In order to accomplish this goal, we decided to get him a Money Savvy Pig for his fourth birthday. Here’s the happy birthday boy with his pig (and an over-the-top goofy grin):

What is a “Money Savvy Pig”?
As you can see from the picture above, a Money Savvy Pig is a bank with four distinct compartments: Save, Spend, Donate, and Invest. The bank has four slots along the top – one for each compartment – and each of the pig’s feet provides access to one of the chambers to empty it individually.

The idea behind it is pretty simple – it makes it very easy and tangible for children to separate (and effectively budget) their money.

How We’re Using It
Each week, we’re giving him $2 in quarters for his allowance – $0.50 for each year he’s been alive. Thus, next year, he’ll get $2.50. We may at some point in the future change this rate, but it works for the time being.

He then splits the money into four roughly equal amounts. Two quarters go in the “Spend” slot, two quarters go in the “Save” slot, two quarters go in the “Donate” slot, and two quarters go in the “Invest” slot.

He is completely free to spend all money that goes in the “Spend” slot as he wishes. If he wants, he can take that money and put it in the other slots in his bank, or he can put it in his pocket and take it to the store with him to buy something small.

With the “Save” slot, we had him identify something that he wanted that was much more expensive than a dollar or two. We told him to think about it and later he told us he was saving for a Batman action figure that costs about $10. So, we told him that he could keep adding to the “Save” slot and in a few weeks, we’ll count it up and see how close he is to it.

With the other two slots, we told him that for now, they’re going to just build up.

For the “Donate” slot, we’re talking right now about the various things that people can donate money to – the local church, the local food pantry where people who don’t have much money can get food, Heifer International, PBS, and so on. We told him that when he gets $5 in that slot, he can pick something to donate to. He has expressed positive interest in donating to PBS, so I more or less expect that to be his first donation in two months or so.

For the “Invest” slot, we’ve told him that it’s just going to build up for a while. Our plan with that is to wait until there’s a “lot” of money in it (from his perspective). Then we’ll use that money to introduce various ways to invest, starting with a savings account at the local bank.

Does a Four Year Old Understand All of That?
No, nor do I expect him to.

We’ve started doing this when he’s young so that saving seems like a completely natural thing to him as he becomes more aware of money and how a person can use it.

I don’t expect him to fully understand, and he doesn’t. For now, he really only understands the “spend” part and the “save” part of the bank – the other two are mysterious.

We are quite sure he understands the “save” slot. We told him that he’s free to put any money he gets as a gift into any slots he wishes and he chose to put almost all of it into the “save” slot because he wants the Batman action figure that he had chosen as a goal. He put a smaller portion of it in the “spend” slot and a bit each in the “invest” and “donate” slots.

We’re also quite sure he understands the “spend” slot, since he wanted to take a dollar out of it a couple of days ago to buy a Hot Wheels car for the race track his grandparents gave him for his birthday. We, of course, approved this, since it’s money he can spend as he chooses.

The other slots are a mystery at this point – they’re clearly there for him to grow into it.

What About Sibling Rivalry?
Joe has a two year old sister who loves to do exactly what her big brother is doing. So how are we handling that? We decided to start her on an allowance, too, but a much simpler setup is in the offing for her.

For her, we’re just giving her four quarters on allowance day (again, fifty cents for each year) and allowing her to put it in her bank. We don’t have any rules on how she can use it, but for now they’re really not needed. She simply enjoys putting “monies” in her bank, just like her big brother.

When she’s four, if Joe is seeing success with his bank and we’ve seen it as a valuable tool, we’ll get her one, too.

One big reason for doing this is the idea of peer reinforcement. If they’re both saving together, it seems more normal. It isn’t just them doing it – one of their peers is saving, too.

Over the past decade, I’ve had the chance to intimately watch other families raise their children through the teenage years with lots of success and some failure. I’ve been impressed with some of the young people that are the core of Generation Y coming of age. Two in particular, my niece and my first cousin, are the kind of people that are a big net benefit to the world, and I would be incredibly proud if my own children turned out as well as they have.

At the same time, though, I’ve seen many tweens and teenagers spending money with reckless abandon, spending hundreds of dollars on completely unnecessary things and acting repeatedly as though money has no consequences at all. These people, I’m afraid, are headed down the same painful path that I went down.

When my children approach their teen years, what can I specifically do to teach my children the value of managing their money? This is a topic that’s left me thinking for a long time and I’ve been jotting down ideas and findings all the time. Today (finally), I had a chance to read through quite a few of these things and I was able to pull out several strong tactics that seem to work together to teach teenagers the value of managing money.

Start young. You’re better off starting too young than you are starting too old. Introduce an allowance as early as possible. Encourage their entrepreneurial behavior early. Introduce them to basic budgeting early on, too. You’re better off starting before they can fully understand all of the meaning than later on when their ideas for what’s normal have already been set, because it will take far more work to undo bad behaviors.

Don’t tie a basic allowance to specific chores. A basic, small allowance should be given without strings attached. It’s not a tool to leverage for good behavior, it’s a tool to teach basic money management. There should be certain behaviors expected in the home, but the allowance should not be a bludgeoning tool to force those behaviors.

Offer extra allowance in exchange for specific extra tasks. If you have extra tasks that go above and beyond normal household duties, you should offer a separate payment to your child in exchange for the task. Allow them (or even encouraged them) to negotiate for the exact amount so that they can learn the art of negotiation.

Make basic budgeting part of the equation from day one. I’m a huge fan of the Money Savvy Pig for this purpose. A child’s budget should be very simple, especially at first, and that’s exactly what the Pig helps with. It just splits a child’s allowance into four pieces – spending (they can spend it on whatever they want), saving (saving for a bigger goal), donating (giving to some cause), and investing (learning how to invest money). This forms a perfect simple budget for children. Later on, you can work on more complex budgets with them, with multiple savings goals and so on, but this type of thing forms the backbone in their mind.

Open bank accounts when the “investing” portion grows large. When they’ve built up quite a bit in the “investing” portion of their budget, take them to the local bank and open a savings account for them. Have them deposit their money. Then, when there’s an interest statement, show them the interest that’s been earned. As they grow older, you can talk about other investments with them and allow them to try these investments (stocks and so on). Set a very long term goal for their “investments,” such as college or a house down payment (seriously) so that they can begin to get a taste for the long term, plus it allows you to differentiate between short-term savings and long-term investments.

As their money grows, move to a checking account. Migrate toward allowing them to manage their entire budget themselves, incorporating saving, spending, donating, and investing to their own desires. One big step in this direction is their own checking account with a debit card – a great tool for a pre-teen. Make the card only able to access the checking account.

Give them a credit card when they’re teens. Gulp. Many parents avoid this because it seems like a recipe for disaster, but it actually serves a very important purpose. By giving them a low-limit credit card while they’re in your home, they can learn about how to use a credit card – and, likely, the dangers of getting into debt with them – while there’s still a safety net. Ideally, you want them to get into a bit of debt with it so that they can see the pain of interest.

Show them your monthly budget. Seriously. Show them how much you earn in a given month, then how that money breaks down into mortgage payments, car payments, electric bills, food, and so on. This is a firm taste of the real adult world, something that teenagers crave. Let them see the reality of adulthood and how expensive it is. Talk about the choices that you have to make along the way.

Work on distinguishing between wants and needs. This ties in perfectly with showing your children your monthly budget. Some of the items are needs – your housing, your electricity. Others are wants – entertainment. Others are somewhere in the middle – food spending. The better you’re able to distinguish between needs and wants – and to control those wants – the more likely you are to teach them to control their own wants. That’s one of the biggest keys to adult personal finance success.

This is my gameplan for raising my children to better manage their money. Hopefully, you can pull out a nugget or two for your own children or grandchildren.

I have a twenty four year old daughter who is still living at home. She went away to college, but moved back in after college while looking for a job. She’s had a good job now for two years, but has made no move at all to move out. She does give me money for groceries and for bills, but she spends the rest of her money as soon as she gets it on clothes and cell phones and laptops.

I think it’s time for her to move out, but I know that if I kicked her out, she would have nothing to fall back on. What credit she has is pretty poor.

So I’m stuck. What do you suggest?

I suggest putting the impetus back on your daughter. This is how I would handle the situation.

Here’s what I would do. I’d sit down and have a heart to heart with her. Explain, quite simply, that you’ve been happy to give her a place to live while she gets back on her feet, but now it’s time to move on. Most of the time, children in this situation will do everything they can to delay moving out, so you’ll hear a lot of excuses about how she doesn’t have enough money, she’s not ready, and so forth.

So change the rules a bit. Offer to let her stay there for one more month if she opens up a savings account. At the end of each month, as long as the balance in that account is $500 (or $1,000) higher than it was the month before, she can stay for another month. Otherwise, it’s time for her to go.

This little move achieves both your goals and her goals. Your goal is to have your daughter become responsible for her own money to the point where she can easily move out of your home, a goal accomplished by her having a wad of money in the bank. Her goal is to prolong the situation – and you’ve given her a route to do that.

Eventually, what will happen is that she’ll begin to realize the money she’s saved up can be enough to help her buy nice living quarters of her own without Mom constantly there overseeing things. That’s a big difference from the state she’s in now, where the idea of moving out is far in the nebulous future. When that option becomes tangible and real, she’ll want to move out.

What if she says that this is impossible? Simply tell her you’d be happy to help her figure out how to manage it. Point out that her income significantly exceeds the amount you expect her to save. If it results in a fight, stick to your guns and remember that she’s actively choosing not to progress forward. That’s much different than merely spinning her wheels, which is what was happening before. If that’s the situation, you have to cut her free and let her make mistakes on her own.

What if she’s on board strongly with the idea? Encourage her. Give her a copy of the book Your Money or Your Life as food for thought. Offer to counsel her in any way that she wants, but don’t push – quite often, the path to learning how to manage one’s own resources is a solitary one. You might even end up pointing her towards The Simple Dollar or other such websites for other ideas.

Remember, the end goal here isn’t to merely extract your daughter from your home, but to make sure that she’s self-sufficient enough that this won’t be a continuous problem in the future. Give her all you can to make her self-sufficient – if she chooses not to, you’ve done all you can. That’s what good parenting is, in the end – making sure your children have the tools to succeed on their own and that they know how to use those tools.

Good luck, Margaret.

I’m a high school senior and I’m going to college next fall. When I go to college, I want to be completely independent, paying my own bills. My parents insist that this is financial suicide and that they should support me through college. What do you think is the right way to go?

Shortly after my eighteenth birthday, I left my parents’ house and went to college. When I left, there was a pretty implicit understanding that I would not be moving back in with them in the future. Sure, while I was a student, I could spend between-semester breaks living there and I could live there in short spurts after college if necessary to facilitate moving on to somewhere else, but my parents’ home was no longer my own. It was up to me to find my own way in the world.

This flies squarely in the face of many parenting trends today in which children often live with their parents throughout college and afterwards, sometimes for many years. The reasons are many, usually revolving around the child’s inability to earn a sufficient income to be financially independent.

Even when children reach a point of “independence,” meaning they don’t live at home, many parents still provide some sort of regular financial support, just to help the children make ends meet.

My belief is that I learned much more valuable lessons by having to make it in the real world than I ever would have back under my parents’ roof. Yes, even if that means a very low standard of living during one’s twenties if necessary.

I’m not saying that parents shouldn’t help if a child completely loses everything. However, there’s a big difference between a helping hand and long term support of a lifestyle.

Short term help in a problematic situation is great – it’s the type of thing that strong relationships are made of. The ability to rely on someone else for a short while when life has knocked your feet out from under you is a tremendous boon and I absolutely do not begrudge parents for helping out in those situations.

The problem comes when that help progresses into expectation and reliance. Any situation in which an individual is unable to be independent and is reliant on someone else is dangerous to both parties. It hurts the parent by taking money away from their future plans, ensuring that they’ll be in the workplace longer and will have fewer assets to rely on late in life. It hurts the child by denying them the skills they need to survive in a world that will eventually not include the parents. Plus, it extends the inevitable ending of support to a later date when it’s quite likely to be much more uncomfortable for both parties.

Yes, financial support of one’s children in adulthood makes life “easier” for them in the short term, but it makes life harder for them in the long term. Such support stunts the budgeting and money management skills that they’ll need to survive when they actually do become independent. It also encourages the establishment of a pattern of spending that exceeds their real income.

The real danger, though, is how it impacts you. The money given to your children when they should be independent is money that’s not going to support your retirement. You’ll have to work longer – and if you’re unable to, you’re much more likely to become a late-life burden to your children than you would be if you invested in your retirement now.

I’ve witnessed this phenomenon with my own eyes. My grandmother gave tons of support to her children, even in their adulthood, and during her final years, she barely had enough money to keep the power on and wound up having to fully support one of her children. If she had completely cut the cord when the children entered adulthood, she would have been able to enjoy a financially comfortable retirement – instead, her final years were fraught with financial and personal worry.

My conclusion, if you haven’t figured it out, is that delaying your children’s independence for longer than necessary is detrimental to both parties and should be avoided. If you’re still relying on your parents – or if you’re a parent still providing support to a child that should otherwise be standing on their own two feet – now’s the time to break that cycle. It’s the only way both of you can thrive and grow freely.

To the young lady who wrote in initially, tell your parents to take that support money and put it towards their retirement by bumping up their 401(k) contributions by 2 or 3% a year. Suggest to them that this retirement savings is actually a benefit to you because it reduces the chances that they’ll be a financial burden to you later in life while also giving you the opportunity now to figure out how the world works.

Here’s the plan we’ve decided on.

First, we’re going to begin his allowance on his fourth birthday. He’s reached a level of intellectual maturity that he now clearly understands that money is exchanged for goods and services. He also often requests items of various kinds at the store – and is told “no” virtually all of the time. Yet, he does see that Mom and Dad occasionally buy unnecessary items (like a book at the bookstore) and is intuitive enough to ask why Mom gets a book while he does not. His allowance allows him to make some basic money decisions for himself.

Second, his basic allowance will be very small. We don’t intend to throw a large amount at him. We’ve decided on an initial allowance of just $2 a week – and he won’t be allowed to even spend all of that in a given week (as I’ll explain below). This allowance isn’t intended to finance exorbitant spending on unnecessary things – instead, it’s a way to teach simple money management to a small child in small amounts.

Third, the allowance will come in three parts – for now. One part will be pure spending money – he can do whatever he wants with it. A second part will be saving for a specific goal, which we’ll let him identify. We’ll keep this in a jar on the refrigerator with a picture of the goal on the jar (and the price). A third part will be for giving – we’ll let this build up for a bit, then tell him about some local charities that he can give the money to to help their cause. We’ll give him his allowance in quarters, putting them one at a time into each group in the order above until they run out. So, at the start, he’ll get three quarters a week to spend, three quarters a week to save for a goal, and two quarters to give to others. The idea here is to teach some goal setting and also to teach the value of giving to others in need.

Fourth, his allowance will grow slowly in proportion to his age. Each year, we’ll increase the allowance by fifty cents. So, when he’s five, he’ll get $2.50. When he’s ten, he’ll get $5. As always, the allowance will be given in quarters and dollars so it can be divided evenly. So, next year, he’ll get a dollar (four quarters) to spend as he chooses, three quarters to save towards a goal, and three quarters to give to a charity. After that, a dollar goes into each grouping.

Fifth, his allowance will be “automatic” – not based on any specific behavior. There are some things that he’s expected to do at our house – pick up his toys, scrape his plate after meals and put it in the dishwasher, and so on. Those won’t be tied to his allowance – if he refuses to do them, his allowance won’t be the source of discipline (”time out” works really well for that, actually). The goal is to teach money management, not to use it as a tool for discipline.

Sixth, we will offer him optional extra chores to do to earn a little more. For example, we’ll give him a large basket and tell him if he fills it up with leaves from the yard, we’ll give him a quarter in each jar. If he wants to do it, he can – otherwise, Dad will get out the rake. Again, the goal here isn’t to get cheap labor (I could clear the leaves WAY faster myself), but to teach him that if you work, you earn financial rewards for it – which also must be budgeted.

Seventh, when he’s older, we’ll introduce an “investing” jar, too. Perhaps when he’s six, we’ll introduce a fourth “jar” into our system, splitting the allowance money into four equal parts. This final “jar” includes money to be invested for the future – not to be touched until he’s done with his schooling. Why so long term? With such a long timeframe, he’ll have adequate time to see how investing in stocks works, how investing in bonds works, how investing in cash works, and so on. Right now, he’s simply not ready for this and wouldn’t see the connection, but we think he might begin to understand it when he’s a bit older.

Eighth, all “gift money” will be split along these same lines. If he gets $5 from Grandma on his fourth birthday, $1.75 can be spent right now, $1.75 is saved for a big goal, and $1.50 is given to a good cause. In other words, gifted money is treated the same as allowance money.

Finally, he’s freely allowed to put “free spending” money into other jars if he so chooses – with a small bonus. This will allow him to push towards a big goal. What’s the small bonus, you ask? If he dumps all of his allowance that week into the “saving for a goal” jar, I’ll toss in an extra quarter to reward good saving. It’s also a hedge for our own sanity – I’d rather he use his money for a few more expensive toys than lots of $0.50 items that clutter the house.

That’s our allowance plan for Joe and, if it works well, we’ll replicate it in a couple years with our daughter. Any thoughts or comments?

It should come as no surprise to long-time readers of The Simple Dollar that I’m deeply passionate about raising my children with a strong sense of independence, self-motivation, and a strong ability to manage their own money in a sensible way. In fact, I’ve read and reviewed several books on this very topic; among them, Young Bucks, The First National Bank of Dad, and Make Your Kid a Millionaire.

Raising Financially Fit Kids by Joline Godfrey is perhaps the most thorough book on teaching personal finance to children that I’ve yet come across, as well as the best designed. It’s glossy, loaded with wonderful pictures of bright-eyed children, and organized in a thoughtful fashion.

But is it a really helpful guide to teaching children how to properly manage money? Let’s dig in and find out!

1 – From Safety Nets to Self-Sufficiency
Every kid is different. Some kids are naturally spenders – they can’t wait to spend every dollar they get. Others are hoarders – they carefully preserve every dime they see. Some kids are budding entrepreneurs who love to get out there and develop plans for making money. There are countless flavors – and countless different behaviors.

So how can you offer good financial education to all of these different types of children? All of these types are rewarded by teaching them how money flows – the benefits of saving, the benefits of spending, the benefits of investing, and the benefits of giving. In other words, don’t simply force them to go against their natural behaviors, but don’t just go along with them either. Instead, teach them balance – the balance between spending, saving, investing, and giving that’s an intrinsic part of adult life.

2 – Outwitting the Money Monsters
Time. Peers. Media and marketing. Magical thinking. These are all enemies of good money management for children (and for many adults, too). Time is a factor because in many modern households, both parents are working, the kids are in tons of activities, and there’s little time to spare. Peers are a factor because of peer pressure. Media and marketing constantly influence kids to want things that they would have never considered before. Magical thinking teaches them that plastic is free money, just like the tooth fairy.

The best solutions for each of these areas is the same: quality time spent with your kids (not just time running from activity to activity or parked in front of the television) and open and honest discussions about everything (so they feel okay asking you questions, mostly to take away unnecessary magical thinking).

The middle portion of the book focuses on specific issues for various age ranges of children. Godfrey argues that there are ten basic money skills that should be worked on (with different tactics depending on age) throughout a child’s life:

1. How to save
2. How to keep track of money
3. How to get paid what you are worth
4. How to spend wisely
5. How to talk about money
6. How to live on a budget
7. How to invest
8. How to exercise the entrepreneurial spirit
9. How to handle credit
10. How to use money to change the world

The meat and bones of this are laid out in four very nice fold-out tables, one for each of the four age ranges discussed in the following four chapters. It can almost serve as a checklist of sorts.

3 – Stage One: Ages 5-8: I’m Just a Kid
In the early years, the focus really should be on a basic introduction of the ten money skills above (so that the basics of the idea are clear to the kids) and positive reinforcement of good choices (not punishment of bad ones).

Godfrey encourages having a weekly allowance that’s given without any sort of requirement and that it should be split among spending, saving, and giving. In addition, Godfrey encourages developing a list of “bonus chores” that will stretch your child and really make them work, but earn them an additional amount (which is also split among the three areas). Another important part: talk about all shopping trips in detail. Explain to your child why you’re buying what you do and also talk about their spending choices and whether it’s a good idea to spend their spending money on bubble gum.

4 – Stage Two: Ages 9-12: Encouraging Passions
At this stage, the first flickers of independence are starting to appear and you should facilitate it. Give the child more control over their saving and spending and charity decisions. Encourage them to take on larger entrepreneurial projects and give them really big tasks for earning extra money. The more projects they start on their own, the better.

The real focus here is in making sure your child gains self-confidence and a realization that they’re doing it themselves and that they’re doing it right. You can do this by letting them make decisions, letting them follow through, and complimenting their efforts.

5 – Stage Three: Ages 13-15: Breaking Away
This is the perfect age to have your child get a simple job on their own (or perhaps kick an entrepreneurial project into high gear). Hit your own social network to find good job opportunities for your child and suggest them.

This is also a perfect time frame to have them do “dollar tracking.” In other words, have them keep careful track of every penny they spend over a period of time, then summarize and evaluate all of that information so they can clearly see where their spending goes. You should do the same at the same time so that they can see how an adult spends money – and both of you should strive to do it with full honesty.

6 – Stage Four: Ages 16-18: Standing Tall
This is an appropriate stage to really begin involving your child in your real financial situation. They’re just about to take the leap into their full independence, so this is the time to show them how you manage things. Show them your financial state. Review with them how you pay bills.

Another important way to help them take flight on their own is to let them start being in charge of important financial tasks. THEY should be managing their college applications. THEY should do their own FAFSA.

7 – Money and Gender
Boys and girls are different – does that mean you should be teaching them money lessons in a different fashion? In so many words, Godfrey basically says “no.”

The lessons that you should teach both your boys and your girls is that they can do this. They can succeed on their own merits and they can make their own rules. There are countless male and female success stories out there – people rising from humble backgrounds, people doing amazing things. Your children can do it, too.

8 – Raising Rich Kids
How can you do these things if you’re affluent? The most important thing is to discuss this forwards and backwards – if your children are affluent, it’s likely they’re aware of their lucky situation. Make it clear that they have been given a great opportunity to start, but that once they’re on their own, it’s up to them to make of themselves whatever they will. Point out that the kids who come from nothing are going to be hungry and they’re often going to work very hard to get ahead – and they’ll have to compete with those kids.

Finally, don’t helicopter kids into middle adulthood. Allow them to be independent as early as possible, making their own mistakes and mis-steps along the way. Offer a helping hand, but if you pave the road for them, they’ll never learn the self-reliance they need to make it in a world without you.

9 – Raising Young Philanthropists
How can you show your children the value of sharing what they have with the world? The best way to do this is to be an example yourself, all the way along. Be involved in charities. Give your time and your talents to causes you believe in and encourage them, as early as possible, to do the same.

As your child begins to develop a social conscience of their own, encourage them to follow up on that conscience and do what you can to get them involved in a charity. Few things will help a child grow more than a lot of hours invested in a charity that’s deeply meaningful to them.

10 – Yikes! My Kid Won’t Leave Home! Now What?
To put it simply, don’t. You shouldn’t provide a nonstop roof over their heads (although short term help is fine). Nor should you provide a constant subsidy for your kids.

Why not? Doing that discourages their independence. Free money means that they don’t have to put any effort forth to get the things they want in life, which teaches all the wrong lessons.

It’s okay to help on occasion, but never help in an open-ended fashion. That results in nothing positive with an adult child.

Is Raising Financially Fit Kids Worth Reading?
Let me put it this way: Raising Financially Fit Kids is the best book on financial education of children that I’ve yet read and I intend to give it a permanent place on my bookshelf soon (my review copy was checked out of the library).

What’s so good about it? Virtually every page is loaded with great specific ideas for teaching money concepts to children. More importantly, a great deal of thought was put into the layout of this information, making it very accessible and easy to read and find.

Add it all together and you’ve got a stellar book, one I look forward to utilizing as my kids grow older. In terms of practical use, it’s far and away the best book I’ve found on kids and money.

In the long term, though, it’s a different story. It causes weight gain and other health problems. It can cause a negative body image and make people feel worse about themselves. Those effects cause an overall negative emotional sense, so they turn to the things that comfort them.

Many things in modern life follow that same structure: they’re nice in the short term, but incredibly painful in the long term. Credit card debt – you get what you want in the short term, but you wind up paying a ton of debt over the long term. Diapers – we use the convenient disposables for now, but later we lament filling up landfills with things that will take many, many years to biodegrade. A home mortgage – you get to move into a home, but you make huge interest payments for many years.

Again and again, humans choose to value the short term over the long term. We do it with countless daily actions each day, from the food we eat to the activities we choose to fill our time with. Our focus is on the now, not on the five years from now.

This is natural, though. Throughout the course of human history, humans have spent most of their time living a true hand-to-mouth existence. Our hunter-gatherer ancestors constantly benefitted by keeping their eyes on the immediate prize – the food in their stomach today and this winter, nothing else. Agriculture took many, many millennia to take off, and it’s easy to see why – you have to see some real success at agriculture to see it beating the benefits of picking a bunch of wild berries.

Today, though, we live in a different world. Food will be available tomorrow, but many of us still behave as though it might not be. There are thousands of apartments and rentals in most areas, but we buy a home because it fits our needs better – but our biggest “need” is simply a false sense of stability.

I do this myself all the time.

My focus is always on the short term with The Simple Dollar. I obsess mostly over the posts for the next week or so, without often worrying about anything beyond that. On the occasions when I do focus on the long term (like writing books, writing and preparing downloadables, working on projects with other bloggers, and so on), I usually find that over a longer period, I’m glad I did it.

I often try to put off meals that take a long time to prepare because, in the short term, I don’t want to make that time investment. Over the long haul, though, the great meals I enjoy and remember are often the ones I spend a long time on – the pasta made from scratch, the coq au vin cooked slowly and carefully, and so on.

Some days, I do not want to go exercise at all. It seems like a short term gain to just relax and kick back. I could read a book, after all, instead of going out there, getting out of breath, getting all sweaty, and having my legs feel like lead. If I don’t do it regularly, though, my daily life goes down in quality. I have less energy. I have less motivation to do … well, anything. I gain weight and my body image goes downhill, as does my appearance to others.

Sometimes I’m tempted to go the easy route when with my kids. Why don’t we just play in the backyard instead of loading up and going to a state park? It’s rainy – let’s just watch a movie instead of getting out all of the art supplies. In five years, though, what will have built a stronger bond with my kids? Time spent doing something adventurous and creative with their father, or time spent sitting on the couch or playing on the backyard slide?

In each case, the simple choice in the short term is far from the most enjoyable choice in the long term. However, the pain in the long term from the “easy” choice is far, far worse than the short term disadvantage.

Here’s an interesting exercise to highlight how much the phenomenon impacts your life. Spend a day thinking about what this activity will be worth to you in five years. If you eat that junk food, will the impact on you be positive or negative five years down the road? What about if you eat spinach instead? What will be the impact on you if you buy that DVD five years down the road? What if you put that cash towards your debt instead?

You make the little choices every single day to build your future. The better your choices, the better your life will be.

So, today, eat a little broccoli and save a few pennies. Over the long term, big dividends will be paid out.

In 2005, my son was born. To say we were unprepared for it is an understatement. We bungled through the entire thing, not saving appropriately for expenses and not really understanding how much this little child would change our lives, financially or otherwise. With a little bit of preparedness, we could have rolled through this, but his emergence sent us into a financial tailspin.

Financial preparation for having a new child isn’t really that hard, but there are a handful of key things that you really need to think about and take action on. The middle and late stages of pregnancy give you six months to get ready for that new arrival, after all, and there are several important things to do shortly after birth, as well.

Stacy Bradford’s The Wall Street Journal Financial Guidebook for New Parents was pretty much written for the exact place we were at in mid-2005. I think it makes a perfect complement for parents who read What to Expect When You’re Expecting and make a genuine effort to understand what’s going on with their pregnancy and early parenthood needs.

I truly wish we had a guide like this during Sarah’s pregnancy. It would have been incredibly useful. Let’s take a peek at what’s inside.

Your Maternity (or Paternity) Leave
Quite often, the impression of maternity (or paternity) leave is far out of line with the reality of it. A couple gets pregnant, then believes they’ll have all the time in the world off to bond with their child. After all, they have plenty of sick leave… right?

Not so fast. Many businesses and organizations have really draconian policies about time off for a new baby. They’re required to allow you to have twelve weeks off, but they don’t have to pay you for it. For example, when our first child was on the way, we believed for a while that my wife would have three months off to take care of the child with pay, and I’d have six weeks off.

Not true. Sure, we could take that time, no questions asked. But much of that time was actually without pay, even if you have enough sick leave to cover it.

What’s the solution? Find out now what the maternity and paternity leave policies are for your organization and, if you’re expecting to take time that’s unpaid, start building up your emergency fund to a nice, fat level so you can blow right through that unpaid period.

Kissing That Cubicle Good-Bye
The stay-at-home question can also weigh heavy on newly-expectant parents. Should one of the parents walk away from the workplace and stay at home with the child? It can be easy to do a very simple run of the numbers and conclude it’ll work – sure, you lose $X of take-home pay, but you’ll be eating at home more and your tax burden will be less and you can drop a vehicle and so on.

But that back-of-the-envelope calculation can be really dangerous. There are a ton of things to consider. What about health insurance? Will there be a cost increase if one partner puts his or her spouse and new child on their insurance? What about the missing retirement savings? Can the employed partner bump up their retirement savings a bit to account for the lost savings? It’s vital to sit down and write a realistic, detailed post-baby budget and see whether or not it can really work.

Returning to the Grind
Child care is pricey no matter where you live, so if both partners do return to work, you will be dealing with a whole new financial world. Our daycare fees were shocking once we started getting into the routine.

Be creative with this situation. Talk to your employer and see if you can adopt a different work schedule. Perhaps you could move your “weekends” to Thursdays and Fridays and, with your partner covering Saturdays and Sundays, you only need to pay for three days of child care. Maybe you could work an alternate shift, or telecommute a few days a week. Have both partners look into these options – if you’re a good employee, an employer will work with you on this.

Who Says Uncle Sam Doesn’t Care?
The federal government offers tons and tons of tax benefits for the parents of children. You can deduct child care, education costs, health care costs, even the value of any outgrown clothes that you donate to Goodwill.

But there’s a trick (isn’t there always?). You have to be aware of these tax benefits, plus you have to keep track of your spending on them. If you donate clothes, you have to keep receipts. If you have an education expense, you have to keep track of it. Then you have to remember all of this at tax time and figure out how to claim all of these things. An accountant helps – we’ve had great success with TurboTax.

Where Should You Nest?
Having a baby in a tiny urban apartment can be very difficult. There’s not enough space, the costs for everything are high, and getting the baby around can be a real challenge. When a couple has children, they often seriously consider moving to a better location, one more suitable to the challenge of raising a child.

But to where? The suburbs? Costs can be cheaper there on some things, but commuting can be expensive and suburban life (in its own way) can be more challenging than living in a city. I’m pretty partial to living in rural areas, myself: plenty of room for children to explore, lots of free stuff to do, and tons of fresh air.

Don’t just go for the simple answer. Do some research and also do some thinking about your real needs and the needs of your child.

Finding (and Paying for) Mary Poppins
If you’ve decided that child care is right for you, how do you select it? What can you afford? What should you look for within your budget?

I would love to have a nanny for my own children, to tell the truth. I’ve nearly begged my sister-in-law, who has many years of child care experience, to consider the position. I’d be happy to pay her at least as much as we currently pay for child care, plus provide room and board for her, but she’s following her own path.

Aside from her, I have trouble imagining myself entrusting my children’s care to just one person. I value a lot of peer review – situations where one adult I don’t know well isn’t giving care without peers.

These are some of the considerations worth investigating – and they’re worth plenty of time to investigate and calculate. Don’t just jump for the first opportunity you find.

Avoiding a Health Scare
Here, Bradford makes a very strong case for health savings accounts which allow you to pay for your child’s health issues with pretax dollars. This is a great idea if you have these accounts available to you – they can make dealing with unexpected medical expenses that much easier.

As with anything, though, there can be tricks. Know exactly how your account works. Does it carry over, or is there some sort of penalty at the end of the year? How exactly do you get at the money, anyway? Make sure that these things are well-understood by you and by your partner so that this isn’t an issue.

Paying for Harvard
Bradford strongly suggests that it’s more important to save for retirement than it is to save for your children’s college savings. It’s a principle that makes a lot of sense – a good retirement means you won’t be a burden on your children late in life.

So how do you pay for top colleges if you aren’t throwing everything but the kitchen sink at college savings? Bradford offers up a few financial moves, but the biggest one is simply letting your child work through it. If you make everything totally easy for your child, how will they handle adversities later in life? Don’t sweat paving your children’s roads with gold – they’ll learn more if you don’t. Instead, focus on not being a burden on them.

Yes, You Need a Will
The big decision that new parents have to face with regards to a will is who exactly you wish to have as guardians of your child (or children) if something were to happen to both parents.

This is a pretty serious consideration, one we struggled with for a long time. The thought of what would happen to our children if we weren’t there was very, very painful to face. This exploration was valuable, though, because we now feel very comfortable with our guardianship choices.

Trusts: They Aren’t Just for the Wealthy
What about a trust? Many parents don’t even consider this – they get a nice life insurance policy and fill out a will when the children are born, but if something happens to them, their life insurance money goes to the child’s guardians free and clear. Ideally, the guardian will do something responsible, but there’s no guarantee – a surge of money might just mean a new car to that person.

The way around this is to set up a trust. Then, whatever assets you have and insurance money that comes in is handled according to your wishes in the rules you set up for the trust. This prevents the guardian from just blowing the money in a way that’s contrary to your wishes.

Life Insurance: Better Safe Than Sorry
What about life insurance? Obviously, each parent should be insured quite well with the partner as primary beneficiary, and the previous chapter obviously alludes to the idea that a trust should be the second beneficiary.

But how much? And what kind? Bradford outlines a lot of options, but I think a term policy clearly comes out on top. It has the lowest cost and it’s not coupled with a suboptimal investment plan. If you want to invest to “recoup” the cost of your insurance, just figure out the difference in cost between the term policy and the whole life/universal policy and put that amount each month into an investment account of some sort.

Accidents Happen: Are You Prepared?
The book closes with an impassioned argument for disability insurance, which handles the situation of debilitating injury that makes it impossible for you to work but doesn’t end your life. This becomes more vital as a parent because you’re responsible for the well-being of an individual who can’t earn an income for themselves – so what happens if you can no longer earn the income?

The advice is short and sweet: make sure you’ve got 80% of your salary covered, and shop around. Good tactics.

Is The Wall Street Journal Financial Guidebook for New Parents Worth Reading?
If you’re in the target audience described in the title, The Wall Street Journal Financial Guidebook for New Parents is a very worthwhile read. I truly wish I had read this book in 2005 during my wife’s pregnancy.

Even better, this book can be an incredibly useful baby shower gift. If you know someone who’s having a baby shower, include The Wall Street Journal Financial Guidebook for New Parents in the gift you give, particularly if they’re a few months away from delivery. The advice this book provides is vital during the run-up to having a child – there are a lot of additional little tips all over the book, from the small (buying baby items) to the big (considering private school).

The Wall Street Journal Financial Guidebook for New Parents isn’t a world-changer, but it’s a great compendium of really useful information for new and expecting parents, perfect because they’re about to embark on a whole new chapter in their life.

The New Global Student by Maya Frost is one of those books that takes what you think you know about a subject and flips it on its ear. This time around, it’s the standard route that most high schoolers take towards their education: take lots of AP classes, sweat about the ACT and SAT, apply to hyper-competitive colleges and hope you get in, apply for piles of scholarships, sweat out the FAFSA, then go on to college, where you’ll likely be buried in mountains of student loans.

This process is seen as so standard that many people don’t even question whether or not it makes sense to start pushing our fourteen and fifteen year olds through this woodchipper. The New Global Student argues that this path is not the only path – in fact, Frost argues that there is a much better way to help your children transition into the latter stages of their education. Hence the eye-catching subtitle: Skip the SAT, Save Thousands on Tuition, and Get a Truly International Education.

I fully expect that many people will immediately reject the central premise of this book – that the “traditional hypercompetitive SAT/AP/GPA path” can be easily dumped and a new path to educational success can be found. All I can say is this: time and time again, throughout my college career, the people that seemed to have the best grasp of what they needed to do to succeed and the value they could get out of college were people who came in from outside that treadmill.

Ready to dig in? Here are my impressions of and thoughts on The New Global Student.

One: Creative, Not Crazy – Our Family’s Story
In the summer of 2005, the Frost family sold everything and moved to Mexico for a year, then to Argentina. The family had four teenage daughters, including a high school freshman, a junior, and a senior, and they were unable to speak Spanish when they left. Not only that, the girls also spent years in other countries on yearlong exchanges. They did not worry too much about the perfect GPA and they also didn’t take the SAT. You might think that this would blow up all of the girls’ chances of getting into a good school, but instead it did the opposite – it painted very compelling pictures of young women who were experiencing the world, not just pumping up their numbers. Compelling enough to get them piles of scholarships and admissions to good schools.

Two: Beyond Math and Mandarin
Frost’s argument about why all of this works really boils down to two big factors. First, the diversity of experiences forced the children to learn how to be collaborative. They were constantly being put into cultural and intellectual situations where they had to learn to work well with others in order to get through it. In contrast, high school in America – with the SAT/GPA/AP milestones – are highly competitive without much focus on collaboration. The collaborative nature of their high school experience, in other words, was a huge advantage.

Second, the children were heavily ingrained throughout their lives with five key principles: flexibility (independent thinking, eagerness to explore new ideas and places), awareness (ability to intelligently discuss a wide variety of topics, compassion and respect for others), curiosity (an interest in a variety of areas and the ability to ask questions and investigate those areas), trustworthiness (realization of the vitality of being dependable, strong communication skills, complete things on time), and self-direction (establish and move towards goals, internalized work ethic and motivation).

These aspects combine together to make young people who are ready to tackle anything. In my eyes, it’s a great recipe for parenting in the modern world – I strive for all of these things with my own children, even at their young age.

Three: Fego: You’re Soaking in It!
What keeps our children from having these attributes? Frost points at two huge factors.

First, fear. We fear letting go of our kids. We fear not doing enough. We fear taking charge. We fear slowing down. We fear unstructured time and unstructured activities. We fear falling behind. These fears all lead us towards pushing our children hard down that typical path. Instead, we’re better off hammering in the big principles of independent thought and self-responsibility when they’re young and letting go as much as we can when they’re older.

Second, ego. We want to believe that we’re vital to the process of our children’s final steps towards adulthood. We’re not. Once puberty hits, we’re a support staff – we’re no longer absolutely vital to the process. Similarly, we tie our own sense of self-worth to the accomplishments of our children – if our kids get a high score on the SAT or get an A in an AP class, that’s proof that we’re great and something we can brag about to others, right? Wrong. It’s just ego fuel that actually hurts our kids.

Another interesting argument: our children have huge advantages with the advent of computers, the internet age, and the easy access to information. Shouldn’t this mean that they blow us away in terms of intellectual growth at a young age? The problem is that instead of focusing on actually raising intellectually curious and self-reliant kids, we focus on them getting A’s in classes that likely aren’t pushing them very hard at all. So why should they grow if all that matters is that A? Instead, the book suggests using local community colleges to put your child in genuinely challenging classes that really push them – a “B” in a class that really pushes their work ethic and intellect is much more valuable than a cruise-control “A” in every aspect other than the almighty GPA.

Four: AP, IB, & SAT – OMG!
So many students today stress themselves out over taking tons of AP classes and getting a great SAT score. Frost argues that both of these have less value in terms of getting into college than you might think.

First of all, she argues that so many students are taking AP courses that they’re becoming watered down. With B- students taking the courses and sometimes passing, the material may be at a somewhat lower level than before. On top of that, students are now taking three or four AP courses at once. As a result, many colleges are eliminating the credits they offer in exchange for AP courses. In the end, the value of an AP course is lower than it once was, both in terms of what’s learned and in terms of how colleges value it.

A similar phenomenon is happening with the SAT and ACT. High schools are now beginning to require the exams; meanwhile, community colleges don’t require the test at all and most colleges and universities are de-emphasizing the test in terms of admission criteria. In other words, instead of becoming a useful prep tool for college, it’s become so universalized that it no longer matters as much as it once did.

What does matter, then? How can a student stand out? Frost points towards the IB, which provides a rigorous plan of study available in many different nations that, upon completion, is accepted (and often considered quite valuable) for college admission. Plus, the IB de-emphasizes the pressure of AP classes and the SAT, instead focusing on teaching how to learn and how to collaborate, skills invaluable in a person’s career. Another approach: taking the GED as early as possible, skipping the high school “experience,” and moving on to college early.

Five: Meet the New A Student: Artful, Advanced, Atypical, and Adventurous
Frost argues (quite well, with a pile of anecdotes) that a well-balanced student is incredibly well served by spending time abroad during their high school experience. Such an experience provides a huge deal of personal growth, vastly improves personal awareness, and demonstrates on college applications that a student is committed to outside-the-box exploration.

Here’s the thing: people at this age are passionate and that passion floods in surprising directions. If you stifle that passion and attempt to channel it in a way you see fit, you’re likely to see the dam break and see passion flow in a terrible direction. Instead, offer your child as many positive channels as possible and see where their passion takes them. Putting a study abroad experience on the table certainly does that.

Six: The Boldest Advantage: A Yearlong High School Exchange
Almost all parents feel some strong reticence at the idea of sending their child abroad for a year to study. That’s the “fear and ego” mentioned earlier raising its head.

Instead, a study abroad program – if done with thought and planning – is probably the best move you could make for your child. It’ll help you deal with the “empty nest” problem in a cold turkey way, keeping you from being a helicopter parent when your child moves on. It’ll show your child in the clearest way possible that you respect their independence. Most importantly, though, it’ll give your child a huge dose of personal and intellectual growth as they learn about a different culture and different way of life while also continuing their education. Few things set up a student better for college than such an adventure.

How can you make the most of this? Go early (sophomore year is a good target), go long (a full year instead of a semester), and go challenging (a place with a different language and a different culture).

Seven: How to Save Thousands on College: Study Abroad
A similar philosophy applies in college – go early (sophomore year is a good target), go long (a full year instead of a semester), and go challenging (a place with a different language and a different culture). A study abroad program while in college also has an additional benefit: it’s cheap.

Many people scoff at this, pointing toward expensive study abroad packages offered by schools. The truth, though, is that those packages are often glorified travel packages – instead of immersing the student in another culture, it actually isolates them in a vacation-like bubble, housing them with other native English speakers and providing every possible accommodation. Very little actual value is gained.

Instead, consider applying directly to the university you desire to attend as an independent international student. You’ll live in the same housing as students there and will be fully immersed in the culture instead of isolated in a “submarine” of your own culture. Plus, the price is reasonable – often very reasonable. In many cases, it’s far less expensive than the price you’re paying for university at home.

Eight: The Full Family Deal: Sabbatical or Sell-It-All?
A third option – one that works well if you have multiple high-schoolers at once – is to simply spend a year abroad, enrolling your kids in school in that country for a year. This will be something we consider circa 2019, for example, when we have two children in early high school.

Obviously, this doesn’t work for everyone, but it does have certain advantages. If you can find a job in your career in another country, it’s a huge resume booster. If you’re engaged in a creative career, immersing yourself in a different culture can pay real dividends.

This is something that’s at least on the radar for us in several years. If my wife can get a job teaching English in another country for a year, we would be quite interested in pursuing this. I can in theory write from anywhere, too, so that also helps.

One good compromise – a summer-long sabbatical. Rent an apartment in a foreign nation for three months and see how things go. Engage in every activity you can while there – not tourist stops, but the way of life that people have there. Shop at their stores. Eat their food. Learn their language.

Nine: The Get-Real Guide for Bold Parents
The final chapter is something of a clean-up of the many issues brought up by this book. How do you handle the criticism from others who say you’re sinking your child’s chances because you’re not following the “normal” path? What about their safety?

Each of these questions has a very reasonable answer. As for the criticism, such study abroad programs actually vastly improve chances of college acceptance and of growing a student to the point where they can really take advantage of college. With the safety issue, high school students are often more safe abroad than at home – no drivers under the age of eighteen, students are protected from anti-American sentiments by their youth, and students are naturally more cautious because they’re in unfamiliar territory.

Is The New Global Student Worth Reading?
I’ll be honest with you: I’ve been questioning the absoluteness of the high school/SAT/college application/expensive college pipeline for a long time. I’m actually in favor of delaying college for a year or two after high school, allowing other life experiences to fill in the gap. Why not let a student spend a year working hard at a job or for a non-profit in between high school and college, learning what it actually means to earn a paycheck and make ends meet and what the value of a college education actually is. I know I certainly would have benefited from such a sojourn. I’ve also been thinking a lot about traveling abroad for an extended period when my children are older, perhaps spending a year in another country and allowing them to attend school there (Great Britain, perhaps, or maybe a nation where we don’t speak the language natively).

Reading The New Global Student actually knocked down the idea of the standard pipeline even more. It’s loaded with food for thought for any person with children school-aged or younger. Even if you consider the general idea to be nonsensical, there’s enough material in here about how to set the path for your child to excel in their educational and professional career and save money along the way that it’s at least worth a read for specific tips.

For us, it’s opened the door to a lot of discussion about what we can do as parents to prepare our children for this ever-shrinking world.

If you have kids, you owe it to yourself to read this one. It’ll really make you think about their education and how simply connecting the dots might not be the best route.

The Psychology of the Reminder
A reminder? If a goal is really important to us, why would we need a reminder?

It’s simple. Most of us have really busy lives, and in order to actually make those lives work, we have to adopt some serious routines. If you have only thirty minutes after you wake up and before you’re leaving for work, those thirty minutes are going to have to involve some serious routine – showering, brushing your teeth, eating a quick breakfast, doing one or two other little things, then bolting out the door.

Similarly, any person with children knows how many routines have to go into their life in order to prevent complete chaos from breaking out. There’s a meal routine, a nap routine, a bedtime routine, and so on.

Even our lives out and about are filled with routines – we shop at certain places, get gas at certain places, use the same routes to get places, and so on.

The real kicker is that breaking these routines is hard. Often, it’s not so much the individual act that’s the problem – it’s remembering that individual act and finding a place for it in that busy routine.

For example, I’m trying to find space in my daily routine to (slowly) work up to being able to run a 5K. The problem is, with a thriving writing career, two young children, a marriage that needs care and feeding, a number of other commitments, and personal interests as well, it’s hard to find space for the training.

So I’m using a reminder. I have a single bright note right on my desktop where I can’t miss it that says, “Have you worked towards the 5K today?” I look at it several times a day and, usually the first time I see it, it motivates me to get up and do something to get myself in better shape.

Ten Great Reminders
Different reminders work well for different people and different situations, though. Here are ten things you might want to use in your own situation.

1. The Progress Bar
This works great if you have a specific numerical goal in mind – for example, you have a certain dollar amount that you’re wanting to save, a certain amount of debt that you’re looking to repay, or a certain weight that you’d like to reach.

It’s simple: just bust out a piece of graph paper (like this one). Figure out what number you’re targeting and what number you’re at now. Then, break the difference between the two down into equal pieces. So, let’s say you have $17,000 in debt and want to pay it all off. You might break it into 17 pieces – $1,000 each – or 34 pieces – $500 each – or 85 pieces – $200 each. Let’s say you want to go from 214 pounds to 180 pounds. You might break that into 34 pieces – 1 pound each. You get the idea.

Then count out a line of that many squares in the middle of the paper, then draw a big box around those squares, similar to what you see on the right here. Write the starting number on the left or bottom of the bar, then the finishing number on the top or right of the bar. You can even write in the increments if you want, or just note what each square is worth.

Then put this reminder somewhere where you’ll see it all the time – on the fridge, for example. It’ll serve as a reminder of your progress – plus, it’ll be quite fun when you make some forward progress and get to fill in a square on that bar.

2. The Pointed Note
This is the technique I’m using for my 5K goal. Just write yourself a very pointed note – “What have you done today to move forward on X?” and put it somewhere where you’re going to bump into it over and over again.

This is perfect for a goal where you need to make a bit of active effort each day – like athletic training. It might be easy at first to simply forget about it during a busy day, but that note forces it into the forefront of your mind.

The key is to make the note pointed – it needs to prod you into taking action – and put it in a place where you’ll be reminded of it with ease every day – or at least each day that you’ll need the reminder.

Some ideas for this kind of reminder: a reminder to network, a reminder to engage in athletic activity, a reminder to take another discrete step on a big project.

3. The Big Picture
One of my biggest goals in life is to own a house out in the country on a few acres. I’d like a good-sized yard with plenty of room for a vegetable and herb garden and a small barn in the back somewhere to effectively function as a large shed. I might even raise a few chickens on it – who knows!

To keep this in mind, my desktop wallpaper is an image of a nice house in the country with a small barn and a windmill. Whenever I see it, I know what my big goal is.

This can work for any big goal that requires continual multi-dimensional effort to reach. It might be a country home, or it might be any number of other things – a great career, an amazing car, or a happy marriage. Find a picture that signifies exactly what you want, then put it in places where you’ll be reminded of it time and time again.

That little boost will push you, more often than not, just when you need it.

4. The Effort Tracker
As I start jogging more and more, I find that keeping careful track of my efforts and recording them somewhere is very powerful. I have a Nike+ iPod setup that makes it very easy to record my efforts, keeping track of each run in very careful detail, as well as my best mile and my overall averages.

This type of data is incredibly psychologically powerful. When I finish a jog, I can’t wait to go look at my data. Did I get a new “best mile”? Did my average go up (it usually does)? Did I manage to maintain a steady pace?

Putting this “effort tracker” front and center makes it easy to keep up with my goal. The same is true for any such tracker. Perhaps you use Quicken to monitor your money? Have it start when you start up your computer. Maybe you use a spreadsheet to keep track of your weight? Have that spreadsheet appear on startup. That way, you’re faced with all of that data and all of that forward progress – and psychologically, you want to keep it going.

5. The Public Notice
Constant peer pressure can be a very effective reminder of your goals. If everyone around you knows that you’re attempting to quit smoking, they themselves will become reminders, encouraging you to quit, complimenting you on your good choices, and so on.

Thus, one way to create some powerful reminders around you for your goal is to simply email as many people as you can and tell them in detail about your goal. Tell them what you want to achieve and ask them for their help in getting you there. Ask them to steer you straight if they see you having problems, and apologize in advance if you don’t handle their help well (since such goals can be psychologically stressing).

Once you’ve done this, everyone knows about your goal and you’ve given them all permission to be your reminders. Thus, their mere presence becomes a reminder of what you want to achieve.

You can take this another step and combine the goal tracking with your public notice. Create a blog or a Twitter account to talk about your goal in detail, mentioning your progress with specific data, then ship the URL for that blog or Twitter account to your friends so they can keep tab on your progress (and leave positive comments).

6. The Pestering Email
Another way to keep you on focus is to have an automatic email service pester you with reminders by email of your goals. I do this myself, with Google Calendar. I set various target dates in my calendar, then order the calendar to remind me by email of these goals. Sure enough, they pop right into my email inbox, reminding me quite clearly to keep up with a particular project.

For example, let’s say you want to really grow your professional network. Go into Google Calendar, schedule an entry on Friday to “send an email to an old work associate,” then add a reminder 4 days, 3 days, 2 days, one day, and one hour in advance. Then, schedule it to repeat. Each day, you’ll have a reminder telling you to send an email to a work associate – and when you follow through, you’re achieving your big goal.

For people who live out of their email inbox (as I often do), this can be a great way to keep your goal in mind – and keep moving forward on it, bit by bit.

7. The Buddy
Having a buddy who is also trying to move forward with a similar goal as yours can be a wonderful constant reminder of your own personal goal.

Let’s say you’re attempting to eliminate all of your credit card debt. You announce it to a few friends and you learn that one of your friends is actually attempting to do the same thing. Suggest to that person that you buddy up to motivate each other, share tips, and share your progress along the way.

When you hang out together, you can swap stories about how you’re moving forward. You can give each other tips on how to better accomplish that big goal. You can actually engage in the activities together – jogging in the evening, for example, or going to free events together instead of spending money.

That buddy becomes a walking, talking reminder of your goal and, in a fun way, pushes you to achieving more than you thought possible.

8. The Inspirational Picture
My family inspires me to make almost every good choice I make in my life. They inspired me to take charge of my money. They inspired me to start getting in better shape. They inspired me to take a real swing at writing for a career.

Keeping a simple photograph of my wife and children with me helps keep me motivated to continue making good choices. I have three photographs of them on my desk and I often look at them when I’m having some trouble getting motivated to write. Their faces always help.

Some people get their inspiration from motivational posters. For me, all I really need to do is look at my family and suddenly I’ve got my eye back on the prize.

9. The Repetitive Post-It
When I first made a serious effort to cut my spending, I found it was very hard to break my old routines. I would simply wheel into the bookstore without thinking about it at all and the next thing I knew, I’d be standing in line holding some books.

What really helped was repetitive reminders, which took the form of Post-It notes. I wrote on each one: “Don’t spend anything.” I put them all over. I put one on my dash and one on my rear view mirror. I put one on my computer monitor. I put one on my wallet so I’d see it when I got started in the morning.

Those constant reminders kept the big picture firmly in my head, mostly because the message was nearly inescapable. I saw it all the time and that meant it bubbled up to the top of my mind when I needed it much more often than before. Before long, that reminder was burned into my brain – and the Post-Its had done their job.

10. The Tool Disfigurement
There were times when I would still fall short and find myself on the verge of spending anyway. I’d have an item up there to buy. I’d reach for my wallet, pull out my credit card, and ….

Right there in front of me was all I really needed to see. I’d put the item back and walk out of the store.

What was there? Wrapped around my credit cards was a picture of my son. Yes, the inspirational picture had found its way directly to the tools I used to undermine that inspiration. Seeing my little boy – and reflecting for just a second on him and the good choices I needed to make as a parent – made me step back just long enough for sense to take hold of me.

If you find yourself constantly turning to a tool of some sort to continue a habit you’re trying to break – a bong, a credit card, anything like that – put an inspirational picture there. Put that picture of your kid right on that item and attach it firmly. Make it so that you have to give that reminder a look before you commit that act – and you’ll likely find yourself turning away at the last minute.

Now get out there and achieve something great.

That’s not to say that I had a deprived childhood, though – I didn’t. My parents – my mother in particular – found lots of little ways to get me the things I wanted or needed. We went to the library all the time. I was always allowed to get a book or two from the book order. And when there were windfalls, I would often get something very nice – a new video game, typically, or a few new books all at once.

One thing my parents often did, though, was make Christmas and my birthday into very big events. They would ask me what I wanted months in advance and encourage me to make lists. Since my birthday was in the middle of summer, by the middle of most springs, I was already puzzling over my birthday list, letting it often consume my thoughts. Similarly, I was already getting started on my Christmas list by Labor Day.

My parents did this for what seems like a very good reason. Since there weren’t a lot of resources around to give me a healthy allowance or to buy me lots of things, they would instead channel my childhood desires towards two big days. Then, they would save up their nickels and dimes and try very hard to make my birthdays and Christmases memorable.

This was really effective in my childhood years. Instead of nagging my parents for things I wanted, I’d stew on them. I’d write down a wish list, revise it, and start over again a few times. I’d pore over the Christmas catalogs like a researcher in the library of Alexandria.

What really happened, though, is that these things that I wanted consumed my thoughts for a big part of the year. I’d spend my time stewing over that list, thinking about the things I wanted, and as I grew older, I began to dream about other ways to get them. I started an aluminum can collecting project – one that actually ended quite sadly, I started doing lots of piecework for my father’s fishing business, and I tried several other small-scale entrepreneurial tasks.

But the problem signs were already in place. As soon as I earned anything, I was already plotting about buying one of those things I had wanted and stewed about for so long. I’d take the $50 from aluminum can sales and rush straight to the local department store (Jacks, a now-defunct chain) to buy a video game.

This only escalated throughout my college years, and by the time I was a young adult, I was still focused heavily on the material things I wanted. Of course, then, with a nice income and access to credit cards, it became very easy to just simply go get all of those things I wanted.

And I did.

I bought multiple DVDs and multiple CDs and a video game pretty much every week. I went out to eat all the time. I went to London and stayed in a hotel room overlooking Hyde Park.

In short, I no longer had a wish list. Instead, I just did these things as they came to mind. All that stewing about the things I wanted finally came to fruition.

How I Fixed This
So what did I do to fix this problem?

The biggest realization – for me – was that this was a never-ending road. There would always be something else to want, no matter what I purchased for myself. I would always be wanting something more.

Thus, if that’s true, isn’t all the money spent trying to sate those desires just money wasted? Even worse, wasting all that money meant that I wasn’t achieving the big things I dreamed for in my life – becoming a writer, providing a safe financial foundation for my wife and my kids, owning a nice house in the country.

What I found was that if I cut back big time on my discretionary spending, I didn’t really lose much at all. Sure, there were still many things that I wanted – and there still are – but that would be true regardless of how much I spent. Instead, now I’m actually using and enjoying the things that I buy. On the occasions when I do choose to buy something for myself, I take my time both on the purchase (researching it and choosing the best deal) and on the enjoyment of the item (reading the book, playing through the video game, and so on).

The “wants” are still there, but they no longer run the show in terms of my spending, simply because I realized that no matter how much I spent, the “wants” would still be there – a ghost I could never catch.

The Parenting Hat
So what can we do to help my children out with this issue?

Our first tactic is to simply strongly de-emphasize wants. We don’t ask for birthday lists or Christmas lists. Instead, we just listen to them and note down anything they might mention.

During the lead-up to the holidays, our gift-related conversations revolve around giving. We talk about good, reasonably-priced items that people would particularly like. Instead of focusing on what we want, we focus on what Luke or Brittany might want – and how we can make them happy for a reasonable cost.

Second, we don’t watch many commercials – and we talk about the ones we do. If my son sees a commercial for a toy or a type of junk food that makes him want the item, even though he’s three, we talk about it a bit. I usually point out how only the good side is shown – and how we already have similar things.

A great example happened a few evenings ago. My son saw a commercial for some type of Batman action figure – he wanted one, and he told me loudly. First, I suggested that he instead play with the action figures he does have (mostly leftovers from my own childhood, honestly). He said he didn’t want them – instead, he wanted Batman. So, then, I suggested if he didn’t want them any more, why don’t we give them away to kids who might want them? He didn’t like that suggestion at all, at which point I suggested that he pull out his favorites and we’d get down to business. By that point, he had completely forgotten about Batman and instead found himself excited to pull out the action figures he already had.

I really believe this is the key. Instead of focusing happiness on things he doesn’t have, I strive to focus his immediate joy on the things he already has. That way, he doesn’t have that burning desire for more things.

He understands that money is used to buy things. In order to get an item, you have to exchange some amount of money for it.

Similarly, he understands that there is only a limited supply of money. There is not an infinite amount of money – in fact, in his world, there’s not much money at all. Thus, you can’t simply buy everything you want.

He also understands that different items have different prices. You don’t have to give much money for some things. However, you have to give quite a bit of money for other things. Not all items have the same price. He also understands that saving your money is worthwhile, though this lesson has been guided greatly by Mom and Dad.

Finally, he can count to twenty with ease and count quite a bit higher with some coaxing and concentration. He can not only count abstractly, but he can also count items: coins, chocolate chips, and so on.

From my perspective, this means he’s ready for an allowance (though my wife and I are still discussing it). On the other hand, I know other parents of children as old as six who don’t feel their child is ready for an allowance.

Our goal with giving an allowance is straightforward: we want to teach him the value of saving, charity, and money management through his own experiences.

However, with such a decision, we’re left with a number of additional questions.

First, how big should his allowance be? There’s a fine balance to achieve here. It needs to be enough so that it’s relevant, but not large enough so that he’s spoiled. I’m leaning towards an allowance equal to his age in dollars – so, $3 now, $4 when he turns 4, and so on.

Second, what kind of restrictions should we put on it? From my experience, an allowance given with no restrictions often winds up being spent on bubble gum, which kind of defeats the purpose.

I’m leaning towards the Money Savvy Pig philosophy. To put it simply, it has the child split his or her allowance into four piles: spend, save, donate, and invest.

The “spend” pile is straightforward – that’s his money to do with what he chooses. If he wants to take his money and buy a Hot Wheels car with it, he can. If he wants some bubble gum, he can buy it.

The “save” pile is similar – he can spend it on whatever he wants, but it has to be a defined large goal. Perhaps he wants another track set for his wooden railroad, for example, or maybe he’d like to buy a Christmas present for someone with his own money. This would build up over many weeks, and if he chose, he could contribute more from his “spend” pile towards it.

The “donate” part allows him to choose every so often (once every three months or so) to give the money to a cause of his choosing. This would open the door to a lot of discussion about others in need and allow us to introduce charities to him. I know a child who saved for two or three years and donated a whole heifer via Heifer International, for example.

For his purposes, the “investing” part will be a very long term thing – he can watch it build and build and build, then when he’s older, we can use that money to begin learning how to invest it for the future. I’d love it if he took some of the quarters he saved when he was three, invested it somewhere, and used all of the proceeds to buy a house when he’s a young adult.

If we go down this path, we may start the allowance by giving him such a “savings pig.”

Third, what about his younger sister? There’s also a twenty one month old girl in our home, one who doesn’t have the foggiest idea about money yet. Before long, though, she’ll become aware of it – and she’ll be aware that her big brother is getting an allowance.

We’re not sure how to handle this. Should we give her a very small “spend”-only allowance for now, changing it when she reaches age three or so? Or should we just wait entirely until she’s old enough to understand the ideas? We’re leaning towards no allowance for her for now, making it clear to our son that he’s getting the allowance because he’s older.

Our goal in the end is to teach our children why it’s awesome to save and plan ahead. Your comments and thoughts on this plan are greatly appreciated.

So what kinds of things do we have in our rainy day box? (Note that we use many of these items in other situations, too, but it’s useful to have all of this stuff collected in one place so you can easily find it.)

A big box Any sort of box will do – it just needs to be of good size to store quite a few items. A pair of large shoe boxes can do the trick – and it’s a great way to reuse shoe boxes. In fact, the first “rainy day” project can actually involve decorating the boxes.

Drawing paper You can get a ton of drawing paper for just a buck or two by buying an end roll of paper from your local newspaper office. This paper is perfect for other projects, too, like paper pirate hats.

Pencils Keep your eye open for free pencils and pens, particularly at hotels or other such places. I unabashedly grab quite a few when I see them – they’re given away for advertising purposes, after all, so I have no qualms collecting them.

Crayons I tend to believe a giant box of crayons is the best $5 item you can buy for a child, but that doesn’t mean I don’t watch carefully for sales on crayons and washable markers.

Food coloring There are lots of different kid-friendly projects that can really utilize food coloring, so just look for a good deal on vials of coloring, particularly red, blue, and yellow coloring (as you can mix these to get many other colors).

Glue, tape, and safety scissors These tend to be overstocked around the time school starts, then they tend to be on sale in late September and early October. These are great items to get at a dollar store.

Paints and paintbrushes Keep any paintbrushes you find in miscellaneous art sets that your kids get (my kids have received several for gifts). Then, make your own paint: mix 3 tablespoons sugar, half a cup of corn starch, and two cups of cold water. Cook it in a pan, bringing it almost to boiling, until it thickens, then stir in a teaspoon of liquid dish soap. Split it into four roughly equal amounts (in small cups or dishes) and stir in some food coloring into each – it works great for simple art projects.

Small beans Buy a bag of beans for a kitchen recipe, then save half a cup of them or so in a small baggie for later use. Beans make a great addition to art projects. You can do the same thing with cereal (like Cheerios).

Construction paper / cardboard Pieces of unmarked cardboard are well worth saving in this box. Shirt boxes are great sources for this material, as are

Old magazines Keep ten or so issues of old magazines in your art box. Old magazines are great sources for collages, and these work even for three year olds. For example, I’m planning on helping my son hunt through these for big examples of the letters in his name and making a big collage out of them.

Old wrapping paper Similarly, keep sheets of old wrapping paper. Just carefully unwrap presents, fold up the sheets, and tell people you’re saving them for an art project for the kids. Wrapping paper can make a great background for various projects.

Old greeting cards Greeting cards (particularly the flood of them that people send for Christmas) are a great source for elements for collages as well.

Paper towel, wrapping paper, and toilet paper rolls Tubes like these can be musical instruments (blowing through them or using them as drum sticks) and structural pieces for building models.

Recipes Not recipes for food per se, but recipes for things like play dough and bubble solution. Having these recipes in the box is often a great reminder to go make a batch of these things if we have the ingredients on hand – and given that such things are usually made from kitchen staples, we usually have them. Bubble solution? Dish soap, cold water, and a spoon full of corn syrup. Play dough? The easy “Mister Rogers” recipe is just two cups of flour and one cup of water, which literally makes dough, but a better recipe is one cup of flour, one cup of warm water, two teaspoons of cream of tartar, one teaspoon of oil, a quarter of a cup of salt, and food coloring (for color). Cook this over medium heat and stir it until it’s smooth, then knead it until it’s doughy.

Music Finally, include a few CDs worth of catchy, upbeat music that appeals to both you and the kids. We’re big fans of They Might Be Giants’ Here Come the ABCs. If you want to save some on this, just download legal mp3s of the music and burn your own CD (or use another music device). I don’t advocate piracy, but if you look around, there are lots of great legal sources for inexpensive and free music of all kinds.

A rainy day box can be a lot of fun for kids and adults alike! Good luck!

But what’s a 529? Erin writes in with a typical query:

You write all the time about saving for your kids college education in a 529. What is that? How do you do it?

Let’s dig in.

What Is a 529?
A 529 plan is simply an investment account with a few tax advantages that make it very useful for saving for higher education. To be specific, any interest or investment income earned in the account that is then used for higher education is exempt from federal taxes (and from state taxes in many locations). In some states, the contributions themselves are deductible from state taxes.

There are two types of 529 accounts: prepaid accounts and savings accounts. Prepaid accounts are used to purchase tuition “credits” at certain institutions at current rates, so, for example, you might be able to purchase a semester’s worth of tuition at East Overshoe Tech at the current rate of $10,000 a semester, but in fifteen years when your child is actually attending the school, tuition might cost $20,000 but you won’t pay a dime – you’ve already purchased that semester.

On the other hand, savings accounts are basically just investment accounts – you contribute money, it goes into the stock market or into bonds, and any gains you earn stay within the account. When the account’s beneficiary goes to college, the money can be used at any school. In other words, savings-style 529s are more flexible, but they often don’t return quite as well (since higher education tuition growth is usually greater than the stock market).

Most states have their own 529 plans with specific rules; however, many states have plans that are open to people from other states to contribute.

Another important aspect of 529 plans is that the beneficiary does not control the account – the person that opens the account controls the money. This is a great protection, as it keeps overzealous children from “cashing in” on their college savings.

How Do I Do It?
My investments go through College Savings Iowa. This offers me a number of specific benefits.

First, as an Iowa resident, my contributions to my children’s plans are deductible from state income taxes. Largely because of these contributions, we received a refund on our state taxes this year, while we had to pay in a small amount on our federal taxes.

Second, College Savings Iowa uses Vanguard to manage their investments, and Vanguard is a company I already trust with my retirement savings and other investments. The plan offers quite a few stellar investment choices – I’m currently using the “aggressive” target investing plan for both of my children, which is a low-cost collection of index funds that strive to earn large returns.

Third, the plan is tied in directly with Upromise. Once I signed up with this program, a small percentage of our credit card usage goes straight into those 529 accounts. It’s usually a small amount each month, but this money is essentially an additional free contribution to my children’s college savings plans.

How Do I Sign Up?
First, you need to decide which plan to use. Most states offer their own 529 plans, but they all vary quite a bit. You should start by seriously considering the plan in your own state, because many state plans offer income tax breaks for state residents – you can find your own state’s plan by Googling your state’s name and 529.

If your own state doesn’t offer a plan or only offers a plan you don’t like (such as a 529 that only allows prepayment of tuition to universities you don’t like), look at plans available in other states. Liz Pulliam Weston at MSN MoneyCentral has identified five great state plans, for starters.

Once you’ve signed up, you’ll set up an automatic investment plan that draws whatever amount you specify each week or month from your checking account and puts it away for your children’s education (or your grandchildren’s education … or your own). It’s quite easy, and it’s a great way to get started with college savings.

The Credit Card Accountability, Responsibility, and Disclosure Act of 2009 would forbid card issuers from opening accounts for people under 21 unless one of these criteria is met:
+ A parent, guardian or other responsible individual agrees to co-sign for the debt.
+ The applicant provides proof he or she can independently repay the debt.
+ Proof is provided that the applicant has completed a certified financial literacy course.

I understand where this bill is coming from and I agree with it in large part, but I would be opposed to it overall. Let’s look at both sides of the coin.

What I Like About the Bill
When I was a new college freshman, I signed up for a credit card in exchange for a t-shirt, then I began to use it for all kinds of stuff – video games and so on. In short, I acted like a fool with that credit card – a card I would have never had if this act had been in place.

A bill like this would unquestionably have kept me from getting into this early credit card debt. My parents would not have signed off on such a card and thus I would have been forced to learn how to manage the money from my part-time job more carefully, teaching me some valuable budgeting lessons.

I also strongly agree with the idea of basic financial literacy being a requirement for credit card use, though I’m not convinced at all that this is the way to do it.

What I Don’t Like About the Bill
What I don’t like about the bill is that it takes away personal responsibility in two different ways.

On one side of the coin is the fact that many people under the age of 21 are fully independent and have their head on their shoulders. One individual I know had a very successful business he was running himself at age nineteen. I know several others who have been through trade school and are embarking on plumbing and electrical careers at that age. Why should these independent and self-motivated individuals be required to find someone to co-sign with them for a credit card?

On the other side of the coin is the lessons learned from credit card ownership, which might actually be easier before age twenty one for many. I didn’t figure out how to use credit cards sensibly until age twenty seven, but I’ll be the first to admit that I didn’t receive a great education on how to use them and what their role should be in your life. If I had, I might have been able to make sense of my earliest credit card troubles (when I was in college) when the amount of debt wasn’t that much at all. For many people, college is a time to learn and make mistakes and grow – this bill just offers more hand-holding.

For me, the negatives of this bill outweigh the positives.

Is There A Better Solution?
The solution needed here is pretty simple – there is a desperate need for better consumer education. Consumer education should be a part of the school system from the earliest stages. Reading, writing, and arithmetic are fundamental, but so is managing your money – not knowing how to do that in the modern world can derail your life.

Instead of sponsoring bills that restrict the freedoms of adults, why not invest a bit more in education and a bit less in other areas?

What do you think? Is the Credit CARD Act of 2009 a good thing or a bad thing on the whole?

What’s a 529 plan? “A 529 plan is a tax-advantaged investment vehicle in the United States designed to encourage saving for the future higher education expenses of a designated beneficiary. It is named after section 529 of the Internal Revenue Code.”

Since my investing goal was a pretty long term one – college is at least fifteen years away for them, even now – I chose an aggressive portfolio for the investing – 90% stock index funds and 10% bonds. I then set up an automatic investment plan – $100 a month for each of them.

Notice the start dates, though – mid-2005 and mid-2007. In each case, my investments for their college education caught the full force of the recent stock market downturn. I’d log on every month or two to check on the investments to find that the balance had gone down, even after the contributions.

If it were simply an investment for my own retirement, I could internalize it with no problem. I can stomach losses for my own future, because I’m secure in my own knowledge that over the long run, the tendency of a diverse stock investment is to go up.

But I would look at the terrible 529 investment return, look at the pictures of my kids on my desk, and I’d feel guilty.

“I’m putting aside money for their future like I should be, but it’s falling through my fingers like sand. Their future is slipping away,” I would think to myself as I looked at the pictures, and I’d be sorely tempted to change that investment around to put the money into something more conservative.

It is incredibly easy to let emotions get in the way of rational choices when you’re a parent. You see your children so full of happiness and love, yet still dependent on you for so much, and you want desperately to ensure that they’re safe and that a bright future awaits them.

But emotional investing is the most dangerous kind of investing. When you invest with your emotions, you try to time the market. You sell late into panics and buy late into rallies. You often undo many of your earlier good choices. And, in the end, you’re left with much less than you would have had otherwise.

Instead, if you’re investing for the long term, you’re far better off removing your emotions from the equation as much as you can. Set up an automatic investment plan, sit back, and wait. Make adjustments only because you’re moving closer to your target date, shifting to more conservative options as the big day arrives (or, even better, invest in a plan that does this automatically for you). Look at the balance if you’d like, but don’t let a few poor balances cause you to make radical changes.

In short, be patient.

I look at those two pictures on that desk and I see two young children who rely on me to make many decisions and choices for them. I invest for them, of course, but I also do things like prepare their meals, help them get dressed, and regulate how much candy they can eat and how many DVDs they should watch. As much as I love them and want to maximize their safety, sometimes the best choice isn’t the one that my heart yearns to make.

The addition of a baby to anyone’s life is a major change, to put it lightly. Your life changes in countless little ways because of this new responsibility – often in ways you do not expect. Your expenses change as well – you spend more on some things and less on others.

Here are eight little thoughts/pieces of advice for all of you new parents out there.

The biggest thing your child needs is your time.
If you’re spending every free moment obsessing over the perfect crib, the perfect bottles, and so on, stop. Just stop. The one thing your child needs more than anything else is your time.

Right now, your baby needs to be held. (S)he needs to hear your voice. (S)he needs to be fed regularly and have sanitary diaper changes. Read your child some simple books. Let the child take some naps in your arms. Look directly at the child when they’re awake and talk to them about anything.

Later, they’ll need your time in different ways. You’ll be a teacher, a playmate, a nurse, and a nanny. All of these roles are important. All of these roles take time.

How do you find that time? The biggest change will be in your social life. It’s now much harder (nearly impossible in some cases) to just go out on the town for a good time. For us, social occasions moved from being an ordinary routine to being a treat. This not only freed up a lot of hours, it also saved us a lot of money.

The introduction of a child is a perfect time for other changes.
Your life is going through dramatic change right now, with many, many aspects of your normal routine thrown out of whack. If you’re looking to adopt other changes in your life, right now is a perfect time to start.

For us, the birth of our first child was a call for change. Over the first year of our son’s life, we started a huge financial turnaround. We abandoned several expensive hobbies, got our finances in order, and I gave my dream of writing for a living a sustained, serious shot.

The constant through all of this change was our family – the three of us. Now that you have the same center in your life, take advantage of all of the other waves and make the changes you want to make.

It’s not as expensive as you think it’s going to be.
When many people think about the financial impact that a baby will have in their life, they think mostly in terms of addition. Day care. More food. Baby supplies. Clothes. Ouch.

When you actually have the child, though, you begin to find that there are a lot of subtractions as well. You spend less on your own food because you find it’s easier to make a meal at home than it is to bundle up the kid and go out. You spend less on gas because you don’t go out and about every day. You spend less on hobbies and entertainment because, quite frankly, you don’t have as much time for them.

Don’t panic. The new expenses won’t be as drastic as you think they’ll be. Let your child’s needs (material and otherwise) lead the way a bit and you’ll find that things will fall into place.

Reusable supplies trump disposable supplies.
Of course, this does assume you have a washing machine and a dryer at home. Given that, though, cloth diapers, cloth wipes, and cloth bibs will save you quite a bit of money over the infant and toddler years, plus you can “yard sale” some of them at the end.

The cloth diapering is often a surprise for people. Can that really save money? The Simple Dollar has broken it down before and found that cloth diapering is significantly cheaper for just one child and is a huge savings (well into four figures) for two children.

However, cloth wipes are easier to implement. Just get a pile of cheap, soft cloths and a spray bottle of water and you’ll find that not only do the cloth wipes do a great job, you can toss them right in the wash with pretty much anything else and they come out fine.

Take a look at reusable options. You’ll find that they steadily save you money.

Make time for just your spouse.
Once a child arrives, the dynamics of your marriage will change. Quite simply, you’ll have less time to spend together and less time to communicate with one another.

Make time. Set aside periods (like nap times) where the two of you simply do some things together without the baby.

I have personally witnessed multiple relationships falter and crash because the parents failed to make time for each other when the child arrives. Not only can that be emotionally messy, it can be very financially costly, too.

Eat healthier.
The first six months with a baby will result in a lot of sleep-interrupted nights for all adults involved. This will inevitably reduce your energy level during the day when you need to be performing well at work or at being a good parent or spouse.

One great way to counteract the loss of energy is to improve your energy levels via an improved diet. To put it simply, make better dietary choices. Eat home-prepared meals. Choose fruits as your snacks instead of sweets. Add more vegetables to your meals.

Making such moves will boost your natural energy level a bit, likely cause you to drop a few pounds, and make it easier for you to juggle both your familial needs and your professional needs.

Make an extra effort to find and build relationships with other new parents.
The best friend a new parent can have is another new parent, one who is going through the same experiences and can share many of the same resources.

Look around your social network for people who have recently had children and make an effort to get to know them. Invite them and their child over for a meal and see if you hit it off. If you do, that relationship will help you time and time again.

Another family with a young baby provides opportunities for low-cost socialization. It provides sympathetic ears. It provides supplies and ideas you may have never considered. It can also provide free babysitting if you’re willing to do exchanges with them. All of these can be a great benefit to you during your child’s earliest years.

Reach out to your parents as well.
A final tip: the birth of your own child is a great time to reach out to your own parents. Much as with reaching out to others with babies, your parents can be an invaluable resource for making this period go smoother.

More importantly, grandparents can play a vital role in the life of a young child. It is good for that child to experience a healthy relationship with their grandparents, and vice versa.

Do what you can to patch over any rough spots in your relationships with your parents and open up the doors as widely as you can to their involvement with your children. This is a win-win-win situation – don’t let it slip by.

Prior to the past few months, we would simply allow him to “spend” the money in a very simple fashion. He would take a dollar to the store with him, select a low-cost toy (usually a Hot Wheels car), then give that dollar to the cashier to pay for it (with Mom or Dad quietly making up the difference). It’s a simple enough lesson – money is something to be exchanged for goods and services.

Lately, though, he has become interested in purchasing other toys – some of which cost several dollars. Our answer up to this point has usually been that his dollar can only buy certain toys, but recently I decided that it was time to extend his learning a bit.

A few weeks ago, at the store, he had two dollars to spend. He spent most of his time intrigued by a nifty pullback car that cost $7.99 – and he wanted to spend just a dollar to buy it.

I told him quite simply, “This car costs eight dollars. You only have two dollars. You don’t have enough dollars to buy that car.” We worked through the counting using our fingers so that he understood that he needed six more dollars.

That didn’t shake his interest in the toy, however. He still wanted it.

“Well, if we don’t spend these dollars today and take them home with us, we can wait until we get six more dollars and then buy the car,” I suggested.

After some commiseration, he decided to spend one dollar on a small car and to try this saving concept with the other dollar. We got home, found a jar with a lid, and put the dollar inside so that he could see it.

That jar now sits on our kitchen counter. Since then, our son has been able to add some money to the jar – he can clearly see his savings as it builds up. He knows what it’s for and he’s excited to contribute to it whenever he can.

To put it simply, saving money has now become relevant and exciting for him. It’s very tangible – he can see his savings grow. He also has a goal that’s small enough that it seems reachable – he only needs to save up to $8, after all.

I think that the same aspects that are making saving tangible for my three year old son work well for adults, too:

Set a clear, tangible goal for savings. Know exactly what you’re saving for and keep it in mind. Figure out the exact dollar amount you need to reach. Know what the reward is for reaching that dollar amount. The more tangible your goal is, the easier it is to reach for it.

Set up milestones along the way so you can see progress. A $10,000 goal seems unbelievably high for many people. So transform it a bit. Turn it into a goal of $100 a month. With that little goal each month, you can reach your big goal in a bit less than eight years. Then push yourself just to reach that little goal each month – or to exceed it!

Keep the savings in your mind. Put up reminders of your goals in places where they’ll have impact for you. Wrap a picture of your kids or your dream house around your credit cards. Write the dollar amount on a Post-It note and keep it on the bottom of your rear view mirror. Keep that goal in your mind and you’ll stay focused on it.

So what’s next? The near future points us to our child’s next lesson: how do you earn money? That will be a whole new adventure.

I wrote that article during a time when my wife and I were really struggling with that issue ourselves. We’d read quite a bit about how to select a good guardian for your children and were moving through the process of choosing such a guardian and I felt the information we had learned would make for an interesting article. I often do that very thing – if I’m working through an issue and researching it for myself, I’ll write about that issue on The Simple Dollar, because if it’s something I’m working through, there are likely many others who are thinking about that very issue.

To put it simply, my wife and I are still struggling with this issue. In my original guardianship article, I noted a big handful of questions that one should consider when selecting a guardian. We used these very questions to attempt to select guardians, but every choice we considered failed miserably in at least one aspect.

Here were our criteria:

Does the potential guardian share your values?

Do you believe the guardian will raise your child in accordance with those values? Is that potential guardian a good person?

Does that potential guardian have a strong family network around them to help with the burden of having unexpected (and likely traumatized) children?

Will that potential guardian teach your children the basics of success in life?

Does that guardian have the financial security to ensure that your child’s needs are met?

Will that guardian have an expected natural lifespan that will allow them to remain as guardian until your child enters adulthood?

Our choices for guardianship really boiled down to four options:

Option A is a couple without children at home in their mid fifties. They strongly share our values and are closely tied to our extended family.
Option B is a couple in their forties with three children at home, all older than our children. They share our values pretty well and have some ties to our extended family, but they live far away from both sets of grandparents.
Option C is also a couple in their forties with three children at home, all older than our children. They weakly share our values, but have very close ties to our extended family.
Option D is a couple close to our age that’s unable to have children. They very strongly share our values and probably fill me with the most confidence to raise our children well, but there is virtually no tie at all to our extended family.
Option E is a single female younger than us with values that perfectly match what we want and close ties to family. However, her income level is extremely low and her future and life path would be greatly altered by the burden of children. Likely, Option E will grow in likelihood as time goes by and she figures out where her life is going.

So, each option has some strengths and some weaknesses.

During our discussions, I was a strong advocate for options B and D, while my wife was a strong advocate for options A and C. What does that really mean? My wife and I see different criteria as being the most important in selecting a guardian.

This realization has changed our discussion quite a bit. We know what the strengths and weaknesses of each option are – our question then becomes what criteria is the most important to us. Is it most important that we choose a family that matches our values? Is it most important that we choose a family that has a lot of support with our extended family? Is it most important that we choose a young family that will be able to provide parental support until our children fully leave the nest and find their own lives? How important is it that a family is in strong financial shape?

After a lot of discussion, we tentatively put down Option A as our choice on our will, but we’re still discussing the issue and it’s likely that the choice will change at some point. We pick up this discussion on a regular basis and twist it around, but we usually find ourselves just as far away from a real answer as we were when we began.

If guardianship is an issue that is of concern in your life – and if you’re a parent, it should be – now is the time to start thinking about it. From our experience, I recommend starting with the criteria. Do you want your child’s guardians to be young? Must they have a strong income? Do they need to have close ties to your family? What about their values – do they match what they want for your children?

There is no right answer here. Different people will come to different conclusions to these questions. What matters is that you put thought, care, and love into this question and do what you feel is truly best for your children.

Good luck.

Most parents – actually, anyone who has spent much time around a three year old – know exactly what I’m talking about. He’s basically asking “Why?” about everything that happens, from the simplest mundane household things to complicated issues like the nature of life.

In other words, there’s a lot of explaining going on around the clock here at the Hamm household.

There’s another piece to this puzzle, though. With our little boy wandering around constantly asking “Why?”, we have become much more careful about our specific behavior choices. Let me give you some examples of what I mean.

We’re at the grocery store. I’m standing there examining the different kinds of milk and my son asks what I’m doing. When I tell him I’m trying to decide what kind of milk to buy, he hits me with the why. Why am I buying milk? Why am I choosing the particular kind of milk?

We’re in the basement. An incandescent light bulb burns out, so I replace it with a CFL. The only problem is that when we flip the light switch, the bulbs light up at a different rate. My son notices and hits me with the why. Why do the bulbs light up at a different rate? Why do we have different kinds of bulbs?

We’re on our way to daycare and we see one of the neighbors headed off to a different daycare. I point the girl out to my son and tell him to wave. He asks where she’s going and when I tell him, he drops the why. Why does she go to that other daycare? Why don’t I go there?

With the why’s coming in right and left, I’ve automatically begun to start thinking ahead about what I’m doing, coming up with solid answers for the things I expect him to ask. Doing that, of course, makes me think about why I’m doing things in the first place. Am I doing this for a good reason? Is this action setting a good example for my son?

Here’s the kicker: this is a key time in my child’s life in terms of learning how to behave and acquire knowledge. It’s quite important that I actually come up with correct answers to his questions, even if they seem simplistic or really repetitive. Even better, the answers (and anything we do to bring about the questions) need to indicate good, healthy adult behavior.

This is actually a great frugality motivator. My son has become yet another psychological tool that I can use to convince myself to make good financial choices. The ten second rule? The thirty day rule? Try the three year old child rule – if you can’t explain a purchase or a financial choice to a child without resorting to “because I said so,” it’s probably worth considering more carefully.

I’ve actually reached the point where I use this “why” question no matter what I’m doing and no matter whether my son is there or not. It makes me consider my actions much more carefully – and that results in better buying decisions and better life decisions, too.

One of the most amazing parts of raising a child is that you go into it thinking that you’re going to be doing all the raising and answering all the questions, but as time goes on, you find that the child often teaches you as much as you teach the child.