a drop of water

In light of the ongoing financial crisis and economic mood, there seems to be a growing number of people  re-evaluating gift giving, i.e. the site: No Christmas Gifts This Year.  Gift giving is a lot of things for different people.  It can be a burden when you have no idea what to get your distant cousin.  It can be an expression of love for your significant other.  It can be a responsibility to meet the expectation of your child.  It can be an attempt to “keep up with the Jones” in the expense and magnitude of your generosity.  For me, I’ve been rethinking the pragmatism of gift giving.

I think the challenge this year for me is to give sustainable gifts that keep on giving.  I want to give a gift that just isn’t the proverbial fish, but teaches how to catch fish.  On NPR last weekend, a point was made by Chef Jamie Oliver, (most known for campaigning against processed foods in British Schools) that people [Americans] today are lacking when it comes to making tasty, lasting, nutritional meals at home on a budget and with what ever is available locally and seasonally.  He believes that most people today who are used to going out to eat for a good meal, lack knowledge of substitutions, have very little creativity when it comes to deciding what to make based on what is in their pantry, and have very little understanding of what is in season and what is out of season.  The importance of these skills and knowledge is even more important in light of the current economic atmosphere.

So maybe giving a cookbook to a loved one would be something along these lines, to get them started.  But don’t stop there.  Combine your gift of a cookbook with some IOU gifts of time to choose and prepare a recipe together.  Sharing a meal always provides the ground for deepening frienships, but preparing a meal together catalyzes the process.

I do not own these two books, but received recommendations for them, so for what its worth, here is something to get you started:

1. How to Cook Everything – [$18.10] (After $5 Rebate on Amazon.com)
2. The Splendid Table’s How to Eat Supper – [$23.10] (Amazon.com)

You can also check out some of the cooking adventures of a future trophy husband at my friends blog.

Part 2 of 5 in Tips for Budgeting

Tracking Numbers – Knowledge is Power

1. Category Pools aka the Envelope Method – Discipline is required here.  If you put $25 into the restaurant envelope then you must hold yourself to spending only $25 in restaurants that week.  When the week (or whatever time period you’ve set) is over, the money left over can be moved to a savings account or kept in the envelope as a rollover amount for those weeks where more than $25 might be justified.

2. Automatic Disbursements – If your employer offers direct deposit, you can automatically disburse a percentage of your paycheck to a savings account so that amount of money is never really considered as part of your daily living expenses.  If our paycheck is $1000, we live in a way that uses up that $1000.  If we make our paycheck $850 dollars, we will live a lifestyle that uses up that $850.  Lets say you are paid every two weeks and put $150 of each paycheck into that savings account which you do not have regular access to.  After just one year you would have accrued a savings of $3900.  Congratulations, you have more saved than the typical American family.

3. Electronic Monitoring – Credit cards (lots of incentives–cashback, points, miles–for responsible use) combined with programs like www.mint.com or quicken make monitoring your spending almost automatic.  Seeing the relative percentage of how much money goes into different categories in graphs and summaries can be a sobering and challenging experience, but its helpful to know what we are investing in.  Spending really is investing.  Half the battle of being generous with our resources is knowing where we spend already.

Part 3 of 5 in Tips for Budgeting

Planning Ahead – There is always a Sale

1. Research – Amazon (and other websites) are brimming with user reviews on almost everything.  Generic brands are often cheaper for the similar quality (though not always, so read reviews!).  Sometimes paying more for the non-generic will be a better-longer lasting choice than the generic too.  Price compare with online, outlet and retail stores.  Ask friends and family for advice and past experiences with brands and products. There is always a sale, so you need to do the research to know at what price point an item is truly “on sale.”

2. Questions – “Do you really need this?”  Try waiting 30 days from the point of deciding to purchase something to actually purchasing it.  This practice helps avoid buyers remorse and also allows you the opportunity to be creative in using something you already have to meet the need the new purchase is suppose to meet. “What will this enable me to do and what will this disable me from doing.”  The typical example is, “what will paying for cable enable me to do”: sit in front of my tv at night while “what will paying for cable disable me from doing”:  deter me from having real conversations with people.

3. Buying tips – Consider supply and demand – try not to pay for items that are marked up just because there is short supply (i.e. Nintendo Wii’s).  Admittedly my friends and I bought Wii’s for MSRP and sold at 60% markup for almost a year so if everyone were to follow my advice, I would have no customers :).  Consider buying  Used-Like-New.  Jenn and I found the bedroom set that we had listed on our Crate and Barrel Wedding Registry on www.craigslist.com in like-new condition at a fraction of the cost!  Use shopping lists and stick to them, especially when going into warehouse stores like Costco.  These stores are designed to feature items on the aisle ends that you were not intending to buy, didn’t even know existed, and now suddenly think you need.  Just don’t do it (!Nike).  Some thing you should do is use coupons and search for online deals (www.retailmenot.com).  Some say coupons are a waste of time, but I would say being aware of coupons and refusing to buy items that are not on sale is more worthwhile for its perspective-habit building than its qualitative benefits.

Part 4 of 5 in Tips for Budgeting

Involving Community – You are not alone

1. Accountability - Budgeting sucks when you have no more money in your restaurant envelope and everyone else is going out to eat.  Budgeting can feel lonely and overwhelming, so involve your community.  When we share about our financial decisions and are open about where we are investing (spending) our money and include others in the decisioning process, it becomes a lifestyle for a group of people instead of just a loan dingy on a stormy sea.  This helps expand our perspectives and exposes us to others research, questions and buying tips.

2. Sharing – We seem to have a collection of household items that get used once and then sit on the shelf for the rest of their lives till they are donated or given away.  Consider buying these type of items with the purpose of sharing their cost and their use among your friends and family.  When did restaurants become all about quantity instead of quality?  Jenn and I like to eat out on our date nights, but it can easily get expensive.  We’ve been trying to share dishes instead because often times one dish is enough for both of us.  When we do order two, we tend to regret the stuffed feeling in our stomachs as we exit.

3. Be relational – Ultimately, the things we buy really don’t provide us with lasting satisfaction.  It is more about how those things we buy bring us into relationship with others.  Relationships, memories, friendships, and the like are what is lasting, beyond the latest and greatest, shiniest and fastest electronic device, shoe, bag, car, and tv.  Books have a great power here.  I find myself often buying books to own them, read them once and then display them on a bookshelf as proof of my worth, but this renders books to mere dust collectors. If we buy a book, read it, then give it away it opens up opportunity for dialog and discussion between people.

Most would agree that budgeting is a good habit.  It keeps us from spending beyond our means and helps us save for rainy days.  But in practice many people find themselves on the extremes of the financial spectrum.  They are either spending above and beyond their means or they are stingily hoarding money for a possible future unknown event.

Those who spend, spend, spend see little value to budgeting and saving and elevate the importance of a moments whim above everything else.  Those who “hoard, hoard, hoard” place their security. identity, and their own worth into the bottom line of their account statements.

Having the right perspective on money and budgeting is transforming.  It reorders the priorities in our lives, sheds light on the resources we have available and frees us to efficiently help our neighbors in community. Budgeting frees you to give more and to turn your spending into investing.

In the following three posts I want to share some perspectives on three aspects of budgeting and managing your money:

1. Tracking the Numbers – Knowledge is Power
2. Planning Ahead – There is Always a Sale
3. Involving Community – You need not be Alone