Financial Affordability & Children

Had a great weekend, and loved spending Halloween taking my God Children trick or treating(I wish I could put up pictures).  On Halloween(before I took my God Children trick or treating) I had deep discussion with a friend of mine who is engaged to be married and who is really anxious about having children.  The conversation centered around how much she believes she needs to make in order to have children ASAP.  She believes that all you need is love, a steady paycheck(even if it’s slightly above minimum wage), shelter, and supportive family and friends. I agreed but also stated that she should at least make enough to afford the basics, and to also provide a good solid foundation for the child. This was a hard pill to swallow for her because admittingly she isn’t at all financially prepared for a child–like most young twenty somethings she has student loans, debt, and a below-median salary which doesn’t really afford her many luxuries and also barely keeps her afloat. Her fiance is in a similar position. Needless to say when she found out I was taking my God Children trick or treating I could sense in her voice that the topic was a very sensitive point for her–knowing that she wants to have children, hearing about me spending time with children, but also being aware that she isn’t in the position(realistically) to have children. She claims that at 24 her biological clock is ticking and that it depresses her that she isn’t able to have a child(sooner rather than later).

Later on that night, after I was done trick or treating I talked to my best friend(the mother of my God children) about the conversation I had with my other friend(the one who is engaged). She was on the side of my “engaged” friend. This is probably because she had her children with the idealist approach that all you need is: love, a steady paycheck, and support. Yet she is very much struggling right now and isn’t at all where she thought she would be financially. So listening to these two give their opinions about why you don’t need to be completely “stable” before having children was really intriguing to me. These were some of the reasons that they believed that having a kid even when one isn’t completely financially prepared is okay:

1. Babies don’t need very much(they only need love)

2. Hand-me-downs, used baby furniture, and baby showers are good enough for covering the basics (in other words, she won’t have as much out-of-pocket expenses by relying on these things).

3. She can build wealth later on(she already has her degree and is in the beginning of her career).

4. She can cut corners the first 4 years of the baby’s life(i.e. breast feeding instead of buying formula, using clothe diapers, living in an apartment, relying on family members to watch the child to avoid daycare costs, and so on).

5.  You can never be financially prepared for a child.

 

All of this sounds nice and I’m now on the fence. A part of me thinks that is possible for a financially unstable person to “wing” it by doing the things listed above though another part of me(the more cynical side) feels as though this sort of thinking is far too idealistic and does the parent and the child a disservice.

What is your opinion?

 

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What’s wrong with Hand-Me-Downs?

I’m a godparent to two of my best friend’s children. They are 2 and 3. As much as I love my friend, there is one thing we disagree with: clothing.  For some reason she and her husband are really into dressing their children in expensive name brand clothing. This wouldn’t be much of an issue(even if I disagree with spending that much money on children that grow very quickly) if she had the money to invest in this sort of clothing. But she doesn’t. For all intent and purposes she is considered “poor”.  She is still in college and works part time, her husband is unemployed. They barely make ends meet for there three children, and themselves–especially in expensive Chicago. But when they do get any sort of income(whether it be taxes, student loan money, or money from parents and friends) they often spend it on their children and buy a ton of name brand outfits.

When I was growing up, my parents weren’t nearly as poor as my friend is and yet my mom had no problem taking her hard earned cash to a second-hand shop and buying us nice “hand-me-downs”.  In her mind there was no point in spending a ton of money on our clothing, especially when you consider the fact that most children grow tremendously from the time they are born until they are 6 or 7.  Buying a ton of name brand clothing that will only last for 6 months just didn’t make sense. Yes every now and then she may go on a splurge and buy one or two outfits that were outside of the budget, but for the most part there wasn’t an emphasis placed on “name brand clothing” in our home.

And up until my best friend got married, she didn’t really wear name-brand clothing either. Yes she WANTED to but could not afford name brand clothing and her parents weren’t willing to buy it for her either(even when we were in high school). So where this mindset comes from–I’m still not sure, but I can only think that it’s a result of the man she married who places a large level of importance on his kids ONLY being dressed in name brand clothing. Which is a shame since they can barely afford to put food on the table half the time.

Nonetheless as a Godparent I love to spend a little cash on my Godchildren and with their birthdays coming up I’ve decided to buy them winter coats since my friend has stated that they really need coats at this time. When I asked her how much I should budget for, she told me $80-100 should be fine. When she told me that I nearly reeled in surprise. And of course she made a point of telling me the store where she would prefer I buy the coats from (a store notorious for name brand clothing). I was baffled that she was asking me to spend that amount of these coats when clearly she wasn’t able to spend that much herself. But anyway I’ve pretty much decided that I’ll be going to Target, TJ Maxx, Walmart or a second hand store(all of these places offer coats for $20-25 per kid and will last the kids through the winter and through next winter).  My budget is  between $45-55 for the GRAND TOTAL of both coats. When I told her this she was offended and a bit put off. She also didn’t appreciate me telling her that she should consider second-hand stores for clothing since she is broke. This really made me wonder: what is wrong with hand-me-downs if that is what you can afford?????

Maybe I’m too frugal when it comes to kid clothing, but I’ve always wondered why there is such a negative stigma to buying inexpensive “used” children’s clothing.

Teaching your kids about savings and finances

For parents that are interested in teaching their children about finances, savings, and how to avoid a terrible economic position, the information below should be very helpful.  I found this information on the Alliance for Investors Education website. It’s title: “Teaching Your Kids About Saving and Investing: A Guide for Parents“. The section features the following 10 web resources as a financial “savings” guide for parents:

  1. Investing ABCs: Teaching Your Children About Stocks – http://tiny.cc/cq9nb, AICPA’s 360 Degrees of Financial Literacy.
  2. Gen I Revolution – http://tiny.cc/o3stv, Council for Economic Education.
  3. A Hitchhiker’s Guide to Planning for College Expenses – http://tiny.cc/qxlt8, CFA Institute.
  4. Choose to Save: Savingsman Episode 5: Saving Early – http://tiny.cc/1epiw, Employee Benefit Research Institute.
  5. Tips for Teaching Students about Saving and Investing – http://tiny.cc/f9sp3, Securities and Exchange Commission.
  6. Teach Your Children – http://tiny.cc/xgyow –- Certified Financial Planner Board of Standards.
  7. The Basics of Saving and Investing – http://tiny.cc/oo6a5, Investor Protection Trust.
  8. Cover the Basics Before Your Child Leaves the Nest – http://tiny.cc/k4dr9, National Endowment for Financial Education.
  9. Great Minds Think: A Kid’s Guide to Money – http://tiny.cc/rtcuo, Board of Governors of the Federal Reserve.
  10. Fraud Scene Investigator –- http://tiny.cc/5w7ga, North American Securities Administrators Association.

Shopping to Find a Bargain

I posted a blog post last week about ways to save money. In that post I provided tips about ways in which I’ve learned how to better manage my money, budget, and save when I go shopping for groceries each month. That list has helped save me anywhere from $100-150 per month. Which may not be much, but goes a long way when you’re operating from a pretty tight budget.  A great way to also save is to KNOW those places that offer easy “finds” and bargains. So here’s a very brief, short list of the places I go when I’m bargain hunting.

Cleaning Supplies, Paper products & “small” decorative items. When I shop for these products I make sure to head to the “Dollar Store” or “Dollar Tree”.   The reason why, is because paper plates–a majority of the time-are non reusable. Why pay 4 dollars for a stack of plates that will only get thrown away when you can get these same plates for only a dollar? The same goes with cleaning supplies–why pay a sum total of 20 dollars to clean up your kitchen, bedroom, and bathrooms, when you can pay half of that at the Dollar store on the SAME products?  And, if your like me, I have a habit of going into a store and seeing something cute and automatically wanting to buy that item to use as a “decoration” piece for my apartment.  At the dollar store, you have a variety of “small” decorative items that you can use. From $4 dollar posters, to $3 dollar “welcome mats” and so on. Take advantage of those items. Yes the dollar store has somewhat of a “stigma” to it, but it’s a great place to shop for deals without even trying.

Produce/Fruit. I don’t know about you, but at my local grocery store, fruit is pretty expensive. I could end up spending $15-25 on fruit/produce each week which comes to a sum total of about $60-125 a month on fruit and produce. That’s pretty large chunk of money to spend.   So I recommend finding a fruit market within local proximity when you’re buying produce. At my local fruit market, a box of strawberries cost anywhere from .99 cents to $1.50. You can also find inexpensive organic produce at your local fruit market as well. Fruit markets are GREAT places to shop, if your on a budget and your still looking  to eat healthy.

The Basics. So when it comes to buying basic ingredients: flour, eggs, meat, etc. I take a trip to either a Super Wal-Mart or to Aldi’s. Both places are great for basic food products. Aldi’s is often better than Wal-mart.  I always recommend these two stores for people who are looking for an alternative to “high” costing food at their local grocery store.  There’s a stigma that Aldi is for a “certain” group of people. Ignore it.  If your smart, then use your buck wisely and invest in these low-costing stores.

Household items/ Beauty Products. For basic household items, that need to be replaced and for beauty products. Target and Wal-Mart are your friends. There’s nothing else really to be said about these stores–since they are well-known. I’ve bought covers, sheets, and towels,  from both Target and Wal-Mart–rather than Bed Bath and Beyond. I’ve bought soaps, laundry detergent, shampoo, etc from these stores as well. Again, these are great stores to go to when your looking for some of those larger and (smaller) house hold items and beauty products.

And…. If you must make a trip to your local store, then use the tips that I provided about “Ways to Save money”, as that will help you save a big buck even at an expensive local store.

For Many Americans, ‘Marriage Is An Economic Decision,’ Sociologist Says

Found this article and an interesting audio sound byte from NPR.org:

“In the U.S., fewer and fewer young people are getting married, the U.S. Census Bureau reports.

Among 25-to-34 year olds, 45 percent are married. (By comparison, in 2000, 55 percent of Americans in that age group were married; in the 1960s, more than 80 percent were.)

In an interview with NPR’s Melissa Block, Andrew J. Cherlin, author of The Marriage-Go-Round: The State of Marriage and the Family Today, said that, “for college-educated young adults, this is a story of postponing marriage.”

They want to finish graduate school, maybe have a couple of years as a law firm associate, and then get married. So, they’re waiting longer and longer until they have the rest of their lives in order before they get married.

For people without a college degree, some of them are postponing too, but some of them will never make it to the alter. We really will see probably a decline in the lifetime percentages of ever marrying for them.

According to Cherlin, increasingly, marriage is a financial decision:

They don’t think they have what it takes economically to get married, but they’re not willing to wait to have a kid, and so they have one.

That has become even truer recently, during the economic recession, he said.

There is something hidden in the statistics, Cherlin noted. More and more unmarried couples are living together, so they count as single people.

That may illuminate another interesting piece of data: 41 percent of births in the U.S. in 2008 were out of wedlock. According to Cherlin, many of those children probably were born to cohabitating, but unwed couples.”