Think About Money Like A Kid

Sometimes I feel like we're so worried about saving, spending and investing that we don't see the financial forest for the greenback trees. Perhaps it's time to go back to the mindset we had when we were given our first allowance and go from there.

1. Separate wants and needs. As children we saw everything as something we just had to have and couldn't live without. As we age our mindset doesn't always change. Distinguishing between the essentials (tithe, bills, food, gasoline) and the extras (movies, music, books) can truly illuminate where your money goes.

2. Give yourself an allowance. Sit down and figure out exactly how much those essentials cost you each month. With whatever is left, set aside a portion for savings and a part for the extras. This simple plan will help you establish a clear savings plan, plus put you on a budget for your extracurricular spending. Don't go over what you set aside, or you'll deplete that all-important savings plan.

3. Set a spending limit. We're often told as children that you get $5 and that's it - when it's gone, it's gone. If you only allowed yourself $50 to redecorate a room for the summer season, you'd quickly look for the most efficient way to use that amount. It may mean shopping thrift stores or the bargain rack instead of the regular-priced items, but more than likely you'll be more creative in your spending and pick up some great finds.

4. Save for the long haul. Even as adults we love to have a paycheck in our hands, just waiting to be turned into spending cash. Instead of allowing yourself that temptation, have your pay direct deposited into your savings account. Only transfer over to checking what you'll need to pay bills and the extras you already know about. This will help keep as much in savings as possible while protecting you from spending it before you even get it home.

5. Check your work. When you were in school you were taught to double check your math work before you turned it in. The same goes for budgeting and checkbook balancing. If your bank has online banking, check the deposits and withdrawals against what you have in your checkbook ledger. Are you keeping track of each purchase you make whether you wrote a check, used your debit card or paid in cash? Add up everything at the end of the day and balance it with the bank's statement. This will only take a couple of minutes and keep you from overdraft charges.

6. Find your piggy bank. Time for some fun - go around the house and collect all that loose change that's been floating around for months. Put it all in a jar of some kind until it's pretty full and then go to the grocery store's coin changer. This may sound like a silly idea for little kids, but I found almost $10 the other day in just a couple of minutes. Cha-ching! Then keep adding to your piggy bank, changing it over every so often.

7. Create a matching fund. Some parents will have their kids save the equivalent amount of whatever they spend on a shopping trip. For children that might be 50 cents or a dollar. If we implemented the same idea, we could save $80 on a grocery trip, $50 when we go clothes shopping or $15 at the dry cleaner. It will also make us stop and think about the amount that we're spending if we have to have an equal amount going into savings.

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