Budgeting for Homeschool Families - On the Road with Amy Sloan at HumilityandDoxology.com
June 25, 2021
By Matt Miner, MBA, CFP®
Homeschooling is both the most expensive approach to education and offers huge value to students and families. Post-pandemic, homeschooling’s getting a lot of attention and has been on a major growth-trajectory; even the Census Bureau noticed.
How does this relate to personal finance? On the one hand, cash costs for homeschooling are low compared to private school, ranging from several hundred dollars per year to a few thousand dollars per year, per kid. On the other hand, one parent will be engaged full-time on the homeschool project, and the other parent will be a very important member of the homeschool support staff! Therefore, the decision to homeschool removes one [potential] earner from the paid workforce, and occupies a non-trivial fraction of the supporting spouse’s brain-space for a period of about two decades, overlapping with those “peak earning years” from ages thirty-five to fifty-five.
For these reasons, if homeschooling is on your radar, it’s reasonable to ask how to pay for this endeavor.
In today’s interview, Amy Sloan of Humility and Doxology interviews me on budgeting for homeschooling families. Amy and I share how to make the family budget work with one main income and some side-hustling. The big idea is freeing up one parent to be available to homeschool the children.
Amy wrote a big blog post about budgeting for homeschool families when our interview was first released in very early 2020.
Budgeting: How to Start and Where to Go
A key theme emerges in the interview: “Don’t let despair about the difficulty of maintaining a detailed budget keep you from getting started with a budget plan for your family.” We discuss a detailed budget where you track every dollar coming in and going out. This can be done with pen and paper, by using an Excel sheet, or using an app like YNAB or Every Dollar. I provide a 10-20-20-50 Budget - 10% giving, 20% savings, investing, and debt repayment, 20% to “fun” categories, and 50% for lifestyle overhead expenses.
We discuss the The Anti Budget and how to implement this approach.
The Grocery Bill
We zoom in on the grocery category, which in my reckoning are the 3rd biggest budget category after taxes and housing for families with two or more children. The grocery bill is usually the third highest spending category for families with children, clocking in behind only taxes and housing in the budget-category league tables. I share a framework to address grocery spending by considering what you buy, where you buy, how you buy, and how you use the food you buy. For more, go to WorkPantsFinance.com/resources and access the “Hacking the Grocery Bill” whitepaper there.
Just what’s possible in budget-landia? What if you could cut your family’s food, entertainment, clothing, and miscellaneous budget from $2400 to $1600 per month, just by switching the payment method from credit card to cash? That’s what happened in the Miner family when we got serious about budgeting. And what if you could adopt this approach without handling physical currency? Amy and I discuss physical and virtual cash-envelope budgeting and other family budget hacks to live on one income.
Cash Envelopes - Tangible and Virtual
If you want' to exert greater control over grocery, entertainment, clothing and miscellaneous budget categories, using currency can be a great hack. If you don’t want to use cash, or for spending where cash is impossible, like online, use debit rather than credit, or if you want to use a credit card, pay off the transactions as soon as they post, weekly or even more often, using the app on your phone to transfer money from your checking account to pay off your credit card. This keeps your checking account balance trued up with what you've already committed or spent each month.
More Homeschool-Connected Content @ Work Pants Finance
TRANSCRIPT
[00:00:00] Matt Miner: What if you could cut your family's food, entertainment, clothing, and miscellaneous budget totals from 2,400 per month to 1,600 per month just by switching the payment method from credit card to cash? That's what happened in our family in 2010 when we got serious about budgeting. What if you could adopt this approach without handling physical currency. Today my guest and I discuss physical and virtual cash envelope budgeting and other family budget hacks for families to live on one income.
Hey, and welcome to the Work Pants Finance Podcast where I serve up hard won wisdom about work, life, and money. I teach you how to be a debt free millionaire in your 30s, 40s, or 50s, and build a life where your money works for you, not the other way around. I'm Matt Miner, your money guide, and for the last decade, my family and I killed debt, built wealth, and started teaching other people how to do the same. In 2018 I stepped away from corporate work to serve clients full time as a fee only fiduciary financial advisor. Work Pants Finance is the show for MBAs, entrepreneurs, and other professionals who want their financial plan to work as hard as they do.
Sometime I’ll do a show on why having one stay at home parent is the best life hack and tax break going. In this conversation, first released by my friend Amy Sloan on her podcast and video series Humilityanddoxology.com, Amy and I tell you how to make the family budget work with one main income and some side hustling. The big idea is freeing up one parent to be available to homeschool the children.
A key theme emerges from this interview. Don’t let despair about the difficulty of maintaining a budget keep you from getting started with a budget plan for your family.
With that in mind, here’s your money guide quick tip. Amy and I contrast a detailed budget and the anti-budget philosophy described by Paula Pant in her world class podcast and blog Afford Anything. While it is best to begin your budgeting journey with a detailed budget, if you’ll do that for just a few months while you dial in your budget goals and make the desired changes after a little while you can transition to the anti-budget and get very similar results with much less effort. Then, every few years, do a detailed budget for several months to see if your spending still aligns with your values. Or, if you want to make changes, then you implement those changes. After that, go back to your anti-budget again. Read more about the budgeting process at workpantsfinace.com/31.
Today’s episode is Budgeting for Homeschool Families-On the Road with Amy Sloan at Humilityanddoxology.com.
[00:01:32] Amy Sloan: Hello, everyone. If you do not know me, my name is Amy Sloan. I am a wife, a mom of five, and a second-generation homeschooler. You can find me online at humilityanddoxology.com. Today, I'm so excited to be joined by my friend, Matt Miner.
[00:01:50] Matt: Hey, good morning, Amy.
[00:01:51] Amy: Good morning. Thanks for coming. Matt earned his MBA at Dukes University's Fuqua School of Business with concentrations in marketing and general management, and his undergrad degree from Arizona State University in Finance. Matt's focus is helping others to do a great job managing their money. His love of personal finance grew out of his family's journey to repay nearly $250,000 in student loans.
[00:02:21] Matt: That was way too much.
[00:02:22] Amy: It's crazy, but kudos to you. They did this within about three years of completing graduate school. Since then, Matt has worked to provide resources and coaching in this important area. Matt lives here in Raleigh with his wife, my friend, Charity, and-
[00:02:41] Matt: She's my friend too for a long time.
[00:02:43] Amy: That's right, life long friend, and their three amazing children, Lucy, Josh, and Ben. Matt loves spending time with his family, writing, running, hunting, doing carpentry projects around the house. You can read more about Matt and his thoughts on money@designindependence.com. Matt, we heard a little bit of your story there in that bio, but could you-
[00:03:07] Matt: A lot of it really.
[00:03:09] Amy: A lot of it, but could you share a little bit more about your family, your homeschool, and your family's history with this whole life budgeting finance thing?
[00:03:18] Matt: Well, look, Amy, thank you so much for having me on today. It is just a pleasure to be here at Humility and Doxology, and hopefully to provide some value to your readers and I guess for this call anyway, to your listeners. My family is, like Amy said, we have three children, my wife, Charity and I have been married for almost 19 years. I should be able to just rattle that off, but it'll be 19 years this year, and our kids, Lucy, Josh, and Ben have been homeschooled for the last 10 plus years.
They're 14, 12, and 11. We have only and always homeschooled, and we have also done a lot of that homeschooling through the classical conversations community in Durham, North Carolina, and have had a lot of our homeschool resources and experience through classical conversations. That's been a good fit for us. From the standpoint of our history with budgeting, my history with budgeting was sorted until about 2010, and then it's been a lot more ticked and tied since then, that enabled some of that progress that you talked about, and then even more recently is what enabled me to make us switch from the corporate work that I've been doing post-business school to working as a financial advisor, helping other families do a good job with their money.
I'm what's called the fiduciary fee-only financial advisor and I have my CFP now and have been doing this for about two years. My firm, PLC Wealth Management, works with about 200 families mostly in North Carolina, but also have clients all around the country and even some global consulting clients.
[00:04:49] Amy: Oh, that's good.
[00:04:50] Matt: Yes, that's what I'm about. I think it's going to be fun to go through these questions. I definitely have opinions about homeschooling and money, and hope that the conversation will be super helpful to your readers.
[00:05:01] Amy: Awesome. Well, we love strong opinions around here. Let's start with a basic big picture question, because sometimes people feel overwhelmed just even by the idea of budget or the term budgeting feels scary or it's super complicated. When you say budget, what do you mean by budget? Why is it important? Are there any common misconceptions around budgeting?
[00:05:26] Matt: I guess when we say budget, I like Dave Ramsey's definition on this as well as anywhere, he says it's telling your money where to go rather than wondering where it went. How you do it is less important than that you do it, and that you do it as a team approach between husband and wife and as they grow up, even involving your children is I think really desirable. I tend to think of this in two main ways. One, I would call the detailed budget, and one I would call the anti budget.
If you're just getting started, it's probably great to think about the detailed budget, which is where you literally look at every dollar that's coming in, start with your gross income, show the taxes, any benefits that you may have withheld from your check, and get all the way down to your take-home pay. By literally starting at the gross income level, you may notice that you signed up for a benefit that you never use, and that may be a chance to get rid of that.
You get your take-home pay and from there, as a Christian, we would always start with the tithe that the very top, and then because we want to think about these things in the right way, we would look at saving and investment as the next thing after giving, and then whatever's leftover after that, we would look at allocating to various spending categories, and the way you'd want to do that is you take your best stab at it, and then you literally track it dollar for dollar.
I think when you talk about people feeling that budgeting is intimidating, the huge reason is that that's a really big project what I just described. Maybe the hope that I can offer on that is if a family will engage in that for two to four months and really do that, they will then have an accurate picture of what they're currently doing and then maybe can begin to move towards what I'm going to talk about next, which is the anti budget.
In the anti budget, you just set budget categories at the highest level and you fill those buckets up with your income and you don't have to track everything at a dollar for dollar level as long as, and this is the key, you can't be borrowing money or accessing savings to top things off if your anti budget isn't working.
[00:07:29] Amy: It's not really a budget.
[00:07:30] Matt: It's not really a budget. As long as you're not adding new debt or tapping savings, a great anti-budget, I would call it the 10, 20, 20, 50 budget, and that would be a 10% towards giving, 20% towards savings and investing, 20% towards fun things that you enjoy, whatever those are, and then 50% towards your general lifestyle expenses. On a budget like that, you're saving way more than the average American and by the way, it's fine if you're in a debt repayment phase to think of that 20% as being a debt repayment target because 20%, first of all, it's a big number, and second of all, debt repayment is like savings.
If you were trying to mess around with those numbers to make them bigger, I would urge you to consider trying to drive that 50% number down. I think keeping giving high and keeping savings and investing high and keeping fun high are good. If you want to try to raise those other categories, then see if you can fit your lifestyle into 45% of what you earn, or something like that. How would you like to follow up, Amy? Those are a couple of budgets and-
[00:08:31] Amy: No, that's really helpful. I guess what I hear you saying is that I think a lot of people think that for a budget, there's a bunch of specific rules they have to follow or an app they need to get, or some intricate envelope system and they just don't even think about it because that feels overwhelming, but what I hear you saying is that being purposeful and being on the same page with your spouse is really the foundation of budgeting.
[00:08:55] Matt: I could have given a much shorter answer. Be purposeful and be on the same page with your spouse. Actually what you say highlights an important point. A lot of people when they want to talk about budgeting, they want to talk about what's the best app or something like this. Really, it's about having that intentionality, creating that plan, and then figuring out what works for your family. In our family, that's always been a mix of Excel and then my wife, Charity, likes to sit down on the couch with pencil and paper. I start with the Excel and then we go to pencil, and then we go back to the Excel. That's how it works for us.
[00:09:29] Amy: We use Excel too. You just put in the formulas and it takes care of itself.
[00:09:33] Matt: Yes, good deal. You asked about common misconceptions. I think you've addressed them with just thinking in terms of, on the one hand, it needs to be real and right, on the other hand, you don't need to make it harder than necessary. It will feel hard for the first one and two times especially. If you can persevere and get to times 3 and 4, let alone times 30 and 40, it will seem much easier.
[00:09:59] Amy: Yes, like many things, as we practice, we get better at them and it comes more naturally.
[00:10:03] Matt: That's right.
[00:10:03] Amy: It doesn't feel like you're having to build the new habit.
[00:10:06] Matt: We tell our children first time, worst time. It's true for grownups too.
[00:10:10] Amy: Yes, for sure. My audience is primarily homeschool families, but thinking specifically within the specific challenges that come in the homeschooling family world, what are some key first steps a homeschool family can take to bring order to their budget?
[00:10:27] Matt: I think it's like a lot of things. There are many things I could say, some that I jotted down before our call. I think it's always good to put your giving first, if that's something that you're focused on in your family, and then beyond giving, to pay yourself first in terms of your saving and investing habits, whatever amount that's going to be. It's generally really helpful to automate everything you can.
The only bills that you should want to receive in the mail are ones that for some reason you think you want to review or negotiate, everything else should just be coming out automatically and that'll free up-- if you're not having to think about how to pay your bills, it'll free up brain space to think about creative ways to make your budget better, or something like that. In my personal experience, switching from credit cards to cash and debit cards is hugely impactful. It will have an automatic effect of driving your spending down.
When we first got clued into this budgeting stuff, we had a set of expenses that was all on predominantly one American Express credit card, and when we switched that same set of expenses to using cash for it, we dropped the same expenses from $2,400 to $1,600 a month just by changing how we were paying. Again, for us adding that extra friction to the spending was meaningful. We talked about this in the last question, but making a plan before the month begins, and then tracking yourself against that plan.
This is one I run into all the time with clients. People don't seem to think about a lot, but to allow yourself a miscellaneous category for things that you just failed to anticipate or wanted to do. I was on another show and talking about this and it's just like, "Oh, it's like a mini emergency fund within your budget." If you want to think of it that way, a good level for this would be like 5% to 10% of gross income.
If you're running on a $5,000 a month budget, a $250 to $500 miscellaneous category for things you just forgot about or want to do in the moment or just come up, like the dishwasher we were talking about before, that's a good place to have that. That's something that's helpful because otherwise the budget just becomes too rigid.
[00:12:35] Amy: I find this a lot when I talk to homeschool families actually about planning their time. There's a lot of times you plan out your time to the very extreme edges and you leave no white space in there. One kid gets sick or the dishwasher broke, like happened at my house, or somebody needs a little extra help with their math, and it's throwing your entire day off because if you just gave yourself that margin and expected the unexpected to begin with, it ends up making it a lot less stressful day-to-day. Same thing with your money.
[00:13:05] Matt: Man, so wise, Amy. It's the Sabbath principle for money.
[00:13:09] Amy: You weren't saying that to make me love it. Thinking, again, still this homeschool family thing, I don't know a lot of homeschool families that are trying to keep up with the Joneses and comparing fancy yachts and houses, but it's really easy whether with the homeschooler next door, down the street or on social media, you're seeing families doing all sorts of really cool classes and co-ops and subscription boxes. There's those library books sales that really get the--
How can we provide a quality education to our children, which is really important to invest in that, while not sacrificing our financial independence and still making wise choices with our money long-term?
[00:13:56] Matt: Your readers all know homeschooling isn't cheap but it's also not easy. If you can figure out the homeschool part, this money thing is not that bad. I thought a little bit about how to come at this question that you shared with me. I feel a quality homeschool education looks different for each family, but in terms of how you might think about, first of all, budgeting for homeschool if you've never done it before, then assume you can do it fairly cheaply because like anything, it costs what you want it to cost, and so start with cheap and then notice where the pain points are and add over time services or resources that may be helpful to your homeschool.
If you have been spending money on homeschool already and you have a baseline and you can then have a sense of probably whether that baseline is uncomfortably high for you, or maybe you have a lot of unnecessary pain and you're homeschooling because you're running around to libraries in three counties trying to do it all for free, then add some money to it and go from there. You can spend any amount, little or high, on homeschooling.
Families that I know who are in ordinary financial circumstances, it seems to me that they're spending somewhere between several hundred dollars per kid per year to a couple thousand dollars per kid per year. You're still at that rate ignoring the economic value of the homeschool parent's time. You're still way below private education in terms of what you're putting towards this, and of course, obviously since we do it in our family we think it's a great way to go.
Maybe if your readers are anything like my wife, sometimes there's interacts with other homeschoolers on social media and, or other homeschool families. Just remember everybody is not posting every picture of all the disasters that go on, there just wouldn't be enough time in the day to do all that. What you're seeing on Facebook does not represent the entire picture.
[00:15:43] Amy: No, that's 100%, especially as I've gotten in the online world over the past few years ago, you peek behind the curtain at all these people's lives, and everybody just has their own struggles. I guess with that, you brought up every family is doing things differently, it's going to look different. Even a couple hundred dollars per kid to a couple thousand dollars, that's a really big range, a wide range. I guess for people to not feel the pressure, "Oh, if I don't do what that family's doing, my kids are missing out or I'm not a good homeschool mom," or whatever.
[00:16:19] Matt: Never feel that way.
[laughter]
[00:16:23] Amy: Easier said than done.
[00:16:24] Matt: I fall into the same thing, probably not in homeschool because I'm a homeschool dad, I'm not a homeschool mom. I think it's different. The other thing here then is I would just also say don't neglect-- There can be income opportunities along the way in this homeschool thing. For us in classical conversations, we've usually found that we're able to do it pretty much as a wash with the income that my wife is able to earn from that or maybe even earn a few dollars.
Again, that doesn't account for what the value of her time could be outside the home, but since we're committed to how we're doing school, then it's nice to at least have the direct expenses of homeschool covered. You're in this world more than I am. I've seen moms do a tremendous job with things like thrift sales and with online businesses such as your own as long as they're real and not somebody else's scam, all kinds of things like that. Again, you're creative enough to school your children this way, your readers are creative enough to do that. There is a world of opportunity out there alongside the expenses.
[music]
[00:17:27] Matt: Today's episode is brought to you with deep appreciation for the folks who have taken time to leave iTunes reviews. Dave H, Score Joe, Springing through the Meadow, N-C-H-L-S-D-J-N, Charlotte, Tim and Tucson retiree, many thanks to all of you. To everyone out there in internet land, if you're enjoying the show, please share it with your friends and family. If you have something to say about the show, please leave a rating and review on your favorite podcast player.
[00:17:55] Amy: Well, let me ask you this question. Gearing away from the homeschool specific part, but as I asked the question on social media, what are some questions you want me to ask this person I'm going to be interviewing, so many people brought up the grocery budget. I think that can be a hard thing to even know what is reasonable to expect, like what's a reasonable expectation to have for the budget because a lot of estimates don't seem to take into account that we have these larger than average family sizes and we're home all day everyday. My kids seem to have a hard time doing math without a snack. How do we even know what's reasonable? How do we set a good goal there?
[00:18:38] Matt: I put a little thought into this before we talked, because this is one of those budget categories where it can be a killer and if you've got a big family, it's going to be big and it changes over time, and it depends on where you live. Just to give you some idea of how much it can change, in my own family when we were really crazy about the budget and paying off the student loan debt, we had this thing down to like $550 or $600 a month with three kids, but those three kids were like four, three and one or something like that at the time, and we were living in the Midwest and it was 2010, so it was in the midst of the economic catastrophe.
Whereas now we've got a booming economy. There's a little more inflation out there. Anyway there's not all these cheap things going on in the same way that they were and probably in many ways, we're all thankful for that. Employment prospects are also much better, but we now have months where we'll peak out as much as $1,300 a month, and the kids are now teenagers. If we get real careful about it, we can maybe drive that down to like $900 or $950 in a good month, but that's still a ton of money.
Here's my thought about this economically. If you can hit $5 to $7 per person per day, you're doing well. With a family of three and your teenage kids like mine, that would be a range of $750, which will be very hard for us to hit, but would it be doable, of 750 to 1,050 per month. If your kids are smaller than mine, maybe you can be on the lower end of that. If your kids are bigger than mine, you might be another $100 or $200 a month higher than that.
Of course, it depends on how you eat. If you really ate nothing but dried rice and beans, but many in our circles are also looking to eat in certain healthy ways, including meat and vegetables and things like that. That's where I think a good range is. I think figuring out what you buy, where you buy, how you buy it, and how you use it, it's how I thought about this.
We've never been coupon clippers, but we're big fans of figuring out which store to go to so we just happen to know that like for bulk purchases, Costco is where it's at, as long as you stick to your list. For consumer packaged goods, Walmart is typically dominant. For low volume, fresh stuff, Food Lion or your inexpensive Aldi or whatever is a good place to look for that, and then how you buy it, here again, is one where setting and sticking to your budget, either using the debit card or even using cash for this category I think is helpful.
How you use it, force yourself to stretch the inventory. If the fridge is just full all the time and you're throwing stuff away from wasting it, that's not great. By having a leaner inventory, you'll be more likely to move through your food and not have waste ,and then you'll just find things that work for your family. An example of this for us, we'll buy a rotisserie chicken. It's actually cheaper cooked than it is raw, then we'll eat the meat and salad and then we'll make soup out of the carcass or whatever. These are just ways you can find a stretch. There's nothing that I can tell a group of homeschool moms about how to do this.
[00:21:39] Amy: I think all of us know that rotisserie chicken. I'm like, "It's like free chicken broth." Not really free because we paid for the chicken, but-
[00:21:46] Matt: Yes, just add salt.
[00:21:48] Amy: That's right. I've actually found that the Walmart Grocery Pickup, which does not cost anything extra, so they don't charge a fee for the pickup. I can see a running total as I'm adding to my online cart, I can see a running total of how much I'm spending, and then you're not walking by the aisle like, "Ooh, the chocolate chips are on sale," and you end up with stuff you didn't intend to come home with.
[00:22:13] Matt: Yes, so that's really interesting, Amy. It's a convenience factor that actually adds control rather than taking away control.
[00:22:18] Amy: Exactly.
[00:22:19] Matt: That's great.
[00:22:19] Amy: Oh, I love it.
[00:22:20] Matt: Good tip. I never done the Walmart pickup. I'm a technology luddite.
[00:22:25] Amy: I always said I would never do it, but it has changed my life this past year, so I'm a big believer in it now.
[00:22:31] Matt: Yes. I think the difference, we only have the small Walmart near us. Our Walmart is not a grocery store.
[00:22:36] Amy: That's really tragic. I'm sorry.
[laughter]
[00:22:39] Matt: I don't know if it rises to that level, but it is a fact.
[00:22:42] Amy: Okay, well, let's think now towards the future. We're used to an outside of the box approach to education and we also want to give our children as many options as possible. I often tell my kids, I don't know what God has for you in the future, but my job is to give you options. What are some ways that we can be doing now to save and to help our children financially for college, or maybe they're not going to go to college, for whatever the future might hold?
[00:23:13] Matt: You touched on this so well. We're raising adults, not children and our job is to raise them to have many options and then to have the capacity of character to make wise and loving choices. I think that the framework maybe has two main things, in my opinion. The first is that you need to make sure that you are taking care of yourself. I don't mean that in a selfish way, but that your own personal finances are on a stable trajectory such that you're not going to be either a source of worry or a source of burden to your children at a future time, whether that's in the near future or in the far future.
Said bluntly, some level of retirement savings, I would say at least 10% or more and not having debt are higher priorities than any financial savings for your children. Whether that's thinking in terms of legacy gifts, or whether that's thinking in terms of paying for post-secondary education. Take care of yourself first. I guess this is the put on your own oxygen mask before you help others portion there.
Okay, so then as far as the kids themselves go, I think teaching them the framework to earn, give, save and spend, and just giving them those basic budgeting tools, they can earn through employed work. Whether it's babysitter or grass mower or leaf raker they can earn through launching their own business. They have the luxury of time, which parents don't, to put into that. They don't need a high hourly rate, but they can learn the skills through their business.
I think teaching them about earning capacity is really important. When it comes to college savings, whether it's because my own financial services industry pushes this or just because of parents tendency to be concerned about whether they're doing it right and wanting to immediately think about five to nine investing and stuff like this. Five to nines are great. If you're clearly filling up all of your other buckets, they can offer a tool for saving for college for your kids, but I think they need to be thought of as luxury investing, what you're doing in their lives is a lot more important.
Even when there is sufficient resources to begin doing some of that five to nine investing, I like people to think of these in terms of funding them at a level of not more than 50% to 75% of the total budgeted costs, even if you're at 25% of the total budgeted cost. A quick framework on that is even for full boat in state tuition here in our state, and it's fairly expensive. If you take $20,000 as a fully loaded UNC tuition right now, a child through hustle can earn $10,000 a year. That's not easy, but it's not by any means undoable.
That's $5,000 in the summer and $5,000 over the course of nine months, and then meanwhile if you have saved, and this isn't today's dollar, so it'll be different in the future, but your money will have grown as well. In today's dollars, if you had saved $20,000 for that child, that would be $5,000 a year that you could put from your savings towards that, and then the other $5,000 could either come from current cash flow or from some other creative way of doing that.
On the one hand, you look at it just on paper, and you're like, "Oh my goodness, it's going to be $80,000 to $100,000 just to send my child in state tuition." If you break it down the way that I've just described there, I think most people go, "I could save $20,000 between now and the time they go to school for my kid's school, and they could earn $10,000 a year, and then we'll figure out the other $5,000."
[00:26:47] Amy: That gives us some good perspective because I think you do-- there's all the crazy headlines where you see all this future of education costs, and you're just like, "Aahh."
[00:26:58] Matt: Right. You just curl up into a ball, right? What can I do with this?
[00:27:00] Amy: Right. You're like, "Hey, this is manageable. Let's not make it a crisis."
[00:27:04] Matt: That's paying boat. You can then quickly, again, in our circles, look at things like do enrollment, do a couple of years at a community college. Now you've cut that $80,000 figure in half. Now you're down to two half of those numbers that I just illustrated, for example.
[00:27:19] Amy: Yes, it makes such a big difference.
[00:27:22] Matt: Big difference. Yes.
[00:27:23] Amy: You talked a little bit in there, you were mentioning how you can give that earning, giving, saving framework to our children. Are there any ways that you would encourage families to help kids get a vision for taking care of their money, earning it now, and saving for the future, or do you have a go-to resource that you would recommend?
[00:27:45] Matt: I don't. I don't think it's a trick. I think it's just something that you do overtime. I think you can think of it as part of your homeschool, as part of what you're teaching your children.
[00:27:53] Amy: Or parenting.
[00:27:54] Matt: Your parenting, yes. I think you may have people in your life that you can enlist to support you in this. I'll give you an example. I always offer to clients that if they have a child that they would like to bring into a meeting, I would love to talk to that child about that child's financial plan. Like, "What are you doing to earn, save, spend and give?" That's one example.
You may have a family member who would be willing to support your efforts in this just by having a conversation. We've done some things that are co-op. There's a project, it's called, in our co-op, I think it's called Project 23 that asks the kids to imagine their life at age 23 and put together a plan for that. You can certainly create something like that on your own. Dave Ramsey definitely has some resources out there related to talking to kids about money, and I think they're probably as good as anything. I think it's his daughter. I think it's Rachel Cruze who has a whole book on that, that she wrote with her dad. I have not read it. I think it's one that's on my shelf that I haven't read, money I could have saved.
[00:28:53] Amy: The library mat, the library.
[00:28:55] Matt: No, it's in the library. [laughs] I don't know. Those are a few thoughts, Amy.
[00:29:00] Amy: Okay, great, thank you. Well, how about for adults and the books or resources in the financial realm. Let's think of two different things, one, we have somebody, a beginner, maybe they're in debt or they have never had any experience or training and this is all new to them, where would you send those people, and then maybe people who are, "Okay, we have a bit of an idea of what we're doing, but we really want to get even better, what would you have to know?
[00:29:27] Matt: Well, this is the trouble when you invite me to come speak and ask for three, I bring six, so there you go.
[00:29:32] Amy: Awesome.
[00:29:33] Matt: For the beginners, in my opinion, there's no better motivation book than Dave Ramsey's Total Money Makeover, especially if you're in debt, but that's the why pay off debt, why care about your money book. Some people find Ramsey completely unpalatable. If that's you, I guess you should skip it. That was the book that started us on our journey and I still think it's quite good.
The companion book to that, if you are in control of your money, would be The Automatic Millionaire by David Bach. That's all about automation and how to set that up in your finances to move then to the intermediate or advanced options. There's a book, I actually just recently gave a bunch of copies of this away to folks in our homeschool co-op, called the Simple Path to Wealth by Jim Collins.
I have not read this one cover to cover. I'm going to qualify these next intermediate advanced options by saying, actually, all of these books have a specifically non-Christian worldview. I just find them good books. The Simple Path to Wealth by Jim Collins, Your Money or Your Life by Vicki Robin, if you want to go down the minimalism crazy path, she has good motivation there. If you're like me and you like to laugh and you also are not overly offended by profanity, Mr. Money Mustache's blog is a great place to dive into the frugality financial independence space.
He actually writes about homeschooling from time to time. His son has done both homeschooling and traditional schooling. He is an entertaining writer, and his articles run the gamut. Those would be my intermediate or advanced options. For kids, I came up with two, there's a classic book, it's from the '20s. It's more in the prosperity mindset space. I have some, maybe some reservations on it, but I've had my kids read it. It's called The Richest Man in Babylon. The author there is-- I don't know how to pronounce claesson or Clason, but C-L-A-S-O-N.
By the same author is The Automatic Millionaire. This is another book that I just gave away a bunch of copies in our homeschool co-op is the Latte Factor by David Bach. That one is about a young woman who has left home, I don't remember if she's post college, I think she's probably post college. She begins to interact with a low-key millionaire next door type entrepreneur who teaches her some things about money. It's a novel that's written in a narrative format. It's short. [chuckles]
[00:31:56] Amy: Those are all great. I'll make sure to have all of those linked up in the notes and to post with this and in the video description. Well, thank you so much.
[00:32:05] Matt: It's just been a pleasure to be with you, Amy. Thanks for having me on.
[music]
[00:32:14] Matt: Now, here's your money guide quick tip. Don't let despair about the difficulty of detailed budgeting keep you from getting started with a budget plan for your family. Today's show contrasts the detailed budget and the anti-budget hat tip to Paula Pant in her world class podcast and blog, Afford Anything, for the term anti budget. I share that while it is best to begin your budgeting journey with a detailed budget, if you'll do that for a few months while iterating your budget and making desired changes, you can then transition to the anti-budget and get very similar results with much less effort, then every few years do a couple months of detailed budgeting to see whether your spending still aligns with your values, or if you want to make changes, and then you can go back to the anti-budget yet again.
Now you've heard all about budgeting for homeschool families at almost any income level. Here are the key takeaways. First, budgeting is the tool for using your money to implement your values. Second, the 10, 20, 20, 50 budget is a great framework. That's 10% for giving, 20% towards savings and investing, 20% fun money and 50% household overheads. If you want to join the budget and lifestyle hacking crowd, look to drive down the 50% lifestyle overhead costs and goose you're giving investing and fun money budgets.
Using cash, that is physical currency, for grocery, entertainment, clothing and miscellaneous or other categories that are routine budget busters for your family. Hello, Amazon, anyone, can create needed friction and actually drop your spending. How can we use cash during the pandemic? Well, the answer is, it's pretty hard to use currency right now. Instead, you can use debit rather than credit, or if you want to use a credit card, pay off the transactions as soon as they post, weekly or even more often using the app on your phone to transfer money from your checking account to pay off your credit card. This keeps your checking account balance trued up with what you've already committed to spend each month.
Fourth, the grocery bill is usually the third highest spending category for families with children, clocking in behind only taxes and housing in the budget category league tables. I present a framework in this episode to address grocery spending by considering what you buy, where you buy, how you buy, and how you use the food you need to live. Thanks so much for tuning in to episode eight. Please come back tomorrow when we wrap up this education miniseries as I discuss when enough is enough but formal education on Lacey Langford's Military Money Podcast. Until then, this is Matt Miner encouraging you to plan to fund the life you love.
[00:34:52] Speaker 3: Matt Miner is a fee-only, fiduciary financial advisor and Founder & CEO of Miner Wealth Management, a North Carolina Registered Investment Advisor where Matt provides personalized, unconflicted, advice to clients for a fee. He’s also my dad, so please be nice when you talk to him! Matt is a Certified Financial Planner Professional and holds a Series 65 securities license. He earned his bachelor’s degree in Finance from Arizona State University, and his MBA from Duke University’s Fuqua School of Business.
Work Pants Finance is Matt's financial media business where he talks about work, entrepreneurship, kids and money, taxes, investing, and other personal finance topics. WorkPantsFinance.com exists to share wisdom and provide general financial information. It is not financial, tax, or legal advice. You are an individual and probably need personal advice for your specific situation. You should consider building relationships with helpful, caring, and competent professionals who understand your unique context and can provide advice that is tailored to your needs
[00:35:39] [END OF AUDIO]