This week I tackled two more categories for the $1,000 Challenge. The expenses associated with having children and work expenses. I didn’t expect to have much in the way of savings in either of these categories, as Eva pays for many of her own expenses and I work mostly from home, but I do want to share with you some of the ideas that Brian O’Connor shares in his book The $1,000 Challenge.
Brian gets this section started by letting us all know that it costs approximately $286,860 to raise a child to age eighteen. Sigh. Deep breath. Double sigh. I knew it was expensive but this figure really brings it home doesn’t it? In some ways it doesn’t really seem possible. But I guess it is – and this figure is just through 18 so it doesn’t include college costs. Ugh.
There are a number of ways you can save when it comes to your children. Brian points out that you don’t have to buy brand name clothes and shoes (as if I could afford those anyways!). You can buy generic for their favorite items from the grocery store, etc. Those are very good ideas but I think that the one thing you can do that will be most beneficial for your wallet and your children’s life is to teach them how to manage their own money from the earliest ages.
From my own experience one way to do this is through an allowance. There are many different ways to set up an allowance system – all that really matters is that you are consistent. You can tie the allowance to chores or not. It really is up to you. However you decide to do it be sure to use the opportunity to teach your children good principles. We tried to teach our children three fundamentals. Whenever they earned or were given money as little kids we asked them to put something aside in each category. The categories were spending, saving and giving. This seems so basic but it’s something our children don’t know unless we teach them. It is so much fun to see a five year old with a few dollars deciding how much to put into each of their envelopes. We never told our children how much to put in each category – just that they had to put something into each of their envelopes each time.
Doing this will not ensure that your child grows up to make the best financial decisions but it is a good place to start. Another idea that we implemented is to give your young teens the ability to purchase their own clothing. If you are going to do this I urge you to make sure that you are giving your teen enough money to purchase the clothes they need. It will only serve to anger and frustrate your teen if you don’t. We figured up how much money we typically spent on clothing annually, divided the number by 12 and gave that amount of money to them every month. In the beginning we closely monitored how the money was spent and such but as they get older and demonstrate responsibility with the funds then we allow them to handle it entirely on their own. Implementing this when our kids turned 14 has made a huge difference in their ability to spot a clearance rack from a mile away and also made them very willing to shop consignment and second hand stores.
I work from home in my pj’s. I make my own coffee so I can’t cut out the expense of going to Starbuck’s. I do occasionally venture out and wear real clothing but I try to limit that to extreme occasions. I won’t belabor this point and will close by saying that I couldn’t find anything to cut.
My savings so far:
Miscellaneous Savings: $110 on yard maintenance
Transportation Savings: $0
Utilities Savings: $65 ($15 on internet and $50 on cell phone)
Groceries: $80 (I decided to see if I can get by with $20 less per week as I get back to shopping more often and waste less food.)
Kid Costs: $0
Work Expenses: $0
Total Savings: $255.00
Although it isn’t looking like I’m going to make my goal of saving $500 a month I have to say that I am really pleased with my progress. How are you doing with the Challenge?