Live Within Your Means

Do you remember being told “No, you can’t have that” when shopping with Mom or Dad? Or maybe now you’re the parent telling your children “No.” What if instead the children make the call on what to buy and what not to buy? Either that makes shopping a lot easier or a heck of a lot more expensive!

Children don’t get a lot of practice on how to live within their means. That’s because they’re not the ones making the money. But wouldn’t it be better for children to learn at an early age how to spend money wisely? That’s where teaching the skill of prioritization comes in. As adults, we prioritize things every day: at home, at work, and yes, even out shopping. We understand that there is a limit to what we can or can’t do, so we need to decide what matters most, even if it involves sacrificing for the greater good.

The best way to learn about prioritization is to practice. When it comes to money, a budget serves as a useful tool to figure out what’s important. A budget will not mean much to a toddler, so let’s tackle this skill by grade level.

Preschool – Elementary

For young kids, set a limit on shopping purchases. Either using the money that children have set aside for spending or providing them with a stipend, let them choose what item(s) they want to buy. You may want to guide their choices by providing 3 of your own recommendations. However, the only way this works is if they feel that the money belongs to them, so they should make the final decision.

Junior High – High School

Since the teenage years introduce allowance and wages, children can shoulder some of the expenses they incur, like cell phone, gas, or food. This opens up the realm for ongoing expenses and non-tangible expenses which is good practice for adulthood. A simple budget could look something like:

$65 / Month Earned (or $15 / week)

(-) $20 Cell Phone

(-) $20 Savings

(-) $25 Spending

College and Beyond

College brings heavier expenses, so this budget will require ongoing monitoring and possibly revisions along the way. A sample budget might start out:

$1,500 / Month Living Allowance

(-) $1,000 Rent

(-) $200 Food

(-) $150 Car

(-) $100 Spending

(-) $50 Cell Phone

But later get tweaked:

$1,500 / Month Living Allowance

(-) $1,000 Rent

(-) $200 Food

(-) $150 Car

(-) $50 Public Transportation

(-) $150 Spending

(-) $50 Cell Phone

(-) $50 Gym

As we can see from this example, the student prefers to have more spending money than a personal vehicle. Regardless of what was chosen, the student was able to prioritize without going over budget.

Putting Priorities To Work

Keeping expenses low is especially important during this time of financial hardship for many. That is why it is even more timely to bring children into the conversation, so they can gauge their own priorities and figure out how they can aid in the family’s finances. The next time you go shopping, try asking your children, “To buy or not to buy?”

Homework: Give these prioritization exercises a try! How did you / your child do? Were any decisions tougher than others? If you found yourself analyzing the other possibilities, you just learned about opportunity cost!

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Lessons In Entrepreneurship

This weekend marks a big milestone for Ace Academy: We turned 1! Looking back at the past year, I still can’t believe this idea came to life. I’m not the kind of person who takes big risks or who likes to chart my own path, so starting a new venture is completely foreign to me. But there is no better teacher than experience. Here are some of the lessons I want to share.

  • Have a clear vision. The best thing you can do when starting out your business is to come up with a business plan. What special need are you fulfilling? How will you drive business, and what’s your timeline? Do you have an exit strategy? If any of these questions are unclear to you, take the time to figure out the answers now. Creating a business plan does not just help you. Having details of your business readily available attracts more potential investors and gives future employees a clear direction.
  • Learn to set limits. When you start on a new project, the tendency is to put all of your energy into something because you are trying to prove yourself. This makes it easy to get burned out and may set the stage for little or no work/life balance. By setting boundaries for yourself from the beginning, you are establishing a pattern of working more efficiently.
  • Pursue your passion. Entrepreneurship is not easy. There will be setbacks along the way, things that you don’t know to expect, lots spent with little in return. That is why it is so important to pursue something you love. If you’re not sure you can stick by your idea for the long haul, test the waters while keeping your day job. That’s exactly what Daymond John from ABC’s “Shark Tank” did. He kept waiting tables at Red Lobster as his clothing line started to take off. Just consider it your passion project.

While it’s only been a year, Ace Academy has already reached thousands of views across the globe, including China, Europe, India, and the United States. Thanks for subscribing and following along as we continue to learn and test new ways to explore money. Welcome to a new school year, ace!

Homework: Think of an entrepreneur you admire. How did they get their start? What lessons did they learn along the way? If it were you, what would you keep the same or do differently?

If you like this lesson and want to see more, please consider a donation on GoFundMe.