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Archive for the ‘Money Matters’ Category

First off, I’d like to say that my spending habits are not exactly exemplary (or have I said that already?). I have moments of weakness, such as spending NIS 200 on a bunch of plants or even more money on books. But the present is definitely a HUGE improvement compared to, say, ten years ago. Lots of hits and misses there.

Since the Babii started handling her own money, we’ve been trying to teach her about spending it wisely. It’s not easy, especially since she has a penchant for buying little treats for us and a love for Coca Cola, which we rarely drink at home. Nevertheless we try to involve her in discussions regarding family finances (how much to spend for shopping, how much to save for a vacation, etc.) and walk her through what are considered needs and wants.

Lesson #1: Money is earned.

We don’t pay her to do chores, because we believe that chores should be done for the sake of doing it (unless a person wants to live in a pigsty— I actually know someone like that). Instead, I take her to work with me where she shreds my papers and I pay her “per project.” In reality she gets paid more than the average worker, but the lesson is learned and she gleefully puts the money in her piggy bank, mentally calculating how much more paper needs to be shred in order for her to buy an iPod.

ShreddersThe Babii and a friend pack away the papers.

Lesson #2: Money is limited.

When she was a lot younger, she would ask us to buy this and that. The incident would usually end with a very public discussion about money (might as well let the saleslady hear it). “We only have enough money to buy this or our food. Is it okay with you if we have this toy but we won’t eat?” (Okay, extreme example.) Or, “If we buy this we won’t have enough to watch the movie you wanted. Which is more important to you?” (Also a lesson in priorities for her)

I guess we are fortunate that the Babii is very reasonable and easily understands our explanations for why we can’t just buy everything we want. Thankfully, we’ve never had a rolling-on-the-floor-kicking-and-screaming kind of incident. R and I did not engage in that when we were kids and I like to think we passed that on to her. 😀

Lesson #3: We spend money because we have to, not because we can.

We tell the Babii that we are able to live the life we have through lots of hard work and good fortune. Just because we have a little money does not mean we should spend it left and right. Hence, the baon.

During school days, the Babii is obliged to bring to school her lunch and snacks (heck, even I bring my own baon!). She has a small allowance  in case she gets extra-hungry, but anything she saves she can spend on other things.

We don’t buy her everything she wants. We are very clear about the limits: we spend for food, clothes, books, school, toys for special occasions, and the occasional entertainment (parties, outings, etc.). Any thing outside of this (read: luho), she has to pay out of her own pocket.

We also don’t encourage the use of designer things. If the quality and function is the same, we opt for the lower-cost version. Hence, our lack of designer bags and clothes. With some things, though, quality is synonymous with the brand. Hence our kitchen knives. And pots. And tools. Hay, nevermind.

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Anway, there are always opportunities to teach the Babii about money. The other night, she had complained, “We went around the night market all night and we haven’t bought anything!!!!” (Is that such a bad thing???? Cue: sermon.)

It is easier now that it’s summer break and she does not have her daily allowance (which is why she is so gung ho about the paper shredding). I foresee that come school opening, however, she will be back to her occasional soda, donut and pizza treats. But how can you lecture someone for thinking of you and bringing you home a donut, eh?

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Night Market Goodies

Every summer, Thursday nights mean the summer night market. It is an excellent time to view the work of local artists and learn how to control your spending urges. Or not.

R likes to say that the best way to deal with temptation is to give in to it. In this case, the Babii kindly bought something for me because I didn’t want to be seen buying from the same stall twice in less than ten minutes. 😀 (I changed my mind after I paid, ok?)

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Jumping off from last week’s thoughts on money, I actually wrote that post because of an article by Dan Kadlec on common lies that people believe, which lead them to end up in debt. The article is pretty good, unlike some that I’ve come across that try to market the author’s agenda (i.e. “hire my services!” or “invest in my company!”).

Dan Kadlec really got me into thinking of how advertisements are geared towards this human tendency to believe that acquiring something material would help people find happiness: shampoo that would give you the man of your dreams, soap that would give you the face that you want, clothes that would make you cool and give you friends, and yes, a bag (or bags) that would make you successful and admired by all.

It seems that the more that the world is bombarded by all this information the less people stop to think about what it all means, or if it even means anything. But who could blame them? For a long time I was one of those people that Dan Kadlec was referring to in his article; at times, I don’t think I’ve even fully escaped that trap. My only saving grace is that I have a family to think about, and now I hang out with people who take good care of their money. So yes, surrounding yourself with like-minded people and avoiding those who don’t fit in with the life you want really does help.

But avoiding spending on this and that knick knack is always a day-to-day conscious effort for me, particularly because I have serious gratification issues (“I want it and I want it right now!”). I always have to remind myself that it is more important to have money to pay the essentials, than to have some bauble that would be admired by everyone while I secretly fend off all my creditors (Gah!).

In conclusion, here’s another link on the author. This time, it’s a letter that he wrote for his daughter entering college. I hope that in due time I can also impart these same lessons to my daughter.

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Despite the quick passage of time and my fast-advancing age (33), I often forget that I am supposed to be an “adult” now. In my mind I am perpetually an adolescent, stuck in that stage between high school graduation and entrance to college. (In relative terms, that would be pretty advanced since some of my friends admit that they have an emotional age of 5. Hehe.)

One of the more difficult things I encountered as I got older was managing money. To make a long story short, I didn’t know much about money except to spend it. Recipe for disaster.

I went through the usual financial disaster stories: credit card debt, no savings, and turning back to parents at the ripe old age of adulthood for financial help. Then at a certain point I had to put my foot down and tell myself that I could not go on indefinitely like this. At that time I was lucky enough to receive a scholarship, which I used to pay off my credit card debt. I had to subsist on mostly ramen noodles for the next three months, but it was well worth it. I also read up on financial management, and came across Francisco Colayco’s book, “Wealth within your Reach: Pera Mo, Palaguin Mo!

(Let me just state unequivocally now that I am not being paid to do this.)

His book helped me a lot in understanding the cultural factors that dictate my spending habits, and it also prescribed ways on how to overcome it. This was back in 2006, and I started doing the Personal Income Expense Statement (PIES).*

For the first year it didn’t do much except make me depressed at how my money just seemed to trickle out due to the small things that just added up. Eventually though, I developed my own system on a simple spreadsheet that helped me track down my budget. It was hard work at first, disciplining myself to log in all my expenses, but I started making a conscious effort to spend only what was budgeted. I actually started saving (huzzah!).

A few years down the road, I can’t say that I am exactly out of the woods, but I can definitely say I am no longer in the red. It helps of course that HB is financially savvy, and I have turned over most of the money matters to him (haha! cop out ba?).

To tell the truth, I  really, actually no longer have time to deal with the nitty gritty of paying the bills and buying things for the household. Rather than overexert myself and hold everything in suspension until I find time to do it, I prefer to divide the labor and turn that part of managing the household to HB, who is by all means more capable. I guess in that sense I am not a control freak. (In other senses I am not so sure.) And I still do get a say what we should spend on or not.

I still do use a credit card, but I make sure to pay off the balance in full every month. It also helps to keep on reading up on managing your money, although one needs some discernment on which financial advice is valid and which is just plain crap.

We are now working towards saving a tidy sum of money, which we will then use to diversify our sources of income. When that happens, then we would really be out of the woods =)

* PIES is a basic accounting of your monthly income and expenses.

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