Simply Junior

I would like to share with you my thoughts on how to get out of debt and start saving money. I hope you enjoy it.

Whatever your income, whatever your priorities for your money, there are millions of people living happily on less than you earn. This logically means that not only is it possible to enjoy a great lifestyle on your income, but it is also practical.

Lots of people spend around 102% or thereabouts of their income, that is they are not saving anything and in fact they are slowly going backwards.

Have you ever received a pay increase only to find that your lifestyle does not noticeably change but the additional funds just disappear? Like you have holes in your pockets! I know the feeling, it has happened to me, and quite a few friends.

A different friend of mine went to a mortgage broker and consolidated all of his loans to one large flexible loan with all the features of his other loans rolled into one. He used to have a home loan, personal loan, car loan and several credit cards and now all accounts are linked to a central account that is at home loan interest rates and has his home as security . This arrangement can work very well resulting in the saving of hundreds of dollars a month in interest as it did in his case. But he was no better off either!

Yet another friend had his wife return to the workforce after their kids were all at school. Their household income in this case increased over 80% overnight. But. guess what, after a couple of months they too found that they were no better off.

Why is it so? It seems that without some discipline and a plan our spending habits just seem to automatically adjust to use all the money, and a bit more! If you have easily accessible cash or credit you are more likely to spend it. Most of us like spending money or at least are tempted. ‘Hide’ it and you are less likely to be tempted.

Remember before Credit Cards most of us had to save up to buy that special something. Idea : Pretend that you did not get the raise or pretend your wife did not go back to work. Then put the proceeds into a separate bank account (or get your employer to do it) and carry on as you did before. You will not miss the money!

This simple idea can be the start of an effective budget With some prioritizing and fine tuning as outlined below the results can be staggering.

Most people do not have a budget. Every successful business has a money plan. This is what a budget is, a plan for your money, you telling it what to do instead of it telling you what to do. With a budget you can set and achieve your financial goals. You will also get a better view of what your money can do for you now and in the future.

Usually people just pool all their funds and simply take it and spend it without regard to its priorities or limits. At any one time they do not really know if they can afford to or should buy something. For example a night out with friends could jeopardise the next weeks rent or mortgage payment , but they may go out and be blissfully unaware or unconcerned about their bank balance. They could well get a nasty surprise later.

Money is a hard thing to come by these days. Jobs in this world are scarce because everyone is looking for one and the competition is stiff. You have to be at your best in finding a job and holding on to your money. The same goes for children. Parents should spend some time teaching children about money.

Is is necessary to teach them about money? You bet. Children want to have money of their own, when the finally learn what it is good for, and so they should. But, teaching them the right way is the most important thing. Money has value, and, if not used wisely, can be gone in an instant. This economy is a very good example of that.

Too many times have people seen families that have good cash flow just lavish their children with money and objects. And, when the money is gone, they just give them more. When they become adults they haven’t learned how to deal with less, and therefore are poor managers of money. 

Those that are taught at an early age how to save their money, and spend it only when needed are going to be able to live on their own it leaner times. It is these children who are told to save their money for a rainy day and not spend needlessly that will survive in hard times.

Teaching children about money is a very wise thing to do for their future. It ensures they will become responsible and good money managers. Not teaching them the value of the dollar and saving will make sure that they are irresponsible and will rely on others to give them whatever they want. 

They do not become independent and resourceful. Parents have a duty to their children to speak to them about proper spending and saving.

In today’s economy it is important as ever to learn to save money and spend less. There are many ways to save money and if you are accustomed to freely spending your hard earned (or inherited) money than making this kind of change can be a challenge. For some it is a matter of survival and even life or death. Why should you start saving?

A lot of young people don’t think about their retirement, but it seems like yesterday I was 25 years old and people were telling me to save for my retirement and I thought to myself, that is so far away, I am not going to worry about it now. Well I am now nearing 50 years old and I am definitely thinking of my retirement and think about what could have happened if I started in my 20′s.

So maybe you are raking in the money and have a great job. Well in these times you can’t count on that job to last forever. You don’t know if you will walk in on Monday morning and you could be handed a pink slip. Or maybe you own your own business. You never know what the future will bring and there could be a downturn in your business.

That “American dream” of owning a home isn’t even anything you can count on anymore. It used to be you can buy a home and count on some kind of appreciation. The average person was able to own a home for 20-30 years and be able to sell it and make enough money to fund a large portion of your retirement.

You never know what your future will bring, you might become ill and not able to work, you may suddenly find yourself supporting yourself (and maybe children) on half of what you used to because of divorce. Maybe there will be massive inflation and everyday staples will become unaffordable to the average person.

I realize all this sounds like doom and gloom but it really is only meant to bring up possible scenerios that alot of people don’t want to think of. There is nothing wrong with a little planning in advance for a rainy day.

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What does it take to encourage a child start saving as early as 5 or 6 or perhaps when they start going to school and being exposed to money, may it be paper or coins?

I would say that when kids are encouraged by parents through example, it will not be so difficult to parents to convince their kids to save in the future. When there is initiative in the part of a child to save every penny that is left of the daily allowance, then that will be a sign to parents that their growing kid will be a person who will value money, great or small.

There are banks that have saving programs for kids and the minimum age starts at 6 years old. The best thing here for the kids is, while they are able to save as they are growing and on their way to college it will be easier for them to start on their own by the time that they decide to totally be on their own. This means they do not have to ask a penny from mom and dad, unless of course mom and dad will offer to give help or a surprise in the form of money.

So, how are kids motivated to save early on. We all know that whatever the kids will see their parents do that is what they will also do, sooner or later. So, basically when the kid starts to learn about money and they see their mom, dad or both parents’ attitude about money that subconsciously gets programmed in their minds.

For example, when the kid sees her mom splurges on make up, perfume or expensive clothes and shoes too. Soon when she is probably in college or when she is already earning for herself, she might do the same or perhaps a little bit different.

It would be good that parents would explain about spending and saving. Spending is easy IF you are earning for yourself already. Spending really depends on what you are spending on. Expensive items are supposed to be explained as little rewards after working for a long time. Spending on luxurious things is not a hobby like collecting things. It is okay to spend on luxurious items as long as it will not instantly drain your savings. Saving is the best thing that anybody could do because that would mean we do not have to loan either from banks or even friends. Being able to save is supposed to be one’s pride because it would show others that you are responsible enough to value money.