Most people would say that they have money “habits” and not necessarily money “traditions.” Money is often looked at as a necessary evil instead of a tool that can help you focus on your priorities in life. Take the changing of the seasons as an opportune time to change your attitude towards money. Instead of your adversary, make it your friend and form new positive traditions that align with how you would like to feel about money.
Create Financial Traditions
Tradition #1 – Maximize Retirement Savings. For most companies, the fall is “open enrollment” season for benefits. While you should be able to change your 401(k) elections at any time throughout the year, most people don’t bother to look at their retirement until it is time to confirm your elections. If you turned down or off your retirement savings when you bought your house or had a child, now is the time to commit to this new tradition and maximize your contribution. For 2010, you can put away $16,500 pre-tax, which will not only make sure you are staying on track for this important goal but also ensure you pay less in taxes. Don’t forget a SAHP either! As long as the working spouse earned at least $5,000 during the year, a SAHP can put away $5,000 in a traditional IRA, or in a Roth IRA (if your Adjusted Gross Income is less than $166,000). Think of the great example you are setting for your children and how happy they will be when they don’t have to support you in your retirement!
Tradition #2 – Find Real Holiday Spirit and Set a Holiday Spending Plan. This lackluster economy has made many families cut back their spending and re-evaluate on what they spend their money. I have seen families do very well at living within their means and then completely blow it when it comes to the holidays. Do yourself a favor this holiday season and decide in advance how much you would like to spend on gifts for your immediate family and other relatives. Set a target amount, and try your hardest to stick to it. Impulse purchases can ruin the best-laid plans, so if something catches your eye in a store… wait 24 hours and go back if you really think it is the perfect gift. Also, take time to critically evaluate whether you need to get everyone in your family a gift. Most people give relatives gifts because it is a “tradition,” but if you do not want to carry that tradition onto the next generation now is the time to make the change.
Also, have you gotten in the habit of giving new friends or their children gifts at the holidays? Instead of giving more “stuff” to each other, consider having a potluck holiday party and creating a new memory.
Tradition #3 – Keep What You Value and Get Rid of The Rest. Do you have closets in your house filled with things you do not use, a garage full of who-knows-what, or even a storage space? Start an annual tradition or semi-annual tradition of going through your possessions and deciding what you really value and want to keep. You may want to enlist a good friend to help you go through your closets and be a reality check. Also, it seems that kids are never too young to start accumulating stuff they never use. Try to make it fun by making piles to keep, donate or recycle. If the donate or recycle piles are bigger than the keep pile, reward yourself, or your kids with a fun treat like an afternoon out picking pumpkins.
While the urge to purge is deep in my bones, my daughter is getting the hang of it as well. Every few months she decides that she has outgrown something (a book, jacket, toy) and specified to whom it should go, be it a friend’s younger sibling, her school or someone who might like it more than she does.
You can always turn this tradition into a money maker by having a yard sale or selling goods through Craigslist or eBay. Also, remember that donations are tax-deductible, so you will be saving some money by paying less in taxes.
These are just a few examples of traditions we have implemented in our family. There is something comforting about having a tradition and calling it your own. Ideally, I would love my children to look back on their childhood fondly and to have developed a very positive relationship with money from an early age. As my grandmother always said, “good habits start young, but you’re never too old to learn.”