Budget Help from a Financial Advisor

I am not afraid to ask favors from people around me, especially if it could bring some good to the readers here.  My husband is not safe from my requests either and this week he had a giant bulls-eye on his back.  Just so happens that I am married to a financial advisor and he has earned himself the nickname "the human calculator" by me.  Truly opposites do attract!




I will continue to try to bring you everyday deals and resources for saving, but I wanted to pick his brain on ways for you all to start saving on a bigger scale.  Here is some insight from him on ways to start saving this year and planning for your kids futures.

1.  We want to save more this year where do we start?  Do we need to have a large amount of extra money to begin? 

Like any new goal, keep it simple.  Remember, this is a long-term goal (usually for retirement) so start with an amount that isn't overwhelming then increase over time as you feel more comfortable.  If you're new to investing your number one goal should be to just get in the habit of putting money away every month.  Don't worry about finding the next Apple or Google.  My 3 suggestions are;

    1)  Find a mutual fund to invest in.  Mutual funds are baskets of stocks, baskets of bonds, or both.  They pick the stocks or bonds for you and you could own 100s of stocks or bonds in one fund.  Most fund minimums are $2 or 3k but you can find some for as little as $250. 

    2)  When you open your account, set up a monthly draft.  Most will allow you to add as little as $50/month.  Set it and forget it.  When you can, increase the monthly amount.  This does 2 things.  First it gets you used to a regular investment plan, second it allows you to buy in at different times.  That means sometimes you're buying when the market is up and sometimes when it is down - it smoothes out the ride.

    3)  Educate yourself.  This is nothing major, just take a quick look at your quarterly statement and the newsletter that comes with it.  It will help you to understand what you're investing in and why it's important.

2.  What's the best way to start saving for our kids? 

If it's for a specific goal like college and your child is at least 5 - 7 years away, you need a 529 Plan.  This is the best way to save for college and it's flexible.  You can use it for any of your children, anyone (parents, grandparents - think birthdays and other special occasions) can add money to it for your kid(s).  Try www.cfnc.org for more information. 

If it's just to teach them the value of a dollar, see below...

3.  Any recommendations for how can we start to teach our kids the value of a dollar?  

Teaching kids the value of a dollar can start at an early age.  Aside from the typical piggy bank, kids can learn to earn and save money in ways that will teach them the benefits of making good choices with their money.  Most importantly make saving fun.  Like with most things, kids are going to lose interest if its not entertaining or rewarding.  At our house we let our son earn dimes for various tasks.  For example, if he puts his plate in the sink after dinner he gets a dime in his jar.  At the end of each week he gets to take his dimes to the store and choose a prize.  The dollar bins at Target are a hot spot!  He is only allowed to spend the dimes at the end of each week so that he sees the reward only after saving his money.  Although the dimes do not represent a lot of money its just the habit of saving we are instilling in him.  As he gets older he will earn larger amounts and will be encouraged to watch it grow for longer periods of time.  

Thank you to my hubby for this information and here is another link he passed along for anyone who is more of a visual learner:  How Much Does it Cost to Raise a Kid?