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Mon, 6 Oct 2008 11:09 am

Simple Times - 10/05/08 - What's frugal living?; teens and money

 

 

Simple Times

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Vol. 10, No. 19 -- October 5th, 2008

http://thesimplemom.wordpress.com/

debi

Copyright 2008 Deborah Taylor-Hough

ISSN: 1527-1269

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Celebrating over a decade of saving your time, money and sanity!

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IN THIS ISSUE:

-- "Dear Readers"

-- Simple Living Quote

-- What is Frugal Living?

-- What to Teach Your Teens About Money

-- Letters to the Editor / Reader Tips

-- Assorted Information (archives, etc.)

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Debi

(Deborah Taylor-Hough)

Editor, Simple Times Email Newsletter

--Author of the popular '

Frozen Assets' series; 'A Simple Choice: A

practical guide for saving your time, money & sanity'; and 'Frugal

Living for Dummies®

--Editor, Simple Times and Bright-Kids email newsletters

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SIMPLE LIVING QUOTE

 

“Frugality is founded on the principle that all riches have limits.â€

 

--Burke

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WHAT IS FRUGAL LIVING?

Copyright Deborah Taylor-Hough

Used with permission. All rights reserved.

http://thesimplemom.wordpress.com

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If I want to know what a word means, I usually run to my dictionary

or do a quick search online. Keeping true to my normal mode of

operation, here’s what I found in my first search for the meaning of

“frugality.â€

 

According to Webster's Revised Unabridged Dictionary (1913),

frugality is “the quality of being frugal; prudent economy; that

careful management of anything valuable which expends nothing

unnecessarily, and applies what is used to a profitable purpose;

thrift; -- opposed to extravagance.â€

 

If I sat down to choose a catch phrase to define frugal living in

today’s world, I’d probably say frugal living equals “living within

your means.â€

 

The reality is all riches have limits. Some of us live with more

limitations in the riches department of life than others, but even

the largest fortune can still run dry if no restrictions are set on

spending. After all, how many mansions, yachts and private

jets does one billionaire really need?

 

By cutting back on basic expenses, it can enable you to live

out your dreams, get out of debt, and find yourself on the road

to enjoying a financially stress-free life.

 

 

Why Live Frugally?

 

I’ve found over the years that people choose to live frugally for

one of the following reasons:

 

1) Limited income

 

Whether someone’s just starting out in an entry level job, or

perhaps a young family choosing to have one parent home

full-time, there are a variety of situations that make it necessary,

either temporarily or long term, to live on a small paycheck.

 

 

2) Emergencies

 

Unemployment and medical emergencies are two common

and usually unexpected difficulties that can throw even a

=0

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financially well-off family into the “we-have-to-reduce-our-

expenses†mode of living.

 

 

3) Debt reduction

 

With consumer debt rising each year, many find themselves

juggling debt, maybe even borrowing money from one credit

account to pay the monthly fees on another. Reducing debt

can seem like an overwhelming prospect, but for people who

are serious about getting out from under the heavy weight of

monthly installment payments, frugal living can be the perfect

solution.

 

 

4) Stages of life

 

College students, young married couples, single moms, and

retirees can all be in stages of life when there’s a lot more

month left at the end of the money and it becomes needful to

examine the budget to look for ways to pinch a few pennies

here and there.

 

 

5) Philosophical

 

Many people look for ways to reduce their spending as they

voluntarily choose to simplify their lives, maybe to allow more

time to connect with their families, community, and hobbies.

 

&nb

sp;

The Benefits of Frugality

 

Reducing spending can have far-reaching benefits beyond

just today’s grocery bill.

 

1) Achieving dreams

 

By cutting back on monthly expenses, many people are able to

fulfill dreams they may have decided were out of reach: Going

back to college, being home full-time with their children, working

from home, buying a home, starting their own business, pursuing

a favorite hobby, or acquiring acreage in the country.

 

 

2) Becoming debt-free

 

The first step for getting out debt is to stop going further into

debt. Choosing to live within your means is the beginning of debt

reduction.

 

 

3) Easing stress

 

Pinching pennies in daily life can allow you to re-prioritize your

expenditures and have more available for things like vacations

and hobbies, and if you don’t have to work as much just to meet

basic expenses, you’ll have more time to spend with your friends

and family. If you’re in over your head financially, a huge stress

reliever is putting an end to phone calls and letters from bill

collectors.

 

 

4) Reducing ecological footprint

 

One way that frugal living helps the environment is when someone

chooses to use more homemade food items, it cuts down on

relying on over-packaged convenience items. Those items may

make life a little simpler in some ways, but the packaging adds

a huge amount to local landfills.

 

 

So whether you’re a single mom trying to make ends meet, a

middle-income family deeply in debt, or you have life dreams

you’d like to accomplish but think you can’t afford, frugal living/ div>

could be just the ticket to get you on your way to accomplishing

your goals.

 

 

ABOUT THE AUTHOR:

--Deborah Taylor-Hough (free-lance writer and mother of three) is

the author of several popular books including Frugal Living For

Dummies®, Frozen Assets: How to Cook for a Day and Eat for

a Month and A Simple Choice: A Practical Guide for Saving Your

Time, Money and Sanity. Visit Debi online and read more articles

dealing with simple living, frugality, parenting and much more at:

http://thesimplemom.wordpress.com/

 

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WHAT TO TEACH YOUR TEENS ABOUT MONEY

Copyright Gary Foreman

Used with permission. All rights reserved.

http://www.stretcher.com

 

 

There's an old saying that 'the apple doesn't fall far from the

tree'. For those of you too young to have heard that phrase

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before, it means that children will be a lot like their parents.

I was reminded of that the other day when I found my twelve

year old reading The Millionaire Next Door.

 

Lest you think that I'm some kind of fanatic, I don't give my

children homework assignments on money management.

The book was just sitting next to my easy chair. But, in

fairness, my kids have heard me talk about the value of

money on a regular basis. And I do hope that some of the

lessons stay with them.

 

You have the same opportunity to help shape your teen's

money perspective. Lessons learned now could save them

a lot of grief later. So let's spend a little time talking about

what to teach your teens about money.

 

A cornerstone of building a sound financial future for your

teenager is to teach them how to save money. Sounds

easy, but even many adults don't know how to do it. And

that might be because no one ever taught them.

 

You can use three strategies to teach a teen to save. First,

you can encourage them to reach a goal. Suppose that they

want a $100 pair of shoes. Let them save $5 or $10 a week

until they have the purchase price. Have them put a reminder

of their goal in strategic places. They'll learn patience and

persistence. And by the time they save the money, they

might also learn that they really don't want the shoes any

more.

 

Another way to encourage savings is to match any money

they put into a savings account. Set a minimum length that

the money must stay in the account before being withdrawn.

You don't want them to put it in with your match and withdraw

it a few days later. This won't work for everyone, but some

teens will love to watch their savings grow.

 

The teen years are also a good time to teach your young adult

to 'pay themselves first'. That means that they set aside part

of their income for savings before spending anything.

 

It's a perfect time to learn this lesson. Most teens don't have

any real financial responsibilities. They don't have items that

they're forced to buy each month (like rent, electricity, food).

They generally just spend what they have available.

 

Of course, many adults do the same thing. They spend until

they're out of money. Learning to set part of any income aside

for savings is a great habit that will pay dividends for their entire

lives.

 

Next a question for you. Do you remember who taught you to

balance your checkbook? Most of us don't. And that's a shame.

You'd be surprised how many people reach adulth

ood without

knowing how to perform this simple task. And it's important

that your teens learn it.

 

First, they need to know where they stand financially. Even a

teenager should know how much money they have. The reason

is simple. It's essential to understand that you can run out of

money. Balancing a checkbook is a wonderful way of teaching

them that there are penalties if you spend money that you don't

have.

 

The alternative is to let them learn to keep spending until they've

reached their credit limit. And that lesson will create heartaches

later in their life.

 

PC software makes balancing a checkbook easy. But make sure

that they don't just enter numbers and let the software do all the

work. They need to understand the basics. You put money in.

You write checks to take money out. What's left is the balance.

 

They also need to learn basic investment information. It's really

essential for modern life. Teach them that stocks represent

ownership in a company. And bonds are like an IOU. Introduce

them to CD's, money market and mutual funds. Perhaps you'll

want to to Money magazine and discuss the articles

with them.

 

Don't forget to teach them how risks and rewards work. They

need to know that a big return will include a big risk. It's surprising

how many people think that they can get huge returns without

taking any risk. That's a good way to lose money.

 

Also teach your teen about the beauty of compound interest.

Let them know that money will double every 7 years if it earns

10%. That means that $1 that they don't spend on a soda today

would be worth $128 when they're in their 60's. Compound interest

is the secret ingredient of building wealth.

 

Conversely, they need to learn the risk of compounding debt.

They'll learn this lesson before they die. Help them to learn it

without pain. Teach them that borrowing money obligates them

to pay the loan back with interest. And that credit cards are set

up so that they keep making payments each month without ever

paying off the debt. In fact, if they pay the minimum due on a

charge card each month, it's just like doubling the price of every-

thing they buy. That's a lesson that's less painful if you learn it

before the bills come due.

 

Teach them what things cost. Some families share budget

information with their teens. Others prefer to keep that private.

If so, send your teen on a pretend 'first apartment' hunt. Have

them walk through all the costs of setting up an apartment

including rent, utilities and food. It will be a real eye opener

for them.0A

 

Finally, help them to learn the difference between creative

thinking and creative financing. Creative thinking is the ability

to have a need and find a way to fill it without spending money.

People who don't have money are forced to consider alternative

answers. And some of those answers are quite creative.

 

The flip side is the person who only thinks of creative financing.

He can't think of a way to solve his problem without making a

purchase. His creative energies are spent trying to figure out

who will loan him the money to make the purchase. Not only

will he spend a bunch of energy trying to figure that out, but

he'll make making payments for quite aw

hile, too.

 

Many of these lessons will pay dividends for the rest of their

lives. Who knows, if your teen learns them well perhaps the

apples will fall close to their tree, too.

 

 

ABOUT THE AUTHOR:

--Gary Foreman is a financial planner and editor of The Dollar

Stretcher family of resources. You can visit Gary online at:

http://stretcher.com

 

 

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Feel free to forward this newsletter to your family and friends. :-)

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LETTERS TO THE EDITOR / READER TIPS

We'd love to he

ar YOUR tips and ideas for simplifying daily life.

Send your simple living comments/tips to: DSimple

 

 

== Cookie Day ==

This isn'y really a 'tip' or 'hint' but just something we love to do

and look forward to all year.

My sister started it in 1998. She decided before Christmas we

would have a "Cookie Day" for the kids. We started out with my

son, her daughter, her 2 stepkids, and any other friends' kids that

wanted to participate. The first year we had 6 kids. In 2005 we had 12.

My sister cuts out and bakes the sugar cookies before the

scheduled 'Cookie Day'. I'm the designated bringer of the sprinkles,

decorations, colored icing, gel tubes, etc. I collect these things all

year when they go on after-holiday sales. So we just might have

Christmas reindeer decorated with orange icing and black sprinkles

from Halloween!! But the kids love it.

We clear off her dining room table & cover it with a disposable

tablecloth. We put out big bowls of various colored icings. Plastic

knives, spoons, and plates make clean-up easier. Then we let the

kids get to work!! The kids do all the decorating while our job is to

put the finished products on the waiting cookie sheets and be sure

there's not too much eating of the wares!

When every last cookie (at least 6 cookies per child) is iced

and decorated, we have clean-up and then we order in pizza while

the kids play. At the end we send everyone home with a plateful

of cookies he/she has decorated.

We have friends asking by Halloween when 'Cookie Day' will

be so they can circle it in red on their calendar! It's become our

best family tradition.

--A reader

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SIMPLE TIMES RECOMMENDED BOOKS

Book list for frugality and simple living

Go to: http://snurl.com/simplebooks

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As always, a special "Thank you!" goes out to Gary Foreman

and the friendly folks at the Dollar Stretcher for making this

mailing list possible!

 

== http://www.stretcher.com/ ==

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EDITOR'S BOOKS AND AUDIO RESOURCES:

Books and resources by Deborah Taylor-Hough

Editor, Simple Times Email Newsletter

http://snurl.com/debisbooks

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DEBI'S ON-LINE RESOURCES:

Personal Blog: http://dsimple.wordpress.com/

Frugality/Simplicity: http://thesimplemom.wordpress.com

Cooking Ahead:

http://frozenassets.wordpress.com/

Bright-Kids: http://brightkids.wordpress.com

Tupperware®: http://snurl.com/DebiTupperware

Kids' Books: http://snurl.com/books4kids

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