Teaching kids financial responsibility is not easy. In today's world, where instant gratification is the norm, understanding the real value of money and the necessity of saving (translated as delayed gratification) is of immense importance. Kids need to learn that money doesn't grow on trees—it has to be earned through hard work.
My husband and I have agreed that we don't want to hide our financial situation from our kids. Because we want them to have a good understanding of real-world finances, our children are aware of how much money we make each paycheck, as well as how much our expenses are each month (like our mortgage, utilities, etc.)
But our kids also know why we don't always have extra money to spend throughout the month—namely because we have incurred a lot of debt. We don't hide that (awkward and embarrassing) fact from them; rather, we stress to our kids that we are in debt as a direct result of poor decisions we have made in the past (can you say instant gratification again!?).
Since we haven't necessarily been a good example to them in the proper way to manage money, our children at least have the opportunity to learn from our mistakes. So we stress to them that although we made poor financial decisions in the past—buying things on credit instead of waiting to save the money for the purchase—we are now doing our best to make the right decisions, and to be good stewards of our money.
Since I started blogging last October, I have been inspired by the stories told on some of the blogs I have read (Toni and Crystal come to mind). We are still far from our goal of being debt free, but here's what we are doing now to keep our expenses low and move us down the path towards becoming debt free.
We tithe to our local church.
I think it's true that God can help us live on 90% of our income better than we can do it on 100%. Tithing, however, is an area that has been logistically difficult at times. My husband is paid once a week, so it was not uncommon for me to forget to write a tithe check occasionally, causing me to have to write a much larger one later to make up for the weeks I missed.
To solve that problem, we adopted an easy method to help us streamline the process. Every so often—usually once every month or two—I sit down with the checkbook and write tithe checks for the next four to eight weeks. I put each check in an envelope, marking the appropriate dates on each envelope. Then I put all the envelopes in my purse so it's easy to just pull out the correct envelope to turn into the church offering each Sunday.
I pay almost all our bills automatically or online.
If automatic payments are possible on a bill, I set it up. If automatic payments are not available, I just mark on my calendar to schedule the payment online each month. Thankfully, every one of our bills, except our local water bill, can be paid either automatically or online, so we haven't had to worry about any late charges because I forgot to mail the check in time for it to arrive before the due date.
Automatic payments and paying online also allows me to budget more precisely since I know exactly which date the payment is going to be drafted from our bank account.
I set up automatic transfers into savings accounts.
Our local bank offers both free checking and free online banking, so we opened up three separate checking accounts, designating them as (1) checking, in which we deposit our paychecks, (2) savings, and (3) medical expenses. To make the actual process of "saving" easier for us, I schedule recurring weekly transfers from our checking account into our savings and our medical expenses accounts. That way the saving is automatic!
Of course, I still have to make sure I don't spend the money that is designated as savings; but if I do need to want to spend it, I actually have to go through the process of transferring money from savings back into my checking account, a process that makes me think twice about whether or not I really need to be spending that money.
I pay my kids' allowances this way as well. Each child has a savings account into which I transfer their allowance each week. They really enjoy watching the account balance grow when I pull up their accounts online. This is a simple step in teaching the kids financial responsibility.
We don't eat out a lot.
As a general rule, we don't go out to eat unless we can do it for less than $15 as a family (and even then we do it very sparingly.) This is where I proclaim the praises of Pizza Hut's Book It! program. All three of my kids participate in Book It!, which means they each have a coupon for a personal pan pizza that they can use once a month. If we want to go out to eat, all five of us can eat at Pizza Hut for less than $10 by using the coupons.
We also participate in Braum's Book Buddy program, so the kids can even get free dessert after dinner!
We don't have cable TV.
We just don't choose to spend money on it. Not only do we save money by not having cable, but it gives us fewer reasons to leave the TV on all day!
We don't have traditional health insurance.
We participate in a Christian Medical Needs Sharing program called Samaritan Ministries for our medical costs. We have been members with Samaritan since 2007 and have been extremely pleased, even with some big medical costs. You can read about my mom and my daughter together had over $200,000 in medical bills, but all was paid by Samaritan members.