There are a few things being given away online that I wanted to let you know about this weekend:

• A Netbook Computer over at CoupleMoney. There are a few ways to enter to win so check it out.
• H&R Block is offering 24-hours of free tax advice this Thursday, March 25.  You can call 1-866-HRBLOCK or e-mail taxtalk@hrblock.com for free advice.
• Next week I’ll be giving away a few free copies of H&R Block at Home tax software.

Here is some personal finace reading for the weekend, enjoy:

Frugality

• The Key To Living Frugally @ Lazy Man & Money
• Household Debt Panel @ Suns Financial Diary
• Preparing for a Long Decline @ The Simple Dollar
• Save Money! Get a College Degree In Three Years @ Free Money Finance
• Would you out a friend’s spending patterns on Facebook? @ Mighty Bargain Hunter
• Library Sent Me To Collections! @ My Money Blog

Car Savings

• Best Gasoline For Your Car Engine? Not Always Premium Gas @ The Digerati Life
• 9 Ways To Save Money On Car Insurance @ Frugal Dad
• 28 Tips to Save Money on Car Expenses and Save Thousands of Dollars @ Generation X Finance

Making Money and What to Do With Your Money

• Do You Have What It Takes To Manage Your Money? @ Free From Broke
• Ban Credit Checks for Job Applications @ Bargaineering
• Unexpected Income: What Should You Do With a Windfall? @ Consumerism Commentary
• how to make money on Facebook @ Brip Blap
• CD Laddering: The Frugal Way to Build an Emergency Fund @ Being Frugal
• How To Make Money Blogging @ Debt Free Adventure
• Get a Second Job and Quit Whining About Debt @ Fiscal Fizzle

Taxes

• Canadian Income Tax Deadline @ Million Dollar Journey
• Unemployed Tax Deductions Provide Tax Relief @ My Dollar Plan
• Filing A Tax Extension: Don’t Pay Someone, Do It For Free. @ My Two Dollars
• How To Make Quarterly Estimated Tax Payments @ Good Financial Cents
• Why Doing Your Own Taxes is Beneficial @ No Debt Plan
• Owing on Your State Income Tax Return @ Out of Your Rut

Personal Finance

• 9 Effective Ways To Protect Yourself From Being Scammed @ Money Ning
• OptionsXpress Promotion – Free Stock Trades @ Deals
• Five Ways to Disaster Proof Your Finances @ The Wisdom Journal

Business

• How To Survey Your Customers for Free Using Google Docs @ Erica Biz
• How to Organize Your Small Business Finances @ Cash Money Life

Health and Money

• How to Get In Shape and Save Money @ Moolanomy
• Why the Gym is a Waste of Money @ Fiscal Geek

A TradeKing IRA is a good option if you’re looking to open a Roth IRA or traditional IRA and make contributions for last year.  April 15^th is the IRA contribution deadline, same as the tax deadline, and contributing to a traditional IRA can lower the taxes you owe for last year.

There are multiple things to consider when deciding between an IRA vs Roth IRA but the contribution deadline for both is coming up; which is why a recent email from TradeKing caught my attention.

TradeKing and Taxes

Trade King is offering a free report on taxes and investing, just give them your email address and they’ll send it to you right away.  They also offer their customers free tax reporting software by Scivantage, called MaxIt.  The software gives you cost basis information and can help you make investment decisions from a perspective of minimizing your taxes.

Of course your tax investing strategy will differ depending on whether you have a Roth or traditional IRA since you don’t have to pay any taxes on a traditional IRA until you take money out of your account.  Regardless of how much income your investments earn or how often you trade within your traditional IRA, the taxes aren’t paid until you make an IRA withdrawal.

A Roth IRA on the other hand doesn’t lower your tax bill in the year you contribute funds since the money is not pre-tax (like a traditional IRA).  However, when you make qualified withdrawals from your Roth, you take the money out tax free.  One thing to keep in mind is that the Roth IRA rules are changing some this year regarding income limitations and ira conversions.

TradeKing IRA

In addition to keeping taxes from eating into your retirement you also want to keep your expenses low.  Since TradeKing is a discount broker they offer low commissions and don’t charge maintenance fees for your IRA account.

Tradeking also allows you to invest in ETF’s, which can lower your expenses, since ETF’s often have lower expense ratios than mutual funds.

You can read more about the online brokerage’s various features in this TradeKing review and also see what’s required in order to open a TradeKing account.

There are so many different ways to earn extra money with your brain, the best question isn’t how can you earn extra money but how can you earn the most money the fastest. The place to start is determining which of your skills or specialized knowledge you have that you could turn into extra income.

In this article we’ll look finding a market for your skills and determining whether what you’ll earn will be worth the time and effort you’ll have to put in. Then we’ll finish up by taking a look at some resources for making extra money with your brain.

Your Brain is Money

Over the years, you’ve probably picked up special skill sets or valuable bits of knowledge that other people would pay to tap into if you could make your expertise available for sale.

It seems the challenge for most people when going through this exercise is figuring out what it is that you know that is valuable and unique enough that people would be willing to pay for it.  Of course it’s different for each of you but we can look at some scenarios and maybe those examples will get your brain going.

Shopping Expert – If you know where/how to always get a good deal when buying a popular product, you can buy it cheap and re-sell it on a site like eBay.

Digital Creator – If you know how to write software, layout web pages, design databases, or build mobile apps you can sell your services on sites like eLance or oDesk.

Handmade Creator – If you know how to create things with your hands (knitting, sewing, etc) you can make clothing, decorations, or other crafts and sell it on a site like Etsy.

Math or Science Whiz – If you understand & can explain calculus, chemistry, physics, or statistics you help tutor others on a site like Tutor.com.

Marketing Your Brain

Of course, having the knowledge isn’t any good for generating income if you can’t turn it into money. You have to decide if you want to market your expertise yourself (which typically takes longer to get going) or find an existing marketplace.

For example, my wife tutored kids one summer in our neighborhood.  She put up signs, passed out flyers, and worked her network of school teachers to find parents that wanted tutoring for their kids.  She wasn’t busy every day, all day long because it was her first year. If she’d have continued tutoring, over time she’d have built up her network and word of mouth and become more and more busy.  She probably would have been a lot busier that first year if she’d have signed up as a teacher on tutor.com.

If you don’t want to take the time to market your brain yourself, there are many websites available that have already created an online marketplace where you can find people in need of your information or skills.  The trade-off is that they’ll usually take a cut of your earnings, but they can start sending you customers right away.

Effort vs. Reward

When you’re selling your brainpower, one thing to consider is whether the work you’re putting in is worth the money you’re making.  The whole reason you’re leveraging your brain is to earn “extra money”; extra implying that it’s more money than you already make.

Of course this means you’re probably still doing all the things you normally would in a day, and working extra in your spare time for more money. Since you only have 24 hours in a day be sure that the time you spend is worth the money you’re making. 

Opportunity Cost

An important concept here is opportunity cost.  Let’s say you’re spending two hours a night and on average earn $30 for your efforts.  The extra money will be nice, but if there’s something you could be doing that would earn you $50 a night for two hours work; then by taking the lower paying gig, you’re missing out on the opportunity of earning an extra $20 a night.  The best way to avoid this is by researching the opportunities for all your skill sets before you commit to one.

Create Once, Earn Multiple Times

One last thing to consider. If you can make money more than once off the effort that you put in, then your earnings can increase without you having to put in as much time.  Take the Digital Creator scenario I discussed earlier for example.  If you find a client on eLance and write them some software for $100, then once the work is done you have to write another program for another client to make more money. 

On the other hand, if you write a useful program that a certain type of person or business would need and sell it for $25, then you do the work of creating software once and can sell it multiple times for $25.  There will be marketing involved but that will take less time than the work of creating, testing, documenting, and packaging the software.

Guides to Making Extra Money With Your Brain

As I mentioned earlier, coming up with ways you can sell your brain power is challenging for a lot of people.  I thought it might help to look through some examples, just to get the wheels turning.  Phil Taylor, from PT Money, has gathered together a free resource of 52 ways that you can make extra money.  Not all of them are focused on leveraging just your brain power but it’s a good starting point.

One way that you can build a platform from which you can sell your brain is to write regularly about your area of expertise online.  This approach can help people find you on the Web and allows them to get to know more about you and your expertise.

Peter Anderson, from the site Bible Money Matters, offers a resource, called Blueprint For How To Make Money With A Blog, that is a good overview of using a blog to make extra money.  Peter has personally used the approach to earn money writing about personal finance but you can apply the concepts to most any area of expertise you might have.  I got a review copy for free before Peter made it available for sale but I’d say it’s definitely worth the price if you’re thinking about getting started with this approach.

So there are some tips and tactics for earning extra money with your brain.  If you’re looking to make extra money, take a few days to let the concepts simmer and start coming up with a list of skills you have that people would be dying to get their hands on.

As you might know I’m all about automating our finances. I make every effort to make our transactions live in the digital realm so they can happen automatically without us having to worry about them:

– We pay our bills with online bill pay. I setup exception checkpoints so that if bills are larger than normal I get an email or if a payment isn’t made I get a voice mail.

– Our paychecks land in our bank accounts via direct deposit and our investments are made automatically as well.

– My wife and I put most of our purchases on our American Express Blue cash card to help organize and categorize our spending, plus earn credit card rewards.

– We don’t spend a lot of time budgeting, our spending doesn’t vary that much from month to month so we don’t spend a lot of time focusing on how we’re spending our money.

Is this the smartest way to do things? It’s what I’m most comfortable with but a new book from Baker at Man vs Debt called Unautomate Your Finances takes an alternate look at this approach.

Why Not Automate?

I think the line that best sums up Baker’s approach is that “the more you simplify your financial life, the easier it is to take back control”.  He and his wife have been battling consumer debt and have the used the methods he describes in his book to pay it down.  Their approach has been to have as few accounts and as little automation as possible so they can focus all their attention on the money they have, and the money they owe.

Here are some of Baker’s arguments against automating your finances:

• Automatic payments mean that you don’t notice as much what you’re spending your money on
• Automation makes your bad habits harder to change by pushing them to the back of your mind

Credit Cards vs Cash

Baker’s not a fan of credit cards and believes that paying in cash can make a real difference in the way you spend your money.   As he says, paying with cash “lowers the time between when you make the purchase and when you ‘analyze’ your spending. “

I’m in the middle of reading a book on behavioral economics called “Why Smart People Make Big Money Mistakes” and research has shown that Baker’s theory is correct. People do spend their money differently when they’re paying with plastic vs paying with cash.

Spending Exorcism

The useful thing about “unautomating” your finances is that you get in touch with every penny you’re spending and come to terms with how you’re using your money.  It’s almost like a debt intervention, or a spending exorcism, or like basic training for your budget. You get down in the mud and track every cent that comes in and out of your possession and ask yourself, “am I really spending money on the things I want in life”?

Why Unautomation?

I didn’t ask Baker why he wrote the book but you get a good feeling for why he might of from one of his early quotes:

“We’re living in upside-down homes, driving upside-down cars, and now even watching upside-down t.v.s on upside-down couches”

I can tell he’s astounded by the enormous amount of consumer debt we’ve accumulated in our country and wants to do his part to help people out with it.

So What’s the Answer?

So how exactly do you unautomate your finances?  Baker goes into a lot of detail about emotion vs. numbers and how to pay off your debt by fighting small battles; not getting overwhelmed by everything at once.  He offers an alternative to Dave Ramsey’s debt snowball called the debt tsunami; which gives you more flexibility about how you pay off your debt.

Baker offers lots of very specific actions and offers worksheets and instructions for:

• Creating a budget
• Following a envelope budgeting system
• Creating an emergency fund
• Deciding whether you want to use credit cards

Taking Action

So would an automation proponent like me consider taking Baker’s approach of buying everything with cash and tracking my purchases with paper and pencil for 30 days?  It makes me squirm to think about it but perhaps that’s an indication that I should take another look at our current process.

I love the automation because it means I don’t have to mess with the recurring bill payments, fund transfers, and trips to to the bank.  But I imagine going through those steps would make me look a little closer and think a little harder about how we spend our money.

I’m not committing to “going native” with my finances but I like Baker’s book because it makes me think about how aware we are of what we’re spending. It also offers tons of action steps we can take to make sure we’re staying on top of our money and Baker does a good job of getting you fired up to take action when you read it.  If you’re looking to get out of debt or get a better handle on what you’re spending then you might want to check out Unautomate Your Finances.

We covered money from a few different angles here on Money Smart Life last month.  As you’re probably aware, the primary focus was on taxes; however we did touch on some health insurance, retirement, and career topics as well.  Here’s a look at some of the articles from last month and after that I’ll talk a little about what you can expect this month.

Taxes

• Online Tax Software Success
• 2010 Federal Tax Brackets
• Common Income Tax Problems
• How to File Taxes Online
• Tax Credits for 2009
• Turbo Tax Review
• Turbo Tax Free Trial

Health Insurance

Health insurance is a major issue for all Americans because we all get sick or injured at some point and costs of dealing with these issues continue to go up.  We’ve realized this more since we’ve added a few more dependents onto our health insurance plan and I talked about the cost of sick kids. 

I also looked at how high deductible health insurance plans are not for everyone.  If you’re young and healthy you can build up a nice bundle of pre-tax money but if you have a lot of health issues it can really suck your wallet dry.

Retirement

This year brought some new Roth IRA rules that we go int a little more detail on. Mike Piper from Oblivious Investor warned us about IRA mistakes, specifically 9 sneaky ones that you’ll want to avoid.

Career

Referrals are often the best way to get your foot in the door, especially when not many companies are hiring. I shared some tips on how to refer a friend for a job when you don’t know a whole about their qualifications.  I had some changes in my job so I dug into the difference between exempt employees vs non-exempt employees.

Personal Finance

Then there were a few more that span a number of topics such as kids and money, marriage and money, paying for graduate school, and a credit card scare that left my heart racing!

Coming Soon…

Taxes

So what’s next?  Well taxes are due in a little over a month so we’ll touch on more tax topics.  Next week we’ll hear from the people at H&R Block talking about their H&R Block at Home software.  We’ll be giving away a few copies of the software, so be sure to get updates so you can put your name in for one of them.

Health Insurance

I’ll also have a follow up on the high deductible health insurance plan post from last month. A reader named Ted left an interesting comment that I followd up on and he’s going to share his health insurance experiences with us.

I also have a LOT to talk about in terms of health insurance.  I’m still going back and forth between the hospital and our insurance company on bills for our daughter’s birth, almost a year later. Right now, we’ve been stuck with over $11,000 of bills that should have been covered by insurance. 

I’ve been fighting to get the issues resolved and thnink it will be in the next few weeks. I’ll share some tips on how I’ve dealt with being stuck between the insurance company and the hospital.

Have a great weekend!

Have you heard the saying, “If you fail to plan, then you should plan to fail”? Well how about making a “no debt plan” to keep yourself out of debt?  Well Kevin, of the blog No Debt Plan, is doing just that; sharing his tips for avoiding debt.

His site is setup to help people with basic financial education. As you can read on his about page, Kevin believes that the American education system doesn’t prepare students adequately for managing their money in the real world.  Kevin’s doing his part to fill in the gaps by sharing what he’s learned about money.  Some of the topics he covers are:

• Budgeting
• Saving for retirement or a rainy day
• Avoiding living paycheck-to-paycheck
• Buying a home

About Kevin

So what does Kevin know about money? Well, in addition to his life experience, he has a Bachelor’s Degree in Business Management and an MBA so he certainly knows how to whip together a spreadsheet.

Kevin’s passionate about showing others how to budget and get their financial situations under control. He’s been writing online since 2008 and has recently been working on a comprehensive guide for staying on top of your credit.

You can keep up with the latest on Kevin from his article feed or on Twitter

No Debt Plan Recent Posts:

• A look at mental mistakes made when I was in debt
• Is mooching off society wrong?
• Reward of working married finances as a team

Here are some other articles to check out from the last week or two around the web:

Valentine’s Day

• 7 Green Valentines Day Gifts Your Girlfriend Will Love @ Bargaineering
• A Frugal Valentine’s Day @ Million Dollar Journey
• Save Money and Celebrate Valentine’s Day for the Right Reasons @ No Debt Plan

Taxes

• How to Take a Property Tax Deduction Without Itemizing @ My Dollar Plan
• Do You Qualify for These 4 New Tax Breaks? @ Money Ning
• 11 Most Commonly Missed Tax Deductions @ Debt Free Adventure
• First Time Home Buyers Tax Credit – Who It’s For And What Is Needed To Claim It @ Free From Broke
• How To Generate and Issue Your Own 1099-MISC Forms @ My Money Blog

Investing & Retirement

• Social Security What You Need to Know About Benefits, Coverage, and Eligibility @ Generation X Finance
• How to Open An IRA Account @ Suns Financial Diary
• Save for Retirement With a Spousal IRA @ Five Cent Nickel
• What’s the Differences between Coverdell Education Savings Accounts vs. 529 College Savings Plans? @ Good Financial Cents
• 10 Ways To Invest $100 @ Fiscal Geek

Debt and Personal Finance

• DIY Debt Reduction Programs: 3 Affordable Ways To Beat Debt @ The Digerati Life
• Take Control of Your Finances by Building on What You Already Know @ Get Rich Slowly
• Variety of Savings Accounts: Where I Keep My Cash @ Consumerism Commentary
• in the salt mine @ Brip Blap
• Costs of Commuting, and Nine Ways To Reduce Them @ Frugal Dad
• Hindsight Is 20/20 @ The Simple Dollar
• Options for Term Life Insurance Death Benefits Payouts @ Free Money Finance
• Three ways to find a cool deal using Google @ Mighty Bargain Hunter
• How to Find a Reputable Debt Relief Company @ Cash Money Life
• Could You Survive Without Money? @ Moolanomy
• I Changed My Mind – Go Ahead And Walk Away From Your Mortgage. @ My Two Dollars
• What Should I Do if My Toyota Has Been Recalled? @ Being Frugal
• Public Storage: Problem Ignored @ Lazy Man & Money

Carnivals

• TurboTax Software vs Manual Income Tax Returns in Financial Planning @ The Skilled Investor
• Best Tax Software for 2009 Returns in Taxes @ Dont Mess With Taxes
• How to Refer a Friend for a Job in Money Hacks @ Rabbit Funds
• 2010 Federal Tax Brackets in Personal Finance @ Budgets are Sexy

Graduate school costs are an expense that’s tough to afford. If you need additional skills or a master’s degree to keep your job or advance at work, how can you afford to pay for grad school?

Costs & Benefits of Graduate School

U.S. News & World Report looked at some of the best graduate schools and found that  today’s average master’s degree holder earns an average annual salary of $52,000 compared to $42,000 for someone with an undergraduate degree. For those who’ve earned professional degrees such as law or medicine they can earn an average of about $82,000.

Yet costs can vary widely among U.S. graduate schools. Some average a few thousand dollars a semester in tuition – not cheap, but doable for many working people. However, Business Week estimated last December that the average tuition for a two-year MBA program now tops $60,000 – that doesn’t include room, board or other fees. So for top graduate schools in many fields – not just business – the whole graduate school bill can easily top $100,000.

Does Graduate School Make Sense for You?

No doubt about it, graduate school is certainly a big commitment.  It’s not just expensive, it also takes a big chunk of your time.  When I went back to school to get a Master’s degree I took night classes since I worked all day.  Most nights I wasn’t in class I spent doing homework and often worked over the weekends as well.   Before you decide to take on the expense and work load of graduate school here are some questions to consider:

1. Have I researched my career field fully to determine whether a graduate degree in this subject will improve my earnings and professional advancement? If I have significant experience in my chosen field, do I really need the degree?

2. How quickly do graduates from my school of choice find employment and what is the average opening salary in my chosen field?

3. Do I have the time and focus to attend school while I’m working, and have I set a reasonable deadline to graduate? Will it place an burden on my family, career or social life?

Dealing with the Cost of Graduate School

If you’ve already decided the school or schools you’ll apply to, then the next step is to determine how you’ll whittle down what you’ll spend to get that diploma. One of the first steps in that process is to evaluate your total financial picture. Many early and mid-career students have additional expenses to consider, not the least of which includes family.  Here are some ways that you can reduce the cost of graduate school.

Investigate endowments: A university’s endowment is its nest egg – a pile of investment dollars that produce investment income going to a variety of purposes. One of those purposes is grants and scholarships, the most attractive form of college aid because students don’t have to pay that assistance back as they would a loan.

Check on fellowships and assistantships: Depending on the advanced degree you’re going for, you might be able to fund your education through fellowships or assistantships. Fellowships are a sum of money awarded to promising students that can go toward paying tuition and room and board. Generally, they are awarded on the basis of merit and don’t have a work requirement.

Assistantships are a bit like a prestigious work-study program. Students who have a promising future are awarded a stipend or salary based on 10-20 hours a week of helping professors grade papers, conduct research, teach classes or supervise lab or workshop courses. Of course, any student considering these options also needs to consider whether they can support the workload while excelling in class.

Borrow smart: Most undergraduates exit college with debt in excess of $20,000, so without a pile of savings built up from their careers, most grad students end up borrowing heavily. The National Center for Education Statistics reports that based on 2004 data, 73 percent of all graduate students received some form of financial aid with an average amount of $15,100.

Generally it’s smart to tap all government-sponsored lending programs before turning to private borrowings. Stafford loans are generally the cheapest way to go with lifetime average. Subsidized lending rates for the 2009-2010 school year are currently at 5.6 percent (the unsubsidized rate is 6.8 percent), and their lifetime borrowing limits are at $138,500 for most degree programs and up to $224,000 for health professionals who spend the most on their education.

Check your qualifications for tax credits: Recent economic stimulus legislation has loosened up more tax benefits for new and returning students. The new American Opportunity Credit allows a rebate of up to $2,500 for each qualifying student in a family for the first four years of college.

The full credit is available to individuals whose modified adjusted gross income is $80,000 or less or $160,000 for married taxpayers. This replaces the $2,000 Hope credit for the first two years of school and the Lifetime Learning credit that applies at a lower amount afterward.

Get your employer to pitch in: Take advantage of every educational break you can take before you leave your company. If they require you to stay in your job a certain amount of time after accepting that aid or attaining your degree, work that into your plan.

Check local scholarships and grants: See if there are sources of grants and scholarships not only in your community, but also within your industry. Go online and do a general search for such aid among local nonprofits and professional organizations.

Consider a functional degree. All sorts of colleges – even the nation’s most prestigious schools – are considering abbreviated graduate and post-graduate programs that give students exactly the amount of education to upgrade their skills and head back into the workforce. In other words, if one year of college will do, why pay for two or more?

Get that PhD: If you’re in a field where a Ph.D means something – better job, more money, or both, then go for it because funding options might actually be more plentiful. Colleges want the best possible students in their Ph.D programs and load on tuition and living benefits to make sure that they choose their program and more important, that they complete those degrees.

This article on graduate school costs and options was produced in association with the Financial Planning Association (FPA), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.

I apologize, these stories won’t be as entertaining as the tales Paul Harvey used to tell but people have been asking so I’ll share.

For better or worse, there are times when I share personal stories on this site or write about something based on personal experiences.  I’ve had several people follow up with me over email to see how things turned out so I thought I’d share some of them here.

How to Refer a Friend for a Job – Good news!  He made it past the first interview and went back in for the second round of interviews today! Turns out my company has a referral program where I can make $2,000 if I someone I refer gets hired.  Unfortunately, there’s a certain form you have to fill out before they apply to make it official, which I didn’t know about, so I don’t qualify for the referral bonus even if he gets the job.  Bummer. 

Lost Wedding Ring Blues – We searched high and low for my wife’s missing wedding ring and had written it off as lost.  Then one day when I was at work our son runs out of his bedroom yelling, “I found it” and holding her ring.  Apparently one night when she was picking up his toys it must have slid off and ended up in the bottom of his toy box.  He gets a gold star for finding the ring.  He was VERY proud of himself for finding it : )

Cost of Sick Kids – Our family was suffering through several bouts of cold and stomach bugs this winter season when I wrote about some of the ways that sick kids cost you money.  Well, we ended up losing money in each of those ways. 

• I had to take sick days to stay home with sick kids. 
• We lost daycare money that we paid when the kids didn’t go to day care. 
• We had several bills from several visits to the doctor’s office.
• I burned some cash stocking up on prescriptions and over the counter medicine.
• My cold turned into a sinus infection that lasted FOREVER which meant more doctor’s visits, more time off work for appointments, and more medicine.

Our poor little girl’s cold stuck around long enough that not only did it turn into a sinus infection, she ended up with a double ear infection as well.  Luckily we’re all feeling much better now and our girl is finishing up her final dose of antibiotics.  Thank goodness I put a chunk of money in my flexible spending account!

Our son has been making me proud lately with his unexpected frugal remarks.  The first one came as he browsed the toy aisle in a CVS pharmacy while we waited for a prescription to be filled.  As he played with the trucks he said:

“we won’t get these… they’re too expensive”

Then the next night when I went to take out the garbage I left the door open a crack.  He jumped up from across the room and yelled:

“Dad, close the door you’re letting out all the warm air”

Just last night he was running around the house turning off the lights.  He told me:

“we don’t leave the lights on, they might burn out”

Understanding Scarcity?

Of course, I’m sure he’s heard me say similar things before but I think it’s cool he’s making the connection between the frugal action and the reason behind it.  He knows the reason that we don’t buy randomly buy toys in the store is because they’re too expensive (or a rip-off as I sometimes say). 

He doesn’t really know what expensive means but he knows it’s a good reason NOT to do something.  He doesn’t understand that it costs money to create warm air in the winter or electricity for lights; but he does know that you don’t want to waste the air or the light bulbs.

I can tell he doesn’t get the overall concept of conserving your resources because of little things; like tonight he used 8 sheets of toilet paper to dry up a little spot on the floor.  He also likes to flush the toilet multiple times just so he can watch the water go down.  So far he’s only picked up on specific behaviors, not the idea as a whole.

Frugality Genes

So all this seems behavioral, stuff he’s learned from watching and listening to my wife and I. We learned it from our parents, and they learned those behaviors from theirs. What I wonder is whether any of these tendencies are inherited rather than learned.  Are there genetic characteristics that lend themselves to conserving what you have and not wasting your resources?

I doubt there is a “frugality gene” but what about the cavemen that were hunting and gathering ages ago?  Were there some families that were a little more lavish with their food and belongings or were they all “frugal” with their resources?  We often think of survival of the fittest as the strongest and fastest but maybe it was also the most frugal?  Did the family that could make the woolly mammoth meat last an extra few weeks survive while the others perished?

Maybe nature was too harsh at that point in our history and every person knew to conserve as much as possible or die.  However, as society evolved I can’t help but think frugal tendencies emerged as commerce started to develop.

The Cheap Inherit the Earth

I know there’s a Biblical passage something along the lines of the meek shall inherit the Earth.  Well maybe for the time being it will be the cheap who inherit the Earth. When the foolish spenders fall into foreclosure and bankruptcy and the stock market plunges, those with frugal genes can tap into their long accumulated rainy day funds and buy stock and property at a big discount.  Maybe as they’re bargain shopping they should be thanking their ancestors for passing on frugal genes?

What do you think?

Worried about fighting over money once you get married?  You’re not alone. A survey on couples and money released last November by Capital One pointed out that younger people (18-34) are more prone to conflicts with their partner about money: 36 percent disagree monthly (or more frequently) with their partner. Sixty-five percent of those between ages 18-24 and 41 percent of those between ages 25-34 report that they have argued about money during the last 12 months.

Money problems can certainly overwhelm a relationship, particularly a relationship on the verge of marriage. Here are 10 ways prepare yourself for a more solid money foundation before you get married:

1. Agree that money is something that should be talked about: Not every couple needs a set date and time for a monthly money meeting – though that might help a lot of people. The first discussion any couple should have about money should deal with whether they can talk about it. It might be worth discussing how each person’s parents dealt with money issues and whether those practices would be worth copying or avoiding. Most important, money problems will happen in relationships – it’s important to discuss how you want to handle disclosure and working things out.

2. Swap credit reports: Before discussing who will pay the energy bill, couples need to know if they can afford it. Individuals should check all three of their credit reports – from Experian, Trans Union and Equifax – on a staggered basis throughout the year to get an idea of debt amounts and to catch inaccuracies that might surface during the year. Ignore all the heavily advertised “free” credit report services and go to the Annual Credit Report site for credit reports that are actually free.

Swap reports when they arrive and check the other’s data for inaccuracies and changes from the previous reporting period that might signal an increase in borrowing or the possibility of identity theft. And again, make sure you talk about it.

3. Discuss all the past baggage: If couples have been previously married or in other live-in relationships, there might be expenses associated with kids to consider or previous debts and bankruptcies. If you’ve seen each other’s credit reports, that might also add a few topics for discussion. You’re not ready to handle money until you understand how both sides have handled it in the past. Talk about money priorities for the kids, and how one or both of you will extinguish debt.

4. Discuss money dreams: Part of the reason money discussions can be so stressful for couples is that most discussions focus on problems. Make sure you also discuss positive stuff – like how you’ll afford travel you both want to do, how and when you’ll be able to buy a house, future tuition dollars or how you’ll afford to start a family.

5. Build a first budget: If you’re moving in together, you need to create a budget. The first step is tracking current income and spending data for at least three months and making sure you’re noting important expenses coming up in the future. If you want help, it’s easy to get. A financial planning professional can help you measure where your money is currently going and where you might have opportunities for necessary spending or saving.

6. Decide how – or whether – you’ll merge your money: Being a couple means building shared financial connections. The extent of those connections is up to you. Talk about combined checking and savings accounts and access to each other’s investments.

Joint checking accounts have several advantages – they allow for simplified recordkeeping and greater transparency on what both sides are doing with money. Separate checking accounts allow for greater independence and individual responsibility over money.

7. Be very careful about joint credit: There was a time when women couldn’t easily get credit and were solely dependent on the credit history of their husbands while their men were alive – once the male spouse died, so did the wife’s credit opportunities. That changed with a broadening of lending law in the 1970s, and it’s particularly important that both partners establish credit in their own names with a good history of using that credit.

Surviving spouses have the freedom to establish credit, but without a solid history, it may be particularly tough to get credit at a time when they really need it. Also, surviving spouses have to pay off outstanding credit held jointly, so it’s critical to keep those accounts under control.

8. Consider  a prenuptial agreement: If one or both partners or potential spouses have sizable assets or particular priorities about allocating money for specific purposes, charities or family members, a prenuptial might be worth a discussion. A financial planning professional can work with tax, estate and matrimonial attorneys to work out that agreement in a way that’s advantageous to both sides.

9. Talk about long-term savings, investing and estate issues: Even couples who keep separate finances need to prepare their income and retirement plan together to maximize the money they’ve worked for. A financial planning professional can help couples sort through their goals and what it will take to get there and how a potential inheritance may affect these plans and potential estate issues.

10. Plan for the unexpected: Couples should begin building safety nets from the beginning. Building an emergency cash reserve fund to cover between three to six months of living expenses should be a first goal. Then, depending on living circumstances and whether children or significant assets are involved, couples should develop estate plans as early as possible including wills, powers of attorney and specific plans to pass or dispose of business assets.

A discussion about beneficiary designations on life insurance policies, 401(k) plans and IRAs is also a must. While worst-case scenarios don’t make for the most enjoyable conversations, these discussions are better done before death, illness or a financial emergency makes such plans essential.

These money tips for couples were produced in association with the Financial Planning Association (FPA), the leadership and advocacy organization connecting those who provide, support and benefit from professional financial planning.

For more tips on finances and marriage check out our Money & Marriage series, a Couples Guide to Managing Money and Finding Financial Bliss!