Money Saving Mom®

Guest post from Maya of Great Living Now

My family is moving halfway across the continent. So instead of paying ridiculous shipping fees, my husband and I decided to de-clutter our house — we’re getting rid of everything that we don’t use on a regular basis.

We put together huge boxes of books we don’t re-read, toys our son doesn’t play with, and clothes we don’t wear. Then, a crazy idea occurred to me: “Why don’t I estimate how much money we spent on all this stuff?”

I did a quick estimate: about 200 books, each at approximately $15, gives $3000. Three thousand dollars! I was stunned. That’s just for books!

Now, I consider myself very good with finances. I am very careful with large purchases, and I stopped living paycheck-to-paycheck years ago. But here were piles upon pile of small things that nobody uses, and it all adds up fast.

Then I noticed one other thing. My piles of junk had little variety. Books. Dresses. Toys.

That’s when I knew I was onto something. I had discovered my financial sinkholes.

What are financial sinkholes? They are the small stuff we buy, and keep buying, that nobody really uses.

I am not here to tell you to stop buying books, dresses, or toys. However, I would like to help you identify your own unique financial sinkholes, so that you can use your money towards things that will actually get used.

Here are three signs to help you identify financial sinkholes:

1. You have a lot of them.

Whether it’s shoes, toys, books, or skincare products, in order to qualify as a financial sinkhole you should already have a lot of it.

Of course, you probably don’t buy exactly the same pair of shoes twice. But if shoes are a sinkhole for you, then you probably have many pairs of shoes just sitting in the back of your closet.

Take a look around your house. What do you see a lot of?

2. Most of them don’t get used.

The primary feature of a sinkhole is that nobody really uses them, except perhaps for very few times right after the purchase.

If shoes are a sinkhole for you, then you don’t wear most of your shoes. You might have 2 or 3, or even 5 pairs of shoes that you wear regularly, but there are 15 more sitting in your closet that never see the light of day. But, if you have 20 pairs of shoes and actually use all of them regularly, then they are not a sinkhole by my definition.

3. You enjoy buying them.

One of the best ways to tell if something is a sinkhole is how much pleasure you derive from buying it. I love trying on dresses. Apparently, I also enjoy buying them. So, I have a couple dozen dresses just sitting in my closet.

The problem is that I like trying them on a lot more than I like wearing them. I’d wear a dress once or twice, and then I go back to the more practical pair of shorts. That’s how dresses became a financial sinkhole for me.

When it comes to financial sinkholes, knowing is more than half the battle. Once you become aware of them, it is a lot easier to put a stop to it.

Now, when I consider buying a book, I first check whether the library has a copy. When I consider buying a dress, I think long and hard how often I will actually wear it. Before buying a new toy for my son, I ask myself, or him if he is with me, whether he will actually play with it.

Putting a stop to financial sinkholes is very effective, as these sinkholes use up hundreds or even thousands of dollars without us realizing it. But more importantly, eliminating financial sinkholes leads to saving without any self-deprivation, because you are cutting out that which does not get used anyways.

What are your financial sinkholes?

Maya Ackerman divides her time between research, writing, teaching, and spending time with her family. To read her other work, check our Maya’s blog, Great Living Now.

photo credit via Bigstock

Guest post from Heather of My Mothermode

After years of living, um, a little spoiled, I had to face being a stay-at-home mom in the current economy. MoneySavingMom and other financial gurus have been life changers for my family. We are, finally, using a cash system and paying off loans like crazy.

We now have three children, and there is no way I’m letting them coast into the big world with no guidance in money management. From toddlerhood on, here are the steps we have taken to teach them the value of a dollar.

1. Don’t give in to “I wants”.

As soon as they began feasting their bright eyes on colorful trinkets at the checkout, we began to divert their attention. If they do not expect something each time we shop, it makes errands much easier.

We only allow a free sample if the store offers them, and sometimes a quarter machine visit on our way out for good behavior — and the money comes from their own wallets.

2. Teach that money comes from effort.

Our three-year-old recently began insisting, “I want pennies!” My prompt response? To provide him with opportunities to earn pennies!

He was happy to fold towels for his small fistful of pennies. Around age three or four, we introduce a chart with both commissioned and non-commissioned chores. Commissioned chores are for pay; non-commissioned chores are done simply because we should all contribute to the household.

Examples of our commissioned chores are: water the flowers, vacuum, fold towels, and the like. Our non-commissioned chores are: keep your things picked up, help with dinner, care for the animals, and so on.

3. Encourage wise use of money

A small portion of birthday and Christmas money is for their Give, Save, and Spend jars. We explain that many people give 10%, and we let them make the final decision which is usually more like 20-50% for them!

Saving towards a big, but attainable goal is encouraged (such as the guitar my seven-year-old is working toward.) The remainder of the gift funds they receive is put towards sports and other activities.

They have a vested interest in their activities of choice and know that “money doesn’t grow on trees!” We also put their sports uniforms and gear needs on their wishlists to guide family members towards useful presents rather than a load of soon-forgotten toys.

4. Teach the fun in frugality.

We find enjoyable frugal activities to do almost every day. Church activities, library visits, crafting, cooking together, and freebies in our mailbox are just a few ways to have tons of fun on a dime.

Lessons learned? Time management, spirituality, creativity, and resourcefulness, to name a few.

Instruction in money management is confidence-boosting and rewarding. It helps our little ones hone the skills of earning, saving, spending, and giving.  These life skills will be priceless, so to speak, as they venture out in the world as young adults.

How do you teach good money-management in your children?

You can find more frugal adventures at My Mothermode, a place where Heather blogs on parenting, saving money, and more. 

Guest post by Dannah Gresh of DannahGresh.com

It doesn’t matter how much your daughter has watched you print coupons or chase down bargains, somewhere around the age of 13 she will “just die” if she can’t spend something-like-half-the-amount-of-the-national-debt on a pair of jeans. What’s a mom to do?

I didn’t know. My normally content little girls had become two fashion-greedy teenagers who would liked to have shopped until I dropped of severe credit card exposure. Since we don’t like credit at our house and don’t use it much, something had to be done.

I asked a friend who was parenting a few years ahead of me and found the most amazing solution. It was so simple that in my many efforts to solve the problem I hadn’t thought of it, but it literally cut my clothing budget in half and my girls got just as much — or more — each season.

1. Give Your Teen Their Own Clothing Cash Envelope

Add up what you can budget for this season’s shopping, put it in an envelope and present it to your daughter or son. (They’ll smile and be giddy at the thought of how far it will go. Don’t tell them just yet that it never goes as far as you think it will.)

2. Help Your Teen Establish a List of Priorities

Sit down with your teen and talk about their clothing priorities.For example, if it’s time for back-to-school shopping your daughter might want a new pair of jeans, three great t-shirts, a new pair of shoes, and a sweater.

This step is really critical or she will be distracted by the bling on a party dress that she won’t need… ever! Instruct her that she needs to find the priorities and purchase them first and if there’s money left she can get that cute dress.

3. Go Shopping!

Head to the mall and hold your tongue while your teen learns the lessons of money management on the hot pavement of life! Expect it to be a little hard at first, but I can testify that the three Gresh girls cried a whole lot less after we started shopping this way.

My daughters loved the sense of empowerment and almost instantly became bargain shoppers. They passed up the expensive brand-names and instead choose similar much less expensive brands. It was also their idea to take last season’s clothes to a local secondhand store to increase their spending power.

Perhaps most importantly, my girls learned valuable lessons in budgeting and saving and our relationship was no longer strained by me saying “no” to things our family could not afford.

Let me say that another way: this was one of the best things I did for our relationships during my daughters’ teen years.

Recently, I tried to buy one of them an expensive jacket as a going-off-to-college gift. She gasped when she looked at the price tag, “Mom! I could get four for that!” Lesson learned!

Dannah Gresh is a mother/daughter relationship coach and the author of Six Ways To Keep The Little In Your Girl: Guiding Your Daughter From Her Tweens To Her Teens. Visit her website at DannahGresh.com.

photo source