Browse Tag: saving

National Bank of Mom 3 Amazing Resources That Helped Me Get Control of My Finances

3 Amazing Resources That Helped Me Get Control of My Finances

Being a blogger who writes about teaching my son personal finance — maybe you think I’ve always been good with money. That’s what gives me the creds, right?

Eh… not exactly.

I’ve never been in a really bad place, but I’ve never felt really good — like I was in control and going in the right direction.

It’s not for lack of trying. I tried for YEARS to get it together and feel good about my state of affairs. I’ve always balanced my checkbook and attempted budgeting at various points in my life (even enlisting my cousin’s help as she learned about it herself). There were homegrown worksheets and an elaborate configuration involving a shoebox and manilla folders with the days of the month for organizing receipts.

But I didn’t have a system that worked. I didn’t have a direction, or goals, or practical steps to take to meet those goals.

Until three years ago.

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How National Bank of Mom Rewards Savings

By this time, you already know that we subscribe to a three-envelope system (complete with registers) for savings, spending and giving. At times, we also use an additional envelope for short-term savings — when J is saving for a larger purchase a few months in advance.

The first stop in our banking process (and the reason for the name of this blog) centers around the savings envelope.

Every month on the 9th, I pay interest on the total in J’s savings envelope. To make it enough that he can see a tangible result (and earn more than the few cents he would at a bank), I pay 3% monthly.

I create a bank statement, give him a printout and also email him a copy. He writes the interest amount in his savings register to balance the account.

I developed a spreadsheet to calculate the amount and format a nice-looking statement for him. (Download a copy of the spreadsheet.) Fill in the sections in blue on the first sheet. Each month, enter the deposits made in the appropriate section, and the interest and totals will recalculate. Print a copy or save as a PDF and email away.

What is interest?

When borrowing money, interest is the money that you pay on top of what you borrow. Borrow money, pay it back AND extra.

When saving money, interest is the money that you earn. The bank “borrows” money from you and gives you a percentage of that money (for the privilege of using it). Put money in and get that amount back PLUS more.

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National Bank of Mom Banking for Kids

Banking for Kids

In order to maximize savings and provide a good learning experience, I subscribe to a three-bank system. J has savings accounts at the National Bank of Mom, our local bank and an online bank.

Bank of Mom

The first stop for savings is the National Bank of Mom. J divides his money between his savings, spending and giving envelopes, and I pay interest monthly on the money in his savings envelope. He gets a statement printed and emailed to him, and he writes the interest in the register, keeping the account balanced. We make note of the increasing amount of interest each month, which will prepare us for a more in-depth conversation about compounding. Right now, our focus is on putting at least 10% of all money into savings and the idea that your money can make money.

Local Bank

Every few months, we take the cash from the savings envelope to our local bank. I think it’s important for him to go to a physical bank and deposit money. (So much happens electronically nowadays, and I think it can be difficult for kids to understand. This is why I pay his interest and allowance in cash, so that he can hold it in his hands and work with it.) The tellers are also very nice to him, which adds to his experience.

When looking for a bank, you might want to start with your own bank, but you could also look at other local banks or credit unions. Also important when choosing a bank:

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Practice Makes Perfect

Last month we started talking about percentages in the 10-10-80 savings plan with our focus on the 10% that goes to savings. I want J to save at least 10% of all money he receives, so we’re working on how to calculate 10% of any amount.

I showed him two ways to calculate 10% last time:

  • Use the 100-grid and divide the amount into 10 equal parts. $3.00 divided into 10 equal parts gives you 30 cents in each 10-block
  • Move the decimal one place to the left to find 10%. $3.00 becomes $.300 or 30 cents

J got a calculator for Christmas, so we integrated it into our practice. I showed him how to find the decimal equivalent of a percentage by moving the decimal point two places to the left (10% becomes .10). Continue Reading

10-10-80 Savings Plan

Have you ever heard the following sage financial advice?

Pay yourself first
Live below your means
Save 10% of your income and live off the rest
Don’t spend more than you make

Books like The Richest Man in Babylon and Automatic Millionaire cover the topic right off the bat in detail, but you may have also heard the advice from family or friends.

When I was younger, my dad had me take half of any gift money I received and put it towards a savings bond. We would go to the bank and fill out the paperwork, and I still have a stack of bonds to this day.

My aunt would also tell me to make sure I saved 10% of anything I was given (with instructions to also give 10% to the church).

National Bank of Mom Save 10 Percent

We’ve been using the envelopes for six months now, and so far I haven’t said much on how J should distribute any new money between them (although I might gently push towards making sure some money goes to savings). He hasn’t learned about percentages yet in school (he’s still on multiplication and division). A quick Google search says he might not learn them until 6th grade!? That’s not going to work. I’m going to have to start sooner.

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