Recently I read an article on the Sydney Morning Herald about the cost of paying for private education for your children. They aren’t getting any cheaper that’s for sure. Regardless of whether you want to send your children to private school, saving money early is the key to having enough funds to base your decisions not on financials but instead on the best possible outcome for your children.

Here is my savings plan for my future children, which starts as of right now.

I am going to start saving now

As of today, I am going to put away $50 per week into a high interest savings account that is exclusively for my children’s education. Whether it is books, private schools, public schools, school clothes or simply stationary – my goal as of today is to dedicate a small portion of my money towards my future children.

Starting to save money now means big future returns

So what does saving $50 per week mean? Assuming I am 10 years away from having children enter high school, here is what the savings will mean for me (assuming an interest rate of 5%)

• After two years I will have saved $5,466.13
• After five years I will have saved $14,761.30
• After seven years I will have saved $21,779.10
• After ten years I will have saved $33,712.91 and earned over $7,712.91 in interest.

What if we start getting a bit creative with the savings amount?

Imagine what $75 or $100 per week could do? You might not only have enough money saved for their education, you may also have a little left over to give your children well rounded trips overseas with the family to educate them above and beyond the school system.

This is nothing new and many of you will just say ‘DUH!’ – but my biggest fear is that one day I will have kids and be deciding where they should be going to school only to be constrained by not having a dollar in my savings account for them.

Thinking ahead means I hope to avoid this situation and leave them with the best possible decision on where they go to school based on merit, not financials.

Reality Versus Perception

According to an article in the Huffington Post, Baby Boomer parents almost universally expect their children to be as financially successful as they are, yet don’t expect it in the near future. Indeed, about 41% of parents are supporting their grown children (between 23 and 28) in some financial sense and 30% don’t expect them to reach financial independence by the age of 30. Conversely, 86% of Baby Boomer parents say they were financially independent by 25. I’d love to claim rose coloured glasses on this one, but the reality is that my parents, like most people I know, were married by my age. They had bought a house, they both had jobs and were looking to start a family. It is, without a doubt, more independence than I could claim I or any of my friends have.

Why The Bounce?

Why kids are staying home, or returning home, is no real mystery. Debt from university, tight job market, a need to save a house deposit. The younger generations are a curious mob- outwardly, so fiercely proud of our independence, inwardly so happy that our Mums still put leftovers in takeaway containers for us. It is a growing trend, however, and one that can have a significant financial effect on parents.

What’s The Cost?

According to the Huffington Post, 85% of Baby Boomers are concerned about their financial security. 29% may never retire, and 22% fear they will outlive their retirement savings. Doesn’t sound quite the demographic to be able to have additional derivatives from their income. And on top of that, the survey the Post draws on from Charles Schwab found that 64% of parents believe their kids are not concerned about the cost of the financial burden on their parents.

What’s The Answer?

The answer doesn’t to be a barred door. Letting your kids crash in their old rooms is the natural thing to do, and it doesn’t necessarily have to cost you any money. As long as you are clear with them that they pay for petrol, contribute to food costs and will certainly not be getting any spending money. Your kids need to learn- or should understand- that you worked hard for your standard of living, and they will have to as well. Once you move out of home, the costs of ready-made meals become apparent. How quickly your finances drain when you eat out 5 nights a week, or buy copious amounts of wine, is a shock but a necessary one. Even if they are living with you, they’ll need to start appreciating those facts- as I know appreciate the costs associated with general warmth in the home. Retirement saving is inevitably the most important thing at this point in time, and your children need to understand that. Else they end up being sandwiched themselves, and having only themselves to blame.

After I picked the poor man up off the floor, we started worrying about how we would manage financially in the months ahead.

It is now several weeks later we’ve started our 7 month saving plan which will allow me to take 6 months minimum off work without too much suffering. However this experience has thus far demonstrated to me exactly how much money I was spending on naughty little luxuries.

Of all the things I loved to do of an afternoon, my favourite was to make a cheese plate, buy a bottle of wine and meet up with my girlfriends for a chin wag. Oh how I can no longer do that! No soft cheeses, no alcohol, minimal caffeine and after the past four weeks I have saved over $100 in my grocery budget.

Your spending should naturally drop

Instead of my $15 bottle of wine I am buying a $1 bottle of lemonade. Instead of my $15 cheese plate I take a $3 dip and a box of $2 crackers. Instead of a $4 coffee every morning I make an instant decaf coffee at home and drink it on my way to work. I don’t buy extravagant breakfasts on the weekend as I used to, the most I can handle is dry toast and water before 10am anyway. So I treat myself to a $20 foot massage once a fortnight, and even with that small luxury I’m still spending less than I used to on brunch with my friends.

Substituting is the key to saving

The key point for me during this time is that by simply substituting a few items in my regular routine I could stand to save thousands of dollars over the course of a year. Have a think about what activities you participate in where you could make a substitute to make a saving. For example; buying generic products instead of name brand; choosing water with a dash of cordial instead of juice; going for a walk instead of going to the gym; using takeaway food containers to store left overs instead of Tupperware; taking public transport instead of driving.

The concern of living on only 1 salary

In seven months we will be living on 1 ½ salaries for 6 – 12 mths and that has also struck us with fear. As such we have started a savings account and are putting $200 a fortnight into it as a contingency to help us through the months following birth. I thought initially that finding $200 a fortnight would be difficult, but there are two principles that have made this an easier task for me; firstly, the $200 comes direct out of my pay, before any bills are paid, before I whittle it away on something silly, I save for our baby first.

Secondly, by using the substitution principle in my daily activities I have found the additional $200 a fortnight in my existing budget. This contingency fund is also invested in a high interest online savings account at 5% pa, so at the end of 7 months we should be looking at over $3000 of savings to be used in case of emergencies. If (touchwood) we don’t require these funds it’s also pretty good start to an education fund for the little one, yet another successful substitution!

So are there hobbies, unlike horse-riding and professional go-karting, that won’t require you both to get extra jobs so as to afford them?

Music

Music can be an expensive hobby. The part where the kid asks for a grand piano for instance. Or the bit where your child claims that the violin you bought them “isn’t their instrument” and they’d prefer to be learning the tuba. While that can happen, it is one of the most gratifying and successful of hobbies and it needn’t be too expensive. Buy a really cheap guitar or borrow one from a music school. Get a harmonica, or a melodica.

Do not, under any circumstances get a recorder, they’ll inflict that on your during school term. Save yourself for the time being.There are enough music geniuses around in local high schools, it’s not hard to find one to teach your kid some licks and they won’t charge too much money. It’s like baby-sitting, a hobby and party trick all in one.

Astronomy

This may or may not turn into an article about things that I like doing, but I’m going to persevere. Astronomy is a fantastic hobby, although you might end up spending hours up, late at night, staring into inky darkness. And it can get expensive. But to buy a book on stars and a cheap telescope, or binoculars, is no huge cost and can be the start of a great passion. Let’s face it, you’ll probably end up out there, getting more excited than your five year old about Venus.

Making Clothes

Take dress-ups to the new level. For all the old clothes that no one wants to try on anymore, why not cut them up and make something new and fabulous? It costs nothing- you can print off tips or prints from the Internet and you already have materials, and for fashion-conscious kids, it can provide hours of entertainment.

Chances are it’ll be something that their grandmothers can help them with as well, and provide something to fill baby-sitting hours.

Veggie Garden

While it might take a bit of work on your behalf initially, and a small outlay for herbs and plants, a vegetable garden is the perfect hobby for boys and girls. They can plant whatever they want (within reason) and are wholly responsible for it’s upkeep. Start with easy plants like tomatoes. It gives kids a chance to get entirely muddy and play with the hose without getting on your nerves. Plus, you’ll get home-grown veggies provided they don’t kill them with too much love.

Magic Tricks

It doesn’t take anything but a pack of cards and lot of patience, and you can become a pretty classy magician. Point your child to magic tricks online, equip them with some cards, and soon enough they’ll have plenty of wild and wacky things to practice. And once they’ve conquered that, get them a juggling book from the library, three juggling balls and you won’t see them all summer.

But that doesn’t mean I have lost all hope of raising children (eventually) that cost the earth. I’m not saying that Christmas will be a one day cessation of back-breaking child labour, but there are a couple of pointers I have found in my researchers (Nine MSN Money and … to be exact) that I thought I would share with y’all, whether you have children, are expecting or haven’t thought about it yet.

Food shopping is not a family exercise

I was a master at this one. The sad eyes, the trembling lip and the finger, outstretched, pointing at a chocolate bar or strawberry milk or whatever. It’s not that I really wanted it, and I would have existed quite happily without it, but now I had seen it, I needed it.

Avoid this situation at all costs, because those mid-supermarket screaming matches are unpleasant for every one involved. Grocery lists are your saviour, so go at a time when you can stick to it. This means you can audit the health level of the food entering your home as well.

No name brands

There is an odd trajectory- when your child is young, brand names mean nothing to them. Then they go through this horrible decade or two decades where brand names are all that matter, and then come out the other end distinctly uncaring once more.

I like Alison Tait’s suggestion of making them pay the difference. If you were happy to spend $30 on jeans, and they can’t live without a pair that costs $100, don’t front up the extra money. Let them save and cover the costs- that way you are not costing yourself a bucket, and you’re teaching them a good lesson in financial goals and denial at the same time.

Check out the freebies

My parents took my younger brothers and I to Europe when we were kids (you see now how easily I have cost a million dollars). Obviously we were expensive baggage, but not in an entertainment sense. People working at art galleries, train stations, the occasional petrol station (a long story) would trip over themselves to give us free tickets. Maybe it was the blue eyes and pathetic expressions, but it works in Australia too. There are tones of free things organised for kids throughout the year- capitalize on them.

Yes Yes Yes No

I can’t say no, it’s a gift I plan to acquire before having children. If you have children, saying no is important. Money is not infinite, and the sooner they grasp that thought, the happier their lifelong finances will be. In the Tait article, she mentions how children can sometimes think that cash is simply dispensed by an ATM, with no thought as to how you earn it.

I’m not suggesting I’ll be giving personal finance advice to my toddler in between Sesame Street and Play School. But an awareness of the value of money, and the work ethic required to earn it, would be two lessons I would hope to teach my kids quick smart.

How have you saved money while raising your kids?

Organise

It’s not the first thing you think of. First, there are the excited calls to parents/ friends/ next-door neighbours/ anyone. Then there’s the whirlwhind of names, thoughts of redecorating, realization of the horror of morning sickness and a lot of general excitement.

Once all that is settled, however, its time for decisions about who you want to see about having a child and who you want to deliver it. Things are currently in flux in Australia, with legislation regarding homebirth currently being debated in the Senate. Public care should be entirely free, unless you need to cover the gap if your doctors don’t bulk bill.

If you go private, either with an obstetrician or midwife, you will have to pay for it and it can be expensive. If you have insurance, that should cover you to a large extent if you are going through hospitals. If you would like a midwife, you will probably have to go through independent midwifery and that will probably not be covered. Insurance for midwives is at the centre of the current argy bargy, so hopefully things will improve one day soon.

Work out

Since last year, things have improved for women requiring maternity leave. Your employer should be providing it as long as you are a permanent part-time or full-time worker. The advice floating about it that you can’t bet on being able to work every day of your pregnancy until your wheeled off to a bed or birthing pool. Morning sickness and fatigue makes the working week difficult, so leave some allowances in your budget.

Wear out

Who would have thought- all those years you’ve been longing for some new clothes, and now you have to buy ones that you can only wear for short periods of your life. Some clothes are capable of taking a pregnant belly, and ask the people around you (after all, most women probably have lots of clothes they can’t wear either). Stuff from K-mart usually looks nice and doesn’t break the bank. I can’t wait- some of it looks so comfortable but I don’t feel like I can justify wearing it until I actually am pregnant.

Know your future plans

There are benefits offered by the government for parents, or parents with small children. Make sure you find out what they are. Ensure that you’ve thought about childcare costs, and where you might like to send your child.

Treat yourself

You’re pregnant, so if there are a couple of spoilt moments here or there, then what’s the fuss? A friend of mine swears by massage, another by almond croissants. After all, you have a doting partner who is caught in a hilarious bind of half-joy, half-panic, and he’ll probably do anything you ask. Now is the time to take advantage of his unusual willingness to please. Eat organic, stay away from deli meats and revel in the new Earth Mother that is you.

What did you find were unexpected costs when you or your partner was pregnant?

Your teen may not be giving you so much as the time of day at the moment, but providing support and being a good financial model will set the hellraiser up for life. After all, teaching your teenager how to be financially independent may be the quickest way to get them to move out after school and resume a semblance of normality in your day to day.

Here are some tips:

Make allowances

The general consensus from the blogosphere seems to be that allowances for teenagers allows them to develop independent decisions about how to use or save their money. How much, or even if you provide one, is entirely up to you. It’s important (according to parents, myself being much closer in age to teens that parenthood) to not just give an allowance, but to support it with advice about saving money and understanding the consequences of spending money.

Encourage them to sell

Selling unwanted items as a valid way to generate income if you are a teenager. Encouraging your teen to sell clothes they no longer wear or items they no longer use will give them a sense of moderation about purchases, as well as a bit of spare cash to save.

Assist them in finding work

Job-hunting is stressful, especially the first time. Don’t let your teen flounder without any advice; help them to write a resume and cover letter, and encourage them to call places they’re interested in working to see if they can offer any work.

Volunteering is also a great way to gain experience in an area, and will be invaluable in any job hunt. Once they have a job (which most teens have these days outside of school hours), help them draw up their first budget and think about a savings plan. Talk about what they want to save for- their first car, a trip overseas in a gap year, or higher education. Discuss long and short-term goals, and ensure they have realistic ideas about saving.

Save first

Saving first is a habit that’ll stand you in good stead for a lifetime if you can learn it. When you’re setting out the budget, suggest putting savings aside from an income first. If your teen has a phone, help them to understand the importance of paying bills on time and budgeting to accommodate expenditure.

It’s a scary thought

but your attitude towards money and spending behaviours will have a significant influence on your teen’s relationship with savings. As best you can, provide a positive example to your teen.

Instill a bit of old school frugality in your teen and talk to them about how to make each dollar count. Don’t send them out to the world as unthinking consumers; teach them how to be savvy about purchases and credit.

After all, it’ll probably save you money in the long run if they can handle their own finances, as opposed to constantly attempting to get a hand on some of yours as well.

How do you teach your teen about persona finance?

But besides that, it does get difficult to fill that lunch box. Some days you wake up and just want to give them money for tuckshop.

Sound familiar?

Change your habits!

Instead of having to make it every morning I try to make it at night. If you are really strapped for time during the week, spend some time on a Sunday night and freeze sandwiches etc – being prepared and planning your school lunches can save you heaps of cash!

Recess

Try to avoid the isles of overpriced muesli bars and attempt to make your own. There are some fabulous yummy recipes on the internet, so you don’t even have to go and buy expensive cook books.

Get back to basics! Carrot sticks, celery sticks, cheese sticks etc, can all be prepared on a Sunday and will keep in the fridge if stored correctly in lidded containers.

Don’t forget strawberries, apples, grapes, you name it. It is all healthy and doesn’t cost a weeks wages. Be sure to buy fruit that is in season. This usually means fruit that is on special. Strawberries and grapes can also be frozen!

Lunch

Most meats and cheeses (and vegemite) can be frozen and add extra if you need to the night before. Make sure you take it out of the freezer the night before in winter to ensure it has defrosted and in summer, by the time it is lunch time it will be lovely and fresh!

Drinks

Avoid expensive poppers (unless they are on special for a super ridiculous cheap price, that’s when I stock up) and invest in a decent solid drink bottle.

This year we have gotten some excellent aluminium flasks on special at our local camping store that seal tight and keep drinks cool. You can fill them up with anything and unlike there plastic counterparts, they don’t taste like cordial (or smell) when you have water in them.

Don’t forget the importance of water! Juices and cordial taste yummy, but water will keep them much more hydrated and on the go. The plus side is, it is basically FREE!

Especially in summer, they really need a drink bottle that they can refill with water at the bubbler!

After school Snacks

This is just as important, in my opinion, as any other meal of the day.

I remember nothing better then coming home from school and tucking into a tall glass of icy milk that contained almost a full tin of Milo.

Milo is packed full of all the good things a child needs and teamed with low fat milk is perfect for keeping your children’s bones strong and healthy. Not to mention it is also the best tasting snack!

How do you save money on school lunches?

We need some money saving mums out there to share their tips, cmon! Leave a comment below!

There is a way of making your money go further and saving on the expenses but you need to be willing to spend money to save it.

How?

The best way to put it is, don’t buy cheap! Sorry I’m aware this is a savings website, but I promise it will save you money.

Uniforms

The best thing about uniforms, is your not trying to keep up with fashion trends and washing. Don’t be afraid to check out the uniform pool OR if you have other children, buy it and store for the next child. My grandmother always used to tell me, ‘the difference between New and Old, is a good wash!’ and with Napi San, anything looks new again.

Stationary

Crayola! This I would say is the best product. And at this time of year, you can get them at half price. Buy 2 of everything! That way yes you are still paying full cost but saving heaps down the track. Put the extra away in a box on top of the cupboard out of the way. You will go through 2 packs of Crayola, instead of 6 cheap versions.

BoStick

It sticks, last and works. Really stock up at the start of the year on this, because they go through it and again HALF PRICE!

Shoes

No matter what shoes you buy, they are going to really cop it. Shop around you can get good less expensive ones but make sure they are made of leather to ensure your child wears out of them before they wear out!

Joggers

again shop around and get good quality. Children’s feet are so important to look after to ensure they don’t have problems later in life.

Bags!

There is always a huge debate on bags. There are all price ranges on them and you certainly get what you pay for. I bought my daughter a Billabong one at $45, a lot would faint at that price for a bag, so let me explain.

Most brand bags come with a 12 month warranty, (this doesn’t cover it being kicked about) so if my daughter uses that bag for the next 3 years (with a good wash from year to year) I have technically paid $15 a year for a bag! Most other bags last 12 months!

Lunchboxes

Hard lunch boxes are absolutely fantastic, but we went through 3 of those last year because of kids kicking them round the playground and so forth, so a recommend soft insulated ones. They work a treat!

How do you save on back to school expenses?

Teaching your kids about money is one of the most important ways to ensure your kids get through life in the best way possible.

Here are some of the best strategies:

An allowance

From an early age, it is important that kids understand how to use money and the best way to instill that is for them to have an independent source of income. The actual level of allowance is less important. I functioned off 50 cents a week for most of my youth, as well as a bit of money every birthday and Christmas.

People tend to differ as to how a child receives an allowance; is it dependant on chores or independent of their contributions to the household? That’s up to you, but it is crucial to introduce ideas of budgeting and discipline with money whenever you set up an allowance.

Big dreams? Big savings plan

Help your kids to develop good saving habits from the start by setting out budgets for big purchases. Kids may spend their money on lollies from the local store at first, but once they realise that long-term saving can result in something like a new lego set or doll, they’ll be able to put their (financial) nose to the grindstone. If Christmas is coming up, offer to contribute a portion should they reach their financial goals.

Help them to invest

My Dolomites account was a stalwart of my childhood, and a big reason why I have any skills in saving now. I loved the glittery ruler that came with it but, most of all, I loved the feeling of affirmation every time I could deposit a bit of money. Dollarmites by CBA is a good start.

Take your kids through the benefits of each account, and each investment idea. If your kids are a bit older, talk to them about term deposits or saving accounts.

Talk about it

If talking about money makes you uncomfortable, get over it now. The more communication around money issues with your kids, the better they’ll be prepared. Debt is something every household should know about, and kids (especially adolescents) need to understand what can happen when it gets out of control. Encourage your kids to steer clear of credit cards for as long as possible.

It sounds extreme, but show your kids how it’s done when you pay a bill or do your tax. These are essential life-skills that get no attention in education. Show them how to write a shopping list, and stick to it.

It’s a harsh reality but a child’s way of saving and spending money will be largely derived from the example of his or her parents. Demonstrate restraint in how you use money, and they are likely to learn from that. It’s not enough to talk about the starving children in Africa at dinnertime; instilling a sense of the real value of money in your children is essential. So they tell me (childless as I am).

Piggy banks, budget plans and saving goals are all important parts of growing up, and becoming an adult who can function financially. It’ll help you financially as well if your kids have a sense of money matters, as it’ll decrease the likelihood you have to bail them out of a $300 phone bill any time soon.

What tips do you give your children in money matters?