Should Companies Pay Us When They Make Mistakes?

Every day, it feels like we are barraged by more and more responsibility for company mistakes while they suffer fewer and fewer consequences. After banks went into bankruptcy in 2009, we bailed them out. Meanwhile, if you have a credit card at 29% and can’t pay it, you are given the choice of bankruptcy and being hobbled financially for 10 years. When I lived in Germany, a country with a generally strong economy whose inhabitants almost never use credit cards, I shared American CC interest rates. 
“Here we would put someone in jail for rates like those,” they said. I could spend a day on the credit situation in this country but that’s for another article. What I want to talk about is the numerous hours each of us spends every year fixing company mistakes. Problem with your phone bill? That’s an hour on the phone. Computer breakdown? Three hours. Gas or internet set up? You might have to take off an entire day of work to be home between the hours of 10 and 6pm when the repair man might or might not come. Is there a reason we aren’t allowed to charge for our time? If I’m a graphic designer at $50 an hour, those three hours fixing my computer just cost me $150. Depending on your salary, these losses could be anywhere from $45 dollars to $600 each time. Why aren’t companies paying us for that time?

Once upon a time, companies used to pay us back when they made a mistake. It was called, credit. Companies seemed to be concerned with making us happy. When problems arose, you spoke with a human being who most often, would give you a refund to pay you for your trouble and inconvenience, A win-win for everyone. In the past decade, with the rise of digital companies who opted for no customer service and no way to reach a human being, other firms followed suit. After all, business is about money and customer service costs money. Since those days, it seems as if today’s business strategies revolve around how much money they can make with the least amount of effort and how much of their responsibility they can shove onto us. Here’s what is fundamentally wrong with that business format. We’re human. Paying someone for their time shows respect. It shows that you value that person’s expertise. By not reimbursing us, companies are in effect demonstrating that we don’t matter. Now on top of taking up our time, they are also taking our private, personal information. And what was the solution to protect our privacy? Use up more of our time. Take the current privacy crisis with social media. What solution did great minds come up with to solve this problem? They decided to set up light boxes that force anyone who wants to protect their privacy to read through pages and pages of legal documents few understand and no one has time for. That might be fine if each of us dealt with only one online company, but we don’t, we deal with hundreds. The other solution? Make us give our personal email and location information in order to have “privacy” with zero assurance we are actually getting it.

I am continually amazed by how kind, thoughtful, generous and nice people are, by how long they are willing to put up with persecution and only stand up to fight back when things have gotten to a point where they can no longer survive. Why are humans so patient in the face of injustice? I for one, say, companies should pay us for our precious time that they waste. Credit card companies should cut us the same breaks they get, our data should be private without having to read a legal forms, and none of us should have to miss work for a day for the repair man.

.

The Single Most Useful Book I’ve Read

The first time I read one of the most useful books of my life, I’m ashamed to admit that I read it for free online in a scanned PDF.

I’m not quite sure how I found it — whether it was a referral from another personal finance blogger or it made a ‘must read’ list for personal finance beginners like myself.

Either way, I remember the feeling of my world slowly being turned upside down as I scrolled through each page of the Millionaire Next Door by Dr. T. J. Stanley.

At the time, I was horrible with money. I was making more than I had ever made, and I was spending more than I had ever spent before. I thought I ‘deserved’ to spend frivolously because I was a newly minted lawyer.

Thankfully, I stumbled upon this book right at the moment I needed it.

Here are five key lessons that I learned from reading The Millionaire Next Door.

[1] Most millionaires are self-made. I used to think that the majority of millionaires in the U.S. inherited their wealth. I mean, how can one accumulate so much in a lifetime? Not true, says Dr. Stanley. It’s possible to be a teacher, nurse, or someone working in a blue-collar trade, and still generate enough wealth to pass the threshold of six zeroes in their net worth.

[2] Most millionaires did not provide economic outpatient care (EOC). In other words, most millionaires did not receive money from their families after high school. Dr. Stanley explains that adults who rely on or wait for their parents to give them cash gifts or subsidize some of their living expenses are generally not very productive. Usually, this money gets allocated towards consumption and supports an inflated lifestyle that cannot be sustained should the EOC be withdrawn.

[3] Millionaires allocate their time, energy and money in ways that is conducive to wealth building. Millionaires do not care about spending time on negotiating to get a $1,000 discount when purchasing a depreciating asset, such as a car. They do, however, care about spending time and money on selecting knowledgeable financial and legal advisors, especially when it relates to handling their business affairs and growing other appreciating assets. Millionaires dedicate their resources to learning about areas of potential growth.

[4] Most millionaires do not flaunt their wealth or have expensive tastes. Surprisingly, most millionaires purchase American-made cars. Those, however, who choose to buy foreign-made cars predominantly purchase Toyotas and Hondas, and not Mercedes, BMWs, or Audis.

In terms of living arrangements, most millionaires do not live in upscale neighbourhoods, but rather live in nondescript communities where the cost of living is affordable. Dr. Stanley insists that one of the biggest destroyers of wealth is living in a high-cost area, in which you are living among households who earn substantially more than you. Instead, he urges, to live in an area where your household is among the highest earners. He explains that these neighbourhoods tend to be populated by small business owners, blue-collar workers and middle managers and/or executives, rather than lawyers, doctors and c-suite executives.

Millionaires, especially self-made ones, play great defence rather than offence, which means that they believe in maintaining a frugal lifestyle, receiving joy through non-material possessions and avoiding the trap of being ‘house rich and cash poor.’ Dr. Stanley insists that you would not recognize most millionaires when you meet them because they do not have expensive tastes.

[5] It’s entirely possible to become a millionaire in your lifetime. This is the biggest takeaway from Dr. Stanley’s book. If you refrain from frivolous spending, live within your means and invest early and consistently, you can become a millionaire without a six-figure salary.

The biggest misconception when it comes to millionaires is that you need a six-figure salary in order to accumulate a seven-figure net worth. I understand now that this couldn’t be further from the truth.

I couldn’t be more grateful for Dr. Stanley writing The Millionaire Next Door because it made me realize that the pursuit of money is not really the purpose of life (as it was evident from the millionaires featured in the book), but at the same time can be attainable if you just have the patience and persistence to play the long game.


If you enjoyed this story, you should check out www.jenonmoney.com where I write about personal finance, progressive economics, going against the grain, and tons more. — Jen


This originally appeared on Quora.

5 Smart Ways to Make $500 Extra a Month Work for You

You’re busy, we’re all busy. Being busy has become somewhat of an epidemic, especially in the United States. That being said, there are still many ways you can pinch pennies and earn $500 extra a month.

How?

Well, we’ve covered a few ways, from freelancing to micro jobs. However, now I want to show you what you can do with the $500 a month, and how it can make a HUGE difference in your financial freedom.

Get a high return savings account.

If you can bring in $500 more per month and save it, over ten years you would have $79,084 in your bank account (assuming a 6% growth rate). Yes, you read that correctly. Almost $80k! Now, of course this is easier said than done, however, you know the famous saying: out of sight out of mind? I have found this works for savings accounts, too. Set up an automatic deposit into your savings account. Set the deposit to an amount that works for you. Perhaps you want it to be weekly, or maybe one lump sum works best for you. However, make sure the deposit is automatic, and keep your savings account in a place you are not constantly checking. If your savings account is separate from your checking, you are less likely to monitor it and justify a withdrawal.

If you could keep this up for 20 years, you will have accumulated $220,713. That would definitely help make retirement more comfortable, wouldn’t it?

Get ahead on credit card debt.

Perhaps you have a bit of a spending problem. Let’s say you owe $50,000 on a credit card with an interest rate of 23.99% (ouch). Paying an extra $500 a month on that bill would make you debt free in about five years. In addition to paying off your debt, you will be saving yourself an incredible amount in interest. After that 5-year span, you would be able to start putting that $500 into your savings account and watch it grow.

Pay off those student loans.

With $500 extra dollars a month, you can cut down on your student loan and its interest by $6,000 in one year. Once you are able pay down your student loans, you will have less debt and more financial freedom.

Plan for the future.

Putting 500 extra dollars into your 401k or 403b, you can significantly help your retirement cushion. With an extra $6,000 per year in your retirement account, your money can work for you. Depending on how diversified your portfolio is, you may be able to increase your investment as the market ebbs and flows. Check with a financial advisor for further insight into your portfolio.

Improve or save for your home.

Sometimes home improvements go to the bottom of our list, and often times millennials worry they will never be able to afford their first home. When you start chipping away at your debt and start focusing on your savings, you will see both home improvements and home purchases become a lot more feasible. With a goal in mind, your savings seems a lot more worthwhile. Think about your granite kitchen island, or your 2-bedroom condo as your savings piles up.

Have some fun.

You work, a lot. You have to. Especially if you’re looking to have an extra $500 a month. So, you need a vacation. Everyone does! As Americans, we tend to work ourselves to the bone without leaving much room for vacation. According to Moneysense.com the total cost for a 2-week European vacation for 2 is around $7,000. This means, after just a year of savings, you and your travel buddy can hop a plan to Europe for 2 weeks. Now, these costs can change depending on where your flying from (West Coast versus East Coast), or where you’re traveling to (Italy is more expensive than Portugal, for example). If you’re looking for a more tropical vacation, cruises can be between $500 and up to $3,000 per person. Don’t forget to take airfare into account, but also remember food is included.

Money. We never seem to have enough, but usually, that’s because we are not handling the money we have correctly. So, start planning, and start saving properly to make sure you’re making the most out of all the extra money you have coming in from your efforts.

Should Couples Share Bank Accounts?

Having been married for well over a decade I sometimes take for granted that my wife and I rarely argue about money. But then we cut up our credit cards almost 10 years ago and make sure to budget and pay cash for most things.

But I often hear from friends about how much they fight with their spouses over money, particularly over the question of should couples share bank accounts.

While I know why my wife and I do, I decided to investigate and see what kind of data is out there. I especially wanted to see what percentages of divorces were from couples who kept their finances separate.

Here’s what I found out:

Upwards of 75% of couples in the US share at least 1 bank account. Generally speaking the younger the couple, the less likely they are to combine bank accounts. But the younger couples also argue a lot more about money and see significantly higher divorce rates compared to couples over 50. So the data overwhelming says yes; married couples should share bank accounts.

But there’s a lot more that goes into creating financial peace with your wife or husband that just sharing a bank account. So in this post, I’m also answering all the top questions that usually follow questions about sharing bank accounts.

Why should couples pay bills together?

When everything everyone earns goes into one account and then all bills come back out of that account it just makes everything simpler and easier.

Sometimes people avoid joint accounts for some of the following reasons:

  1. They feel it’s not fair if spouse 1 makes more money than spouse 2
  2. Or they are resistant to anyone telling them what they can do with their money
  3. They don’t want their spouse to know what they are spending their money on

At the end of the day if you want your marriage to succeed you have to be open and transparent. So right out of the gate that knocks out the 3rd reason.

As for one spouse feeling controlled by the other, if you have a controlling spouse, it’s likely showing up in many other ways too and not really tied to finances (in short, you have a bigger problem and need to deal with it. The money issue is a symptom of the actual problem).

If you make more money than your spouse or if one spouse doesn’t work and stays home with the kids, they still provide value to the relationship and family; it just shows up in different ways.

If you don’t feel like your spouse is working as hard as you then again, you have a bigger problem than just salary amounts and need to deal with the actual problem.

But if everyone is contributing in different ways for the couple’s common goals, why keep score?

How couples can combine their accounts and not feel controlled

Not wanting to be controlled by a spouse is one of the top reasons one or both spouses resist combing bank accounts.

I get that, although when you live your life openly, honestly, making mistakes but not engaging in behaviors you don’t want your spouse to know about, it just lifts a weight off of you that just makes life that much more enjoyable.

But what my wife and I do is simple; we follow Dave Ramsey’s Envelope System.

In that system, we take out a set amount of cash from the bank each payday. How much we withdraw is based on the written monthly budget we do.

While things like mortgage payments, insurance, Netflix, etc get paid directly from our bank’s payment website, things like gas for cars, groceries, eating out and his and hers spending money we only pay cash for.

Thus, that money we withdraw gets divided up into envelopes labeled by category.

Guess what? I don’t tell my wife what she can do with the money in her spending envelope and the same goes for me. How much goes into the envelopes is something we discuss and agree upon.

But once it’s there, it’s that spouse’s choice.

Why pay cash? Because it forces you to stay on budget and it teaches you to scrutinize purchases more. When you look in your wallet and see how much cash is left, you will spend less than just blindly reaching for plastic.

A recent study by Avni Shah examined how we spend and discovered the roots of why we tend to spend upwards of 18% more when paying by plastic than if we paid with cash.

Are joint accounts a good idea?

For married couples? Absolutely.

When you said “I do” you came together and joined together. You didn’t answer “maybe”. But when couples keep their finances separate from one another, they are essentially keeping part of their lives separate.

If you want to live part of your life separate, why get married in the first place?

Ultimately when you combine income, bills, and debt, you are agreeing with your spouse to join together like superheroes to take on the world. “Your” bill or “my” debt or “your” paycheck being large just won’t matter anymore.

When everything becomes “ours”, the number of money fights diminishes dramatically!

Do most married couples share bank accounts?

In short, yes.

According to a recent Love and Money survey by TD Bank, almost 3/4 of all couples in the US share at least 1 bank account. Interesting, that seems to be on the decline with millennials as only 58% of millennials do the same.

But either way, well over 50% of couples do share bank accounts.

But only about half also combine income, and the younger the couple, the less likely they are to do that.

Other interesting takeaways from that survey include:

  • 61% of couples discuss money at least once a week
  • 36% of couples argue about money monthly
  • The younger the couple the more they argue about money
  • 44% don’t seek any financial advice
  • 52% don’t seek any marital advice
  • Upwards of 20% say their biggest financial successes are paying off debt & budgeting

So the obvious takeaway here is that millennials tend to combine and share less than older generations, but we also see that they also argue more about money.

Not surprisingly, the divorce rate for younger couples is almost twice as high as it is for adults 50 and older, according to the American Community Survey by the Census Bureau.

What do we older folks know that the younger couples don’t?

In short, guys like me (in my 50’s) know that money fights and money problems are often one of the top 3 Reasons for Divorce, and combining finances is one of the best ways to minimize that!

How do I merge bank accounts after marriage?

Remember, as I get into elsewhere in this post, don’t do ANYTHING with combining finances until you’ve said: “I do”.

This isn’t about love or trust. But life happens and while we never want to plan for a split before the wedding day, guess what? It happens!

So once the ink is dry on that marriage certificate, here are the steps to merge bank accounts after marriage:

1. Get a joint checking and savings account

You can start fresh together with a brand new bank or one of you can add the other’s name as co-owners on their accounts. Either way is fine, but make sure to close any non-joint accounts once funds have been moved and outstanding bills have been paid.

2. Set up all accounts on your new bank/account’s payment system

Before you go about canceling auto-drafts on old accounts or shutting down accounts make sure there aren’t any outstanding payments that haven’t cleared. Leave a small amount of cash in the old account for 30 days to catch anything that might sneak through,

3. Begin paying all bills on the new joint account payment system

Once you have your new accounts set up on the new bank website system, and you’ve verified all outstanding payments have cleared, go ahead and shut down the old accounts.

4. Transfer any cash from the old accounts to the new joint accounts

This will be easier if you were both already using the same bank. If not, it may be easiest to get a cashier’s check from the account(s) you are closing and then deposit that at the new bank.

One of the most crucial things a new couple can do is budget.

These days, Budgeting Apps make it incredibly easy to do and you can both access it on your smartphones. In the linked post, I walk you through all of the best budgeting apps breaking down pros and cons so you can decide if one of them is right for you.

Can you merge bank accounts before marriage?

Can you? Yes. Should you? Absolutely not!

While I’ve been married for a long time, I have had previous relationships. Once I bought a house with my then girlfriend. When we split up, because we weren’t married, I couldn’t do ANYTHING with the house without her written agreement.

After the split, she moved out and stopped paying the mortgage. I stayed in the house a few more years, paying the mortgage by myself.

Even though we went years of her not paying the mortgage, I couldn’t sell it or even refinance it without her agreement and guess what she wanted in exchange? That’s right, a lot of money.

Now of course since she had helped pay the mortgage when she still lived there, she was entitled to half of the equity at the time she moved out.

But she insisted on half of the equity years later and I had no choice but to agree (or keep the house and prolong the issue). In the end, I paid her $80,000 when really she probably was truly owed closer to $40k.

Had we been married and then split, the judge would have simply divided the assets at the time of divorce, but when you aren’t married, you don’t really have any legal rights to joint property or accounts.

So until you are married, while it’s great to communicate about money, income, bills, and debt, don’t get joint accounts, co-sign loans or anything else like that.

It’s an expensive recipe for disaster.

Are separate bank accounts marital property?

In short, if you are considering or in the middle of a divorce, you should obviously discuss the matter with your attorney.

Also, know that divorce laws vary from state to state. Thus, there isn’t a one-size-fits-all answer to this question.

That being said, we can say that whether or not a spouse’s name is on the account isn’t likely to affect whether the state and the judge will consider it joint property or 1 spouse’s separate property.

In many cases, across many states, though, any assets (including money in accounts) that were acquired during the marriage, would be considered martial or joint property and thus a judge would divide it up during the divorce.

But always consult an attorney in your state before making any legal decisions.

I would not, however, ever make a decision regarding my spouse and our finances with divorce in mind. If you already have 1 foot out the door when you set up finances in a marriage, you’re increasing the likelihood the marriage will fail.

How should married couples split finances?

For me, keep it simple!

All paychecks go into one checking account and then all bills get paid from that account. I do recommend having Multiple Bank Accounts as it makes budgeting WAY easier.

All bills get paid out of those accounts.

For finances at least, forget his and hers or yours and mine. It’s “ours”. Who makes what is irrelevant. That being said, sometimes one spouse brings a large amount of debt into a marriage.

Thus, it’s important to talk about that before you say I do.

It’s not that you wouldn’t get married to someone with a large amount of debt, but it is important to know whether or not each of you shares values with money and finances. So before you tie the knot make sure you’ve discussed and agreed upon the following:

  • Debt (how much you have and whether you’re OK with using credit cards and other debt)
  • Budgeting (do they budget or do they just “wing it”?)
  • Spending (are the intentional with their spending, are they frivolous?)
  • Red flags (large amounts of student loans, bankruptcy, etc)

Ultimately when there’s no surprises, there will be less friction, fewer disagreements, more harmony and more financial as well as marital success.

Still not convinced? Check out my post about how Financial Marriage Counseling can help improve your marriage!

Did I answer all your questions about whether couples should share bank accounts?

In this post, I took a deep dive into one of the most common questions that married couples ask about money; should couples share bank accounts.

Ultimately while I’ve always believed couples should combine accounts, the research we looked at proved that to be true.

So if you aren’t sharing bank accounts and expenses, start today!

What is the biggest frustration in your marriage?

All Grown Up

This is part of my experiment to write regularly and publish every day with the help of 365 Days of Writing Prompts. Today’s prompt: “When was the first time you really felt like a grown up (if ever)?”

The first time I really felt like a grown-up was when I got my first paycheck.

This might sounds spoiled, but my native Chinese culture is different from the American one. In the former, parents support their children, at least financially. Whenever possible, children do not have as much pressure to financially sustain themselves until they finish school. It sounds great for the children until one thinks about the fact that children are considered their parents’ properties. I would have preferred the American culture any day.

When I was studying for my bachelor’s degree, my parents supported me financially. A long time ago, my father gave up his chance to go to college because of financial hardship in his family. It seemed to be one of his missed goals, one that he wanted me to somehow achieve for him. I was trained to be a hardworking student, so I did not give it much thought other than that I had to do my best. It was one of the rare things that we seemed to be in agreement over. (In retrospect, I also underestimated my ability to balance work and study. I thought working would ruin my study.)

When I decided to go to graduate school, I figured I should support myself or at least try to. They already spent a lot of money on college for me and my sibling. My parents did not ask me to go to graduate school. I made the decision, and I should be the one who made it happen. Also, my relationship with my parents was at a low point. Who knew what they would have done next? I could not just count on their support.

I was in a software engineering course. It was coincident that one of my project partners was working for a staff member who eventually became my first supervisor at work. We got introduced to each other, and the rest was history.

Financial independence is one of the things in my life that I really like once I have it. Not having to ask another person for money, and accept all explicit or implicit strings attached, is wonderful. Getting paid to do work instead of paying someone to do work for them is fantastic. My employer eventually switched my payroll to direct deposit, but my first payment was issued as a check. I still have that paycheck with me. That might sound stupid, but the amount was not huge anyway. I can always earn more money, but I will never get my first paycheck again. It was that much of a turning point for me.

Top 5 Money Mistakes that Most People are Making

In today’s environment managing your money can be one of the most difficult and complicated things in your life. Since money makes the world go round and having enough is something that most of the population struggles with, making the right financial decision with your hard earned money can be a daunting task. We have all heard the ways to successfully manage your money whether that be through investing or just coming up with a financial budget but more people make more mistakes with their money that can derail even the best-laid plan. To make sure you’re not sabotaging your chances for financial success, it’s helpful to look at some of the big money mistakes you might be making right now. Here are five common errors that could be costing you your chances at financial independence.

  1. Not monitoring your investments

Almost 40% of Americans don’t know how their investments are allocated. Asset allocation accounts for 93.6% of your investment returns, according to a frequently cited study 1986 study, so you simply cannot afford to make this mistake when it comes to allocating risk appropriately.

Depending on your age, your risk will vary and the theory of stock vs bond ratio has greatly changed over the years. For instance, the bond theory was that your bond investment should be the same as your age. So if you were 60 years old, then you should be 60 in bonds and 40 in equities. Due to higher costs, inflation, and low bond yields, this thought process is no longer an agreed theory. It is recommended that you continue to diversify and stay moderately aggressive with your portfolio to be able to fund your retirement. Stay on top of how your money is invested and make appropriate changes as you age to avoid ending up with too little retirement cash when you need it.

Here’s what it comes down to

Rebalancing your portfolio quarterly can make a big difference in your finances. So mark your calendars now so you don’t miss out.

2. Not sticking to a budget

Just 2 out of 5 Americans have a budget and a clear knowledge of what they’re spending their money on. This means that about 60% of Americans truly have no specific knowledge of managing their money. If you are unaware of where exactly you are spending your money, it is safe to say that you are most likely not allocating your money as wisely as you can, which means you are probably overspending. You should budget how much of your money is spent on fixed income like your mortgage and how much is spent on discretionary items like that $5 Starbucks coffee that you drink every day. The data reveals when people do track their spending, their spending is at least 20% higher than expected.

To avoid wasted spending, use a budget to take charge of how you allocate your hard-earned money. Track your spending for around 30 days first so you can ensure your budget is realistic, and don’t forget to budget for savings.

3. Investing too little in retirement savings

On average, Americans are contributing around 6.8% to their workplace retirement plans. While any savings is better than nothing, this is significantly below what you need to save in order to retire with financial security. Most experts recommend saving at least 10–15% for retirement, and even this amount is likely insufficient given the fact interest rates are near historic lows while life-expectancy has increased. On a $50,000 salary a year, investing only 7% of your salary will earn you about $300,000 given a 7% return on your investment. While this might seem like a good amount of money, it will not last you for the 30 years of retirement with your normal lifestyle, especially with rising health care costs. Remember, that early investing is your best friend due to compounding interest.

4. An emergency fund is NOT a credit card.

A large percentage of Americans do not have $500 saved to cover an emergency. This continues to be a HUGE concern as 60% incurred an unexpected expense last year. Unfortunately, if you are in the same situation as most with no emergency fund, you probably used credit to cover your expenses. This ends up costing you significantly more in the long run due to high-interest rates. To give you an idea of what that will cost you, if you go $1,000 into debt due to an emergency and you make only a $20 monthly minimum payment on a credit card with a 17% interest rate, it would take you 88 months to repay that debt — and you’d spend an extra $752 in interest in the process . During that seven-year repayment period, chances are you’d experience other emergencies too that would cause your debt balance to rise further. So an emergency fund is one of the first thing that you should have. This should take precedence over investing or any other purchase. A $1000 emergency fund should be your short term goal but your long term goal should be to have 6 months in an emergency fund.

5. Spending too much on your car

About 83% of all new cars were financed, with drivers borrowing an average of $30,000 and facing payments of around $500 monthly for over 6 years. Used cars that were financed had average loans of about $20,000 or $375 payments for the same time frame. Most Americans only keep cars for about 7 years, which means that most never usually go more than a year or two without a car loan. If you bought inexpensive reliable used vehicles and invested the money saved by not constantly having a car loan over 40-years of your working life, you could end up with around $600,000 saved for retirement. So ensure that you don’t go car broke but instead find that great cost-effective mode of transportation. A vehicle is your largest depreciating investment. Think about it this way, if I told you that investing $30,000 in the stock market would be worth $7,000 in 7 to 10 years, you wouldn’t invest. That is what your doing by buying that cool looking BMW, is simply not worth the cost.

Is teaching children about money effective?

saying no…

Soon after starting facilitating money management workshops for migrant workers in Hong Kong, parents approached us for workshops for their children. So we designed and ran workshops as after-school activities for several years, until one day, I was asked to run a series of private workshops for a small group of 10 year old children in the flat of one of them. There we were, practising prioritising expenses, discussing which spending was important, how to save for future expenses… in a play room packed from floor to ceiling with toys. When I went out, I seriously wondered what the children had really internalised (not just understood with their brain) from what they had just done.

Children learn from watching people around them, especially us, parents; they mimic us, internalise our behaviours and act them through their games and interactions with others. But do we (parents) send the right message? What do children understand when we don’t say “no” when they want something, when we always buy a little thing for them when we go shopping, or when going to the mall is a family outing? Do we want them to understand that money is unlimited, shopping is a hobby and the purpose of life is spending? What do they understand when we promise them money to clean up their room or get good grades? As parents, being role-models is more powerful than preaching. In an experiment (1) about generosity, the psychologist J. Philippe Rushton found out that children who observed adults donating money were more generous in the short and long terms than children who were preached by an adult to donate. So if your organisation runs financial literacy programmes, consider reaching parents instead. Besides, by the age of 6 years old, a child may have already spent around 26,000 hours with her/his parents (2) — how does that compare to a 3, 12 or 20 hour financial literacy programme? If you still want to teach children directly, embed it in a family programme so that parents are involved and whatever is introduced in the training room is practised at home. Else you are just wasting time and money.

What do we want our children to learn about money? Learning basic skills like budgeting or reading a bank statement, or acquiring technical knowledge about bank or insurance are important. But is it the only thing we want our children to understand about money? Why do we want them to learn about money? Imagine: you give your child a weekly allowance, (s)he writes a budget and plans all his/her expenses, including savings for university. You are quite amazed at her/his ability to manage expenses and save, with such a small allowance. So one day, you ask your child for her/his money notebook: everything is neatly recorded — ins and outs, and your child is happy to walk you through the details: the stationery looks really cheap. “Oh yes, the shop lady is not good at maths, and most of the times, she gives me the wrong change. Too bsd for her.” And what about these other incomes? “I lend money to my friends — they are always running out — so that’s the interest.” How do you want your children to handle money? Is it possible to teach money matters without ethics?

Raising children is more than acquiring skills. Aren’t corruption, tax evasion and oppressive deals much bigger financial issues than lack of budgeting? To raise financially responsible children, we need to lay solid value foundations: money is about trust, honesty and accountability. As parents, we must embody these values if we expect our children to internalise them. Why could we require more from our children than from ourselves? The wonderful challenge of parenting is, because they have a knack to point out our hypocrisy (we don’t fully do what we say… and find tons of excuses to hide ourselves behind), children help us become better people: they help us continue growing as adults. Trust is especially important: Keep your word: if you promise something, hold to what you have committed to. Another key value to instil is clarity. Money very easily destroys relationships — between family members, or business partners, or friends — whenever the expected outcome was not clear. Another key understanding is that money is a flow: someone’s income is someone’s expense. Money is a relationship tool. Besides watching yourself and aiming to be a role-model, you can also use “money mantras”: do you still remember phrases or proverbs that your grandparents kept repeating at specific occasions? I still remember my mother’s saying “doing and undoing is still working, said my grandmother” whenever I had to redo a house chore or homework from scratch: a wisdom word passing through four generations or more. Build your own money mantras and use them often: you (and your children later in life) may be grateful to use their memory cells for money wise words rather than for advertising slogans (sad enough… I also remember some 40 year old ad slogans — this shows how powerful words can be): here are a few ideas: “Big toys don’t mean best friends.” “Money is a tool not a goal”, “More “I have” doesn’t mean more “I am”. “Someone’s expense is someone’s income.”

Team work: when spouses have different spending styles or money management habits, this sends contradictory messages to children and impacts how they learn about money. Children are clever and use our inconsistencies; they know who to ask to buy something they want for instance. Work on managing money with your spouse. This will also set an example to your children, later when they get married.

Talk to your children: sometimes what we convey through our behaviour may need further explanations. Help your children decipher the world around them: they are surrounded by lots of things to buy and mostly virtual money (plastic cards for instance) — it is a tough environment! Our ancestors would pass knowledge about dangerous plants and animals to their children… how much do we warn them about the dangers of debt, overconsumption, the deception of “bargains” and the consequences of cheap goods on those who produce them and the environment? Build their critical thinking so that they understand the difference between advertising and information, for instance, or always find out the two sides of any transaction (where does it come from/where does it go) instead of “what’s in for me?”

Involve them: imagine telling your 18 year old child who has never ridden a bike before: here is a bike: you have 100 kilometres to ride to university. This is what we do if we never give the opportunities to our children to practise managing money. We can nurture honesty and accountability by entrusting our children with errands: give them clear instructions on what to buy, ask them to track what they have spent, and give you the change back. Count the cash to see if this adds up. When they are used to buying groceries for instance, you can ask them to estimate how much they need for this errand: you give them an opportunity to practise planning and getting a sense of prices around them. Involve them in family spending decisions — whether it is back to school purchases, your next holiday, or buying a computer. Research and compare various options together, discuss what criteria you should consider to take your decision, while staying clear on who has the final word if you can’t agree. Give them part of the family budget to manage: for example, weekend meals. As they get older, teach them skills like reading and checking a bank statement, comparing phone options, etc.

Allowance or not allowance? Pocket money is a way for your children to learn to manage money; let them experiment and make mistakes while this is still of little consequences. Just keeping money safe… is something to learn, and sorting out banknotes, giving change, waiting to get enough to buy something they want, noting down expenses, planning future incomes and expenses. Don’t only give cash. Let them learn virtual money with either a bank account or a “parents’ account” (you can keep the detail in your family money software for instance and give a monthly statement). Don’t interfere in their choices: they will learn from their mistakes. However, allowances can be distorted and an incentive to spend: allowances in many families are usually given as an extra while all the other expenses are still paid by the parents. So allowances don’t teach kids about “needs” and “wants” at all… they just cover wants and can even be an incentive for wants. Be clear with your child on what you expect them to cover with the allowance and as they grow older, shift more and more responsibility to them: phone expenses, lunches, clothes, school books and stationery, leisure… and don’t change the rules because they run out of money. Yet, involving them in family spending decisions is probably more powerful than allowances (see above).

Be also cautious about financial rewards. If you link expected house chores to a financial incentive, what happens if you stop paying them? Do you get paid for house chores? But you can consider paying your child for specific exceptional tasks that you could otherwise pay a third party to perform (car wash, gardening, IT help…) and up to them to be creative and come up with ideas of jobs they could do for you. Be especially careful in linking school performance to financial incentives. Will they only study hard for exams for the money?

Turn as many daily life situations as possible into learning opportunities: from taking the bus (calculate the cost of two way tickets, compare with other transportation means…), choosing food (look at cupboard first, write grocery list, read labels, estimate total cost…), to yearly family holidays (budget, reflect on the meaning of the holiday for your family…), giving to charity (which one, how much….), school expenses, clothes, equipment…. Take them to the bank with you. Explain to them how confidentiality and trust complement each other. Say “no” — this is the most powerful tool to set limits, especially to consumption, and learn to manage frustration. Each child is different- so if you feel one of your children tends to be stingy, you may involve them more in giving to charity for example.

Money is not all: Involving children in specific decisions doesn’t mean monetising your relationship. Draw a clear line — your time together cannot be traded with consumption: a present will never replace you. When your child requires time with you, address her/his request with your full attention and presence… not with a thing –even if it is two minutes now and a promise of one half-day next weekend. Then write and keep your promise. Helping friends and neighbours… cannot be systematically turned into paid services. Whenever you involve your children in a decision, or help them when they ask for advice, discuss all the possible sides of it: its financial implications but also its impacts on others, on our lives, on the environment. Gradually, through parents’ examples and guidance, children can learn to navigate in our society and on the Earth –including (not exclusively) its financial sides, and nurture both mind and heart.

(1) Source: http://www.nytimes.com/2014/04/12/opinion/sunday/raising-a-moral-child.html

(2) Calculation: 12 hours/day (awake) x 6 years x 365 days (we’ve neglected the leap year)

Budgets Don’t Suck — 7 Ways They Will Change Your Life Forever

Chances are…

You’ve been wanting to create a budget, but keep overspending your money the moment you get paid.

You’re constantly frustrated after reading success stories from others who’ve saved thousands of dollars creating the “perfect budget”.

You even start thinking that maybe something is wrong with you, or that people are stretching the truth about their success.

Eventually, you come to a conclusion.

Budgets suck.

Here’s the reality:

Budgets don’t suck. You’ve just been budgeting in a way that sucks. You’ve been using budgeting techniques that have worked well for others, but not for you.

You don’t need to keep searching for the perfect budgeting strategy. You don’t need to be blessed by the finance Gods. You don’t need a miracle.

If you want amazing results then you’ll need to implement a new budgeting strategy. One that’s customized for you.

Here’s how you can create a customized budget, and the 7 ways it’ll change your life forever.

In the process of creating a budget you’ll adopt a strong mindset.

Why?

Because without a strong discipline you’ll spend your money on unimportant items. It ‘s tempting to fantasize about earning extra money and how you’d be saving all of it.

You don’t need higher income. You need more discipline.

Enhance your discipline by constantly learning about finance. Read books, listen to podcasts, and learn from the financial blogs.

Budgeting involves setting money aside for specific goals. Squash your old belief that you need to earn a higher income to start budgeting. You should strive to earn a higher income, but this alone won’t make your financial problems will disappear.

A customized budget will allow you to budget for any income you receive.

All budgets are not created equal.

Maybe you’ve tried the 50/30/20 budgeting method (50% of your income on wants, 30% of savings, and 20% of needs), and failed miserably.

Instead of reading dozens of finance books or searching the web for a magical budget, why not create your own? Taking the initiative to create your own budget will ignite your confidence.

The first step to creating your budget is understanding your cash flow. You’ll need to understand how you’re spending your money each month, as well as the average amount you have left over.

Start by logging online into your bank accounts and review your last 3–6 months statements. Check for recurring expenses, miscellaneous purchases, and begin grouping them into different categories. Tally up your expenses and group food, electronic, and other miscellaneous items together.

Once finished you should have a clear picture of how you’ve spent your money each month, and how much you’ll be able to save.

Next, decide how you’ll spend your leftover money.

Answer these questions:

  • How much do I need to retire in X years?
  • Am I comfortable carrying debt?
  • What items are important to me (clothes, music, etc.) that absolutely must have to feel good?

Dedicate a percentage of your excess income to fund your most important goals. This can include saving for a home or paying your debt off.

For example, if you have $300 left over, you can save $200 each month for a down payment for your home, and $100 for additional debt payments.

A budget isn’t successful if you’re feeling miserable. Make sure that your saving for goals that are important to you and not what the experts tell you.

J Money, an inspirational finance blogger believes:

Great budgets give you confidence, and that’s what makes them sexy!

It sucks receiving your paycheck only to feel miserable several hours later. Mentally, all your money is gone before you get paid. In reality, most of it is just spent poorly.

I’n the process of creating your budget you’ll spend 5–10 hours analyzing your spending habits. If you only use cash then you will need to start using your credit card or debit card to track your purchases. This process will transform you to become more conscious with your spending habits.

Look for recurring patterns. Small purchases add up, so don’t exclude these transactions. This can include coffee, take out food, etc.

You can either track your spending habits through online banking or with Personal Capital. Creating your custom budget will leave you with no choice but to understand your spending habits like the back of your hand.

A budget will steer you towards your most important goals in life.

You’re not budgeting to save money. You’re budgeting to accomplish specific goals. These goals include retirement, a down payment for a house, and even quitting your job.

The reason why you’d overspent your money in the past was because you didn’t have a clear purpose. Without a purpose, it’s really hard to stay committed.

You’ve already learned what to do with your excess money, but it’s important to dig deeper. Why do you want to save for retirement, clothes, etc? Once you’re clear on these answers you’ll be more likely to stay committed.

Questions to ask yourself:

What does financial freedom mean to me?

How does my ideal retirement look like?

No more saving aimlessly. No more saving for fun. Start saving with a purpose and feel damn proud of it.

Budgets will help you become laser focused on removing unnecessary items in your life.

You’ve tracked your expenses thoroughly. You know how much you spend on coffee, take out food, clothes, etc. Because of this, you’ll be less likely to spend your money in areas that don’t matter to you.

You’ll finally know a dollar’s worth. Instead of spending $60 a month on Starbucks lates, you’ll rather drink coffee at home and use this extra money to save for retirement.

Like some things in life, the most challenging goals give you the best rewards.

A budget is no different.

Creating a budget can be one of the challenging tasks you’ll do in your lifetime, but well worth the effort.

After analyzing your spending habits, prioritizing your financial goals, and minimizing your debt, you won’t be the same person. You’ll be better disciplined with your money, and more intentional with how you’ll spend it. This won’t make all your financial problems disappear, but you’ll feel empowered knowing that you’re maximizing your income to its full potential.

When payday comes you won’t guess how you’ll spend your money because you’ll have systems that automatically budget your income.

Your budget will be working for you, not the other way around.

Picture this.

After your money is deposited into your checking account it’s automatically transferred to multiple accounts. Just like that you’ve funded your retirement, paid your bills, and funded other important accounts.

Everything is automatically done for you.

Here’s how…

Start by scheduling all your payments to be paid from your credit card, so if you ever get overcharged it won’t affect your cash flow.

Next, schedule the amount of money you’d like to transfer. It will help to have several checking accounts for different goals and 1–2 external savings accounts. Multiple checking accounts make it easy for you to track different saving goals, and external savings account make it hard for you to withdraw your money.

Let’s say you had $500 leftover each month. You could transfer $200 to your savings (rainy day ) account, $100 to purchase a new phone, and $200 for retirement. You’ll set the transfer to occur the 1st and 16th which is one day after each paycheck.

Customize your transfers to occur on the days best suited for you.

After accomplishing this, your money will budget itself while you sleep.

Imagine it’s Friday and you’ve just received a notification on your phone that you’ve been paid!

You haven’t even touched your money, but it has automatically been transferred into multiple accounts. You’re also spending your money in ways that bring you pleasure while funding important financial goals. Best of all, you haven’t overspent.

You’re not driving a 95 Honda Civic, and you’re still dressing in the style you love.

You can’t help but think that budgets are just freaking awesome.

Life is good.

Are you dreaming?

You don’t have to be. You now know the fundamentals on creating a customized budget. One that’s optimized to work for you, based on your needs, personal desires, and unique circumstances.

The perfect time to create your budget is now! Stop giving excuses or ponder on what you’re missing in your life.

Start by simply analyzing your spending habits. Then prioritize the things that matter to you and spend your money in those areas.

You know a budget is important. That’s why you’ve searched for the perfect one this whole time. The ability to create the perfect budget is in your hands, not in some finance book.

You have what it takes to succeed.

What are you waiting for?


I’ve created a checklist filled with awesome resources that will help you manage your money better. Adopt these resources to take your finances to the next level!

Grab my checklist

Confessions From the Sorta-Budgeting Life

My partner and I are the quintessential DINKS: dual income, no kids. We certainly aren’t busy in the way that people with children are, but we feel busy a lot of the time, and we allow that feeling to make us a little lazier than we should be with our money. We don’t think of ourselves as wasteful spenders, but we don’t really limit ourselves by putting dollar amounts on each spending category.

Not that we haven’t tried. When we got married two years back, we set up a Mint account along with our joint banking accounts. Mint does a fair job of automatically categorizing purchases by budget line item. Yes, you’ll have to reallocate a few transactions by hand—Mint’s allocation system isn’t perfect—but it is easy to scan a month’s worth of transactions, make sure you recognize them all, and confirm that Mint has correctly allocated them into food, travel, or utilities.

Once all the transactions are allocated or reallocated, Mint creates a monthly budget for you. You can modify Mint’s budget, but the initial numbers are auto-generated based on the status quo of how you spend your money.

Mint, for example, gave us a $460 groceries budget. Not because that was how much we wanted to spend on groceries, but because that was how much we had been spending on groceries per month. (If that seems high to you, it does to me too—I make myself feel better by remembering we throw at least one party or dinner per month, and try to supply enough food/drink for everyone.)

We review our transactions each month, and we look hopefully at the budgets, discovering that most of them are just barely under the amount Mint expects, with a few categories usually going over and turning from green to the dreaded red. We don’t impose any consequences on ourselves, though; we’ll say “we should eat at home more,” or “no weekend trips next month,” but there’s pretty much no follow-through.


Right now we’re at the halfway point in terms of tracking our money: we’ve started paying attention to how much we spend, and just doing that was enough for us to put away some savings for retirement and start saving for an upcoming car purchase. But we haven’t yet done the second half of budgeting: the part where we—not Mint—make our budget, allocate dollars to line items, and stop spending when we reach those amounts.

Why is this so hard for us? I can think of a few reasons. I don’t want to restrict what my partner does with his money, for example. What if, for instance, I spent a ton in one budget category and he was forced to cut back when he wanted to buy something? The communication required to make that work seemed like a headache, especially when we were making all our bills and in no immediate distress.

I also felt some resistance to the notion of scarcity: we aren’t operating that close to the edge, per se, so while the idea of “saving more” in general sounds good, whenever it means “skipping a friend date at the brewery,” it feels unacceptably restrictive.

Finally, I felt like most of our non-trivial purchases weren’t predictable budget line items. Car repairs, charitable donations, taxes, and insurance bills all snuck up on me, and I didn’t have a good way to allocate money to those types of expenses. One budget seemed doable, but a different budget every month? Punishing.

What we need now is a solution that makes us work a little harder, but not uncomfortably hard: something that won’t take a lot of time (because we’ll abandon it), that will force us to confront our overall excessive spending habits, and will leave us the flexibility to not allocate every dollar to a spending category.

So we’ve come up with an experiment, one last attempt, to see if we can save more money without going all the way over to the budgeting side.


Our plan is to go from leaving most of our money in our checking account all the time, to transferring any extra to savings every month as soon as my paycheck hits. It’ll look like this:

—Last day of month: previous checking balance + $2,200 (my monthly take-home)

—First day of month: $2,200 (because everything else is now in savings)

This way, we’ll be working ONLY from that paycheck. We’ll have $2,200 to spend, and that’s it. There will be no obscuring how much we’re spending and saving; every month, the number we transfer will be the amount we saved. The only snarly thing will be if we have major unexpected expenses, which we had a ton of in the beginning of the marriage, but I’m hoping we’ll get a few months without those… and we can just as easily make an emergency transfer back, if we must.

This method is intended to lay completely bare how much we’re spending each month. No more telling myself “this is an odd month” or “we won’t have to buy this next month.” Watching the account balance dwindle all month will help me, I hope, create a generalized scarcity rather than a specific scarcity: “we need to spend less money, so I’ll choose to cook tonight instead of going out,” instead of “we’ve already spent the $10 in the movie night budget, so we can’t have another Redbox film.” Those may seem similar, but to my mind, they feel like the difference between a proactive change and a reactive restriction.

If this doesn’t work, though, I think we’re converting to the real budgeting religion. I know that budgets work well, especially for people who are working with a lower income and want to stretch every dollar. It’s time for us to stop letting DINK-hood make us waste money, especially because at any time we could garner more expenses or lose an income, and I’d hate to have meager savings when tough times hit just because I couldn’t figure out my own budgeting practices.


Laura Marie is a writer and teacher in Ohio. She blogs about family recipes, among other things, at Recipe in a Bottle.

This story is part of The Billfold’s Halfway Series.

c.r.e.a.m — her

who knew digging graves was so vital…

Photo by Michael Longmire on Unsplash

Question — What rules everything around you?

When God told the rich man in Luke 15 to give his money to the poor, he became sad because he was very rich. Personally, I think André felt that same sadness when he read this scripture.

Photo by Joshua Earle on Unsplash

During your 20’s, much needed exploration presents answers to a lot of unanswered question. Questions like, who are you? What drives you? What are you passionate about? What do you stand for? What do you stand against? What rules everything around you?

If you’re brave enough to enter a relationship during this period of exploration, the ONLY way it will work is if each person helps the other to dig up old dirty graves.

Old dirty graves… What does that even mean?

Just about everyone knows that your childhood shapes who you are as an adult. Specifically however, I’ve found that it’s important to look back at your five year-old self. Now, I know that sounds crazy, but honestly, that is where you’ll find the root of your problems.

Sometimes looking back into your past can bring you so much comfort. But sometimes, it can feel just as torturing as pealing off your skin piece by piece.

As André’s partner, it’s my job to help him dig up his old dirty graves but to also make sure he paces himself. He can’t dig too deep prematurely, but he also can’t give up when things get hard and rocky.

“But that’s when Tiaira and I took a closer look.” — c.r.e.a.m — him.

Quick backstory: André grew up with two parents who worked their tails off to lead him on a path of better opportunities than they had. Seeing their hard work taught him to be the hustler he is today. What he didn’t learn is how easily you can fall into the trap of idolizing money. He had been working his entire life to be “rich”, so reading Luke was like a punch to the chest.

“For it is easier for a camel to go through a needle’s eye, than for a rich man to enter into the Kingdom of God.” Luke 18:25

André and that rich man were hit with an ultimatum… do you want to be rich or do you want to enter the Kingdom of God?

Now to clarify, Jesus isn’t saying that rich people can‘t get into heaven. He is saying that it is hard.

He understands the hold money can truly have on people, and he understands how easy it is to allow it to become more important than himself. Without having a gravedigger girlfriend, André would have missed it — his chance to choose God.

So here’s something to think about: Are you grave digging? If you are in a relationship, do you assist your partner with the pain when things from the past seem unbearable?

Ask yourself, what are you allowing to rule everything around you?

Comment and let us know.

Tiaira Plummer✨ (@tee_doubles) * Instagram photos and videos
2,292 Followers, 1,884 Following, 17 Posts – See Instagram photos and videos from Tiaira Plummer✨ (@tee_doubles)www.instagram.com

The Gravedigger,

Tee