Four things to do with your Money

So girls, there are really only four things you can do with your money, whether you have one dollar or a hunded.

1. Save – the obvious one.  This means you put the money away someplace (in the drawer, in a standard savings account) and you don’t touch unless for carefully considered reasons – the rainy day has finally come.

2. Spend – the second obvious choice.  Most of us need to spend some of the money we have, for necessities like food, shelter, etc.  It’s figuring out what the difference between a need and a want that you’re classifying as a need that makes the difference in how much you spend and have left over. So the more you can control your spending, the more you will have left over for everything else

3. Invest – this is money that you haven’t spent, or saved.  Here you are going to take some risk with the money.  You’re going to spend a little money in hopes to make money.  Some investments are safer than others.  For instance some bank accounts pay a higher interest rate than others, but may not be secure.  However, you might also decide to invest in a company, through the purchase of stock.  You buy 1 share for say $10 and you hope that the share price will go up, to say $11 – thereby giving you a 10% return on your investment. 

However stocks are risky and sometimes the share price might go down to $9 and you have less money than when you started.  So it’s important to invest with money that you don’t need – after you have spend for your necessities and put some aside for the "rainy day".

You might also decide to invest more directly in your own business. For instance you may decide to start a babysitting service. So you invest $10 in printing up fliers and post cards in the hopes that you will get several clients who will pay you more than $10 for your services.  That would be your profit as a result of your investment.  Your profit can be used how you wish – Spend it, Save it, or invest it again…

4. Give it – that’s right – sometimes, girls it is better to give than to receieve.  Somehow the money we give seems to come back to us in some other form  – the great cosmic rule of the universe, I guess.  So if there is a special cause you would like to support, don’t be afraid to share some of your cash with them – just make sure you have covered your spending needs and your saving needs first!  And – please lending money to friends isn’t exactly charity – it’s called borrowing – and they should pay you back!

 So four different ways to spend your money – what’s the best way to stick this plan.  Take 4 jars or a box or something and divide it into 4 different compartments.  Mark it spend, save, invest and give and divide up your money among the 4 buckets.  You don’t have to divide it evenly, in fact saving just 10% of your income can make you rich in the long term – that’s $1 out of $10, as long as you don’t spend that dollar.  From the save dollars, you might want to allocate half of that to investment purposes.

To help with your spending – sometimes we need little things on a regular basis, and sometimes we want something bigger – like a new shirt or shoes.  Make a list of the bigger items you want. Cut out a picture of it and put it on a jar to motivate you to save for it.  Put some of your money towards those everyday expenses and something towards the thing you really, really want. Paying for it yourself, in cash will feel great.

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More Tips for Raising Finacially Savvy Girls

Here’s another tip for raising money savvy kids.  This came via a WSJ column.  Offer your kids a dollar ($1.00) if they drink water (tap) instead of ordering a soda at a restaurant.  You’ll save a few cents and they’ll probably start drinking a whole lot more water.  And it will be healthier all around.

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