Until 10 years ago, I really didn't know much about money. It wasn't really something that we discussed growing up, I just knew I needed money to buy things. Or did I?? When I was 18, I got this very pretty credit card; it was a great accessory in my wallet! It was only for emergencies.....if you count a new desktop computer, 5 pair of $100 jeans, and several concert tickets emergencies. Oh, and dinner out every other night and groceries and gas. Oh, can't forget the cell phones and new bed. But don't worry...I would be getting a real job after college and could pay it all off then.
I did have a good job after college. I actually made more money than a lot of my friends. But I might as well have been jobless, because I tried to live above my means. I had to have a fancy apartment, new furniture, décor, etc. I had a gym membership (at least I actually used it), even though my apartment complex had a "free" gym, I shopped and ate out a lot. Having a "real job" kind of went to my head and I wasn't properly prepared for life in the real world. I ended up with $7,000 on that pretty credit card! It was scary to be honest. Especially because I also had a car loan that still had 3 years left on it and an enormous college debt to start paying. At least I lived in a nice apartment with brand new furniture, right?!?!? Ugh! To make matters worse, I decided to switch jobs and took one that paid less than what I was making.
It was about this same time that I met James, who lived in a super modest (okay, it was a dump) basement apartment. He made much more money than I did and didn't have debt. Seeing that someone with the means to live the way I did, but choosing not to, was eye-opening! He talked me into cutting up my credit card. I got a 2nd job and eventually got it paid off. Somewhere between cutting up my card and paying it off, I was gifted the book "The Millionaire Next Door: The Surprising Secrets of America's Wealthy" and it may be one of the most influential books I've read. Thank you SO MUCH to the person who gave it to me!!! If you haven't read this one, I highly recommend it. It helped me understand why a person does NOT want to "keep up with the Jones'". I have actually read it several times! I plan to pass it along to my children.
Fast forward to today....well several months ago... my spending was getting a little out of control. When you have kids it is so easy to buy them all kinds of things they probably don't need. It wasn't just the kids though...I got on a kick for a little bit to redecorate my whole house. Anyway, I realized I was doing a little too much unnecessary spending and wanted to set a better example for my kids, so they don't go down a road of debt like I did. I'm a big fan of Dave Ramsey, who's doesn't believe in debt and encourages America to pay for everything with cash, and have read a couple of his books....twice! I'm trying to put some of his suggestions from his book "Smart Money, Smart Kids" into place. This is another "must read". I talk about money with Rylee a lot! Daily! When she asks for something that costs money, my answer is always "No. That cost's money." And then we discuss that we have to work hard for our money and need to save it for important things....and no, McDonald's isn't important today. Her sweet little heart will offer me money from her piggy bank not only to buy something for her, but also to buy something for myself :) I think she is slowly catching on. I asked her if she wants to go to Reiman Gardens this week and she asked if it costs money. When I told her it does, she said, "Well you can go if you want, but I'm not going to because I will have to do a lot of chores to have enough money." :) Side note: when I pay her for working, she puts some of it in her brother's piggy bank because she feels bad that he didn't get any money :)
A few months ago I sat down and created a budget. This wasn't my first time. In fact, I have put together a budget many times in the past 7ish years, but I never stuck to it. I tried Dave Ramsey's envelope system before I even knew it existed. In theory, it is a fantastic money management tool, but I just found it to be too much work to keep track of. This time though, I think I have finally found something that works for me. I'm on the 3rd month with it. Basically, I figure how much money I have for "spending" after my few bills and savings are considered (don't forget to pay yourself -- savings!!), and I take that amount out in cash at the beginning of the month. Once it's gone, I'm done spending for the month. I use cash for everything except gas, and the only reason I don't use it for that is because I would have to take my kids out of the car to go inside and pay. If I buy something online, I still take that amount of cash out of my wallet and put it in an envelope for the next month.
I read that using cash makes it harder to spend money because we feel an emotional attachment to the money we can physically hold in our hands. I wanted to put this theory to the test, and I call tell you it is absolutely true for me!! When I get down to the last $20 in my wallet I get very attached to that piece of paper. Even though I've given myself permission to spend it buy placing it in my wallet at the beginning of the month, it is just very hard to watch the end of my money get spent. Or when I spend a large amount right away at the beginning of the month, I get so nervous that I won't make it through the month and I'm very mindful of my spending for awhile. This never happened when I paid for everything with plastic, because I couldn't actually see and feel the loss of my money. Even though I always paid my card off in full at the end of the month (and had quite a bit of rewards cash to put towards the bill), the total of that bill every month was several hundred dollars more than what I am spending now. I'm telling you, cash is the way to go!
The other biggest reason I wanted to try using cash was so that my kids can see the money transactions taking place. Today I was reminded why this is so important. We were at the mall (I was actually returning clothes, not spending money!) and Ry asked if we could get pretzels. I gave my usual "no, it costs money" response and I will never forget her reply.... "It does?!?! But I never see you give her any money!!" Ah-ha! She does pay attention and does understand. She has a little cash register with play money and a play credit card. I hate that it comes with a card. When I'm the shopper I always tell her I will pay with cash because credit cards aren't real money and can't really buy anything.
Money has a life of its own. It can be good and it can be really bad, in so many ways. I keep reading these shocking financial statistics, such as, only 1 in 4 American's has a savings account. That just blows my mind. I know it's my responsibility to make sure my kids grow up to be good money managers so while they are young little sponges, I'm trying to do what I can.
If you need/want to watch your spending a little closer, I challenge you to try using only cash and see if you can make it last the entire month. You might be surprised how it makes you feel to hand over your money for an item you know you don't NEED.
If you want to read some really inspiring financial stories, these are my 3 favorite finance books to date:
Total Money Makeover by Dave Ramsey (Trust me, this book is insightful and inspiring even if you
don't have debt)
Smart Money, Smart Kids by Dave Ramsey
The Millionaire Next Door by Thomas Stanley
Great post, Emily! I don't pay with cash but have often thought about it; especially as of late with Tess getting old enough to understand. I am one frugal mommy though and saving is soooooo important. Lord help us that the statistic you posted is unscientific and completely incorrect...yikes!!!!
ReplyDelete