And for all adults to put into practice too
I was walking with a friend and his 6-year old daughter and we stopped by an ATM on the way to lunch. As my friend was getting some cash, I couldn’t help but notice the confused look on his 6-year old’s face. She was struggling to understand this machine on the side of a building that spits out cash after you put some kind of card in it. Then she blurted, “Daddy, when am I going to get my own cash card thingy?”
After I caught my breath from laughing, it dawned on me: gone are the times when you taught kids about money by giving them a piggy bank and allowance, followed by a savings account with a check book that they could learn to balance. Remember when we used to go into the bank to make a deposit or a withdrawal? Have you done that lately? And can we truly teach our children the value of money when no one is carrying actual cash around anymore? And while the concept of saving really has not changed much, what has changed is that if our kids – and adults alike – aren’t diligent about “balancing their checkbook,” then they can fritter money away too easily and get themselves in trouble. So here is what I remind my clients (ostensibly by telling them to teach their kids):
Review your bank account every month. Whether you review it online or by printing statements, it’s imperative that you review the activity in your bank account. Here’s what you’ll find:
Whether or not you have credit cards, checking your credit report at least once a year is very important. Not only does your credit score impact you when you apply for a loan, but it also impacts your current and future job. Plus, it can protect your identity. But the best part? It’s free. Most people don’t realize that under the Fair and Accurate Credit Transactions Act of 2003, you have the right to view your credit report from each of the three major credit bureaus for free once every 12 months. To get your free reports, request them from the federally authorized website, www.annualcreditreport.com. And despite what some people might suggest, accessing your own report will not impact your credit score at all. But it can save you a lot of money and headaches later on.
I try to do this a few times a year and I’m always astonished at how much money I seem to fritter away. Sometimes it’s the extra expense I incur after paying for rush services at the dry cleaners, that $32/week I spend on my afternoon coffee or the impulse-buys at the checkout lines. The point is, over a year, that adds up to a decent amount of money that I could be saving for retirement.
Almost every merchant has some sort of frequent-buyer club as a way to ensure customer loyalty. But there usually are significant benefits for joining such clubs for places that you intend to frequent anyway. For example, do you shop at the same grocery store all the time? Same gas station? Same dry cleaners? You can for sure save some money by joining their loyalty programs. I probably save close to $20/week at my local grocery store – and I don’t shop any differently than if I didn’t have their card.
Maybe I’m old school, but I’ve noticed that most people don’t use cash anymore, no matter how small the expense. Sure, it helps to keep track of expenses by using a debit card, but I’m convinced that many people become desensitized to the value of money when they just swipe their card. And I think the opposite is true as well: when you use real money, you tend to appreciate what you are buying and make different decisions.
Anyway, putting these habits into practice will allow you to save money. But don’t just go spend what you just saved – instead invest the “found money” into your retirement.