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Save money and improve the quality of life in your household!  These are the best
financial tools I know of for families. These tips improved our relationships with our
children. They even taught our kids to be financially self sufficient. They are easy,
practical and free!  
THESE TIPS WORK! Our children have now left home and support
themselves. They call regularly... Mostly to ask for advice, talk about a struggle or
share good news.

Simple Budget System for Families: It Works!
Complete Allowance
Grade compensation
Teenage Driver Tips
College Money Saving Tips
Math Motivation for Dollars... a game
Fine Sheet
Your Teen Should Cook... work instills respect

J. C. Phillips
Simple Budget System For Families
We used this system during the lean years of the Oil & Real Estate Depression
that occurred during the 1980's in Texas. That's when Oil Prices collapsed to $9
per Barrel and unemployment was over 9%. I worked for a company that was
involved in Oil & Gas Exploration and Real Estate Development. Sales in the Oil
Gas division fell 65%. Sales in the Real Estate division declined 95%. The CEO
had a heart attack. It was more like war than business. We lived for nearly ten
years under the constant threat that my employer would not survive. I developed
a number of restructuring plans designed to buy time for my employer. I remember
telling the CEO that the company had 90 days to live. If we cut lower level salaries
by 10% and upper level salaries by 30% we could survive another 6 months. Yes,
my plan called for reducing my own salary by 30%. I remember telling a sales
manager... "If a prospect walks through that door, sell something... anything... even
if its for 25 cents on the dollar." Those were desperate times. I didn't know that
hey would last so long. The use of the Budget Box actually helped my family save
a lot of money during that terrible period.

Estimate your household income. Estimate all your fixed expenditures
(mortgage or rent, utilities, car payment etc.) Determine how much to
invest for retirement and college. The remainder is for "everything else".
Stop using a credit card except for emergencies. Expenditures for the
"everything else" category will be spent using cash. I call them cash
expenditures. See below:

Monthly Income
- Monthly Fixed Expenditures
- Monthly Investment for Retirement and College
= Monthly Cash Expenditures

Buy a plastic recipe box with 31 dividers. I call this the Budget Box. If you
can't find dividers, use 31 index cards. Label the cards 1 -  31.  

Lets say that your Monthly Cash Expenditure amount is $930.
$930/31 days = $30 per day. You have $30 per day to spend in cash.
Get $930 from the bank. Put $30 behind each card in the Budget Box.
On the first day of the month, you can remove the $30 behind the card
marked "1" and put it in your wallet. It may be spent. On the second day
of the month, you can remove the $30 behind the card marked "2" and
put it in your wallet. It may be spent. Do the same each day. You'll never
go over budget. You'll never develop credit card debt. You won't spend
hours working on the budget.  

Complete Allowance
Our most productive money saving tips have to do with requiring our
children to pay their own way... They profit from their good decisions
and suffer the consequences of their own actions. This actually reduced
tension between us and our children. It reduced tension between my
wife and I.  It saved money as well.

Beginning in the 5th grade we required our kids to pay for all of
their clothing and entertainment out of their allowance.
estimated a reasonable allowance and then increased that number
by 25%. At first, they would ask for this and that and we would say "sure,
you may use your allowance for that if you wish".  After about 6 months,
they gave up and stopped trying to get us to pay for items covered by
their allowance. We have saved time and tension by avoiding continuous
negotiations and arguments regarding whether they really needed another
pair of jeans, etc. When they spent money, they made sure that it was
really worth it. Otherwise, they may have to pass up a better opportunity
that presented its-self later. They took care of everything they bought.
They learned to make cost effective compromises. They didn't blame
us when they didn't get something they wanted. They had received control
over their expenditures. They chose what to buy and what to pass up.
They essentially became grown-ups (financially) by the time they were
thirteen. You can still reserve the right to veto an expenditure because
of safety, morals, etc.

Warning: If you give in and buy things for them upon request, the
allowance system will not work. You can still buy something special for
them. But such purchases should be infrequent. They should be your
idea, not their idea.
Most of the money saving and tension reducing
ideas on this page are dependent on the consistent application of
the allowance system.

Necessity is the mother of invention. My kids found ways to make
money on their own. My daughter started a thriving baby sitting business.
She had a long list of clients developed through referrals. My son even
sold old toys on Ebay and used the proceeds to buy something else.
He learned how to write Ebay ads that sell. Today his occupation is in
the advertising industry. You can read an inspiring story about how he
found jobs during difficult times on the Unemployment Rate Forecast page.

As teenage drivers, our two children paid for their gas and the cost of
auto insurance out of their allowance. After twelve combined years of
driving, they had only two wrecks at a total cost of $300. One wreck
was paid for entirely by the other driver's insurance.  In the other, my
son bumped a car in a parking lot while trying to back up using a
manual transmission. Of course, our son had to pay for the damage as
he knew he would. Then he went to an empty parking lot and practiced
driving in reverse until he
mastered it.

By the time our kids were in the 5th grade, they used their allowance for
ALL of their clothing and entertainment. We actually began using a more
limited allowance system much earlier than the 5th grade. Young children
tend to ask for candy and toys after watching commercials or when they
go with you to the store. A candy and toy allowance can be very effective
at an early age. You can gradually add other items like clothing, personal
products and cell phone bills. By the 5th grade, almost everything except
medical bills can be included in their allowance. Kids can often be very
happy spending ¼ as much… if the money they are spending is their
money, and... if the savings belong to them.

We also required our children to save one tenth and to give one tenth of
their allowance to a church or charity of their choice.

We suggested that our kids observe a two week cooling off period after
they decided on a major purchase. After the two weeks passed, they often
lost interest in the purchase. They were glad that they had waited and
spent their money on something else.

Grade Compensation
We paid our kids a certain amount for an A. They received a smaller
amount for a B.
Their grades determined the amount of their
We believed that two B's with the rest of their grades being
A's were reasonable goals for our kids. So, we put a ceiling on their
allowance. (Their maximum allowance was attained if they received two
B's and the rest A's. So, straight A's resulted in the same allowance as
"all A's and two B's.) That was not so high a standard as to over-stress
them, but high enough to encourage them to develop their potential.
Each "C" would reduce their allowance by 20% and a "D" would
eliminate it. With the threat of a pay cut always looming, neither child
ever missed the target. Both our son and daughter received an academic
and athletic scholarship to a university with high academic standards.

The usual alternative to an allowance is "ask parent". If the parent says yes,
the kid wins. If the parent says no, the kid suffers. And it's the parents fault.
When the allowance has room for ample entertainment, if the child has to
forego an expenditure, it's because the child chose to spend the money on
something else. It's amazing how many expenditures can be happily
bypassed if the consumer gets to keep the money to spend on something

Grade compensation gives the child some influence over their destiny.

Teenage Driver Tips
We bought seven year old Toyota Camrys for our sixteen year old
teenagers. They were required to pay for 49% of purchase price of the
car, all the insurance and all the gas. We paid for maintenance. If they
had a wreck,
they paid for any damage that insurance didn't pay for. If
their insurance went up because of a wreck, they would still pay 100%
of the insurance. Only liability insurance was purchased. (We didn't
insure our car except for uninsured motorist insurance.)

In other words, our kids understood that...
If they had a wreck that was
their fault, the insurance company would not pay to repair our car.
They understood that we would not pay for it. The kids had to pay for it.
If they didn't have the money... bye bye car.

This may sound severe to many of you. I remember how I recklessly I drove
when I was sixteen. (At sixteen, I
thought that I was a safe driver.) My brother
lost his right arm and right lung in a motor cycle accident when he was
sixteen. A tragic, irreversible event occurred with my sister when she was
sixteen as well. Kids think "that won't happen to me."  But they hear of kids
having wrecks every month. I wanted them to know that if they caused a
wreck, they would probably lose their car.

In Texas, a teenager can receive a drivers license at the age of sixteen.
Think about the day your child turns sixteen. In one day, the ability to drive
results in a quantum leap in freedom with only an insignificant gain in
Wisdom. We wanted them to emerge from their teen years alive and
with all their arms and legs. Lower insurance premiums and repair bills
would be a nice bonus.

We did not allow our kids to listen to music in their car while the car was
moving (only during the first year of driving). Music is a dangerous
distraction. If I had one piece of evidence that they had disobeyed, I
would have taken or disconnected the musical device. I didn't have to.

After twelve combined years of driving, they had only two wrecks at a total
cost of $300. One was paid for entirely by the other driver's insurance.  
In the other wreck, my son bumped a car in a parking lot while trying to
back up using a manual transmission. Of course, our son had to pay for
the damage as he knew he would. Then he went to an empty parking lot
and practiced driving in reverse until he mastered it. No injuries were
sustained by either of them in those accidents. My kids did far better than
I did. (I had one wreck per year for the first five years that I drove.)

The best tip of all is to pray for their safety while driving.

College Money Saving Tips

Aptitude Testing
Have your child's aptitudes tested when they are sixteen. It takes a day
and a half. We used Johnson O'Connor Research Foundation and
recommend them highly. The foundation was recommended to me by
a personnel consultant that I knew personally. They have offices in many
cities around the U. S. The fee in 2009 was $600. Our kids took the test,
majored in one of the areas suggested and performed well in college.
One finished a four year degree in three years. The other could have
finished in three years, but elected to stay longer to take additional
classes. Many kids change majors, lose hours and then take five years
to graduate.  Even then, many don't like the area they have been trained
in. $600 is nothing compared to the cost of another semester.

Johnson O'Connor provides scientific testing to help students find areas
in which they will enjoy and excel.   I'm not talking about an interest
inventory. The techniques were originally developed by Johnson O'Connor
for General Electric back in the 1920's. "Mr. O'Connor theorized that if
people were doing work that was natural to their abilities, efficiency would
increase and employees would be more satisfied and productive."
General Electric was founded in 1892 and is one of the largest
companies in the world today.  

My son is working in one of the suggested fields and loves his work. At
the  time this article was written, my daughter is searching for her first job.

One other suggestion... After the test, the parent must be involved in
helping the student select high school electives. If the aptitude pattern
suggests biology or chemistry for example, then biology and chemistry
courses should be taken in high school. This way, the student can
experiment with different areas suggested by the aptitude pattern.
After some experience with courses suggested by the aptitude pattern,  
it will be easier for the student to select a major for college.

College Budget
We told each of our kids that they had $x for college. It was enough to
pay for four years.  
If they didn't need all of it to finish college,
they could keep the difference.
(If they saved money by going to
summer school or placing out of courses, they could keep the savings.)

If they spent all of the money and still had not finished college,
they would have to earn the money to complete their education.
My daughter finished a four year degree in three years. My son could
have finished in three years, but elected to stay longer to take
additional classes. He is working in one of the suggested fields and
loves his work. At the  time this article was written, my daughter is
searching for her first job. A large portion of her college fund has not
been spent. She will receive a check for the remaining balance at graduation.

Math Motivation for Dollars… a game
I developed Math Motivation for Dollars to help motivate young children
to master critical mathematical skills.  How can you motivate your child
to learn? You can nag. You can lecture. Or… you can play a game that
is fun, effective and builds character. You may be able to improvise the
game for use in other subjects and other ages.

How does it save money? Math is a tool. It is a gift that must be received
and mastered. Should you buy 5 gallons for $40 or 1 gallon for $9?  
How can you make money saving decisions without math? Math is a
gift. Math can protect us from swindlers. Math is used to design buildings,
streets and sewer systems. Math is used to design the chemical
composition of medicines. It was math that developed the atomic bomb.

There have been times when I did nothing for months except write
mathematical equations. But was my son mathematical? No. My wife,
(his mother) teaches grammar, Latin and writing. I can’t do that.  But she
has trouble with math. He probably got his math skills from her.

When my son was in the 3rd grade, he couldn’t learn the multiplication
tables. He really didn’t care. I had the same problem in the 3rd grade.
So I developed Math Motivation for Dollars. Here is how you play.

Give your child a toy, candy & entertainment allowance.
Buy Multiplication Table Flash cards.
Give your child two days to drill the flash cards without help.

The Game:
1) Show your child each card.
2) Pay your child 5 cents for every correct answer.
3) Your child pays you $1 for every incorrect answer.

The profit from twenty correct answers is $1. One incorrect answer
results in a loss of $1. In other words, the child must master the math
tables to make money. You may use 25 cents for correct answers and
$5 for incorrect answers. 50 cents / $10 can also work. The stakes
need to be high enough to motivate your child. Just keep the ratio at 1 to

If you are in the habit of buying things for your child, on request, instead
of requiring the child to use his or her allowance for purchases, the
game probably won’t work. The child has little motivation to earn money.

4) Play one round. If the child loses money, stop playing and schedule
the next game for two days later. Stop before the child loses enough to
get discouraged... The loss should be just enough to convince the child
that more work is needed. If the child makes money, play one or two
more rounds for immediate reinforcement. Then plan to play again the
next day. After a week of winning, the multiplication tables will be etched
into his or her brain. Daily school work will keep it there.

Repeat step four until the child makes money by playing the game.
Then keep playing the game daily until the child has won money every
day for a week. The child’s net winnings should be enough so that he
or she feels amply rewarded for working so hard. This will give your
child confidence… the “I can do it” attitude… the “I can overcome”
attitude… the “learning is profitable” attitude.

My son lost money the first two times we played. I praised him for his
progress. I also collected my winnings and reminded him that he now
had less money for candy and toys. I told him that if he kept losing, he
wouldn’t be able to buy any candy or toys. But if he won, he would have
more money for candy and toys.

The day after his second game, he met me at the door when I came
home from work. His first words were, “Let’s play the game.” He won.
For over a week, he was waiting for me when I came home. When he
concluded that he had risen from rags to riches, I stopped playing the
game. He had earned enough to buy something that was important to
him. He had struggled and won.

Fine Sheet
This tool provides a low tension way to encourage children to obey. It
is also a money saving idea. Kids should have responsibilities. They
should pick up their own messes and perform tasks around the home
for the benefit of others in the household. Put a sheet of paper on the
refrigerator. List the duties each child is to perform. Also include a
section to record fines. Here is an example.

Make bed before school without being reminded.
Take out trash after dinner without being reminded.
Straighten the den nightly without being reminded.
Wash the dishes MWF without being reminded.
Mow the yard weekly without being reminded.
Clean your room on Saturday without being reminded.

6/12/10, didn’t take out trash…. $1.
6/15/10, didn’t mow yard           $2
Total fines for the week           $3

Then deduct their accumulated fines from their allowance.

If a $1 fine doesn’t motivate, double the fine. If that doesn’t motivate,
double it again. How does it save money? For one thing, it reduces
your payout for allowance! It also saves your time. It can take thirty
minutes to get a teenager to perform a two minute task. But, It only
takes five seconds to record the fine on the fine sheet. More important
than that… it provides incentive to obey. Any tool that encourages
obedience and cooperation from the kids can save money. If the kids
help around the house you could rest a little more. You may have the
energy to cook a healthy meal instead of picking up fast food.

Tension is reduced when everyone pitches in. Family life is also more
relaxed if there is a peaceful method to enforce family rules. Tension
eventually cost money… medical bills, spending binges, expensive
vacations and eating out constantly. Some parents spend a lot on baby
sitters so they can get away from their kids. Kids who don’t obey the
first time are tense to be around.

The fine system is like real life. It works. Governments around the
world have been using fines for thousands of years. It is very effective.
When a citizen disobeys the law, does the government gripe at you?
Does it yell at you? Does it insult you? No. It fines you.

Your Teen Should Cook… Work Instills Respect
As children age, they become aware that their parents have faults. This
is natural. It is dangerous however, for children to conclude that their
parents don't know anything. There are times when children believe
that they are smarter than their parents. This tendency is great in the
first year that a son or daughter can drive. This is also a time when the
teenager’s activities are free from the parent’s watchful, loving eye.
Kids can play dangerous games with drugs, alcohol, cars, sex and …
you name it. At this critical period, the last thing they need to do is to
dismiss your advice. You may have discovered that lectures,
threatening, and even yelling don’t work. (I didn’t include grounding
and fines in the list of things that don’t work, because they generally
do work.)

Here is a method that works…  Inform your child that he or she will
cook dinner for the family. You could suggest something as simple as
hamburgers, pancakes, grilled cheese sandwiches or sloppy joes.
Let your child chose. Explain that you will be available to answer
questions before and during meal preparation.
But the teenager
will do ALL the work.
Say a silent prayer before you begin. Ask
the one who created you to give you success. You need help from
the highest power to raise kids.

Let's assume that you are trying this with your son. Teenage boys eat.
When they move away from home, they will still need to eat. Eating out
is expensive. The ability to cook is helpful for both sexes. An amazing
transformation will be evident as your child must ask you question after
question. Which pan should I use? How do I keep the food from sticking?
What temperature setting should I use? How do I know when it is done?
If he doesn't want your help, let him fail until he choses to ask. Let him eat
the food he ruined. Let him clean up. Your teen will realize that he needs
your help to put a simple meal on the table. He will realize that you know
things that he doesn’t. You’ll be tempted to say… “See, you aren’t so
smart after all”. DON’T SAY IT. Don’t make him admit that he needs your
help. Don't humiliate him. That will ruin the lesson and cause resentment.
Lovingly answer his questions. If you are angry with him, the training
session will backfire. The objective is not to grind him into dust. The
objective is to build him up... to give him the opportunity to develop
humility and respect. Become his support and loving advisor. Make it
comfortable for him to ask for your advice. Help him develop a habit of
asking for advice. Give him a variety of ways to prepare the meal and
then let him chose. Prove to him that he can ask you for advice...  that
you will not nag him until he does it your way. That is how the teenager
finds out that you are letting go. (It is actually good to tell your teen
clearly that you will begin letting go when they reach a certain age…
That you will still be available for advice when asked…That you will
not badger them until they live their life your way.) After teens can
drive, the training period should be over for the most part. It is time to
evolve into the loving, selfless advisor. Help him enjoy the fact that he
can now do something valuable… something he will someday need
the ability to do (cook a meal). You have helped him on his way towards

Kids don’t like to feel stupid. They are embarrassed to ask questions.
(They think it makes them look stupid to ask for advice.) Cooking a meal
can help them become comfortable with asking you questions. Your job
is to make them understand that it is smart to ask questions… and that
it is your job to answer them. That is why kids have parents.

After you teach them to cook, have them repair, maintain or clean
something around the house. Teaching or coaching your child in a
sport is another great way to apply these principles. Your child will ask
questions, develop respect and know that you took time to teach him
something. Your son or daughter will have a skill… a skill that you taught

Teaching a skill gives you credibility with your teen. If your child respects
your advice, it may keep him or her out of jail, the emergency room, the
abortion clinic and the psychologist’s office. It may keep your car on the
road instead of in the ditch. Respect may keep your insurance rates
down. Many parents had auto insurance premiums that were four times
ours. Teaching your child to cook can save time. Your son or daughter
can cook a family meal. That may free you to do something else. It
helps develop a healthy relationship with your teenager. Believe me…
having a teen who respects you and your advice reduces tension and
improves quality of life for the entire family. Respect from a teen may
be hard to find. But the more respect, the better.

One warning: Raising children is very difficult. Good techniques and
good intentions help but they are not enough. I believe that good
relationships with my children are a gift from above. We spent many
hours on our knees. We spent a lot of time praying.
Money Saving Tips for Families