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Moneystepper’s 2015 Savings Challenge Update #1

couple money moneystepper savings challenge

It’s February so that means it’s time to looking at how we did last month with our money. You may remember that I’ve signed up for MoneyStepper’s 2015 Savings Challenge to help us tighten up our finances.

The two main goals of the challenge are:

  • Grow Your Net Worth
  • Save % of Your Net Income

For 2015 our family will do our best to increase our net worth by 25% and have a 15% savings rate.To do this we will be saving more in the joint accounts and we will be paying off the last student loan.

January Net Worth and Savings Results

So how did we do? I’m happy to say that we started off pretty well considering everything that happened this month.

Inching Up our Net Worth

We increased our net worth 2.5% in January. I’m on my maternity leave so for the next month our income will most likely be dropping. Thankfully I buffered some work so I hope that it won’t be changing too much.

My first goal after the leave is to figure out a new work schedule. With two little ones at home, this will be a challenge.  After the dust settles and we have a better idea of how our monthly budget will be, I think you’ll be seeing some significant growth and changes by the spring time.

Focus on Savings

Our year to date saving rate was 8%. We had a huge event last month – the arrival of our baby girl. It was a much shorter labor than the first time, but the costs look about the same. We received a letter from the hospital with the charges for the labor, delivery, and recovery.

The grand total? $9,500.

The good news is that it’s not the bill, so we’ll have to wait to see what our insurance pays. Still, we will see a big chunk of our money leaving us shortly. That means we’ll be more careful with expenses in February.

To help us continue saving, I’m testing out a new way to automatically save some money – Digit. It’s free service that analyzes your personal spending and every few days, intelligently deducts small amounts from your checking into savings.

I can easily transfer the money back into checking if I need to spend it without any fees or hassles.

I’m starting off with my personal checking account to see if it works wonderful as advertised. I’ll share my results on the next update.

Thoughts on Our MoneyStepper Progress

Now you have a better idea of how things are looking from us. I’d like to hear about you and your family? How are things going so far in 2015?

Personal Finance Shout-Outs – New Baby Edition

new baby girl couple money

Just wanted to announce that we had our second daughter! It’s been an adjustment for sure, but we’re extremely grateful that family and friends have been helping us make this transition smoother.

I’ll have continue to have posts up on Couple Money and new episodes of the podcast, but the schedule will be a lighter than usual for the next few weeks. If you want to reach me during this time, the best way is through Twitter.

Couple Money Around the Web

Besides writing here, I also run the Couple Money Podcast, contribute to other sites, and occasionally do interviews. Here’s where I’ve been this past week:

Let me know what you think of the podcast or interview. If you have any tips on how to save more money while shopping online, leave it below in the comments. I’ll include it in the follow-up episode next week.

Money and More Posts I Loved This Week

One bonus of resting up is that I’ve gotten some extra time on my reading. Here are five of my favorites from this week:

I shared my picks for week; how about you? What posts or articles have you’ve enjoyed this week?

What’s the Best Way to Teach Kids About Money?

the opposite of spoiled book review

If you’re a parent looking to deepen (or just start) your conversations about money with your kids, then The Opposite of Spoiled should be your next book to pick up. It’s the latest release from NY Times columnist Ron Lieber who has extensively covered families and finances.

If you haven’t read any of his previous work some of my favorite recent columns are Letting the Kids in on the Charitable Giving Conversation, Elmo and Sesame Street Teach the Basics of Spending and Saving, and Teenagers Do Not Need Smartphones, So They Should Pay for Them

Teaching Your Kids About Money and Values

With the Opposite of Spoiled, Lieber discusses how parents teach not just the basics of finances with their children, but help them use money as a reflective of positive values such as generosity and entrepreneurship.

It can be intimidating to have your kids come up to you an ask blunt questions about money. Unprepared we may be tempted to deflect or distract, or tell them that they’re too young to understand.

Lieber shows how money can be a valuable teaching tool, one that can help children learn how to take care of themselves, their own families in the future, and their community. The Opposite of Spoiled has plenty of studies and stories from families dealing with issues that parents are faced with on a daily basis.

There are plenty of opportunities such as allowances where parents can explain why it’s important to save, how to spend money wisely, and where kids can give wisely. ron lieber opposite of spoiled review

Moving Beyond The Money Talk Into Conversations

For some parents, they may feel that talking about money is strictly about checkbooks and budget, but The Opposite of Spoiled does a fantastic job of

I appreciated Lieber’s focus on developmental milestones rather than giving hard and fast rules about when to discuss certain money topics. Let’s take for example allowances.

Do you tie to household chores or is it a gift for the kids? Lieber suggests looking at it as a teaching opportunity where you allow your kids to learn from you about the basics and have them gain practical experience on a limited scale.

He then breaks down how you can start off with a conversation about needs and wants. Young children can appreciate that there are some things, like toys, that are wants and then there are important things like food.

As they get older all of you can start thinking of wants and needs not as completely separate columns, but as a scale. Food, shelter, and the essential clothes on one end and name brand clothes, electronics, and games on the other.

Conversations can then move beyond the obvious and instead looks at where to draw the line on where a particular purchase falls.

Thoughts on The Opposite of Spoiled

I highly recommend that you check out The Opposite of Spoiled as it does a thorough job of tackling some of the trickier situations of raising a money smart kid. Lieber offers practical advice, ideas on how to start, and good deal of research so you can find the best way to teach your kids about money and more.

I’d love to hear from you – what are some of your child’s biggest money questions? How have you talked to them about your values and money?

Introducing Money to Kids

introducing personal finance to kids

If things seem quiet lately on the site it’s because I’ve been slowing down in preparation of the (hopefully soon) arrival of our second daughter. The house has been cleaned, the bags have been packed, and everyone is on stand by.

I’ve been spending this month making sure that all of my obligations for work have been met so I can enjoy some time off when our baby girl is here. I’ve also been reading a fantastic book for an upcoming review and post – The Opposite of Spoiled. It’s timing couldn’t have been better.

Our first daughter is now three and a half and is extremely interested in EVERYHTING that we so. Questions are constantly spilling out and including money – or at least the basics of what money can do.

There’s so much more to money than just budgets and investing though. We want to show our kids that money can be a tool for many things including taking care of herself, family, and helping others. Inspired by the book, I wanted to share a couple of ways we started talking and including her.

Using Grocery Shopping as a Teaching Tool

One of the first ways we started introducing her to money concepts is with our grocery store runs. They’re usually short trips to get milk and other perishables so she’s more likely to pay attention for the majority of the time.

As we put items in the cart, I’ll ask her to count what we have. It’s good practice for her and a way for me to keep tabs on how much we’re buying.

While she isn’t ready to discuss budgets yet, we do want her to get the idea of having to make choices on what to buy. For her, we use afternoon snacks. With our grocery trips she gets to pick the snack she’d like for the week.

As a toddler some of her favorites include those Goldfish crackers, chips, and of course cookies. They tend to be in the same area of the store so she’ll usually want to get them all. We explain to her that she can only pick one. At first she was upset and would fuss, but now she starts to look forward to it.

Even though it’s only a minute of two, she will sit there and consider her choices before picking her snack.

Collecting and Counting Coins

She loves to count the coins and watch the jar’s numbers change as she adds the money in. When it’s sufficiently full we’ll divvy up the money into three categories – saving, spending, and giving.

What we’ve been doing so far is having her savings deposited at our bank (Capital One 360). We have used them for several years for our joint accounts and have found them easy to use.

Now that she’s getting more interactive with other kids and has her group of friends, I think we’ll start introducing giving into the equation. I think it would nice for her to start getting either small gifts for her buddies or supplies so she can create something for them.

When we’ve done thank you cards sometimes she’ll happily ‘sign’ her name and deliver the cards. I think she gets a kick out of seeing people smile. As she gets older we’ll talk more amd come up with fun ways to include her with other charitable activities.

Thoughts on Teaching Kids About Money

We are definitely not experts, I just wanted to share some things we’ve been teaching our daughter. I’d really love to hear from you about how you introduced money to your kids. What lessons did you start off with? How old were your kids? What seemed to work really well and what didn’t?

Finding an Investment Strategy That Works for Us

investing tips couples

Every so often it pays to go ahead and review your portfolio. With 2014 over, I spent this week checking up on things to make sure we’re staying on course with our investments. Since I’m looking at our accounts, I thought it might be helpful to explain our process and strategy.

Index or Actively Managed

For our accounts we prefer to go with passive investing as our overall strategy. (We cant’t completely acheive this as my husband’s 401(k) has limited options.)

The biggest difference with index and actively managed funds or ETFs are the goals. With index, you are simply trying to track whatever benchmark you’ve chosen. Either all or a representative sample of a specific index are purchased. Most of this is automated.

Actively managed’s goal is to beat the market or at least those similarly constructed funds. A fund manager works with a team to research and try to predict what securities to invest in.

In theory, most people would love to beat the market, but looking at history and the numbers, there are plenty of investors who come out ahead by going the index route. Two big reasons are:

There are exceptions of course, but most people don’t have the time and resources to make active investing a better option over the long term.

What We Invest In

For my retirement portfolio, my overall investments is based on the David Swensen‘s model. He’s Yale University’s Chief Investment Officer and author of Unconventional Success: A Fundamental Approach to Personal Investment.

For personal investors, he recommends a portfolio that includes:

  • Domestic Equity (30%)
  • Real Estate Investment Trusts (20%)
  • Foreign Developed Equity (15%)
  • U.S. Treasury Notes and Bonds (15%)
  • Emerging Market Equity (5%)
  • U.S. Treasury Inflation-Protection Securities (TIPS) (15%)

As you’ve probably figured out, this portfolio’s strength in how diversified it is without having to a ton of securities. In fact you can construct this portfolio with a handful of index funds or ETFs, making it incredibly easy to track and manage.

  • US Total Stock Market (VTI)
  • Emerging Markets (VWO)
  • REIT Index (VNQ)
  • Total Bond Market (BND)
  • Short-term TIPS (VTIP)
  • FTSE All-World ex-US (VEU)

My husband’s retirement portfolio is similarly diverse.

  • US Total Stock Market (VTI)
  • US Large-Cap Value: VTV
  • US Mid-Cap Value: VOE
  • US Small-Cap Value: VBR
  • Developed Markets: VEA
  • Emerging Markets: VWO
  • US High-Quality Bonds: BND

There are other simple portfolios that you can use for your own investments, just make sure you understand the logic behind it.

Where We Invest

My husband has his IRA stashed away at Betterment.  Basically with them, investing is as easy as depositing money into a savings account. I was able to set up his account in about 20 minutes and it takes even less time to manage.

For my husband who checks his account even less frequently than I do, Betterment is a good fit as it automatically re-balances his portfolio. That helps him to stay on his long term plan without having to constantly check in.

While no investment company can be everything to everyone, I believe that Betterment can offer an easy solution if you’re someone who wants to  your IRA up and running quickly without having to hover. Check it out and see if could be the right option for you.

I use Vanguard to handle my investments. I love them; they have numerous funds that have low fees, meaning more of your money goes towards growing for your benefit. Vanguard is known for having great customer service and being a valuable resource when it comes to investing. Check them out today if this sounds like something you’re interested in.

How We Track Our Investments

Even though we are passively investing, we still want to be on top of our finances. That means we have a system to alert of us of our progress and if anything usual happens. Right now my tool of choice is Personal Capital.

Besides offering a free portfolio check-up Personal Capital also has wonderfully useful ones that can help you optimize your investments including a 401(k) fee analyzer, asset allocation tool, and the latest – a retirement calculator to see if you’re on track for your goals.

Here’s a thorough review of Personal Capital, but if you want to jump in and optimize your investments, you can sign up for free here.

Thoughts on Your Investment Strategy

I’d love to see how you’ve come up with your investment strategy. How long did it take for you to get it set up? How often do you manage it? What resources do you recommend on learning more?