One of my friends showed me a list of questions she wrote on a sticky note and stuck to her credit card. Seeing these questions each time she reaches for her credit card helps her remain mindful about the way she spends her money.
Here is the list of questions:
1) Did I come here to buy this?
2) Is this a need rather than a want?
3) If it’s a need, is this the most cost-effective option?
4) Can I pay for this purchase in full in 30 days?
5) Do I currently carry a $0 balance on my credit card?
I now have these questions posted on a sticky note in my own wallet. I have found that seeing these questions makes me consider my purchases more carefully, especially “impulse purchases”. When I take out my wallet to pay, it does make me pause when I see each question.
Sometimes I end up returning the item to the shelf, and other times I decide that I do want to purchase it. Over time, I’ve started asking myself these questions while I’m shopping, even before getting to the checkout counter.
It’s not a perfect system, but it will help you to become more mindful about how you’re spending your money!
Try writing down these questions on a sticky note and post them somewhere you’ll see them in your wallet. Comment below to let me know if you notice yourself becoming more mindful about your purchases because of these questions.
When my husband read the post I wrote about respecting your money last week, he said when he heard the topic of the post, he thought I would go in a different direction. When I asked him to explain what he meant, he told me that when he thinks about respect for money, he’s not thinking about respecting the actual physical dollar bills and how to organize them. He thinks about respect for the money, finances, in your life.
He makes an excellent point – that is the overall big picture of the meaning of money. That’s what I’d like to discuss today.
I find it difficult to have a good grasp on money and my spending when I use a credit card. It is too easy to forget that you’re spending money when you use it. After all, it’s just a piece of plastic that you pulled out of your wallet. However, when the credit card bill comes in the mail, you’ll really see how much you spent. Often, you’ve spent much more than you anticipated, likely because you lost touch with the connection of the credit card to your bank account when using it.
It is for this reason that I use cash for most of my daily transactions. There are some things that make sense to use a credit card for – gas, car repairs, and large purchases (hopefully planned). But for entertainment and groceries, I use cash.
It is much easier for me to keep my spending in check when I use cash. As I’ve mentioned in a previous post, I take the same amount of cash out of my bank account each week for my allowance. When the cash is gone, it’s gone – there is no overspending. Of course, I always have the option to take out my credit card to pay for something when I’ve run out of cash, but I definitely pause and consider what I’m doing at that point.
I ask myself: Do I really need this item? Can I wait until next week when I have more cash to purchase it? Is there a cheaper option?
Working with cash really does teach you to respect money and understand its value. When kids are learning about money, it is best to teach them using cash. Consider switching to a cash system yourself to model the money management skills you want to teach your kids.
Even if you use a debit card for your transactions instead of a credit card, it still doesn’t seem like real money, and you can still overspend. If you are very averse to carrying cash for some reason, another option is to get a prepaid debit card. When the money on there is gone, it’s gone. Same concept as using cash, and you’ll have to keep track of your purchases.
Take the time to go to your bank and take out a steady allowance for yourself each week and use cash. You may even find that you save money when you do this – you might not realize that you’re overspending now and by how much.
Give cash a try and post in the comments below about your experiences.
Have you heard Aretha Franklin’s famous song “Respect”? Some of the lyrics go “R-E-S-P-E-C-T; Find out what it means to me”. That’s what you’re about to do! (The song is pretty catchy, too…I’ve been humming it the whole time I’ve been writing this post!)
Ok, so just think about it for a moment. Let’s say you gave me money for my birthday. What would you think if I thanked you for it, then wadded it up and stuck it in my pocket or threw it in the bottom of my pocket book? Would that inspire you to give me more money? Would it make you think that I truly appreciated your gift? Probably not.
That’s what I imagine is going on when the Universe gives me money. Not just when I find money on the sidewalk, but each week when I take my allowance out of my bank account. I am careful to be respectful to my money.
Being respectful to my money means that I put it neatly away in my wallet, each bill in its proper compartment (see last week’s post to learn more about my cash allocation system). I also make sure all the bills are facing the same direction and are oriented the same way, all right-side up. All the $1 bills are together and go first, then the $5 bills, then $10s, and $20s.
Taking the time to make sure my money is neatly organized is important to me. It also doesn’t take much time to do. Plus, with everything so organized, I am able to see quickly and easily how much money I have in my wallet.
Now, imagine again that you gave me money for my birthday and I thanked you and neatly organized it in my wallet. Would you feel that I appreciated your gift? Would you feel that I had respect for my money? I think you would!
Going forward, when handling your money, take a few extra moments to make sure it’s neat and organized. I know it’s sometimes hard to do this when you’re in the checkout line of the grocery store and there are several people behind you. You can either step to the side to organize and file your change, or you can take a moment when you get to your car to do so.
However it works for you, take the time to organize your money and treat it with respect. I think you’ll find that you’ll feel more confident with your money and in your money management skills. And you may even find yourself with a little extra cash – a bonus, if you will, from the Universe! Hey, it could happen!
Post in the comments what respecting your money means to you.
Fun fact for today – Most of our paper currency features former US Presidents on the front of each bill. Why, then, is Benjamin Franklin on the front of the $100 bill? Well, first, he was one of America’s Founding Fathers. Also, he used his experience as a newspaper editor (and probably some printing experience) to help print the first US currency. Finally, he believed that hard work was the path to true wealth, an idea that is one of the foundations of the American Dream! (Source: http://www.cnbc.com/id/41375422/page/2)
On Monday, my grandparents celebrated their 63rd wedding anniversary! In honor of this momentous occasion, I am dedicating this post to them.
I remember when I was little, if I would visit them when Nanny had to work on the finances, I would work on my “finances”, too. She would get out her book and organize everything to pay her bills, and I had a little red leather notebook where I recorded my “finances”. As I grew older, I learned of their simple yet powerful budgeting system that they still use today. I use a similar version with my own finances.
So…let’s talk budgets!
There are many ways to create a budget for yourself. Since this is such a huge topic, I’ll only be discussing one part of it this week. That’s the cash allocation of your budget.
When Nanny and Grandpa got married, Nanny came to the marriage with a cash box allocation system. It’s a simple tin box with six different compartments. When they first got married, they sat down and decided on the categories and how much of each paycheck to put in each category. Interestingly, they told me that they haven’t changed the original amounts allocated to each category since then! However, now that their lifestyle has changed with retirement, they don’t always use the money in each category, and so those categories turn into slush funds, if you will.
My mom adopted this method of budgeting from her parents, but tweaked it a bit to suit her lifestyle. She uses an envelope system. Again, she came up with different spending categories for herself and puts a set amount in each envelope when she gets paid. When she needs to use the money for a certain purpose, she just pulls it out of the appropriate envelope.
I have adapted this method for my own use, as well. I use a wallet that has different compartments in it. So now each week when I give myself my allowance, I break it up into the different compartments – easy-peasy!
So as you can see, this is a simple yet powerful method of keeping track of the cash you spend in each category of your budget. What is particularly helpful about budgeting with cash is that when it’s gone, it’s gone. I find it much easier to not overspend when using cash.
Here are some categories that you might find useful in your own budgeting:
Day care expenses
You can determine the best way to implement this strategy with your own finances and lifestyle. You can put a flat amount in each category, or a percentage of your paycheck. You will also need to determine how much to put in each category. This is another aspect of budgeting that we will discuss in a future post.
This week, I want to talk about money’s place in our lives.
At the end of every one of her shows, Suze Orman sums it up best by reminding her viewers: “People first, then money, then things.”
This is a really powerful and important message to remember. People should come first in our lives. I know that work can get busy and it seems like staying late and missing your child’s softball game is the right thing to do at the time. But if you think about it, children are only children for a very short time, but the work will always be there tomorrow. It is said that when people look back on their lives, they never wish they were at work more often.
It is important to take time out of our busy days to spend time with those we love.
Money can also play an important part in our lives. Money can be a source of happiness and excitement, as well as a source of stress and arguments. However, money doesn’t define us. Money is a tool that we can use to enrich our lives by going on fun and educational vacations with our family, providing a nice place to live and delicious food to eat, and fashionable clothes to wear. But it is not the end-all, be-all in life.
Things come last because, while they can also enrich our lives, they are only things, after all. Though your grandparents may have given you that couch, they are not that couch, so if you get rid of it, you are not getting rid of them.
It can sometimes be difficult to keep life in perspective, but it is so important to remind ourselves to do so. Take some time today to tell your family how much you love them and that you are glad to have them in your life. Your money will support you by earning interest in the bank. It will be there tomorrow.
What does money mean to you?
Fun fact for today – Piggy banks originated in the Middle Ages. The orange clay used to make vessels back then was referred to as “pygg”. The name eventually changed to “piggy bank” and these containers were used to store money. The funny thing is, there was no hole in the bottom of the containers, so they had to be smashed in order to get the money out. Thank goodness we have solved that problem with today’s piggy banks! (Source: http://www.piggybankpage.co.uk/piggy_bank_history.htm)