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"The Bills are Due, Now What?"

It’s mid-January, and you know what that means… It may mean that your child’s bedroom floor is littered with toys that are either broken, missing parts, or just forgotten about.

But it also means that the mail carrier is no longer the welcome visitor that he or she was just a month ago. Before the holidays, you may have rushed to pick up the mail to see what long-lost friend was sending you season’s greetings. That feeling of anticipation may be temporarily replaced with a feeling of dread as you reluctantly check your mailbox to see which credit card companies will be the first to claim a hefty chunk of your paycheck.

So, you want to set a good example for your children regarding financial management? You have three choices during this infamous month that is known for making resolutions, and fresh starts.

1. You can yell and scream and swear that next year, everyone on your list gets a lump of coal and that’s it!
2. You can pay a portion of the credit card bills, hoping that next month you will have enough left over to pay off the remaining balance, including the interest rate.
3. You can choose to cut back in other areas, in order to pay the bills in full.

If you choose option 3 (good choice), you can use the challenge to teach your kids some things along the way. This would also be a good time to enroll your teenagers in "Credit Card Charges 101." Credit cards can add flexibility to the way you spend available income. But they can also tie up that income for months or even years in order to "pay down the debt" if the balance is allowed to carry over from month to month, accumulating more and more interest charges.

So gather the family together and make a list of the three types of expenses for the month:

1. Fixed expenses are those that cannot be changed. Bills, lunch money, and bus fare are good examples.
2. Flexible expenses are those things that come up every now and then such as repairs, birthdays, or Christmas gifts.
3. Entertainment expenses include eating out, going to the movies, or buying or renting videos and music.

Once you have subtracted the total fixed expenses from the total income for the month, the family can decide how to cut corners to stretch what is left over until the next check comes.

Here are some nearly painless suggestions for doing just that. Who knows? It may even be fun to tackle the post-holiday slump together.

• Designate one week as a "no-frills" week. That may mean packing a lunch instead of forking over a couple of dollars for the school’s famous "mystery meat helper," or watching re-runs instead of renting a movie. If the week is a success, you may want to do this once a month. The money saved could be put toward a family outing, or to pay for this year’s Christmas presents up-front, interest-free.
  
• Start a family coupon club. Even the younger kids can help out by matching coupons with items on the list. Caution your kids to clip only those coupons for things that your family uses regularly. After all, are you really saving money when you buy the extra large box of cereal that no one likes?
  
• Plan to have an indoor picnic one night a week. The weather outside may be frightful, but what fun you could have eating sandwiches on a blanket and playing games.
  
• Start a record of expenses. Simply divide a piece of paper into three columns labeled item, cost, and date. Post it on the refrigerator and record all expenses for the month. Encourage older teens to do the same for their own expenses. It may take some discipline, but by the end of the month, your family may see ways that costs could be reduced in the future.

So give it a try. Chances are your family will have enough money left over at the end of the month for a pizza party or movie and popcorn night.

References:

"The Monster Money Book," by Loreen Leedy

"Kiplinger’s Dollars and Sense for Kids," by Janet Bodnar

"How to Make Money Make Sense to Children," by Michael J. Searls