can one implement a financial plan in your life. Maybe you feel there is not enough money in your budget to do so. Here are my tips for creating a financial plan and implementing it right away!
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My thoughts on numbers, spreadsheets, money, spending, forecasting, budgeting, and everything in between. Read on!
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