Saving Money as a Family Unit

According to the National Bureau of Economic Research, we are officially in a recession, and we've actually been there since December of 2007. Even before this report became public in December 2008, many economists and other financial experts were of the opinion that we were either heading for a recession or already right in the middle of it. Regardless of who said what, there's absolutely no way anyone can argue the fact that we're living in difficult times. There's even serious speculation that we could be slipping into an actual economic depression.

When the stock market took a severe downturn last year, consumers began to realize that they had to address and possibly alter their spending habits. With the price of gas at an all-time high, food prices exploding and the general cost of living continuing to rise with each passing day, many families found it difficult to make ends meet. Added to all this was the fact that banking institutions stopped lending, increasing the financial burden on households. Home prices declined, student loans were difficult to come by, and the auto industry perched vicariously on the edge of total collapse because consumers could not obtain loans.

Further, the credit card companies also chipped in, adding an additional burden to families that were already in debt. Instead of lowering their interest rates when the Federal Reserve slashed rates numerous times, they began to send out letters to credit card holders stating that their interest rates would be increased as a result of the economic crisis. And, not to be outdone, the cost of healthcare also rose markedly, causing many families to reconsider whether or not they could afford to keep their existing health insurance. With unemployment on the rise, major companies and banks declaring bankruptcy or being acquired by other larger institutions, the economic crisis has wreaked havoc all across the United States and around the world, particularly among homeowners that have found themselves unable to pay their mortgages and, thus, subjecting them to the threat of foreclosure.

It's safe to say that the government's economic "Rescue Plan" – at least as of yet – has not had the intended affect, because virtually every state is seeking federal assistance to help them achieve some sort of economic balance. As the incoming Administration continues to seek new ways to stabilize the economy, families both here and abroad are trying to find alternative methods to ensure that they have enough money to get through the next few years (or months – or weeks).

Through careful family budgeting and the elimination of wasteful spending, along with the development of a new mindset geared more toward 'needs' than 'wants,' our households will be able to ride out this recession, regardless of how things might look. Take the time to have a family discussion about your financial situation, whatever it may be (age-appropriate, of course). Include everyone; after all, your children are an important part of the family, and they need to understand the current economic crisis and what it means both in the short- and long term. Be open and honest with them about why it may be necessary to cut back on certain items and the importance of saving money now. Set up a plan that will allow everyone to contribute to the family's welfare by confining their individual spending. This will foster not only a sense of togetherness, but a sense of responsibility and pride, as well.

While many families typically don't discuss money matters with children, experts agree that children acquire spending habits from their parents. Certainly, there may be some financial topics that are off limits, but kids today are generally savvier than we tend to give them credit for in their understanding of money. As you discuss the current recession with your kids, engage them in ideas about how the family as a whole can save money. Encourage their input and participation. Above all, don't scare them with 'doom and gloom' words or scenarios; just explain the situation in terms that they can understand and deal with.

Perhaps you have teens that work at a part-time job after school, or you give nominal allowances to your kids when they help with household chores. What they do with the money they earn is just as important now as it was when you were growing up. Teaching financial responsibility at an early age not only helps to prepares them for adulthood; it also provides them the opportunity to make prudent decisions about spending and saving.

Here's an idea you might try: set up a chart – a goal, if you will – outlining your family's projected savings each month. Name it, "Money Saved by the Smith Family 2009" (but only if your name is actually "Smith"). Next, write in each family member's name down the left side of the chart. Use different colored markers for each person. Across the top add each month. Choose a day of the month that everyone is required to record their savings. If, at the end of the month, there's a substantial aggregate savings (after all bills are paid, of course), decide how much of that money to put aside for a summertime family vacation. Remember, visual aids are a very important part of the learning process. Think how effective a chart like this can be in teaching your children the benefits that can come from using real 'hands-on,' money-saving techniques.

Remember, saving money as a family is simply about making conscious choices. It requires that we and our families set limits and employ the discipline to heed them. It requires that we teach our children the value of money. And, at the grass-roots level, it necessitates that we utilize every discount, every coupon and every rebate that we can; as well as paying down our debt and becoming more energy efficient. It all begins with the family unit. If, amid the chaos that currently surrounds us, we can make up our minds – right here and now – to change our spending habits, reassess our goals and begin saving in 2009, then there indeed is still hope. Don't we owe it to our children and their children after them?


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