Do The Math!
How Basic Arithmetic Can Rescue Your Family Budget
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Running your household is a lot like running a company. Parents, like CEOs, hold the high-profile home management positions that have become increasingly difficult in tight economic times. In addition to the nonprofit nature, the stress and the 24/7 work involved in our family corporations, we probably have less money to rely on. Our minds are busy figuring out how to manage the costs of rent or a mortgage, childcare, back-to-school gear and extra-curricular activities.
Surprisingly, what may help us most is something that we use least: math. Why? Many of us think that we are just not good at math. Some are afraid of it and others feel it has no use in everyday life. But if we expect real corporate managers to do their math before starting a new fiscal year, we ought to be able to do the same. Here is a look at how simple math can help us, the family managers, get through tough economic times and prepare for the new school year.
Little Things Add UpYears of economic prosperity have spoiled us, allowing a habit of little daily splurges: a latte, a towel emblazoned with a character from the latest kids movie; a souvenir from the museum store, a T-shirt from a business trip. With enticing catalog offers arriving in our email and mailboxes daily, it is often impossible not to need something. Even if we can say no to our own desires, we have a much harder time not surprising our kids with some novel trinkets. But little things add up. Twenty dollars a day becomes $600 per month, and most items that seemed absolutely necessary at the time of purchase are forgotten by month's end. If you understand the impact of accumulated small expenses, you can start to make changes that add up to big savings.
- A daily coffee and a treat at merely $5 per day adds up to $35 per week and $1,820 per year.
- A $50 catalog purchase once a week adds up to$2,600 per year.
Sharing Instead of OwningWe spend so much time teaching and encouraging our kids to share their belongings, but we instinctively prefer ownership when it comes to our own things. Yet sharing increases our connection with our community, and math brings out the financial advantage. Take advantage of the money-saving opportunities that are all around us:
- Check out books and DVDs from the library first before buying them. With books and DVDs readily accessible online, it is easy to just buy them outright. But while some will be read and watched over and over again, it is worth renting them first to see whether this will be the case in your family. Once you start reserving books and films online from your community library, you'll find it almost as easy and addictive as purchasing via Amazon.com or other book and video Web sites. And everything is FREE!
- Try Netflix for your movie fix. Too long to wait for a recent movie release? Netflix will deliver to your mail- box for just $5 a month. When you are done, just mail the film back in the provided envelopes. No charge for postage.
- Look for video games at your library too. How many Nintendo games does your child own at a hefty $30 a pop? Games can also be checked out from most local libraries for FREE.
- Rent ice skates instead of buying them. Do we really need to buy new $80 skates for each winter season? How many times are they going to be used before your child outgrows them? If you rent skates from a local rink 10 times in a winter season, for $4 each time, you'll save $40.
- Share your babysitter. Heading out for some nightlife with friends who also have children? A babysitter's hourly rate does not grow proportionally to the number of kids that he or she supervises. For example, a babysitter might charge $15 per hour to watch one child and $20 per hour to watch two children. You could save 33 percent of the hourly rate by asking the sitter to watch two kids. And your child will be thrilled to have a buddy over for the evening.
- Share a car. At $13-$19 per hour, Zip cars are great alternatives to car ownership and reduce the price and hassle of insurance, maintenance and parking. Find one near you at www.zipcar.com.
- Rent textbooks instead of buying them for your college student. You can rent academic books online at www.chegg.com and save at least 50 percent of their retail cost.
Saving on ClothesA new school year and a new season require a new kids' wardrobe. Try calculating the cost-per-wear when deciding what to buy.
- Invest in items that your child will wear frequently. For example: A high-quality $60 pair of kid's sneakers may last six months and would amount to a cost-per-wear price of $0.33 since the cost of $60 divided by the number of days worn - 180 days - equals $0.33. A lower-quality version for $20 that may come un-glued after one month would be twice as expensive. It would have a cost-per-wear price of $0.66 ($20 divided by 30 days of wear) and would require another trip to the store.
- For costly special-occasion clothes that will be worn only a few times, use your network of family and friends to find hand-me-downs, or shop around at yard sales and re-sale stores. A karate suit that costs$40 and will be worn for only eight sessions would have a very high cost-per-wear price of $5 ($40 divided by 8). Your child would probably be thrilled to inherit a suit from some cool, older karate guru, and you'll save $40.
- Save time, gas and money by shopping for childrens clothes at online stores that carry products from various retailers and offer free shipping on large purchases.If your child is picky, browse the online selection together. Order multiple sizes if you are not sure which one to choose. Domestic returns are usually under $15, and sometimes are free. For example, at Zappos.com you can order shoes and clothing for older kids and adults, with the perks of free shipping both ways and amazingly fast service.
- If you are looking to refresh your own style, consider the many secondhand stores all around Boston. But don't go empty-handed; bring anything you haven't worn in the last two years, to offset the cost of your new items. When donating, you'll be able to get 28 percent to 35 percent of the goods' value in deductions (if you choose a qualified organization with tax-exempt status). Assign fair market value to your items and keep a record of what you pass along. Or, ask for and fill out donation value forms at the drop-off locations and keep a copy fortax time.
Plan at the Grocery StoreStatistics reveal that we buy more when grocery shopping on an empty stomach or when we are in a good mood. So make shopping lists, shop just once a week, set a weekly food budget and stick with it.
- Compare the price-per-weight or price-per-quantity by reading product labels displayed on the shelf below your product. For example:
In one local grocery store, two medium-size packages of chicken breasts from different brands have a price of$13.78 and $15.32. A closer look at the labels reveals that the price-per-pound of the first pack is $5.79 (package contains 2.38 pounds) while the price-per-pound of the second, seemingly more expensive pack, is actually cheaper - $3.99 (package contains 3.84 pounds).
Comparing prices on another commonly used food product - ketchup - shows that for the same $1.99, you could buy a 36-ounce bottle or a 20-ounce tube of the same brand, paying as low as $0.88 per pound or as high as$1.59 per pound. The store's generic brand price runs just a bit cheaper $0.86 per pound but you would need to purchase three bottles of 44 ounces each.
- Let sale items inspire your menu. Along with the grocery store circulars listing food on sale each week, you can find special weekly coupons online at many supermarket Web sites. Some even include ideas or recipes for meals using these products. Or visit a recipe Web site suchas www.foodchannel.com, and type in the name of an item you just bought on sale or dug out from the pantry for ideas on how to use it.
Brainstorm as a FamilyManaging scarce resources demands strong spending discipline, creative solutions, smart shopping and good planning. Unite your family around these goals. The best solutions are often found when people of different life experiences and perspectives brainstorm together. Perhaps you'll discover that a grandmother can volunteer to babysit one day a week, saving you a fifth of the daycare cost. Or your kids may suggest taking on the yard work to eliminate the monthly mowing bill. Make a list of all the main upcoming expenses and discuss what can be cut down. You may be surprised to see how easily your child would trade an expensive birthday party for a make-your-own pizza party at home or a picnic on the playground. A joint family decision to save $20 a day toward a winter vacation maybe a challenging, but rewarding family affair.
Remember: you are the manager of your household corporation. And just like companies confident in their future, your family enterprise should invest in Training. Explain to your kids the rationale behind every economical decision you make. They will learn logical reasoning and see math as a friend, a tool and a toy. The language of math is universal and being fluent in it will help your kids succeed in the globally competitive world of their future.