How to Save $100,000! (Part 3)

Sep 27

When I was 12 years old, I entered the 7th grade. And as you may recall, my Dad gave me my allowance for the entire semester in one shot. Cash on the barrelhead. I was Terrified as his words hit me right between the eyes and in the gut.

But that very act forced me to learn how to make a personal budget, budget my money and create a spending plan.

Nearly 32 years after my Dad started giving me my allowance, my now ex-wife and I had promised to give our eldest daughter Alice (then 6 years old) and her sister Rita (4 years old) a weekly allowance of $1 – one dollar – a week.

The thing was, somehow I never seemed to have a dollar on hand on Sunday night payday.

Especially because I use credit cards whenever I can and use cash infrequently. They’re a convenient way to make purchases and I grab every opportunity to rack up the loyalty points and rewards points. But I always pay off my credit card statement balance in full every month.

What’s more, when my daughters and I went to the supermarket, my daughters were Drawn to the Barbie® dolls nicely presented on the endcap display, conveniently right near the cash registers. Heck, they probably had 15 Barbie® dolls in total by then.

I sorely miss those days.

One Sunday, when I was “in default” and had failed to give out the allowance, Feisty Little Alice declared, “Dad, where’s my money? You owe me $1,000!”

Ouch – six years old!!!

“What?”

In the same breath, Alice asked me to buy her an American Girl Doll®, which at the time cost $80 plus sales tax plus shipping. Pricey!

I recalled my Dad’s lesson, giving me my allowance in full in one shot when I was 12.

I replied, “Alice, you are right! I don’t know how much I actually owe you but not $1,000. NO Way! I’ll create a ‘ledger book’. I’ll be the bank and add your allowance into the ledger book every week. Then, both you and I will know Exactly how much money you have. To start, I’ll also deposit $200 into the ledger book. I’ll even pay you interest on the account balance.”

“Then, when you want to buy something, we can take a look in the ledger book and we’ll know how much money you have at any point in time and you can spend the money as you like – buy whatever you want.”

I created a ledger book for Rita too… ‘Even Steven’. And ultimately, I created one for my son Mike V. too!

The photo on the landing page for this Budget and Grow Rich® blog post – is a selfie of one of the pages from Alice’s ledger book from the year 2000. A relic. . .

A few weeks after I created the ledger books, we went to the supermarket.

Needless to say, Alice and Rita each wanted yet another a Barbie® doll. I think Mike wanted a Soccer DVD.

I replied, “I had some extra expenses this week and I think you should use your Ledger Book Money.”

Suddenly, they weren’t interested in using their own money to buy the doll.

Very Enlightening to me. . . Once they had to pause and consider using their own money, their own savings to buy the Barbie® doll, they balked.

You gotta love buyer behavior!

It comes in all shapes and sizes, but human nature tends to be the same no matter what. Buying is much more fun than postponing, deferring purchases.

I adopted my daughters’ technique in my own life and think twice before I buy. Especially for impulse purchases.

Check out these three techniques to save $100,000 or more:

Freeze! Wait a day, two or three Before you make a nice-to-have purchase or a luxury item!
Commit to stop making impulse purchases and impulse buys. No more!
Make this mental calculation:

WILL You use the product or service enough to make the purchase worthwhile?
How much monetary value and personal satisfaction will you get from out of the item?
How much value compared with the purchase price?
If the math doesn’t pencil out in your favor, ‘Kick the can down the road’ swiftly and defer the purchase!

Separate your money – segregate your money so it’s a bit more difficult to spend money. Open a savings account or money market account that’s separate from your checking account. One solution that I use is American Express’s High Yield Savings Account.
Consider paying bills, especially credit card bills, before the due date to reduce the amount of money you have in your checking account – lower your checking account balance.

What’s more, both of my daughters accumulated $2,500 in their ledger books when they graduated high school. I gave them a check, happily. Very proud. While you’re at it. . .

Repeat this moneysaving technique and wealth-building technique again and again and you too could save $100,000 or more!

To Create More Free Cash, Save Money on Groceries Every Day – click here.

See you next week.

Arthur V.