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Wednesday, October 15, 2014

Savvy Family Tip #5: Take a Tip from Your Grandma

Today's Savvy Family tip reminds us that simpler is often better...

Tip # 5 – The modern version of your Great-Grandmother’s strategy. 





When your great-grandfather arrived home on Friday evening his pocket contained the family pay packet. The weekly ritual in most successful households was the division of the money to pay for the family needs, rent, groceries, heat, light, telephone. Money was also tucked away for larger purchases, shoes, clothing. 

Mason jars and envelopes were the management tools of the day. 
When the grocery jar was empty there were no more groceries purchased until after payday. If there wasn’t enough money in the clothing envelope you had to wait, sometimes for a few weeks. 

Our great-grandparents managed real scarcity. 

In comparison almost all of us have two pieces of plastic, one that gives us access to every dollar we have, the other allows us to arrange a loan to purchase just about anything from a cup of coffee to a vacation. This situation creates its own problems. It is too easy to spend what we don’t have for items that we really may not need. 

We need to create artificial scarcity to assist us to manage our spending. 

The envelope method is often suggested as a tool to manage our spending. The challenge is that we’re not used to or comfortable walking around with cash. It seems too 20th century. 

An alternative method is the account specific debit card.  One family member fills the cars with fuel and goes grocery shopping every Sunday. Sunday evening they transfer a set amount of money from their general account to their debit card accounts. This is their “allowance” for the week. When the debit account is empty, spending stops until next Sunday. 

What tools do you use to manage your spending? 



Dan Olson is a Sun Life Financial Advisor. An experienced Dad with three children, now young adults. With everyone under one roof for the Summer, his home is feeling really, really small.

If you have some questions for Dan, or would like some help with your family's savings, here's how you can contact him: 

604 308 9502
www.sunlife.com/dan.olson

Image source: Lily Shop

October posts sponsored by Cutie Pie Boutique