Kids & Money Tip – The Rewards of Saving

One of the greatest lessons I learned from my parents as I grew up was saving money for a dream purchase.

honda_c70_deluxe

 

soybean-field

When my twin and I were just turning into wonderful and perfect teenagers (a fact not exactly verified by our parents), we really wanted to purchase a motorcycle. We lived out in the country, and a motorcycle would be a great way to explore our farm and beyond. Our father came up with a great way for us to earn the money to purchase it.

In one of the farm fields, we grew soybeans. The field was producing a fabulous crop of weeds that year. Dad said he would pay us one penny for every weed we pulled or cut down. We pulled enough weeds to buy the motorcycle. It was a Honda C-70 Passport, and it was awesome! Good planning and hard work – coupled with saving – led to a rewarding purchase.

One of the greatest things you could do for the children in your life is to help them fully grasp this concept as it will equip them with a key skill necessary to live a fully funded life.

NOTE: This is an except from my book for young people – What Everyone Should Know About Money Before They Enter The Real World. It is written for young people just beginning their money relationship. You can learn more and purchase this book and its related study guide HERE.

Monday Money Tip: Cash Envelope System

In today’s Monday Money Tip, I share one of the best ways to control those “impulsive” spending categories of your budget – things like spending money, groceries, restaurants, clothing, and entertainment.

By the way, my bride loves THIS CASH ENVELOPE WALLET offered by Dave Ramsey and his team.

Can’t see the YouTube link? Copy and paste the following link in your favorite browser: https://www.youtube.com/watch?v=PCzTTlMiIuA

DISCLOSURE

Working With The Wrong Tools

IMG_8419One of my favorite things to do is gardening and farming. I grew up on a farm, and I loved everything about it. From raising crops and a huge garden to feeding out cows, chickens, and hogs, I learned a lot about the principles of sowing and reaping. A great joy of mine is to have the opportunity to jump on a tractor (John Deere, of course) and raise some grain on my own farm.

As I was tilling up the soil the other day, I thought, “I’m so glad we have the right type and size of equipment for this task.” I have the right size tractor and tilling equipment, and it made the work easy. How difficult would it have been to till up several acres by hand with a hoe and a rake? Virtually impossible!

My next thought was how this applies to our personal finances. How many people are attempting the equivalent of tilling up a huge field with a rake? Let me connect the principle a little better:

  1. They want to retire someday, but they are not investing and using the powerful tool known as Compound Interest
  2. They want to maximize their money, but they are not utilizing the amazing money tool called a Budget
  3. They want to pay for their child’s college, but they are not capturing the power of the awesome tool called a 529 College Savings Plan
  4. They are sick of living paycheck to paycheck, but they’ve chosen not to utilize the awesome tool called Automatic Saving.

Are you working with the wrong tools?

The I Was Broke. Now I’m Not. Study was created to help you maximize your money and apply the right tools to your finances. Learn more HERE.

Small Business Tip: The Power of Partnerships

If you ever find yourself stuck with a particular aspect of your business, it might be time to find a partnership.

For example, when I fired up I Was Broke. Now I’m Not., I was the developer of all our web resources. I created most of them with Microsoft Word. You don’t even want to know how bad those looked! So I found a couple of web developers and the partnership helped both of us. The web developers made money and the websites helped us get more free financial tools to people and sell more helpful financial resources!

Our organizations have also partnered with companies that provide database management, marketing consulting services, and leadership coaching. They’ve all helped us move our businesses forward.

Great partners bring expertise and focus that may be difficult (impossible?) for your company to deliver.

One last thing:I’ve heard it said before that “Good partners COMPLETE each other. They do not COMPETE with each other.” Be sure your partners aren’t participating in the same business space as you are as it could create unwelcome competition.

Application Questions:

  1. What areas of your business do you feel are STUCK?
  2. What partnership(s) could you form to get UNSTUCK?

3 Challenging Financial Statistics

Here are 5 financial statistics to mull over (and 3 challenging questions for you to consider):

  1. $10,890 is the median financial net worth of an American household today – According to calculations by Edward N. Wolff, an economics professor at New York University.  See how your net worth stacks up using the CNN|Money Net Worth Calculator
  2. The average large bank is currently paying 0.01% interest on regular savings accounts (and that interest is taxed). Let’s put this in real dollars and cents. If you had $10,000 in savings, you would be paid $1 in interest for the entire year. One single dollar. This is while they lend the money back to the average American with a credit card at 12% or higher.
  3. The poorest give more than the wealthiest to charity.  This article written by Ken Stern focuses on the research about why this is the case. The poorest give 3.2 percent while the wealthiest give an average of 1.3 percent of their incomes. According to the website JustGive.org, 75 percent of all gifts to charities are from individuals – not government or big corporate entities.

So here is the challenge for you right now – ask yourself these 3 questions and DO SOMETHING about them:

  1. Do you know what YOUR net worth is and where you stack up versus your peers? Take a quick moment to use the CNN|Money Net Worth Calculator to find out.
  2. What interest is YOUR bank paying on your savings account? Take steps to address it!
  3. How much money are YOU giving away? There’s nothing like giving. If you don’t like the amount you’ve been giving, take steps today to begin giving more away and discover the joy of helping accomplish great things together with like-minded people!

Monday Money Tip: How To Pay Off Your House In Less Than 10 Years

I was able to pay my house off just 6 years using this technique. I’m confident you can apply it and see dramatic results too!

Can’t see the YouTube video? Copy and paste the following link in your favorite browser: http://www.youtube.com/watch?v=qFleb2h0HrY

You can receive the weekly Monday Money Tip in your email by subscribing HERE.

Small Business Tip: Projecting Income

One of the greatest challenges small business owners face is projecting income.

When providing financial coaching to small business owners, I ask, “How much are you paid by your business?”

The answer is usually some variation of: “Whatever I can take. It’s always up and down.”

This makes it extraordinarily difficult to manage household financial affairs and can literally drive the bill payer completely crazy.

Here’s solution to this problem.

  1. Stop “investing” (spending) all the extra money. When you have a great month of revenue, don’t view it as a ticket to spend money. Instead, view it as a ticket to stabilize your income! Save the extra money in an operating reserve account.
  2. Establish a monthly (or weekly, bi-weekly, or bi-monthly) salary. In your household budget, determine the amount of money your business needs to pay you each month in order to thrive. Ensure your household budget includes saving for Known Upcoming Non-Monthly Expenses (KUEs) such as Christmas, Special Days (birthdays, anniversaries, weddings, showers, etc), HOA, Insurance Premiums, etc.
  3. Pay yourself the set amount of money each payday – and leave the rest alone at the business! Even when the business is thriving, it is important to continue to draw only your salary. This is because the “down times” will be coming soon through the natural business cycle of your business. It’s not fun to leave the money in the business during times of plenty, but it sure is nice to have those reserves when the business is struggling!

It’s how I operate my businesses, and I’m confident it will work for you too!

My book, Oxen, is a great resource to help you establish a new business or acquire an existing one.

Kids and Money Tip: No Spending Until You Prepare A Budget

Money is a foreign concept to most children until they are about 4 or 5 years old. It is at around this age they become aware that money has the ability to purchase things. However, most of their financial knowledge is focused on spending because that is what they SEE happening with money.

  • Mom gives money to the grocery store clerk and carries groceries out of the store.
  • Dad swipes his credit card at the gas pump, and it allows him to put gasoline in the vehicle.
  • Grandma gives money to her beautiful grandchildren (your children, of course) and you take the child down the toy aisle to buy something with it.

Since “spending” is what we see happening with money from our earliest days, it is what most children grow up knowing about money. For them, money equals spending.

The important financial principles of giving, saving, investing, and budgeting are not learned. Consequently, grown children leave the house knowing only that money equals spending. This is a recipe for financial disaster!

Here’s a simple thing you can do immediately to change that for your children (grandchildren):

Ask the child to prepare a budget for any money they receive – BEFORE they are allowed to spend any of it.

For example, my daughter receives money for her birthday. She and I count the money so we know exactly how much she has received, and then I confiscate it. Upon receipt of a well-planned budget, I release the money to her for use. Later on, I do a “check in” to ensure the money has been used according to the plan.

In a recent budgeting moment, my daughter was planning the use of $20. Her first budget had $2 for giving, and $18 for spending. I rejected it because there was no saving or investing. Her revised plan showed $2 for giving, $0.25 for saving, and $17.75 for spending. She gave the budget to me with a smile – knowing there was little chance of it being accepted.

I rejected it.

Her third try included giving, saving, investing, and spending. I released the funds to her.

Here’s the reasons I love this process:

  1. Teachable Moments This process creates space for “teachable moments” about money. It forces conversation about the importance of giving, saving, and investing. It allows us to talk about the “spender” mentality that we both share.
  2. Learned At Home Before my daughter enters the real world, she is receiving real financial knowledge that will set her apart. She knows what a mutual fund is and how it operates.
  3. The Pain of Wasting $20 is Less Than The Pain of Wasting $20,000 I want her to recognize the pain of poor financial decisions NOW when she is making $20 decisions so she doesn’t have to learn the lesson with a $20,000 purchase later.
  4. My daughter actually enjoys the process My daughter actually enjoys the process. It has helped her save a substantial amount of money toward her first car. She has financial margin. She knows her parents care about her.

I have my daughter use our FREE BUDGETING TOOL called the “Mini-Budget.” It’s perfect for kids.

My book, What Everyone Should Know About Money BEFORE They Enter The Real World, is a perfect resource for helping your child start out life with the financial tools and principles essential to life.

Monday Money Tip: Saving Money On Groceries

In this Monday Money Tip, I share several key ways you can save money on your groceries. This is knowledge that can literally help you free up cash to buy more food (or save, invest, give, etc).

Can’t see the YouTube video? Copy and paste the following link in your favorite browser: https://www.youtube.com/watch?v=t-QfOB-SgTo

You can receive the weekly Monday Money Tip in your email by subscribing HERE.

Leadership Tip: Then We Wait

I recently posted the following thought on Twitter:

Some days are for planting seed. Others for harvesting. But MOST DAYS are for preparing, tending, and waiting.

It raised quite a ruckus and a chorus of “that’s the truth!”

Anyone who has been involved in gardening or farming knows this fundamental fact.

In the spring time, there’s a mad dash to till the soil and get the seed in the ground. In just a few days or weeks, the work is over.

Then we wait. Wait for the seed to come up.

Then we wait. Wait for the crop to grow.

Then we tend the crop by eliminating weeds and applying fertilizer.

Then we wait. And we prepare the equipment. We clean up the planting implements and prepare the harvesting equipment.

Then we wait. We wait for the time to harvest.

Then another mad dash occurs at harvest time. We work like crazy to get the crops “in the shed” before weather can destroy it.

Then we wait. And we prepare the equipment again for another season. We prepare the soil for the next growing season.

The same is true for your finances and in your leadership. There will be moments where it will require the “mad dash” of effort. Then there will be moments where it will be waiting, tending, and preparing.

It’s what you do in the “then we wait” moments that dictates how well you will perform in the “mad dash” times.

Are you preparing for your next mad dash? My book, OXEN – The Key To An Abundant Harvest, is a perfect resource to prepare you for a maximized financial future.

I Don’t Know How To Budget

“I don’t know how to budget.”

I’ve heard this sort of statement thousands of times.

Let’s face it. We all know we would be better off if we prepared and lived by a budget. But for some reason, the vast majority of people choose to operate their financial life without this important financial foundational tool.

The reasons can come in hundreds of ways, but when boiled down, there are really two reasons people don’t operate by a budget:

  1. They don’t know how to budget.
  2. They know how to budget, but choose not to do so.

We’re working to prepare a resource that will help equip people to prosper with a budget. Will you take 60 seconds and share your budget experience with me?

 
Can’t see the survey? Click HERE to take the quick survey.

Save Money BEFORE Attacking Debt

When we launched our “How To Have The Best Financial Year Of Your Life In 2014″ live on-line event this year, I asked the question: “What is your top financial goal for 2014?”

The top response BY FAR was “I want to reduce/eliminate debt.”

It is a noble goal that will help create financial margin and reduce stress. However, many people make the mistake of skipping straight to debt reduction without first saving some money in an emergency fund.

This is a big mistake.

You see, we want to kill debt. We’re frustrated and angry and want to say goodbye to our long-time friend, Sallie Mae Student Loans, the banks, credit card companies, and stores. We want the debt to be G-O-N-E!

And we run right past a more important step – saving money.

Think about it. If you do not save money and begin to attack your debt with any and all extra money such as tax refunds, bonuses, and money freed up by better budgeting, you will begin to see your debt go down.

Then your car will break down.

How will you pay for it? Since you skipped the “saving money” step, you will have to use credit to pay for it.

This is demoralizing, and it causes many people to give up on their debt freedom march saying, “I just can’t seem to get ahead.”

Choose to save money first. I recommend $2,500 as a good start. Once all of the non-house, non-business debt is gone, build the savings to 3 months of expenses.

I’ll finish by sharing this: I’ve yet to meet anyone who told me, “We’ve just saved too much money. I regret it.”

Never. Met. That. Person.

The #1 Lie About Why A Budget Won’t Work

Most people believe a lie about why their budget doesn’t work. It’s a sinister deceitful lie. Ready for it? Here it is:

“I just need to make more money to make my budget work.”

Of course, having more money sounds phenomenal. Given the opportunity, all of us would sign up for more income. However, more income is rarely the issue with a person’s budget. On the contrary, it’s the way they manage their outgo.

But we still like to believe that the problem is our income. It’s sinister and deceitful because it allows us to take a “victim status.” If our problem is income, the solution becomes someone else’s responsibility. It’s our bad boss’s fault. It’s our spouse’s shortcoming. It’s the mean company’s greediness. It’s the rich people’s insensitivity. It’s the government’s failure to protect the “little guy.”

However, if we were to take full responsibility for the the outgo by preparing a budget and (gasp!) follow it, denying ourselves some immediate gratification, and working more diligently to maximize every single dollar, we might just discover our income has been sufficient all along.

And by saving and investing every time we are paid, we will see our income increase over time through the power of compound interest.

Don’t believe the lie.

Get started with one of our FREE BUDGET TOOLS and put together a plan that allows you to prosper with your current income.

Monday Money Tip: Two Key Ways To Produce Income

In this Monday Money Tip, I share two key ways to produce income – one of which is less utilized, but has the greatest potential to help you build wealth! This is worth the few minutes necessary to watch it. There may not be any cute kitty cats or puppy dogs, but it sure will help you with your money!

 

Can’t see the YouTube video? Copy and paste the following link in your favorite browser: https://www.youtube.com/watch?v=MAlJnc4hGwI

You can receive the weekly Monday Money Tip in your email by subscribing HERE.

15 Negative Words And Phrases People Use To Describe Budgeting

One of our core financial foundational principles is the importance of budgeting. Many people, however, really despise budgeting. They use many negative words and phrases to describe budgets and the budgeting process.

15 Negative Words And Phrases People Use To Describe Budgeting

  1. Joy-robbing experience
  2. Frustrating
  3. Impossible
  4. Horrible
  5. Terrible
  6. No-good-very-bad
  7. Awful
  8. Depressing
  9. Worthless process
  10. A reminder of the fact that there’s never enough
  11. Clueless
  12. Challenging
  13. Painful
  14. I’d rather go to the dentist for a root canal
  15. Get ready for a money fight with my spouse

It doesn’t have to be this way! I used to think all of these things (and a few more that I didn’t list) about budgeting, but I discovered how to make budgeting work for me and my family.

I’ve prepared a YouTube Video to share some of the key things that helped me have a budget that actually works! WATCH THE VIDEO and then download one of our FREE BUDGET TOOLS.

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