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I am the oldest of seven kids - definitely not a walk in the park. But my parents took their responsibilities of caring for their children seriously, my father working three jobs at times, my mother working one with many days of double shifts.
There were two things that they taught us as we grew, and I taught my children in turn. No matter how much money you bring in when you get paid, these two rules should never be ignored. It can mean the difference between catastrophic devastation and a safe and secure future if you are affected by this or other recessions.
1. Pay yourselves first. No matter the amount of money you bring into the home on payday or the amount of money you owe to others, always put some of it away in a savings account (preferably one where you have a very difficult time withdrawing the money). The amount recommended is 10% of your after taxes take home pay. But any amount, if it be only $5 or $10 each paycheck - always pay yourself first. Who are you working so hard for? The government? Your boss? The grocery store? No, you are working so hard for you and your family. Always pay yourself first and when you get enough money to purchase a Money Market Fund or a Roth IRA (with a Roth IRA, money is taxed before being place in the IRA vs. a regular IRA where the money is taxed when you withdrawal it from the IRA.) That $5 or $10 a paycheck will quickly add up to allow you to purchase a Money Market Fund that will yield you a better return than a regular savings account. The more you save, the more you will have available to you in case of emergency, vacations, college expenses or retirement. It's said if a young person is able to save $10,000 by the time they are 25 years old and never saves another penny - by retirement they will have earned well over a $million. However, that saying was before this recession. I am not familliar with the new calculations. Whatever they are, the fact is that you will have a great amount of money by retirement if you put away as small amount as $10,000 and never touch it again until you retire.
2. Always keep six months of living expenses saved for a rainy day - like when you lose your job. Having six months of household operating expenses will allow you to rest easy and be prepared to dip into that emergency fund when necessary.
By stashing six months of household operating expenses, you don't have to panic or worry when the bottom falls out of the economy because you've got your safety net to rely on. If you ever have to dip into that safety net, be sure to replace it as quickly as you can (even if it means you replace it by making payments to yourself until you've got at least six months worth of living expenses again.
Once you've got six months of savings for your mortgage/rent, utilities, car payments, insurances, gas, diapers, and groceries - plan to begin stashing money to cover clothing (especially with young children who grow out of their clothes every couple of months) and any possible medical needs that may arise. This money should also be kept in a separate account from your regular ones - in an account that is difficult to get to without jumping through hoops to assure you don't touch it until you need it.
I went a little further by opening savings accounts for my children when they were young. When they received money for their birthday or other holidays, allowance or cutting grass, etc., I would insist that they bank half of any money they receive or earn and they can have the rest to do with what they want. If we went on vacation, I would allow them to withdrawal up to half of what they had in their account to spend on vacation. If half of what they had was less than $50, I would match the amount for them. But, I would NOT give them any money while on vacation, since I had already matched their savings withdrawal before going.
Following these two rules will save you many nights of sleepless nights and worry and your children will learn by example. I included my children, when they were older (middle school age) in working on our budget with us. As they grew older, they would have excellent ideas to share with the family budget and had by then created and followed their own budgets.
There is much truth in the quote, "a penny saved is a penny earned!"