Itís happened to all of us. As parents, we have the best of intentions to sit down and methodically plot a financial path, but then the phone rings. Afterschool activities beckon. Itís dinnertime and the kids are hungry. The boss calls. Life somehow gets in the way.
ďIím sure people, as their kids are growing up, realize that they really need to think more about saving for college, but then life gets in the way and theyíre busy running their kids to all of their different activities,Ē said Chuck Drawbaugh, president of College Funding Associates in Rumson, New Jersey.
Parents need to make the time to sit down and review their finances. Itís not just about saving for college. Itís about getting back to basics and having a conversation about the choices that need to be made in order to achieve all of lifeís financial goals.
ďUnfortunately, we live in an ideal world, and then the real world,Ē Drawbaugh said. ďI feel that we allow our busy lives to be too easy of an excuse to not do good enough planning. Thatís hard to overcome. I have my own kids and I know how busy life is. Iím trying to bring some reality to the conversation.Ē
For example, do you lease a car or own it? If youíre looking into a lease and the car dealer says, spend Ďjustí $25 more a month to get into a fancier model, would you rationalize it and make the move, or step back and put that extra cash into a savings fund? Drawbaugh is willing to bet that in our world of instant gratification, many families would rationalize the nicer car.
If you own your car, donít be tempted to trade it in for a new model too soon, especially if you just finished making payments. Keep it well beyond the length of a loan, advises Jeanne Gibson Sullivan, CFP of Wakefield, Massachusetts.
The same principle applies for the big vacations. Sure, you want to enjoy special family time and donít want to penny pinch for the chance to have some special memories. But ďitís a balancing act,Ē Sullivan says. ďReally think what the priorities are,Ē as you make your decisions.
So how can we break the ďbusyĒ habit and make time for our finances? Change doesnít happen overnight, so start with a few basic steps:
1. Establish a routine: Set aside an hour every week to sit down and take a look at your spending. If you examine your expenditures in smaller chunks, itís easier to track and think about where you can start making changes.
2. Make use of automatic withdrawals: Allocate an amount each month that is automatically withdrawn from your regular household budget account and deposited into a separate savings account. Keeping the funds separate makes it easier to avoid spending all of your money Ė and youíll feel good watching that second account grow!
3. Give yourself an allowance, and stick to it: We teach our kids to save their allowance if they want something special. We can follow the same rule.
4. Consider cash: Some people find that when they pay cash they are more conscious of, and conscientious about, spending. Try leaving the plastic home for a week and see if it works for you.
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