When I graduated from college in the early 1990’s, the job market was a mess. I scrambled to find a job…any job.

I took a series of temporary part-time gigs to make ends meet, trying to figure out “what comes next.” I learned the hard way that if I didn’t control my spending there was no way I was going to be able to make things work. The credit card in my pocket was very easy to pull out, but not so easy to pay off.

The single most important thing that you can do when hunting for long term employment is to control your spending. Don’t get me wrong, it’s not easy. But sitting down once a week to review your spending for the week, compare it to your income, and make a plan for the following week can keep you out of trouble for a long time.

Some quick tips:

1. Track your out of pocket spending. Get a receipt for every purchase you make, and look at every receipt when you sit down to review your finances. You’ll be shocked at what you see.

2. Keep track of your finances. Start with a basic budget and adjust as necessary, but stick to it. Other financial tools can come later when you have reliable income. A simple budget form and simple daily spending log can be found at www.financiallit.org/resources/tools.aspx.

3. Buy only what you need. If it doesn’t meet your basic survival needs, or help get you a job, you don’t need it. Ramen Noodles and peanut butter sandwiches will feed you. Paying cheap rent to a family member for a spare bedroom will keep you housed. A couple of basic outfits and a decent second hand suit from a consignment shop will keep you clothed. Keep it cheap and simple now, the dividends will pay later.

4. Don’t put anything on your credit card you can’t pay off at the end of the month. Once you start carrying balances, those balances start to grow quickly, and it’s all over but the shouting.

5. If you are bouncing between temporary and/or part-time jobs, try as hard as you can to put some money into savings. You’ll feel even poorer now, but you’ll have some resources you can stretch if your current job ends and you haven’t found the next one yet.

6. Don’t go out drinking. Trust me. I’ve seen folks dig themselves into holes they couldn’t get out of because they liked to go out every weekend, and after that “1 drink” they promised themselves they loosen up as a “treat” or a “splurge.” Once is ok; every weekend is a pattern leading to a problem.

This is short term strategy to get you through the job search phase. Once you’ve got reliable income, good budgeting and planning will allow you to loosen up and have a little fun.

When working on your budget, it always seems like the fun stuff is the first to go. Essentials take priority over all the discretionary items in your financial plan, which can make you less than excited to pare back your activities. However, there are plenty of low or no cost things you can do that won’t blow your entertainment budget.

If you love movies, you know that it is currently almost $10 to see a movie in the theater. Add to that the gas spent getting there, any snacks you buy, as well as the time wasted standing in line, waiting through the endless movie trivia, advertisements, and previews. Going out to the movies is an exercise in waste.

Consider what my friends and I do: a weekly movie night. We watch movies that someone in the group owns (free) or someone will rent a title that we all want to see (or even pick it up at the library – also free!). Someone brings candy, popcorn gets popped, and the movie starts when you want it to start.

If you rent in high volume, joining Netflix is an option you should consider. Movies are delivered right to your door and return postage is prepaid. There are no late fees, and plans start as low as $4.99 per month. Personally, I subscribe to the least expensive unlimited plan ($8.99 per month) and get 1 movie at a time in the mail, plus I can watch instantly on my laptop or through my husbands gaming system (the Playstation 3 and Xbox 360 systems both have this capability, and the Nintendo Wii is scheduled to be set up for this in the spring).

In the same vein as movie night, a pot luck dinner is an inexpensive way to satisfy your craving for new food. Pick a new recipe that you’ve been dying to try, have someone bring the drinks, someone else bring desert, and you’re set for a delicious night. Yearning for a new environment? Take the show on the road and make it a pot luck picnic!

If you can’t control the desire to go out to eat, keep an eye out for deals. Happy Hours usually have deals on appetizers and some restaurants are bringing back prix fix menus. Something I do when I go out is have each person order an appetizer and we all share. If it’s just the two of us, my husband and I will each get a small salad and split a main course (and if there’s room, share a desert as well!). Many cities have a Restaurant Week, where local eateries offer a 3-course meal for a fixed price. This can be an inexpensive way to enjoy the cuisine in your area.

Your local library is a great resource! Check out a book and head for your favorite coffee place. An afternoon of relaxation can be as inexpensive as a hot drink. As mentioned above, you can also get movies for your movie night there, and if your library is like mine, they will have an annual book sale. I usually hit it on the last day because nothing brings me more joy than a paperback book that only costs 10 cents.

If you’re an art lover, check to see if you library offers passes to your local museum. Sometimes, the museum itself will offer a free time for admissions. The art museum in my town is free to the public on Friday nights. Or, you could stop into a local gallery. They rarely charge a fee to enter, relying instead on the commission they’ll make on a sale. If you go when there is an opening, you might also score some free wine and cheese!

If none of the above quells the urge to get out and DO something, check out any bulletin board and telephone pole you come across. Pick up your free weekly paper. Community events can be fairly inexpensive, entertaining, and easy to get to. They’re specifically designed to cater to the entire neighborhood. It’s a good way to connect with some local people and probably learn a little bit about where you live. If you don’t find anything that suits you, start something! Put up a flyer looking for people who want to play a mass game of Frisbee or roller skate around the park. Take a risk and get out there!

When all is said and done, you don’t need to spend a ton of money to have a good time. The most important thing to remember is to enjoy the little things in life. Once you are in this frame of mind, quality time with your loved ones, or with a good book and a cup of tea, are the only ingredients you’ll need for a good day.

Great ideas for a budget-minded vacation ©iStockphoto.com/bunhill

Everybody needs to get away sometime. There’s nothing more exciting than new adventures and different places. However, the cost of most vacations can make your pulse race for a different reason. But with a few smart decisions, you can have a relatively carefree retreat.

The best way to lessen the financial impact of taking a vacation is to plan early. Determine what your total budget is including transportation, lodging, food, shopping, and entertainment. You should have an idea of when you want to leave. Take your total budget and divide by how many paychecks you will receive between now and then. The resulting number is how much you need to put away each pay period in order to afford your holiday.

Some banks offer a “vacation club” savings account.  They may be called different things, my bank calls it a “club savings” account. To make the savings even more painless, look into having this amount automatically deposited from your paycheck. This way you won’t even have to think about it.

Budgeting is your best friend when it comes to vacationing. Having a set daily amount to spend will help you reevaluate what is priority. If you need a better grasp of your vacation finances, you can decide on set amounts for each thing (i.e. $30 for entertainment, $70 for food, $20 for shopping, etc). The important thing is to set reasonable budgets based on where you are visiting. $100 goes a lot further in a small town than it does in New York City.

Traveling midweek can lower your airfare. Airlines add a “weekend surcharge” onto flights that depart Friday, Saturday, Sunday, and, in some cases, Thursday. There are also many fare tracking websites out there, like www.airfarewatchdog.com , which will email you airfare deals based on the criteria you submit (departure city, destination city, or a defined itinerary). Both Google and Yahoo have plug-ins that automatically checks for the lowest fares to your favorite destinations.

If flying is too expensive for you, think about a destination you can reach by car, bus or train. If you are considering driving, don’t forget to budget for parking. These costs can be astronomical, and some hotels require you to park in their garage, for an additional fee! When looking at the fly vs. drive question, keep in mind that you can either spend time or money. While driving is definitely cheaper than flying, you could spend days on the road getting to and from your destination. If driving is your only option, choose a vacation spot that can be reached in less than a day.

Don’t get tunnel vision when booking your hotel room online. There are a ton of travel websites out there that act as wholesalers for hotel rooms (www.hotels.com, www.priceline.com and www.travelocity.com to name a few), but don’t forget to check against the hotels own rates. When I was booking a hotel room in Boston, I found the lowest rate on the wholesalers websites and then checked it against the hotel’s own website. For the same price, I could get a bigger room with the hotel directly and use my AAA discount (which wasn’t available on the wholesaler’s site).

Why does this occur? Until you book your room, all prices are subject to availability. What this means is, that hotels.com could only have 2 rooms in their allotment left, whereas the hotel itself may have plenty that are vacant. Their incentive to get you to buy is to lower the rate. The reverse is also true. When there are no rooms available, the hotel can charge a premium for the space.

Food can be an astronomical expense when vacationing. If your hotel offers a free breakfast with your room, this is the time to load up. Get seconds! I learned this when on a school trip to Florida. After a huge breakfast, I noticed that I was never hungry enough for a full lunch. A snack usually held me over until dinner. Always avoid eating at the hotel’s restaurant. The food will be more expensive than similar restaurants in the area. Why? Because you are paying for the convenience of not having to look for a place to eat.

Most likely, you have chosen your destination because there is something there you want to see, be it a show or a museum. But what if you just decided to get away for the sake of it? The website www.tripadvisor.com has a wonderful feature that allows you to plug in a town and click on “Things To Do” and you will be rewarded with a list of tours, museums, and outdoor activities. Once you have arrived, it can never hurt to pick up a copy of the local paper to see what’s happening.

With all that said, summer is still the most expensive time to travel. Consider booking a trip for the off-season and spend your summer saving for your trip. However, peak season is peak for a reason and there are some drawbacks to this approach. The number one reason for an area being off-season is usually weather-related, and many places often undergo renovations during the slow months. A quick phone call or a Google search may answer any questions you have about a particular destination.

The most important thing about a trip is the people you spend it with. Using these tips, you should be able to have a vacation that lets you focus on relaxing with your loved ones, instead of worrying about the cost.

Ten Tips

1. Build a fairy house.

If you’ve never built a fairy house with your kids, now’s the time! A fairy house is a small structure built outdoors entirely out of natural materials found close by. You can decorate your fairy house with feathers, berries, seashells anything that is natural and not disturbing the ecosystem you’re visiting. You could build one at the beach, in your back yard or at the park using whatever flowers, leaves,  or stones that may be about.

2. Stargazing night

You can find books full of star charts at most local libraries. Take a little time as a family to see what stars can be found in your area in the summer. Spread out a blanket and see how many stars or constellations you can remember.

3. Take a hike! (or a walk or a bike trip!)

Sometimes there’s nothing better than putting on your favorite sneakers, packing a lunch (and plenty of water!) and striking out on a trail. Summertime is perfect for finding a new favorite mountain view. If you’re not sure where to go, just check out a trail map online and look up your zip code for fun, new places to check out.

4. Stage a family talent show

Everyone has some hidden talent. Dust off your unicycle or show off your long hidden spoon playing ability to your kids. Have someone design some simple costumes or if anyone is an artist you can have them create posters or tickets to the event. Pull some lawn chairs out onto the lawn or driveway and see what happens! Make sure that everyone gets a chance to highlight their unique talents.

5. Kite building

Even on rainy summer days there is something to do with things right out of your recycling bin. All you’ll need is some newspaper, string, a couple of skewers, something for a tail and tape and you’re in business! Cut the paper into a kite shape, reinforce with skewers and tie the string and tail to the kite. Use trial and error to find your favorite pattern and see what works best for your family.

6. Local outdoor concerts

In most towns or cities you can find listings of free local shows or concerts that are put on in parks, colleges or in town amphitheaters. Check out your local newspaper for the ‘What’s Happening’ section to see what’s going on!

7. Visit a  local Farm

Local farms usually enjoy having small groups come in and see just how your food goes from the ground to the table. Depending on the farm you visit you may be able to pet animals or help pick some vegetables. It’s a great opportunity to get to know a local farmer and to show your kids just how much work goes into the food they eat!

8. Build a fort

There is nothing better on a hot day than building a fort and hiding in the shade. Take any well worn blankets, chairs, brooms, sheets or cardboard boxes and build a fort! Once it’s built your kids can play board games, read or just enjoy lemonade until the heat of the day passes.

9. Family Scavenger Hunt

Take a few moments to collect objects from your home; maybe a red crayon, a silly hat or your old unicycle etc. Make a list of the items. Hide the items around your backyard (or inside your house if it’s a rainy day!)  Make a copy of the list of hidden things and give one to everyone who’s participating in the hunt. Put a time limit and send everyone off! Whoever finds the most items in the time given is the winner!

10. Water fight

All you really need is water and someone to surprise! If you have any leftover balloons from a birthday fill them up from the tap and put them in a bucket, or, better yet, fill the bucket up too. Split the family into two teams and evenly divide the water balloons, cups of water or hoses. Have a referee count to ten, while everyone gets a chance to hide and then let loose!

Is a secured credit card right for you? © Viktor Gmyria - Fotolia.com

One option for those seeking credit is to look into a secured credit card. A secured credit card is backed by a savings account, money market or certificate of deposit.  The credit limit on such cards is usually 50-100% of the deposit required.  So if you were asked to deposit $500, your credit limit would probably be between $250 and $500. Unlike a debit card, the money stays in the account unless you fail to pay your monthly bill on time. If you default, the bank will withdraw the funds owed from the savings account.

There are usually fees associated with these cards.  These fees can be taken from the deposit and result in a reduced credit limit.  When you are shopping around for a secured card make sure to read and understand the fine print, including:

1. Annual fees. If there are annual fees, what is the amount and when is it due? Can that amount decrease with your good payment history or increase with problematic payments?
2. Interest rates. Is the interest rate veritable or fixed? Is there an introductory rate that will jump after a fixed period of time?
3. Reporting. Does this bank or credit union report to the three major credit bureaus?
4. Interest rates on cash advances. Interest rates on cash advances are higher than on ordinary purchases. What is the difference in interest rate for cash advances? (If you have an ‘overdraft protection’ on a bank account using your secured card, is it considered a cash advance?)
5. Minimum amount deposited. Do you have to keep a minimum amount deposited in your account; will you be penalized if you go under that amount?
6. Maximum amount deposited. Can you add more over funds to your account over time to gain a larger credit line?
7. Options for Account. Can you choose to place your money in a savings, money market account or CD? If so, what are the advantages and disadvantages of each choice? Make sure to talk though these options with your bank or credit union representative to get a clear picture of how long your money will be tied up and what returns you can expect from each.
8. Interest earned. Overtime do you earn interest on the funds you’ve put away to back the card? If so, what is the amount and could you be receiving more with a higher deposited amount or good payment history?
9. Application fees. Do you have to pay to apply for this card? If so, is that amount refundable if you are denied the card?
10. What percentage of the deposit can you use? It is important to know just how much money will actually be available to you when you open your account. Ask about any extra fees that may be taken out of the total amount allowed to you on the card.
11. Time Limits. Do you have to keep your money in the account for a specific period of time; if so, are there fees for removing your money before that date?

Don’t just settle at the first bank or credit union you find, make sure to shop around to find the best fit for you.  When using any sort of credit, it is important to note that it is never a good idea to carry a balance from month to month. When using a secured credit card with the hope of rebuilding your credit only charge what you can afford to pay off at the end of the month.  This will not only give you a strong payment history but you will avoid finding yourself over your head paying off the interest that collects overtime.

Also, steer clear of cash advances. As soon as you receive that money your interest (almost always at a higher rate) starts to build.

Again, if your goal is to build your credit rating, make sure that your bank or credit union reports to the credit bureaus! Even if you have a perfect payment history, if they do not report to the credit bureaus your good work won’t be reflected on your credit report. It also may be in your best interest to check and see if your card issuer will flag your card as a secured credit card on your credit report. It may be more difficult to build or rebuild your credit if that flag is there. If you’re looking to use your secured credit card as a stepping stone to an unsecured card, it will take you approximately a year of on time and in full payments to build a solid enough history to start realistically applying for affordable unsecured cards.

Retirement planning is like taking your vitamins or eating those leafy greens… you know you should, but … can’t it wait until tomorrow? “Millennials ” (roughly those born between 1975 and mid 1995) are especially vulnerable to this attitude because retirement is so far in the future. Even as those of you in Gen Y respond to the Great Recession with a focus on financially responsible behavior, you’re facing the worst job market in memory, shouldering record amounts of student loan debt and still hoping to buy a home in the not too distant future. Given this environment, many Millennials just don’t see retirement savings as a priority yet. Why save now for something so far off when you’ve got more immediate priorities? There will be plenty of time to catch up later . . . won’t there?

The answers to “why now” are that (1) contributions to your retirement plan reduce your taxes now and (2) the “magic” of compounding interest means that small amounts saved now are better than larger amounts saved later. Whether it’s a qualified IRA (Individual Retirement Account) you establish at your bank or an employer-sponsored retirement plan (like a 401(k), or 403(b)), contributing to a retirement plan really won’t make a huge dent in your take home pay today, but it will make retirement less stressful and more like, well, retirement.

How does this work? Let’s start with our first answer: contributions reduce your taxes now. In the case of an IRA, this means your contributions are deductible from your taxes when you file your tax return in April. With an employer-sponsored plan, contributions are taken out of your paycheck on a pre-tax basis, meaning that the payroll taxes you pay are calculated on lower earnings. Why is this important? It means that either way, less of your money goes to the government. More of it ends up available for your own use, both now and later. Even small amounts set aside in your early 20’s can grow significantly in the next 40 years, which leads us to our second answer, compounding interest.

Compounding interest may or may not seem complicated, depending on how well you did in math class. For those of you who might have missed the finer points, here’s a really basic description:

1. “Principal” is the amount of money in your retirement account that you earn interest on.
2. “Interest” is the amount of money that you earn on the principal from the bank or financial services company. For example, earning five percent (5%) interest means that for every dollar ($1) of principal, you will earn five cents ($0.05) in interest.
3. “Compounding Interest” means that as you earn interest, the bank adds it to your principal instead of mailing you a check. This is an important tool because now you are earning interest on your original principal and all of the interest you’ve earned up to that point.

When you’re young, time is your greatest ally and compounding interest is like rolling a snowball down a mountain. As it rolls down the mountain it picks up more snow and gets bigger, which means that as it keeps rolling it picks up even more snow and gets even bigger even faster and  . . . well, you get the point. If you wait until just before retirement to start saving, time is your greatest enemy and you’re rolling your snowball down an ant hill.

Let’s look at quick example using the assumption that you retire at age 65 and that you can only get an average interest rate of only 2% on your savings (and it’s likely to be higher than that over the course of 40 years):

It doesn’t take a rocket scientist to figure out that having more money for retirement is good. Having more money for retirement is even better when it comes from someone else’s pocket, like the bank that’s paying you interest.

While we’re on the subject of other people’s money, if you have an employer-sponsored retirement plan, ask if the company provides a matching contribution. A matching contribution means that for every dollar you save for retirement, your company will match a certain amount (it varies by company). This is free money, so don’t pass it up!

Here’s the difference it can make, using the same example from above:

Investment Options

Once you decide to open a retirement plan, don’t let the investment options presented to you when you sign up put you into analysis paralysis (I’ve been there; trust me, it’s a useless, twitchy place).

In the examples we gave above, we assumed you were borderline paranoid about the stock market and put all of your retirement funds in super-safe Treasury bonds or Certificates of Deposit insured by the government. If you invest that money more aggressively (read: more risky), you are likely to do better over the long term, but you could also lose some of that money, too.

If you want to invest more aggressively but you’re a slacker, look to see if your plan offers a target fund. Target funds automatically adjust their investments based on a planned retirement year. For instance, this year a 25 year-old planning to retire at 65 would choose a fund that matures in 2049. This fund will gradually get more conservative (think: “less risk,” not politics) as the years go by.

If you’re a control freak, or if your provider doesn’t offer target funds, the Wall Street Journal suggests this simple formula:

“… Subtract your age from 100, with that amount going into stocks. It’s simplistic, but it gets you closer to where you need to be. So, for instance, if you’re 25, you’d want about 75% of your 401(k) contributions going into stock funds.”

But remember the lessons of 2008-2009: nothing is guaranteed in the stock market, and you can experience big losses – especially in the short term. If you are more afraid of losing money than you are of missing out on potential gains over the long term, tell your broker you are “risk averse” and ask them about more conservative investment options. Remember, when it comes to your retirement account, you’re the one calling the shots.

Pensions & Social Security

A lucky few of you may have the opportunity to participate in a pension plan. In a pension plan, the employer agrees to pay you a certain amount each month during your retirement based on your earnings and length of employment with the company. If you haven’t heard of a pension plan, it’s because the employer-sponsored pension plan seems to be going the way of the Dodo bird. According to worldatwork.org, the number of Fortune 1000 companies that have frozen their pension plans has more than quadrupled in the past five years. This is unfortunate, but it’s just one more reason to start your own retirement plan. If you don’t take care of this yourself it just won’t get done.

But what about Social Security, you ask? Right now, the average Social Security check equals only about 40% of pre-retirement earnings. And, if nothing changes, the Social Security trust will be depleted on 2037 anyway… well before energetic, interesting 25-year-olds become old, boring and eligible to retire. If Social Security is still around when Gen Y retires, super. Just don’t count on it. Make your own plans.

It’s understandable that a lot of 20-somethings are putting off saving for retirement. But a 25 year old who puts only $12.50 (or the cost of three lattes) a week into a retirement account, invests it wisely and earns an 8% average rate of return would have an additional $175,000 if they retire at 65 years old. That’s literally money in the bank.

To learn more, read:

• Fresh Start by Leslie E. Linfield, Esq.
• http://www.moneytalksnews.com/2008/07/21/retirement-planning-for-20-somethings/
• http://online.wsj.com/article/SB116355424937623381.html
• http://www.worldatwork.org/waw/adimComment?id=33669&from=HR%20News
• http://www.ssa.gov/OACT/TRSUM/index.html

1. Save automatically. Sign up for direct deposit at work and make sure that a portion is deposited directly into your savings account.
2. Create a workable budget & stick to it. This will help you avoid credit card debt and increase savings.
3. Brown bag your lunch. Spending $5 per day on lunch adds up to $1,300 a year, or $13,000 over ten years. Imagine having that money for your retirement.
4. Pay off credit cards as fast as you can. Paying off $1,000 in credit card debt at a 20% interest rate is the same as earning 20% interest on a $1,000 investment. Get rid of that debt as soon as possible while still saving for emergencies.
5. Reduce tax withholdings. If you get a big tax refund, too much tax is taken out of your paycheck and you’re giving the government an interest-free loan. Yes, the big tax return in April is nice, but earning interest on those funds year-round is better.
6. If you do get a big tax return, pay down your debt or invest that money in a Roth IRA if you qualify. Ask your investment advisor for details.
7. If your workplace offers it, participate in their retirement plan. Contributions to a 401(k) or 403(b) plan are taken from your paycheck pre-tax. You won’t even miss it.
8. Find out if your employer matches contributions to your retirement plan (see #7). This is free money, don’t pass it up! It also gets you closer to your savings goal of 10%.
9. Make it a goal to pay off your mortgage before retirement. It’s one less bill to deal with once you’re on a fixed income, and the interest you pay is higher than the interest you can earn in savings accounts these days.
10. Remember the magic number 10 . . . as in 10%. That’s the minimum amount of gross monthly income IFL recommends you should put into savings, including retirement. If you earn $30,000/ year, this is less than $60 per week.

You’ve known this for a while, so you may ask, what’s the big deal? Well, the big deal could be a sudden decrease in your credit limit if the credit card company doesn’t like what it sees.

Data mining is the process of gathering huge amounts of information to identify patterns. Lately, people have reported that their credit card companies have cut their credit limits based on their spending patterns. The thinking goes, if someone is shopping at a thrift store or local fast food joint, maybe they are facing or preparing for financial hardship. Or, if a credit card company sees a charge for a session at a marriage counselor, they could assume that the card holder will probably get a divorce soon . . . and will have less income. People from across the country have related stories about having their credit limit cut because of where they shopped.

To protect yourself from being labeled as a “risky” customer simply for being frugal or taking care of your physical & mental health, there are times when it pays to use cash:

1. Shopping Sprees at Discount & Thrift Stores: If you haven’t been using your card at discount stores like Walmart, your local dollar store or Goodwill, don’t start now. Credit card companies may read this as a sign that you’re worried you might lose your job.
2. Marriage Counseling & Therapy: Marriage counseling is a step toward divorce which shrinks your income and increases expenses. Personal therapy may imply instability. Both are important to your well-being, just be sure to pay your copay with cash, if possible.
3. Alcohol: Don’t bring your credit card to the bar – charging drinks can look like a way to escape stress. Cash is king (and will keep you from overspending).
4. Retreading Tires: Buying retreads can be a sign that you can’t afford new tires – especially if you purchased new tires on your card in the past.

For more tips about purchases that would be best done without plastic, see IFL’s executive director Leslie Linfield on 207 or this article from Marketplace.

But, with every challenge comes an opportunity – what better way to teach your children the basics of living within a budget and learn the difference between “wants” and “needs?” Here are a few tips that will help you and your kids earn an “A” for shopping smarter.

1. Create a budget. Identify how much money you are able (and willing) to apply to Back to School shopping. Knowing your limit ahead of time will help you stay on track. Share this information with you kids.

2. Identify needs. Contact your child’s school to see if they have a supply recommendation list. Enlist your child to have a scavenger hunt through your home to see if you already have any of the necessities – you don’t need to replace serviceable backpacks, binders, lunchboxes, etc., just because it is a new school year.

3. Create a spending journal. Identify the “needs” from your list that didn’t turn up during the scavenger hunt. Write your budgeted number at the top of the page and leave space a “cost” column to record your purchases. Have your child record the cost of items and keep track of your budget. (You can check out our sample spending journal here)

5. Give your child an incentive to save money. Rewards like putting money left in the budget after the shopping is done in your child’s savings account can help your child understand that being mindful of spending can free money for other uses, like those “wants” that didn’t make your shopping list.

4. Be a smart shopper. Keep an eye open for sales: some discount & office supply stores will sell school supplies for a loss just to get you in the door (remember to limit the purchases to your list, though). Dollar stores often have a good variety of supplies. For clothes, avoid items that are too trendy… when the fad ends, you could have some perfectly useful clothes that your child won’t wear, resulting in replacement costs down the line.

5. Do the math. Sit down with your child to look at where you spent the most money, and talk about what they learned from the experience. If you have remaining funds, talk about what to do with them (savings account, a special treat). This is a great chance to talk about setting and working toward financial goals!

But be careful: most of the law doesn’t take effect until February of 2010. Here is what you should know about your rights under the Act right now, and what you should look out for between now and February.

Beginning August 20, 2009:

• Credit card companies are required to give you 45 days notice of interest rate increases or big changes to the terms of your account. They also have to let you know you have the right to reject the change and cancel the account.

Some changes you can’t reject, including changes in minimum payment and, for variable rate credit cards, interest rate changes related to the prime interest rate (which is set by the Federal Reserve). Also, if you are more than 60 days late on your payments, you can’t reject rate increases.

• Should you decide to reject changes and cancel your account, you won’t have to pay your full balance immediately, but the credit card company can increase your minimum payment. In addition, since you are canceling the account by rejecting the change, you can’t make additional purchases.
• Credit card companies must send you their bill at least 21 days before payment is due.

Beginning February, 2010:

• Rate increases will only apply to new purchases – not older purchases made under the previous rate.

Look out! Rate increases can apply to older purchases if you’re more than 60 days late on your payments. However, if you make minimum payments on-time for six months after the rate increase, the credit card company must bring the rate on those older purchases back down to the original interest rate.

• Higher balances paid first. If you have an account that carries different rates for different types of transactions (i.e. cash advances vs. purchases), the payments will be applied to the charges with the highest interest rate first.
• Over-limit fees become “opt-in.” This means the credit card company has to get your permission to allow purchases that put you over your credit limit. If you don’t give them that permission, your purchase would be declined (but you won’t go over your limit, and you won’t have to pay an over-limit fee).
• No more “universal default.” Universal default is the practice where credit card companies raise your rates because you made late payments to other creditors.
• Credit card companies must tell you how long it would take to pay off the entire balance if you only made the minimum monthly payment. Credit card companies must also tell you how much you have to pay each month to pay off your balance in 36 months, including interest.
• Young adults 21 years old and younger will only be able to get their own credit card if they have an adult cosigner or if they demonstrate that they have independent means of repaying the debt.

What to look for between now and February 2010

Credit card companies have been preparing for this law by changing their fee structures and rewards programs. They are also shifting some fixed-rate customers to variable (prime rate + some percentage) rate cards.

Be sure to read every piece of mail you receive from your credit card company so you will know if there have been changes to your account. And, make your minimum payment (or more) each month keep your accounts current – this can affect your eligibility for the protections of this law. It also helps you avoid those late fees and reduces the chances you’ll fall even further behind.