Monday, August 24, 2009

Set Limits

Saving Money Tip #178 - Set Limits. Most of us like to do fun things. Most of us like to spend money. Most of us like to eat out, go on vacations, and do other things that we enjoy. And most of us can do what we want to do - as long as we set limits. If we enjoy collecting mystery books for example, there can be a place in your budget to buy some books. But collecting mystery books doesn’t mean that you need to buy every new mystery book that comes out each year. Set your limit at one mystery book per week or one per month and you can still have fun with your hobby without breaking the bank.

Same thing for eating out. If you like to eat out, put it in your budget. You can eat out once per week or only once per month if that’s all you can afford or even only for special occasions if money is really tight. It doesn’t mean you need to eat out every night just because you want to or would enjoy doing so. Set some limits and you can enjoy the things you like to do.

Without these limits, people tend to overspend. They go to the record store (are they still called record stores these days?) and buy as many CDs as they want. When instead, they should have a preset limit of how much they can spend. Then they should buy accordingly within that limit. If you go to the store not knowing how much you “can” spend, what will stop you from spending more than your budget allows? Nothing. Instead, go to the store with a plan in mind. Or go to the wine-tasting event with a set dollar amount that you have left in your entertainment budget for the month. Or pick the cheaper restaurant over the more expensive one unless you want to go over your dining out limit for the month. Activities can still be enjoyed. Hobbies can still be done, and life can still be lived. You don’t need to “go all out” to have fun.

In Real Life – We went to a county fair this past weekend with our three children. We were fortunate because my husband’s company insures the event, so the person in charge had given him free tickets for ten rides. Otherwise, we probably would not have gone as the county fair is not even in the county where we live. When we got there, we ran into one of my husband’s good friends, who happens to live in that county. It was great to run into friends – especially ones who have two children the same ages as ours. When we got there, I told my girls they could go on four rides each and that was it. And I figured I would put the baby (our 2-year old) on two rides. I figured that would make for a nice day without having to spend any money of our own.

Ride tickets were not cheap for this event. Each ride was between three and five tickets with each ticket costing $1, although you could buy 24 for $20, making each ride cost slightly less. Our friends had a sheet of the 24 tickets and we proceeded to put our kids on the rides they wanted to go on. As I watched my husband’s friend dole out the tickets, I didn’t hear any kind of limits put on his kids. Neither he nor his wife said their kids could only do four rides each or even eight rides each. Instead, they handed out the tickets as each child chimed in he/she wanted to go on a particular ride. After about six rides, they ran out of tickets and the husband went and bought another sheet of 24 tickets, again handing them out as the children wanted them.

In the middle of going on rides, we passed a few games that of course our children wanted to play. Now I am not against spending a couple dollars here and there for a ride or two or a game or two, but I was aghast at the prices. This particular game our children wanted to do cost $5 each! I was shocked. I told my kids in no uncertain terms that I was not going to pay $5 for them to play a game to win a stuffed animal that would just clutter up our house. My husband's friend surprisingly didn’t say no and handed over a $10 bill for both of his kids to play, and for each one to win a small stuffed animal.

It is easy for me to be judgmental about the situation after what I observed. But in reality, I didn’t have any idea if this fair was in their “budget” or not. This fair was in their neck of the woods after all. So maybe it is something they look forward to year after year and budget $100 for the event. I know we go to a fair in our Town every year, and we set a budget for it, so this very well could have been the case for them, too. (This fair was an “extra” for us, though, which is why I didn’t feel the need to spend anything there.) However, just when it started to pour down rain and we were parting company, my husband’s friend turned to him and said, “Wow, I just spent $60 there!” He seemed pretty surprised by it, according to my husband. When my husband told me this later, it confirmed my suspicions – that they hadn’t set limits on what they were going to spend there.

I think our kids had a fine time at the fair even with the limited number of rides we allowed them to do. It might not make me the most popular mom, but hopefully the kids will thank us later (probably not!) because we have enough money to put them through college due to limits we put on other things. What does everyone think? Does anyone else do this?


Chris at said...

Regarding spending money at the fair - the only time we go (if at all) is for the first day, when they have free admission if you bring in a canned good per person. And my son is a picky eater (so no fair food is necessary) and he doesn't really like rides. So instead...we check out the barnyard animals in the farm buildings.

Sheila said...

Do we do this? Yes! My kids do expect limits and are shocked themselves at the cost of things. I have always been careful to explain that there is a certain amount of money we have to do fun things, and we need to make choices about how we spend it. You are not doing your children any favors in life to grow up without this understanding. And not to worry - they get to do plenty! But I think they actually appreciate it more because they understand the cost.