But my blog has always been about how to improve with a few simple steps, and this graphic is no different. I’m excited about this one – it’s useful in looking at the average American guy, and it gives sound advice for improving your finances and getting active. Enjoy!

If you have kids, you likely worry more about them than you worry about yourself.How do you make sure they don’t fall in the same financial traps you fell into?

I know how you feel.I have 3 kids. The oldest is 22. The middle one is 19 and my youngest is 11. I worry about them.

I was fortunate enough not to have made huge financial blunders growing up – I didn’t have any money to be stupid with. I never had to worry about getting out of credit card debt. I didn’t even have a credit card until I got married.

Because I was so broke growing up I was super careful and never spent money I didn’t have.Fortunately, my kids haven’t grown up under the same circumstances.

That’s why I worry.

They really don’t know how hard it is to make money. And they don’t know what it’s like to go without.I want to make sure they don’t fall into the traps other people do.

The question is how? Here’s the approach I’ve taken so far:

1. Talk

I’ve told my children about my experiences growing up and I think that’s helped. I’m also lucky to be in the business. I talk about how to spot and avoid scams.

But it’s been more important to tell them about our situation in real-time. When my business suffered in 2008 I told them what was happening and what it meant to us as a family.
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Of course I tried to put it in perspective. I explained that we weren’t going to be homeless and we weren’t going to go hungry, but when things got lean, we had to scale down.

I later learned that by doing so I did them a favor.

They already knew there were problems. By talking about it, they were able to reduce their anxiety. Things weren’t as bad as they’d imagine.

2. Stay Calm

Kids think of money like you and I think of water. You go to a faucet. You turn it. Water comes out. It’s a no-brainer.

For kids, we are they faucet. They don’t understand how we earn money and what it takes. I can’t expect my kids to really “get “ that until they experience it for themselves. With young kids, I have to remember they have limited experiences and just can’t really understand it fully. That’s why I encourage them to work as soon as they can. With or without a college degree, any job can be a great job.

3. Encourage them to love spending money.

You probably think I’m nuts…but give me a chance to explain.

Too often, kids think of saving as the opposite of spending. Not so. You can either spend money now or have more money to spend in the future. You can either spend money on something you don’t value or wait and spend money on something that’s truly important. Frame it that way and you’ll see your kids embrace a new attitude towards current wasteful spending.

Once kids understand that money ain’t like water, this concept will be clear. They’ll understand that money is a limited resource and must be spent wisely.

4. Put them on a budget

Give them a fixed amount and let them do with the money as they sit fit. Advise them often, but let them make their own decisions and accept the consequences. When they blow it, don’t bail them out.

If the kids are in college, divide up the support you send into 12-monthly installments. Don’t pay for tuition, room or board. Add it all up, divide it by 12 and put that amount in their accounts each month. Let them learn how to work within a fixed income.

5. Jobs.

If you can, let the kids work for their money. Even if they are full-time students, they can find things they can do to earn money. Encourage them to be resourceful. They can even use Craigslist to find jobs. The bottom line is to give them as much experience as possible in handling their own affairs and refusing to bail them out.

What have you done to raise money smart children?

To simplify things, we decided to use our Amex Blue card to hold all recurring, monthly charges, such as utility payments, subscriptions, etc. The benefit of this plan is two-fold.

First, it makes managing our primary checking account much easier. No longer do we have to reconcile five or six utility payments plus a number of subscriptions (Netflix, Onstar, etc.) to our checking account ledger. We simply write one payment to pay off the American Express Blue card and record it in our checking account.

Another benefit of charging all of our recurring expenses onto a single credit card is that I am able to get a consolidated view of our monthly outgo, grouped by category (more on that in a moment). I can even analyze total expenditures in each category over time online.

Sure, I could do the same thing using personal finance software, but this way I don’t have to download any transactions from multiple sources, or share any login information, making this a one-stop, secure shop to viewing our expenses.

American Express Blue Card Review

Customer Service/Website Interface I’ve never had a problem with Amex customer service, and their interface recently added some features that I’ve come to enjoy. Members may “tag” transactions using user-defined categories and view a number of reports/views based on those groupings. So far, I’ve grouped transactions by Monthly Bills and Vacation (we use this card for reservations and travel expenses). I can graph those categories over a specified time to track spending, and even pay a particularl “bucket” of my balance from a separate account (paying for vacation out of our vacation fund, for instance).

An example of the “transaction tag” I referred to above attached to my Netflix subscription fee. Notice the “Monthly Bills” designation under my Netflix charge. At the end of the month, I sum up this category to determine my monthly, recurring charges.

Competitive Rate While I plan to pay off our American Express Blue card every month, it’s nice to have a competitve interest rate on your card just in case you need to stretch your payments across a couple billing cycles. Blue comes with that flexibility to pay over time, and a 0% introductory APR for 6 months.

Rewards Program A rewards program is not what really sells me on a credit card product. After all, most programs would require thousands of dollars in spending to earn a modest reward. However, if a credit card issuer is offering to give me points just for using their product, I’ll take them!

With the Amex Blue card you earn 1 point for every eligible dollar, 2X points at the American Express Travel website, and 2X – 10X when you make purchases with select partners. Rewards are available in a variety of categories such as travel, gift cards, cash, merchandise and entertainment.

No Annual Fee – A number of Amex products (and others) have outrageous annual fees. I simply refuse to pay a fee for the privilege of charging items to the card. My Amex Blue card has a $0 annual fee.

Additional Benefits I’m Not Likely to Use, but are Nice to Have

Extended Warranty American Express extends the manufacturer warranty for purchases made using your Amex Blue Card.

Purchase Protection Eligible purchases made with the Amex card are protected against accidental damage and theft for up to 90 days from the date of purchase.

Yes, budgets can set you up to succeed, or set you up to fail. Make them too strict, and you’ll never stay within a spending category’s limits. Have too many budget categories, and you’ll spend too much life energy hunting and recording receipts. Like everything in life, try to find some balance when setting up your budget, but err on the side of simplicity. Here are a few reasons why.

1. Strict budgets are as successful as strict diets, they aren’t. Ever tried to lose weight by drastically cutting calories or eliminating all foods you enjoy from your diet? Let me guess – you lost weight the first two weeks, had a slice of cake at a party, and derailed your entire progress.

Humans just don’t like big changes. We are more successful over a longer period of time when we implement small changes that continue to put us on the path towards reaching a larger goal. Like the old saying goes, you have to eat an elephant in small bites. But hold the butter, or you’ll have to go right back on that diet!

2. Strict budgets create money micro-managers. A couple years ago we took the kids to the Smoky Mountains, their first trip to see a hill over 300 feet high. My wife and I were enjoying the vistas along the Blue Ridge Parkway, but noticed our kids had their heads buried in a book, or their Nintendo DS, and were missing the scenic views. I spent a great deal of the time reminding the kids to look up at the overlooks. Sometimes they did, most times they didn’t.

That’s how adults who are consumed by managing their money appear. Our heads are buried in spreadsheets, or Quicken, and we forget to stop and look up at the overlooks. Pretty soon, we were off the Parkway and realize we missed an opportunity to see the sights; to stop and smell the roses.

3. Budgeting is boring. I confess; I just don’t like budgeting. I don’t like creating them or updating them. I realize they are necessary for proper money management, so I create one each month. However, I make it as simple and painless as possible. I haven’t always been this way.

When I was younger I had dozens of budget categories. Instead of a simple “Food” category, I had a category for meals out, snacks from the vending machine, groceries, etc. I meticulously tracked debit card (and at the time, credit card) purchases, and receipts to be sure I put the expenditure in the correct category. Oddly enough, this was also the time when I accumulated the most debt. In my attempt to be sophisticated, I failed to recognize and adhere to one of the simplest personal finance principles around: spend less than you earn.

4. Strict budgets limit opportunities. By opportunities, I mean opportunities to experience something or save money by buying something at a deep discount. How many times have you passed on something you’d really like to do, or really like to own, because it “wasn’t in the budget.”

It is almost as if the budget is controlling us, rather than the other way around. Then again, for the most impulsive shopper, that’s probably how it should be. But for those who have displayed discipline with their finances, a strict budget feels more like a tight-fitting jacket than a useful tool. It restricts us, and keeps us boxed in from the chance to live a little.

5. Budgets cause money fights in relationships. I saved the best for last. My wife and I don’t see eye to eye on the concept of budgeting. She is the free spender, and I’m the nerd, at least when it comes to finances (though she would probably say the nerd label extends further!). Early in our relationship I tried to force my elaborate budget system on her. It didn’t work. For a period we scrapped the idea of budgeting altogether.

These days, we have compromised and met in the middle when it comes to budget categories. Instead of including infinite layers of budget granularity, we now separate our money into larger piles of logically separated categories. Here’s a sampling from our monthly budget (I’m leaving out the amounts because I don’t want to get hung up on the numbers):

• Mortgage
• Utilities
• Food
• Auto
• Household Supplies
• Savings
• Debt Repayment
• Insurance
• Clothing
• Medical
• Entertainment

Our goal was to keep the budget at ten categories or less, but we did add one for entertainment. It’s hard to think of an expense that doesn’t broadly fit into one of the categories. Last month, we thought we ran into one such example:  birthday presents for kids’ friends. We decided to just take it from “Entertainment” for now, rather than create a new category for infrequent purchases (although I made the argument that friends’ birthdays seemed to happen at least once a month!).

Another way to combat budget fatigue is to create a number of sinking funds for irregular expenses. We’ve done this in our household. Notice in the budget above I’ve simply listed “Savings” as a top-level category. That represents a single transfer to our ING Savings account, but from there the money is split into several “buckets,” or sinking funds.

We have a sinking fund established for things like the annual renewal of our car tag, the semi-annual payment of our auto insurance, Christmas shopping, vacations, and a couple others. When these expenses come up, we transfer the money from the sinking fund and write a check. No impact on the monthly budget.

I have written this post with sort of a negative spin on budgeting. I hope that’s not what you will take away. Rather, I’d like for you to take away the idea that by making your budget too complex you are setting yourself up for failure. I urge you to consider consolidating categories, or setting up sinking funds, or allowing yourself more “fun” categories so that you can enjoy life. And please, remember to look up at the overlooks!

People often can be successful in the business world but clueless when it comes to managing their own finances. A business-minded strategy is a great way to manage and organize your household finances.

“Business advice can translate into wise decisions for your personal finances,” said Heath Tudor, consumer liaison for Resqdebt, a financial health management company in Allen, Texas.  “Using simple business practices, you can easily make your house more profitable and efficient.”

Tudor suggests these steps for managing your household finances:

Create a Plan - All businesses begin with some sort of a plan, both short term and long term. Plans help guide decisions and direct you where you want to be in a certain amount of time. Build a plan around your goals. Budget for everyday expenses, emergencies and long term plans.

Track Spending – Businesses often use spreadsheets to track income and expenses. This lets them know the state of the company’s finances at anytime. Tracking your finances will help you visualize your situation and make better decisions. However, you don’t need an expensive or complicated bookkeeping program to track your finances. Check out free online bookkeeping tools, such as Quicken or Mvelopes or create your own spreadsheet. Record everything that you bring in, spend and owe.

What comes in must be more than what goes out- In business you want to bring in more than what you are spending; the same should apply at home. As you track your finances, look at your income and your spending habits. If you are coming up short every month or using your credit cards to cover purchases, you need to adjust your income-to-spending ratio.

Cut Down on Expenses - Businesses want to keep expenses low so that overhead does not cut into their profits. You can’t always change how much money you bring in but, you can change what you pay out. Examine your bills and find places where you can cut down on monthly expenses.

Conduct Reviews - Review your plan weekly, monthly and yearly. Make adjustments and track your goals.

Overall, the most important thing for your household finances is to stay organized. Know what you are spending and always remember the bottom line. These steps will help you become more profitable and the CEO of your house.

I occasionally share small business (or side hustle, as I like to call them) ideas here with you, and found the following video inspiring. Remember when you were a kid? What did you want to be when you grew up? What got in your way? Yourself? It’s never too late to chase your dreams. And it is never too late for the spirit and ingenuity of the American entrepreneur to right this ship. It’s not up to the government; it’s up to us.

Video: Entrepreneurs Can Change the World

The Roundup

We’re In Debt: $150,679 To Be Exact. I admire the writer’s honesty by revealing their debt load, and after reading the post felt anxious for them. I, too, remember being deep in debt, thought not quite that bad. Still, anyone who has lived with significant amounts of debt knows the pressure it adds to every area of your life.   I tell people it’s like being pinned to the ocean floor by a two-ton anchor.  (@ Your Money Relationship)

The Pros and Cons of Joining a Local Food Co-Op. We never got around to starting our garden this year because of family issues and a hectic work schedule. Because of that we are missing our summer vegetables we enjoyed last year. This article presents some pros and cons of joining a co-op, something that can provide lots of local, fresh food, but at a cost. (@ Generation X Finance)

How to Combat Dread and Welcome Adventure Into Our Lives.  This is one I really need to work on. I tend to dread anything out of my routine, rather than looking at these new experiences as “adventures.” (@ My Super-Charged Life)

See How Far Your Salary Goes in Another City. Think you are paying too much for your home, or not earning enough to survive in your hometown? Check out this article which links to a CNNMoney.com tool where you can compare the cost of living in two cities. (@ Life Hacker)

Spending Moratorium Starts Wednesday. I really wanted to join Bargain Babe on this one, but unfortunately July snuck up on me too quickly. It will be interesting following along to see just how many days she can go without spending and money, save the few essentials she mentions in the post. (@ Bargain Babe)

The Cheap Garbage Bag Dilemma. Spending a lot money on garbage bags is hard for me to do. I mean, after all we are simply using them to collect stuff to throw away. But my experiences with cheap bags ripping half way to the garbage cans, or leaking and leaving a trail of rotten food juices all the way through the kitchen and garage. Nope, I’ll pay for my name-brand garbage bags. (@ The Simple Dollar)

The Basics Behind a Budget That Works.  A budget that works in the best kind of budget, which means your options are fairly open.  We budget for major household expenses with every paycheck, but keep things pretty loose when it comes to tracking smaller expenses. (@ Simple Mom)

What Your Moving Company Won’t Tell You Until You Sign the Paperwork. About five years ago we completed an out-of-town move. After making a number of trips ourselves with boxes and small furniture, movers came in to haul away the big stuff. They loaded up the truck on afternoon, and the next morning the stuff was being moved into our new house. I couldn’t help but wonder where my stuff stayed overnight, and I can related to the worries over movers holding your stuff hostage. (@ My Two Dollars)

Fortunately, the June 2009 edition of Money magazine generated some ideas in the article, “Discover Your Budget Style,” written by Ismat Sarah Mangla.  The article describes one method of budgeting that appeals to me.  It is referred to as the “bucket budget.”  The bucket budget is for those who prefer to track spending with less granularity.  So rather than tracking every morning latte, the dry cleaning bill, the occasional meal out with friends, and baseball cap you bought for your son, you would simply track these categories as part of a larger “variable expenses” budget.

The Money article goes on to explain how to implement the bucket budget.  I’ll consolidate their detailed steps into a few quick bullets below.

• Two checking accounts and one savings account are required
• Calculate saving contribution desired from each paycheck and have employer’s payroll office direct deposit that amount into an online savings account
• The remaining amount of paycheck should be deposited in Checking Account #1 for payment of major, fixed expenses such as the mortgage payment, power bill, etc.
• With what’s left in Checking Account #1, divide the amount by four and schedule equal, weekly deposits into Checking Account #2.  This second checking account will be used to purchase all variable budget items, such as food, clothing, and entertainment expenses.

From the Money article:

The system creates “artificial scarcity,” forcing you to live on less and within hard boundaries.

I like the idea of creating this “artificial scarcity.”  If you are like me, I tend to let cash burn a hole in my pocket, so if I withdrawal all of my spending money at the beginning of the month, or the beginning of the pay period, it tends to run out well before my next paycheck.  In the past, when this happened I turned to credit cards to float expenditures to my next paycheck, or I dipped into savings.  Using the bucket budget system, we would never be more than a week from refreshing of our supply of cash.

One word of caution:  to avoid costly overdraft fees it is probably a good idea to save up a little cushion for both checking accounts, since the timing of automatic deductions, subscription payments and your weekly allotments could draw down your balance at the worst possible time.  To keep things comfortable, I’ll try to keep $500 in each account and treat that number as the floor amount, rather than $0.

To further enhance this system we plan to incorporate our envelope budget system.  When the weekly transfers are made to Checking Account #2, we will withdraw a portion of the money in cash and use it to fill our envelopes.  This allows for some specific budget category tracking for things like food and entertainment, and keeps us from overspending in those particular categories.  For remaining categories like gas purchases or subscriptions (Netflix, the gym, etc.) we’ll stick to a debit card for convenience.

I recognize this budget system won’t work for everyone.  After all, some people enjoy tracking spending across dozens of categories.  I used to.  However, I found myself spending too much time in front of an Excel worksheet, and too much time beating myself up for overrunning the “Magazine” category because I renewed my Money subscription last month.  Just imagine–if I had continued to be that strict on my budget categories I would have missed out on reading about this very idea.

Budget Committee Meeting Minutes

Balance checking account.  The first item addressed is our checking account, which by this point in the month could usually use a quick balancing and reconciliation with our online account.  We make sure all outstanding checks are accounted for before “closing out” the month’s final balance and begin tracking the new month.

Review last month’s budget.  It is also at this point that we perform a final review of our budget categories together to determine where we missed the mark, and where we were successful.  The review for March revealed I spent too much money on eating out.  My excuse was that I was on the run a lot visiting my mom (who remains hospitalized), but really that’s a poor excuse – I could have packed something to eat or waited until I got home.  Sometimes you just can’t account for everything when setting a budget a month in advance.

Update personal balance sheet.  If we have stuck to the plan this part is always something to look forward to, but if we have spent more than we should, or not saved as planned, we usually dread this review.  Take an inventory of all your debts and update their balances in whatever format you use to track your net worth.  We use a simple Microsoft Excel worksheet with a column for each month and a list of debts and assets down the side.  Looks like we are on track as our debts continue to get smaller, and our savings continue to grow.

Modify budget amounts for next month’s expenditures.  Some months we just carry forward the budget amounts from last month, but it’s rare.  There always seems to be something happening, especially when you have kids in school.  Yearbooks, camp registrations, clothing, and spring pictures were all mentioned yesterday and affected a couple categories.

When my wife and I first married I handled all of the bills by myself.  After a couple years my wife began to take a passive interest in the finances, but was never particularly interested in knowing all the gory details of debt, account balances, etc.  Basically she just wanted to know how much was in the checking account at any given time.  I recognized that to pull off our financial turnaround I would need her support, and started holding these monthly meetings to discuss our finances.

At first the budget meetings seemed like a chore, but over time my wife enjoyed having input in the process, and I certainly appreciated her input.  With us working together we were blindsided far less by unexpected expenses.

If you are not currently doing something similar with your spouse, I highly recommend sitting down tonight and reviewing finances together, even if it means missing the latest episode of Desperate Housewives.  That’s what TiVo is for!

In the early chapters of his book, Cramer discusses a unique way of budgeting that carries monthly expenses out to yearly outlays. It got me to thinking. My wife and I are big soft drink drinkers. Besides them not being healthy, I wondered in what other ways these things were affecting our lives.

$360 a Year on Cocal Cola

In a given week we probably go through 2 twelve-packs of Coca Cola (or Diet Coke, depending on how good we are being, or not being). Our local grocery store generally offers a 3/$10 deal making these close to $3.50 each with sales tax. That comes out to $7.00 a week on soft drinks. Convert that to a 52-week, annualized expense and it comes out to about $360 a year for our family budget’s food category. That is nearly a dollar a day!

Over the next couple days my wife and I plan to take a look at our family budget and annualize all our expenses to determine what’s costing us the most over the course of a year (can you imagine what the cable bill looks like…yikes!).

By magnifying these monthly household expenses by 12 it really helps to illuminate those categories of the budget that need to be trimmed. Over time, we plan to create family budget spreadsheet to track all of these expenses (we already budget cash expenditures each month using Mvelopes – an online envelope budgeting system), and I’ll now have an “annual” column to calculate as well.