School starts next week for our three girls. They will be in 3rd, 2nd, and 1st grades – this will be their first year in public school (they have been home schooled). My wife and I thought that this year would be a good time to start giving an allowance and start teaching some financial principles in a more direct manner (we are always teaching about money!).

So I went online and I bought each girl a new piggy bank – the money savvy pig. Each bank comes with four separate compartments: one for saving, one for spending, one for donating, one for investing.  The girls will earn their allowance daily – 25 cents. The first day they will put the quarter in to donate, the second day saving, the third day spending. The other two days we will split between spending and saving again. For now we will skip the investing part until they are old enough to understand stocks, bonds, etc.

We decided to give their allowance daily because if they do their chores correctly they will get their allowance, but if they don’t they will not receive their “pay”. This way if they do miss a day, they do not miss out on their allowance entirely, they can still collect for the other days. We want them to learn that they need to work to earn money, and if they goof off, well then their are financial consequences – just like in real life. Their chores are pretty simple for this year – make the bed, keep their room tidy, eat breakfast, be on time for the school bus. Obviously we will give them guidance and at first some “second” chances. The girls are pretty excited about their new banks – they have already talked about what charity they want to give to (makes a Dad’s heart proud!).

What tools are you using to help your children learn about finances? Share your thoughts and help all of us!

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According to the BEA (Bureau of Economic Analysis – U.S. Department of Commerce), the personal savings rate in March 2010 (latest statistics) was under 4%!. The personal savings rate is the percent of disposable personal income (after taxes) that is saved. I really thought it would be higher because of the poor economic times, but then again, with 10% unemployment, that is a lot of people not saving.

Unlike the BEA, I calculate my personal savings rate based on gross wages (not disposable income, i.e. after taxes). I do this because (1) it is easier! (2) I won’t know about my true taxes until after I file – I always owe the state more money and the Federal usually owes me. But I do know what my gross earnings are.

Right now, my savings rate is 15.2%, including retirement saving. Not including retirement, my savings rate is 7.2%. I would like to get both higher. I should be saving around 10% for retirement, and my non-retirement savings need a boost (especially after deleting my emergency fund!).

How does your personal savings rate compare to the national average? Is there anything you are doing to increase your savings? Let us know!

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Usually when you think of Anniversary’s, Birthday’s, and other Special Occasions, you think of spending money. That is true. But you can also save money while you are spending it! I think back to our Honeymoon. One day on our trip we went to a special restaurant that had a wonderful view overlooking a bay. The waitor headed us to a table with a not so great view – I spoke up and said it was our honeymoon could we have a better seat. Immediately he gave us the best seat in the room, and even gave us a free bottle of wine.

As I have mentioned before, in our area, there are a lot of restaurants where you can eat free on your birthday (or at least get a free desert!). It never hurts to let the waiter (or manager) know you are celebrating a special occasion (now be truthful!). This works for other places than restaurants. When I was younger I was buying a birthday present for my mom, I was just short of the amount I needed to buy a particular gift – I mentioned to the clerk that this was a present for my mom, the clerk gave me a discount and I was able to buy it. You just never know – so why not let them know and ask! Maybe you could save a penny!

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As I have mentioned a couple of times in other blog posts, this has been a rough 6 months financially. Now, we face another financial set-back and a bigger life  hurdle. My wife has been sick on and off (mostly sick) for the past three months. They would put her on an antibiotic, she would get better; but then as soon as she was off the medicine she would get sick again. So far she has been on 4 different antibiotics. After numerous tests, blood work, 2 specialist doctors, it appears that she will need sinus surgery in the next few weeks. According to the Ear, Nose, Throat Specialist, her sinus’s are really messed up and need some major work. At this point my wife is excited that there is hope for getting her better. We have talked to several people who have had sinus surgery and they all said it was worth it – they feel so much better. That at least is encouraging. We wont know the date of the surgery until later this week.

So far this year we have spent $2900 on medical bills and supplies. Our deductable for the upcoming surgery is only $750.  Still, we  really need to tighten our belts and put our savings to the max. We have used all of our Flexible Spending Account (medical savings), and we still need to get the girls to the dentist this year. I have already redid our budgets once, but I will probably have to tweak them some more. My new financial goal for this year is to make it through without having to go into debt!

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I had to run my wife to the doctor yesterday – she has an infection in her lungs. Yuck! Afterward, I stopped by our local grocery store to pick up something for the family to eat that would be easy and quick to make. I decided on soup. There,in the soup isle,  sitting on top of some cans of soup was a coupon for a dollar off! A “coupon angel” left it there for someone else to use – and I did!

That was a little pick me up in an otherwise down type of day. It was a reminder to me that little thoughtful things like that can make a big difference in someone’s day. Have you been a little “financial” angel to someone recently? If you have – thank you!

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Pharaoh of Egypt had a dream of the future. Joseph had the plan for the future. In Genesis chapter 41 we learn about Pharaoh having a dream – fat cows and ugly cows, plump ears of grain and thin grain, with the ugly and the thin eating up the fat and the plump. Joseph understood – there would be seven years of plenty followed by seven years of famine. So Joseph had a plan to gather a fifth of all the food of the good years and store it for the lean years. Joseph in essence set up an emergency fund. In verse 37 of chapter 41 we hear Pharaoh’s reply to Joseph’s plan – “Now the proposal seemed good to Pharaoh and to all his servants.”

I think Joseph’s proposal is good for all of us. Although we cannot know the future, that does not mean that we should not have a plan for both good and lean years. Part of that plan should be to have an emergency fund for lean times, and some savings for retirement when working income may be little or nothing.

Maybe you won’t be a hero to Pharaoh and a nation like Joseph, but by saving some money for a “rainy day” you just might be a hero to your family!

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As we usually do at the beginning of each year, my wife and I have been discussing some goals for this year. In light of our recent emergency expenditures (replacing 2 leaky windows, new well pump, new hot water heater)  our goals have been greatly reduced! We have realized that our emergency fund is just not big enough. So our goals for 2010 are pretty simple:

1. Refund and build up emergency fund
2. Increase our home maintenance budget
3. Finish hallway and bathroom project (fix drywall, seal, skim coat, paint)

Pretty short list! But I want to be very focused and the #1 goal is going to take most of our financial effort. If we have too many goals we would probably not make any of them – better to succeed at a few than fail on a lot!

What are your financial goals for 2010?

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Our emergency fund took a big hit on Friday. I came home from work on Friday at lunch time and there was no water! We had to get a plumber (unfortunately we are on a first name basis with our local plumber!). He discovered that our well pump died!

After two plumbers spent most of the afternoon pulling out the old pump (our well is 450 feet deep), they got the new one installed. So we had water right? Wrong! When they started it up all this black gook (a technical term for disgusting black and slimy stuff) came out – and went through the house. We had to clean every bathroom toilet, sink, shower, etc. The gook was so thick that it clogged up our water filter system – so no water. I tried to back flush the system to clean it out but it didn’t work. By this time it was late Friday night so we couldn’t get the people who handle our water system out.

Saturday it snowed. All day. 20 inches worth. Nothing and no one was moving. So we had no drinking water this weekend and we were snowed in! We had water for a shower and the toilets at least. Monday the guys were able to come out and unclog our system – they took apart just about everything to clean it all out. Now everything appears to be working fine.

But this whole episode is going to cost us a pretty penny – the bills haven’t come yet, but I am guessing over $1000, probably closer to $1500. Yikes! I’m glad we had an emergency fund. I has taken a beating this month, first with having to get two new windows (that bill hasn’t come yet either), and now getting a new well pump.

I’ve had to change my financial goals for next year. Now the goal is to just build up the emergency fund as quickly as possible. Not exciting, but necessary. But at least we will not have to go into debt! And for that I am very thankful!

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According to an article at CNN Money, Nicolas Cage is in financial ruin. His former advisor Samuel Levin (who Cage is suing) states that Cage needed to earn 30 million dollars a year to support his lavish lifestyle!  At one point Cage owned over 14 buildings in five countries (Times Online).  According to Wikipedia, he owns an island! Other assets include 15 personal homes, four yachts, nine Rolls Royce’s, at least 22 other vehicles, plus millions of dollars in jewelry and art.

But with the housing market and commercial real estate collapsing, Mr. Cage found himself underwater in many of his holdings, with multiple homes facing foreclosure.  Plus there are unpaid tax leins being placed by the IRS – to the tune of over 6.2 million for the year 2007 alone.

According to Samuel Levin, he warned Nicolas Cage that “he was living beyond his means” and he told him to spend less. Even though Mr. Cage earned millions, he did not have an adequate emergency fund.

I have enjoyed some of the movies Nicolas Cage has been in (especially the movie Family Man). I don’t enjoy when anyone gets into financial trouble. But it almost baffles the mind how a multimillionaire can come to financial ruin. Whether it was directly his fault, or the mistakes of financial advisers, it just shows once again the bottom line is not what you make, but what you spend! Wealth is achieved by spending less than you make, whether you are making pennies a day or millions of dollars!

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The Power Saver 1200 – maybe you have heard about it or visited their website (www.power-save.com).  I know that I had been interested in it since I first heard about the product several months ago. It is a device that you hook up to your electric panel (by a trained electrician) that is supposed to save you up to 25% on your electric bills.

I had tried finding info and reviews on the web, but didn’t find many. Well now a local TV station, WGAL, has tested and reviewed it for me! They placed one in a local house, and they placed one in a controlled test environment at a local technology school.

At the house test, there were no apparent differences from before or after installing the product. In the controlled test, there was a 2.5% reduction in kilowatts used. So, could this save you money? Possibly. But with a $299.95 price tag (plus shipping and handling), and paying an electrician to install, the payback period will be a very long time. For me, it is not worth it.

So, with our electric bill about to increase by about 30% because of electricity deregulation in our state, I will have to find other ways to reduce my electric bill!

Hi there - could you help spread the word about A Penny Saved? We rely on word of mouth to get new readers. If you would send someone a link, email, or even mention it to your friends, I would truly appreciate it. Review of Power Saver 1200 is a post from: A Penny Saved, the best darn personal finance blog around.