Wednesday, March 11, 2015

Family Finance - The Jobless Experiment

A few months ago, Greg and I started noticing that more and more people we knew were losing their jobs.  Having it hit so close to home made us a little uneasy, and we figured it was a good time to revisit our family finances.

As we looked at the family budget and pondered where we could potentially trim some expenses and what size our 6 month emergency fund really needed to be, Greg proposed an experiment.  What if we pretended we were jobless for 2 weeks?

It turned out to be a brilliant idea.

Now, you could go pretty hardcore on this if you wanted, but here is what we did.  Since our purpose was to examine our discretionary spending, and have it be an eye-opening experiment for the kids, we paid all of the bills first.  I also planned our meals for two weeks and did the grocery shopping ahead of time.  Then I went to the bank and took out a small amount of cash.  That was all we would have to spend for the 2 weeks.

We unfolded the plan to the kids over dinner Sunday night.  As expected, there was some groaning and eye rolling.  We didn't really expect anyone to be excited, but they were game to play along.  We explained that the money we had in cash was all that we had for food shopping, gas for the cars, doctor appointments, school supplies - you name it.  That was all we could spend.

Here are some things that changed:

1.) My little boys began riding the bus to school to save money on gas.  Not only did this have more of an economic impact than I expected, but it made my mornings much easier! I was able to let Kate rest longer in the morning and spend a little time with each of them before they left.

2.) The boys began packing their lunches instead of buying them at school.  Huge savings, and a lot healthier, too.

3.) I stopped making little runs to the store for this and that, which gave me more time at home to get things done and play with Kate.

4.) We all got better at differentiating between needs and wants.  I noticed that the kids started thinking more before asking for something.

5.) The boys were better about not plowing through the pantry locust-style.  They understood that today's snack might be tomorrow's dinner.

6.) When I DID give them money for something, they appreciated it more, knowing it was a scarce resource.

7.) We realized a little more what a blessing it is to have a regular income.  It's definitely something we need to treat with care and responsibility, and part of it should be used to help others who are doing without.

What a perspective changer!  Although we have slid back to our normal habits in some areas, I have found that I am more thoughtful about my purchases, and we've held onto the bus and packed lunch habits.   In addition, we also have a better idea of what we would really need to have saved to be prepared for a real economic trial.  We are planning to do another round soon (for a month this time!), and may make it a yearly tradition to help us re-evaluate how we're doing.  While we know that our experiment in no way compares to going through a real period of unemployment, it did open our eyes to some areas where we were taking things for granted.

For some great family finance advice, I highly recommend Dave Ramsey's Total Money Makeover.  We've been following this plan for a number of years and it's a winner.  Tried and true, no-nonsense wisdom.  My college-age daughter even follows the program modified to her meager budget.  It works!

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