Sunday, 29 March 2015

Rough Guide to Family Finance - The Kids Take Control!

Over the years, I think I've become quite savvy about ways to save money and how to get the best deal. I never buy anything without a voucher/offer code, and I use cashback websites like Quidco to get up to 10% cashback on everything I buy online, it soon adds up and I just think - why wouldn't you?

A few years ago when I was on maternity leave with our second child, we suddenly had a whopping big tax bill - my husband worked for a bank at the time and we'd been using his staff discount to get a good mortgage rate, but what we didn't know is that we were supposed to be taxed on that as a benefit in kind.  Thousands of people were hit with thousands of pounds to pay in one go, it was pretty horrendous. Ever the adapter, I suddenly went into famine mode and did everything I could to save money on our weekly bills, from changing energy supplier, cutting back on our sky subscription, limiting lunches and lattes out and changing car insurance companies.

Thankfully we're no longer in that position, though obviously with a third child on the way things will probably be a bit tight for a while. Last month, we made the decision to get rid of my car, so we are now a one car family. Hubby now gets the train to work and I drop him off and pick him up every day. We've been doing this for a month now and I can honestly say there have only been a few occasions where it's been a bit of a pain. We are saving on car insurance, the lease fee of the car and all the other costs that go along with car ownership. I feel strangely liberated from car ownership since our remaining car is a company one, so we have no responsibility for servicing and the like, it's just one less hassle in my life as far as I'm concerned.

One thing I don't think we have got right though, is making our children see the value of money. It seems that every other weekend they are bought a toy, and every outing seems to involve them getting bought a cupcake or comic to keep them quiet! We don't really do pocket money at the moment, maybe we should?

What I decided to do then, was to give them a budget for the day to see what they came up with, and how they spent it, to see whether they understood that money does not grow on trees.

There's a new book out for families - The Rough Guide to Family Finance which has loads of good ideas for families to save money, and there's a great quote that fits in nicely here, "Though it may be convenient for one person to be in control of the family budget and pay the bills, it’s a good idea if everyone is involved, including the youngest members. Encouraging a sense of financial responsibility in children helps them to be aware of the importance of budgeting as they grow up"

I gave them £25 for the day between them to spend, which had to involve paying for an activity and ensuring there was enough money left over for tea. Immediately they decided to head for Toys R Us which I immediately had to veto, this wasn't going to be easy! 

We sat down and talked about the cost of going to various places - bowling, cinema, museum - and how much they would be left with at the end of the day.

They both immediately decided on visiting Eureka in Halifax, we already had a yearly pass for this so it seemed to make sense, so off we went! Arriving at Eureka they were dismayed to discover that there is a £3.50 parking charge, which they had never been aware of before. Dutifully they dipped into their £25 budget and paid it, Son 1 commented that it seemed unfair that we had to pay it since it wasn't in the middle of a town or near anything else - haha! I also factored in £5 for petrol so they now had £16.50 left.

Eureka in Halifax - total crowd pleaser and you only have to pay once for the whole year!

Once in there they immediately wanted a drink, I gave them the option of drinking from their water bottles or buying a carton for £1.50 each. Again, they sensibly opted for their water bottle, maybe we were getting somewhere!

We had a good time at the museum and as it edged towards lunchtime, they started to talk about being hungry. I reminded them that they had £16.50 left to spend, and asked what they wanted to do. They agreed that a picnic would be cheaper but we didn't have one with us, so I pointed out a nearby Pizza Express or a Morrisons Cafe. We looked at the different prices and they soon realised that Pizza Express was unaffordable, so we headed to Morrisons. We all had lunch for under £10 which is pretty reasonable, though now they only had £6.50 left! 

They were pretty fed up of money saving by this point, so we had a quick look round for something for tea, and we decided to make our own pizzas. We already had bread flour and semolina at home so we bought some cheese, ham and tomato puree as a topping. When we got home, we actually had a great time rolling out the dough and making our own pizzas - we had a grand total of £1.50 which I said we could save for buying sweets as a well done for thinking so carefully about our budget. 

Afterwards I asked the boys what they had learned from their budgeting day and they responded, "I didn't realise things were so expensive", and "saving money is really boring, you can't do what you want". I explained that although it's boring in the short term, being careful with money is actually a good way of ensuring that you can do more exciting things in the long term. We don't waste money on things like smoking and going out loads, as to me that's not the behaviour of a responsible adult. If you want good things in your life, sometimes you need to deny yourself in the short term, to achieve your long term goals. I think this delayed gratification is a really important lesson to learn, and it's those people who can't seem to delay gratification that always seem to end up being unhappy. Lecture over!

My top tips for budgeting: 

1) Be organised - if you leave things until the last minute you will always pay over the odds. This is true for holidays, Christmas, travel and lots more!
2) Shop around. Ring around insurance companies and energy suppliers. Lazy people always pay more!
3) Before you buy something, e.g. clothing, online, sleep on it. When you wake up the next day reassess whether you actually need it.
4) Buy season tickets and yearly passes and use them! It gives you a reason for getting out and about at the weekend and means you don't have to keep paying out.
5) Buy a coffee machine and save on your latte costs! We paid £35 for ours in a sale and we use it every single day.

What are your top tips?

This post was written in association with Legal and General.

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