PAY TODAY OR LAYAWAY

The Christmas buying season is here even earlier this year.  We're looking forward to Thanksgiving but the stores already have their sights on maximizing their Christmas bottom line.  Holiday sales are expected to rise 4.1 percent this year.

It seems that our kids just went back to school and the leaves are still on the trees, but the major department stores have already begun their layaway service.  In fact WalMart and Toy “r” Us began a full month earlier this year.

Layaway is a good tool to help you with your shopping and budget.  Using layaway has several advantages – helps you avoid impulse buying, forces you to budget and helps you to avoid getting into trouble with credit card debt.  You can do your own layaway at home with your kids.

In MONEY DOESN'T GROW ON TREES, I teach my Four-Jar Budget System which is saving and budgeting for kids.  Allowance money is divided among the four jars: Charity, Quick Cash, Medium-Term Savings and Long-Term Savings.

Medium-Term Savings is actually layaway at home.  It teaches deferred gratification.  Help your child make a goal to save for.  Go window-shopping at your favorite department store or on the internet.  The age of the child should determine how long the saving should take.  The older the child the more ambitious the goal. Yes, you're teaching delayed gratification, but you're also teaching gratification -   three weeks is a long time to a toddler.  It's a good idea to print out a picture of the item being saved for and attach it to the Medium-Term Savings Jar as an incentive.

When my kids were young we used this method.  You may be surprised to find out how different your kids are from one another.  My son decided he wanted a Walkman – the prehistoric ancestor to the iPod.  My daughter had her sights on a special pair of designer jeans – some of you might be old enough to remember all those commercials  with Brooke Shields – those jeans were all the rage.  

Both kids were certain they knew what they wanted and were patient enough to save up but a funny thing happened along the way.  My son never wavered.  He knew he wanted that Walkman and nothing was going to stop him.  After a few weeks of saving, those must-have jeans no longer seemed so must-have to her.  She decided – and it was her decision – that a pair of regular jeans would be just great.  The logo on the rear pocket wasn't as attractive as it had been.

They both learned valuable lessons.  My son treasured his Walkman for years.  In fact, he took amazing care of it.  My daughter discovered that it might not be so important to have the most expensive item just because it's the trendiest.

As with all good tools you need to do your homework in order to use in-store layaway safely and correctly.  Make sure you read the fine print before you begin.  Putting an item on layaway involves getting into a contract with the store.  Read the rules, payment schedule and fees.  Some stores have eliminated up-front fees.  Others even offer a bonus gift card when your order is paid for. Make sure you really want to buy an item before putting it on layaway.

If you decided not to purchase an item, fees can be costly.  For consumers who don't pay on time or decide to back out, money will be lost [wasted].  Not only will you not get your merchandise, you also don't get your service fees back.  In many cases there is also a cancellation fee.  You will get back any payments you made minus the fees – in the form of a store credit.

Layaway at home or layaway at your favorite stores, it's going to be a long shopping season.  I want you to stay financially healthy.  If the stores are already trying lure your dollars away from you, it is certainly time to make your holiday budget.  After you make your own budget be sure to help your kids with theirs.  Be honest with your budget and be sure to stick to it.  Don't go into debt in the “spirit” of giving.

The Holidays are Here

Our goal is not to repeat the annual gift giving “feeding frenzy” at the holidays. The scene you may remember could have been watching your kids wildly ripping open gifts, hardly looking at each then tearing the next one open. It couldn’t get worse… or could it?  This year, let’s not repeat going into debt the way many people did last year. This holiday season is by far the largest in terms of spending. The total Black Friday spending this year rose 6.6 percent over last year; including online and in-store sales. Online revenue boasted a growth of 24.3 percent over last year. Despite the economy, 2010 spending was an astonishing $135.16 billion, a 5.5 percent increase from 2009. With that trend in mind, 2011 holiday spending is expected to reach an astounding $142.6 billion or more, suggesting we are certainly in a repeat “feeding frenzy.”

It seems that those good ole’ days when gift giving brought a message that “I care about you” are gone.  Wouldn’t you love to instill—or re-instill-- those traditional values in your children?  If you do, you can start by using some of these helpful tips.

First, make sure everyone in the family has a gift-planning calendar. Since you already know the dates of Hanukkah, Christmas, Kwanza or any other holidays on which your family exchanges gifts, it will be simple to get started creating a calendar. Next, mark birthdays, anniversaries, graduations or any other special events that will require a gift. Your children will want to include their friends’ birthdays, too.

But that is just a start. Knowing when a birthday is coming up is important…but knowing when to begin to save for the gift is just as important.  A “start saving” date should be marked on everyone’s calendar…or in the desktop organizer on the family computer.

Make sure your kids understand the importance of appropriate giving.  An over generous gift can indicate too much need for approval or control, it can embarrass the recipient or it can signal the beginning of unhealthy materialistic competition.

You can explain to kids that parents and grandparents love all gifts equally, no matter how much has been spent on it. And suggest that the kids “pool” their resources to buy one gift for special relatives, each child contributing as much as they can afford based on a percentage of their allowance.

Once your children know how much they’re going to be spending on gifts, they can begin to make a saving schedule.  By dividing the cost of a gift by the number of weeks needed to save for the purchase will help them determine when they should begin to save.  Then they can mark the date on the calendar and set their saving plan in motion.

For those very important gifts–perhaps parents or grandparents–you may want to help your kids get that special gift.  The kids should continue to work towards their goal of saving the money needed to buy something special for Grammy and Grandpa but you can help them with a matching fund. In other words, if they’ve saved diligently according to the saving schedule they’ve set up, you’ll match the total.

Gift giving is mostly about “thoughtfulness.” A gift says, “I care.” It comes through most eloquently by how much thought has gone into the gift’s selection not its price.

And don’t forget you don’t have to spend money on every gift. In fact, you shouldn’t. Some gifts shouldn’t be “money-based.”  Help your children to give “gift vouchers” for something.  And that could be the best gift of all.

“Gift vouchers” can be geared to the recipient’s interests.  Like cleaning golf balls for your favorite golfer, cooking a vegetarian meal for the family vegan or cataloging a collection of baseball cards for your baseball lover.

“Gift vouchers” can be redeemed for running errands to the store, for yard work or for babysitting. One of the best ones was suggested by my own children.  It’s called a “No Fighting Zone” voucher, good for three fights. If my children started squabbling, I pulled out the voucher and the kids had to stop fighting. (P.S… This actually works!)
Let your kids come up with their own ideas for giving, just remember: “I care” and “I love you” never comes with a price tag.

How to Make a Money-Smart Kid Consumer

With the holidays right around the corner and shopping on everyone's mind, why not teach your kids a bit about making a "smart" buy decision.  Remember the “blind taste test” we used to do?  Why not do the same with your kids.

For instance, pick a generic cereal and a high-priced brand.  Let the kids blindfold family members and ask them to taste each and give opinions.  You can try this with lots of products (but don’t make the toilet paper test a blindfolded family activity).

You can also test organic or recycled products.  As a family, you may decide to spring for some organic/recycled products that you’ll be willing to pay more for because they may taste better and be better for you and the environment.  For more information go to www.childrensfinancialnetwork.com or eco-effect.net.