Teaching Kids about money, budgeting, paying bills....

Teaching kids about healthy financial habits can be daunting when you are still struggling with healthy habits yourself. It doesn't have to be daunting though, discussing some of those hard issues in terms that they can understand can be healthy. It's sort of like saying "look see mom/dad made some mistakes, we all do, and we are working on fixing them" and then explaining how people fix their financial mistakes.

All of that being said I have an older daughter she is *almost* a teenager *yikes*, at 12 she gets a lot more than she did at say 3. She sees and hears me talking about budget and bills often. A few weeks ago she asked me about how a budget works and "how do you pay your bills?" I was surprised by this. She has always been a fairly observant child. Her father and I are not together, he is no better with money than I used to be he just had lots more of it than I did to spend. Our daughter has never really seen a good example of saving, spending, and paying bills... until now.

Mint.com has a really great blog/article about teaching kids budgets, I encourage you all to read it. In fact Mint.com is a really great (and free even!) website to check out and familiarize yourselves with. I think for my child though going more in depth is what she is asking for.

With my daughter's needs/wants to learn personal finance and budgeting this week we are starting something new. I will give her an allowance for time she has worked over and above family chores that everyone does, she will work with me to create a budget on saving to spend on a goal, savings for college, and spending money. I will take her to the bank and help her learn to fill out deposit slips (and when the time comes withdraw slips) and how to balance her savings accounts and keep track of what money is for what things. I am also going to show her my pay, where things go to, where they come out and how much is left at the end of the month/day/week... Not all kids can handle that I don't think nor should they, my child seems to have a need/want for that to understand. This need/want stems a bit from how she learns anything new and her abilities to really take the information in.

Most of all, I want my child to have a better understanding of personal finance than I did so when she makes mistakes she knows how to correct them. I was never taught anything about budgeting, making money, paying bills, writing checks, or balancing a check book. Nothing at all, I was thrown into it and failed miserably, I'm working at teaching myself now but I'd like for my daughter to know better. Whether she makes the right choices by having the right knowledge is totally up to her. I can instill the right things and educate her with the knowledge and then it is in her hands on how she applies all of those things.

Photo By: Matt McGee

Banking for me versus a cash system

I'm not good at this banking thing, I'm especially not so great at the balancing thing.

I tried to make things simple 3 accounts

Savings/Overdraft protection
Checking for bills
Checking for spending/necessities (grocery shopping, gas, some variable bills)

I didn't do so hot, but I got back on the horse and tried again, only I did it again.

With that said. I'm keeping 2 accounts the savings/overdraft protection account and one checking account. I'm getting rid of the debit cards (although for the bill paying account I will keep the number to pay over the phone if I need to, just not the card). The other account I'm getting rid of and I'm going to a cash/envelope system.

I'm also going to start tracking my spending here on the blog.

I'm not sure where I am going wrong. I tracked my spending before and I was surprised with how much money I was spending in places like the gas station buying 'extras' and the likes.

I know one thing is I don't have a set grocery budget, I'm not quite sure how to create one... I just buy some weeks only what we really need to get by and some weeks when sales are great and I actually have the cash I stock up on expensive items. I know this is one of my big budget busters so maybe if I just buckle down with a cash only system I can get this done and get on a good track.

I'm really trying not to get frustrated or down about this, in the past by now I'd have totally given up. I'm going to keep getting back on this PF horse and keep riding hoping I fall less and less as time goes by.

I'm also toying with getting rid of everything but the savings and getting money orders each week when I get paid for bills then putting those together to mail off payment.

Mad dash for cash.

Since the economy started taking a nose dive I've noticed more and more incentive for using cash. Or rather businesses want your cash not your debit card not your credit card, this is because it cost them to run those darn things plus cash in hand especially for a small business just makes sense.

I first noticed this happening at the gas stations, one by one they all jumped on board the other day it was $2.31 for cash and $2.37 for pay at the pump service. I suspect other businesses have other incentives for doing this too (other than it cost money to run those cards through), see if you pay at the pump you don't go inside and buy that coffee or bag of chips they (the gas station) loses out. If you pay cash you must go inside and that increases your chances of a purchase (either planned or impulse). The gas station is one of the few places I'd rather not pay cash but I think I'm going to start doing so. See I'm kind of lazy and in a hurry when I get gas, going in and giving them a $50 bill then pumping and going back to get my change is really just a pain when I'm most likely on my way somewhere.

I read an article at The Wall Street Journal, Paying with Cash Could Soon Payoff it talked about something I wasn't aware of: There are restrictions imposed that make it difficult for some retailers to let the consumer know the fees paid to the credit card companies for credit/debit transactions. This results in cash paying customers paying higher prices so that other customers may use credit cards. The article goes on to state; "Retailers generally pay credit-card companies 1.5% to 2% of the purchase price -- more for credit cards that offer rewards or other benefits. Debit cards generally cost retailers up to 1%."

Now at first I wasn't all that miffed, until I got to the above comment. Why you ask? Well, I don't carry a credit card and I don't make purchases with one either. I do use my debit card though but only so I don't have to carry the cash, I get nothing in return for doing so and if I process as a debit (using my PIN) instead of a credit card purchase (signing for the purchase) I get a fee by my bank. Anyway, back to why I got upset this portion of the quote in the above paragraph "more for credit cards that offer rewards or other benefits." Am I really paying for the rewards someone else gets for using their credit card? Whoa boy! Nothing like getting my blood going now. Personally, I don't want to pay for that.

These are things I never thought about before, in fact I would have never read about before.

Is this a sign of things to come? I wonder, if more knowledge about this will put us back into a mostly cash only society. Where things weren't purchased on credit and debit cards were not even in existence. Certainly if you are getting rewarded for using cash (a retail discount) then unless your card is giving you a better benefit most people are going to use cash right? My mind starts going in a million directions really when I start thinking of things like this. For instance it just popped into my mind that if we go from mostly an electronic transaction society to a cash society then perhaps some of the swipe, sign and its mine troubles people get in might decline. Hmmmm... thoughts to ponder that is for sure.

Photo By: Dave Gorman

Even when you change your past will still haunt you for some time.

So I shouldn't have posted in more than one place that I haven't overdrawn my account since starting to make healthier financial decisions because I did it in two separate accounts now. Well the first one is my fault the second one is sort of but sort of not too.

The first one I overdrew because I accidentally used the wrong card. I have since wrote on the back the 'name' of the account so I don't do that again. I have two checking accounts at one bank and one is for bills the other is for 'spending' right now it is for groceries, entertainment, gas for the car....

So I used the bill one and there was not enough money in there, they took from my savings to cover it but there wasn't enough money there either so I over drafted plus there is a $10 fee if the bank transfers your money and an overdraft fee as well as a daily fee for the overdraft UGH!!

So far $133 overdrawn YIKES!! Just in that account. I need to sit down and talk to them and see what can be waived, I'm going to explain the situation and hope that I get someone nice to help me out a bit. I'm also going to point out that when you get your card(s) in the mail it doesn't include even the name of the account (primary, secondary, student, free checking... nothing) so it is a bit confusing. It can't hurt to ask and try.

The next one is I must have had my checks somewhere in my old checking account, where I'm still getting my direct deposit, and then distributing the money myself until I know I have what is needed where figured out to a science, because someone stole two checks. Now that account is overdrawn, I'm still waiting on the copy of the check so I can make a dispute and a police report. In the mean time my account is overdrawn and I have no money. For the first time in ages I had to borrow some money from my mom (which makes me feel like total crap) for gas in my car. She had $20. If push comes to shove I may have to figure out a way to work on Thursday as I'm not sure I have enough gas.

I will be closing this bank account because they are being total jerks. For instance there is a $28 fee to stop payment on any checks. If you do an investigation and see my checks were indeed stolen I think it would be good customer service to waive this fee but not so. I will give them another chance to waive this fee but I find it absurd to pay and I have spoken to other bank employees for other banks and they all say their banks would waive that fee in this case.

There are other consequences here as well... I have major tooth pain and a slight fever, which likely means infection. I have no cash to go to the dentist. I'm not borrowing the money for that, I do get paid Friday after all. My flex spending is frozen right now because they are disputing something or another that has me quite confused. I can submit a bill I've paid but not use my flex spending card (I get a debit type card so it can come right out of there right away and I don't have to wait for reimbursement).

See I have no money because I got paid on Friday and by Friday evening this is what happened I hadn't had a chance to transfer any of the money. I have stopped my direct deposit for now, I'll just have to cash my check the old fashioned way. I also saw I had other overdraft/bounced fees in the account from a few days before when the check tried to clear the first time. So they've tried this check twice now. I looked in my check book and sure enough the check trying to clear and the next check are missing. I had mandatory inspection and repairs recently by the city (not my complex) that I wasn't home for not sure if it could have happened then or what. There is no one really in my home but my checkbook has been coming to work with me the past 2 weeks since I needed the routing number and it has been in my work bag so I guess there is a slight possibility there too.

Photo By: og2t**brzegowiec

Banking Day The New Financial Life Has Begun

In my last post, Making Uniformed Decisions When Banking, I discussed in part the old me and how I went right to that when I was excited I was approved for the bank account at a certain banking establishment. Instead of researching I just willy nilly applied at one got approved and went woohoo!! I should have researched then applied.

So I did my research and wrote my lists of pros and cons. I found only one bank in my area where banking would be convenient as well (an important factor for me as it is part of keeping me organized enough) that had a promotion $50 to start a new account. That's a pretty good promotion. None of the other banks even had those little gifts they give you but that's not really what is most important in the grand scheme of things I was soon to find out. The bank that did have the $50 for opening an account also did not have half of the features I was looking for and their fee schedule was a bit much for me, when I look at what fees I usually encounter I wanted to find a bank that had no fees or low fees for those items.

After all my research at about 5 or so different banks I came to my conclusion and guess what? It was the original bank I hastily applied at and went woohoo about. I opened two checking accounts with them and a savings account (which is also linked to both checking accounts as an overdraft protection). I think I will open another savings with ING Direct as well but I'm going to wait a bit on it.

While I still ended up in the same place I am so glad I did do the research and did it all the right way so that I could practice safe and healthy financial decisions. Part of becoming healthy financially is doing those things consistently.

Now I must really try and reach my goal of creating a budget so I know what goes into what account and work on keeping it balanced. I need to pick a day to do that weekly balancing and going over the budget that will work for me.

Picture by: Terri Zwierzynki

Making uninformed decisions when banking

So I decided that I just went with the first bank I looked at.

For a while now I haven't been able to be approved at any bank because of something in chex systems. That must have finally fallen off because I got approved through an online application for a bigger bank. I was so excited that I could give up my crappy bank account that is online only with no branches I just decided I would open it when my check came (it hasn't come yet) I have to deposit $50 in each account.

On Saturday I was driving and saw a sign for another bank that was GIVING $50 to open an account. Banks are doing this because they want your business and your money. So why shouldn't I try for that at least? Compare the features of all the accounts and make a decision.

So that is what I'm going to do. I have a list of banks that I want to check out because I know there are plenty of ATM's and branches in the area (which is hard to find in my area there are only a handful of banks but some of the other banks have ATM's up in the area and like 1 branch that is either in the community or just out of it). Of course all of them are FDIC insured.

Given all of this, I started this blog to become healthy financially. Making a banking decision just based on one bank isn't the smartest and healthiest financial decision so I'm going to do what I intended for this blog and do it right!

So lets share...

Where do you bank?
What features do you like about your account?
What made you choose that over another account at another bank?

Photo by: Consumer Action

What I'm doing wrong... or it takes 30 days to make a habit!

There are several things I know I'm doing wrong and why I've always had financial crisis. Its not that I'm totally frivolous but that I do indeed have a limited income. Although, I do make enough money to make it and have some savings. So what am I doing wrong?

I know I get caught up in the save a little here and there theme of frugality and it does save, but it frustrates me and I quit. Mostly, what I'm doing wrong Sisterly Savings spoke about in her post today Organized Bill Paying. I know I'm not organized at all it is part of my ADD I spoke about in my initial post.

My first goal is to get organized to kick that off I'm going to organize my finances this week by creating a new budget. I have opened a new bank account that has two checking accounts. One has certain features which were appealing and the other has other features I found appealing. I am also going to open an ING Direct account and will have my savings at the credit union for my loan payment. Oye! Just posting the amount of accounts to keep track of has me in a panic. Never fear though, that is the best way for me to stay organized. Sounds backwards doesn't it? Well each account will be for something different. If I mix my bill money in with my emergency fund I WILL spend the emergency fund because I'm not organized enough to not do it. I must organize myself in a way that will be effective for me.

I already have one of the spiral books to hold bills in it that Sisterly Savings speaks about in her post, the problem is I have never actually used it. So that is on my agenda for my budget and financial organization plan. I am also going to make a plan for some of my wants and needs. I'm not ready to post about those quite yet because the plan isn't ready by a long shot.

My newest motto is it takes 30 days to make it a habit. I need to start making healthy financial habits, I have identified my biggest problem which is the organization now I must tackle the issue.

My next step will be to organize my home, in small steps. Big steps overwhelm me so small steps are the way to go a project every weekend is good even if it is just one cupboard or two eventually the kitchen will be organized in an efficient manner.

What are some of the best ways you organize?
Do you have a financial system that works for you? Feel free to share.