Oct 202011

I would love to hear some of your tips for saving money. When I say “saving” I mean tips for actually putting money in the bank in a savings fund. I am currently saving to move out of my parents house and although I have already saved around $2500 (in just a couple of months!) I could really use some advice to keep me saving well in the long-term.

A regular savings plan is very important, and I think it’s great that you’re thinking about your future. The best way to continue saving regularly is to set financial goals, and have a detailed, and preferably written, plan. For example, our financial goals include helping our children with college expenses, saving for retirement, and never borrowing money again, which means that we have to save regularly for big ticket items, such as cars, and home improvements or repairs. We have several different accounts that we use to set aside and earmark money for these purposes:

Emergency fund  – this account contains enough money to cover 6 months of expenses. We don’t touch this fund, unless there is a genuine emergency.
General savings – this is where I sock away extra money (if there is any) at the end of the month. We also use this account to save for vehicles, vacations, and other big-ticket items, until we have enough saved to roll these funds over into higher-yield CDs.
529 plans for each child – I put money into these every month as part of our budget.
IRAs – my husband and I each have one, and we contribute to them regularly.

At the beginning of each year, when we make our budget, we determine how much to set aside for each of these line items, and I handle the actual transfers of money into the various accounts. I like this system because I can see, at a glance, the progress we’re making toward each of our financial goals  (You might also like How I Make Our Monthly Budget).

Have you done a post on frugal baby showers? I enjoyed reading about the wonderful birthday parties you have done. Any additional tips for savings?

I’m sorry, I haven’t. I’ve never actually thrown a baby shower for anyone, though I have contributed food and other supplies for friends’ showers. If any readers have answers to this question, please feel free to share in the comments.

Ooh, I’ve been meaning to ask one: are you still able to regularly purchase beef for under $2/lb?

Nope. I can still buy ground beef for under $2/lb, but those sales are few and far between. This is part of the reason why I recently purchased a quarter of local beef. I was getting discouraged because I could never find any decent prices.

My question is awhile ago you were trying to grocery shop for $60 per week. Have you started that up again? What is your usual weekly grocery budget? I hope that I am not being too prying but we live in the same area and I am having a difficult time with our grocery budget. Everything is so much more expensive! Also, do you figure in gas mileage to get to stores that are a ways away?

Grocery prices are much higher for everyone right now, and I too have been struggling to stick with my $60/week plan. Our weekly grocery budget is closer to $80-$90 per week lately. I do figure in the cost of gas, and I’ve determined that our local store is so overpriced that I can pay for my gas to the city and back very easily with the savings on only a handful of items. To save on gas, we’ve been doing two major stock-ups each month, and we combine them with other errands. We just buy milk, juice, and a handful of produce items locally when we run out in between trips.

Heather, I have been trying to get my husband to sit down with me and get our finances on paper. He is a saver and very frugal, but becomes a squirmy toddler when it comes to spending more than 5 minutes talking about a plan. His solution to any financial issue is simply this: Don’t spend any money (except, of course, for old cars, instruments and hunting and fishing supplies/trips). 🙂 Could you explain in more detail how you and your DH divide your financial responsibilities? Also, how often do you get together to discuss these things?

I asked my husband about this, and he said, “Well, that’s easy to answer. You just do everything.”

This is not entirely true, but the majority of the financial planning does fall to me, not because my husband is unwilling or unable to do it, but I am, by nature, a planner. I’m also more organized than he is, and so, over the course of our marriage, I have assumed this role. We always say that he brings home the money, and I keep as much of it as I possibly can. These are our respective jobs.

My husband and I have remarkably little conflict over money, probably because neither of us likes to spend it. We really only discuss finances when I run the yearly budget plan by him, and when something unexpected happens that affects us financially. Every week, he gives me his paychecks and I deposit them, and allocate the funds in accordance with our plan. We both keep a small amount of cash on hand for incidentals, which we withdraw as needed. We don’t police each other’s spending, but when unexpected expenses arise, we always discuss them. We actually discuss any purchase over $100, including those for gifts and personal hobbies. I think that good communication and shared ideals have been the keys to our success as a couple, and not just financially.

Since I began writing this blog, I’ve counseled many people on money management issues, and it’s been my experience that when one spouse resists discussion about finances, it’s for one of two reasons – they find the subject excruciatingly boring or overwhelming, or they simply don’t want the pressure of being held accountable for their choices. In my first marriage, my ex-husband was in the second camp, and I had no choice but to take control. It was like I was the parent, and he was the child, and I hated it. In my current marriage, we’re partners working toward a common goal, and that makes all the difference.

I think I remember reading about you having a 529 plan for your kids college fund. My husband and I are researching college funds and our only concern is what if our children decide not to go to college. My husband and I both went to college and we definitely want our children to go but we can’t guarantee that will happen but the money in the 529 can only be used towards education expenses. Just curious what you would do with the money if your kids decide not to go to college.

There are many myths about 529 plans, and one is that if your child doesn’t go to college, you lose the money in the account. This is not true. The money can be used for nearly any post-secondary education, including trade and technical schools, and if your child decides to not pursue any further education after high school, the money can be transferred to a sibling, or to yourself. You also have the option of just taking a non-qualified withdrawal, which simply means paying taxes on the money, plus a 10% penalty.

To be honest, I don’t worry at all about this, because around 70% of kids do complete some form of post-secondary education, so from a purely statistical point of view, it’s likely that at least 2 of my kids will want to go to college. In my opinion, the tax benefits of 529 plans far outweigh any risks. (For more information, please see 7 Myths and Realities of 529 Plans).

How do you manage the finances so well? I read somewhere in your blog that you hate Maths…and I am really weak in this subject…so could you guide me about where shall I start learning about the household finance and manage my money,make budget etc…everytime my husband makes me sit down to discuss the bank work, I feel like running away…but I want to learn them as well..Could you guide me where to start?

It’s true that I hate math, and it was the subject I struggled with most in school. In fact, I have a recurring nightmare about college-level math, in which I have to take a final exam, and when I open the test booklet, I realize that I’ve failed to attend a single class the entire semester. This dream pops up frequently during times of anxiety and stress. It’s the math-phobic equivalent of the ever-popular “going to school in your underpants” dream.

That said, I enjoyed and excelled in economics courses, and that’s really what personal finance is about. You don’t necessarily need to have a head for numbers to be a good financial manager (after all, that’s what calculators are for. I have a big blue one with a label that says, “THIS IS MOMMY’S! DO NOT TAKE!” See also What’s Mine is Theirs).

You mentioned that when your husband tries to talk to you about finances, you “feel like running away,” and you’re not alone. Many people are overwhelmed by money matters, but I like to say that when it comes to money, you have to know where you are, and you have to know where you’re going. This means paying attention along the way. The journey is a lot more fun if you make a game out of it, which is what I do. For me, it’s really fun to see how many balanced meals I can get out of my pantry before I have to go to the store, or how great I can make a kid’s birthday party on a $50 budget. It’s fun to keep a detailed record of our income and expenses, and watch the amount in our savings account as it slowly creeps up and up. When we were paying off our debts, the enormous satisfaction I felt every time we crossed another bill off the list was a major incentive to keep going. I can’t even describe how I felt the day I opened a big fat envelope from the bank, containing the deed to our house, and our mortgage papers, which were stamped “Paid In Full.” It was one of the best days of my life.

I once read that what truly makes a person happy in life is not wealth or beauty, but working toward an attainable goal. It’s a commonly held notion, particularly in America, that debt freedom is an unattainable goal. Not true. You can get control of your finances, and lead a happy, productive, fulfilling life without racking up debt, and you don’t need math skills to do it. You just need organization, discipline, and the dream of being free.