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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 they 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

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.
We 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

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 preferable.

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
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

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.
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 20. THIS IS

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 her.

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
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