One of the biggest “life events” many of us experience during our 20s (or 30s) is the arrival of a new member of the family.  A new baby can bring a great deal of excitement and responsibility.  The great thing about a new baby is that you have about 9 months to prepare for him or her.  Your financial preperations are very important.  Here’s what I’ve learned going through the process.

There are a number of expenses that come with a new baby.  Some of the major ones are:

• Medical expenses with repeated doctor visits as well as costs of the birth / hospital stay – Estimate $750 – $2,000
• Setting up a nursery can vary big time depending on how overboard you go, but most people will buy the basics such as a crib, rocking chair, and some other basics – Estimate: $300 – $1,500
• Clothes and other baby essentials such as bottles, diapers, changing pads, blankets, etc. - Estimate: $300 – $500
• Safety items such as strollers and car seats can also get expensive and might not be items you want to skimp on – Estimate: $200 – $800

Additionally, you can count on an increase in your monthly spending.  Items such as diapers, formula and clothes will need to be continually purchased since they’re being consumed or out-grown. I estimate between $200 and $300 a month on the day-to-day needs of a baby.

The wonderful thing is that some of the upfront costs might be saved due to the generosity of family and friends during this exciting time.  Events like baby showers sometimes end up being generous gift giving events where you get many of the items you will need.

I’ve definitely left out many items in the above list, but it’s a pretty good starting point.  I suggest estimating out the total costs of a new baby along with 3-6 months of anticipated day-to-day costs.  Total that number up and start putting money away during the pregnancy to attempt to reach that number.  There are plenty of new stresses with a new baby ( especially if it’s your first baby) so do your best to eliminate the uncertainty over the financial aspect of this process.

If this isn’t your first baby, then you likely have many of the major items that you purchased for your first baby.  While this will help for some of the up-front costs, you will still need to buy the day-to-day stuff for a new baby (in addition to your other children’s needs).  Multiple kids can definitely add up!

If you’ve gone through this process, what are some tips you would share with a soon-to-be parent?

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1840Comments (8)http://20smoney.com/2010/03/15/preparing-financially-for-a-new-baby/Preparing+Financially+For+A+New+Baby2010-03-15+09%3A28%3A16Kevin

Time management is one of the most best things that you can strive to get better at in your life in my opinion.  Improving your time management can be the difference between an increase in income, the ability to build and manage a second income stream and a quality work / life balance versus a poor one.

When it comes to developing a second income stream, most fail to do it not because of the difficulty or the lack of skills.  Most fail to develop a second income stream due to an inability to manage their time well and a lack of determination.  The determination can be solved fairly easy – simply, get determined!  The time management however isn’t solved so quickly.  It needs to be modified and analyzed.

A few tips to improve your time management:

1. Analyze how you spend your time – track your time and categorize it according to purpose (job, side income, leisure, family time, etc.) – rank each “session” according to how productive it is
2. Find specific ways to improve the productivity of various sessions
3. Minimize time wasted doing things like aimlessly surfing the web, or browsing facebook, or “seeing whats on TV” (rather than sitting down to watch a show you actually plan to watch)

Some areas where you shouldn’t eliminate or even cut down:

1. Sleep – you need sufficient sleep
2. Family time – should take priority over work and money
3. Exercise – Stay healthy

What are some ways that you have improved your time management?

Have you added a major responsibility into your daily life such as running a side business or income stream without dropping any areas of life (quitting a job)?  How did you manage to effectively increase your responsibilities?

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1799Comments (0)http://20smoney.com/2010/03/02/the-importance-of-effective-time-management/The+Importance+of+Effective+Time+Management2010-03-02+19%3A43%3A26Kevin

It’s a pointless exercise to attempt to shine a positive light on somebody struggling big time due to unemployment or other economic realities.  For older individuals near retirement age, this great recession might be disastrous.  For us young people, I hope we can learn from this era and hopefully, it will impact us in a positive manner for the future.

Here are some potentail lessons or benefits for the younger readers who are going through what I call the Great Recession:

Lesson #1 – Back to reality with regards to consumption

Consumption levels by Americans were completely unsustainable for a while during the last decade.  Houses were used as ATM machines and the savings rate actually went negative.  Obviously, this could not continue.  I think we will see the savings rate move towards a normal, more healthy level somewhere in the range of 5-10%.  Many young people viewed these insane consumption levels as “normal”.  Learning that these are, in fact, not normal is a good thing.  Hopefully, saving will be a major focus of young people moving forward.

Lesson #2 – Leveraged speculation can get nasty

The real estate boom provided an excellent example of how borrowing money to speculate can turn very ugly.  Individuals who have never speculated on anything thought they could get rich by cashing out home equity and buying up homes left and right.  We all know how it ended.  Borrowing money to get rich quick or to speculate on anything, whether it is a piece of real estate, a stock, or a business is a bad idea.

Lesson #3 – Guaranteed returns are not guaranteed

As I just mentioned, the housing bubble/bust also shattered an idea of real estate always going up in value.  Additionally, the lost decade in stocks has compromised the notion that stocks will always go up, even over the long haul.  I would caution any young person from believing that anything is guaranteed, even over the long haul.

Lesson #4 – The economy is not always a tailwind, but can be a headwind

For decades, Americans saw prosperity and growth continue and increase while the economy was a tail wind.  Simply put, it was fairly easy for many people to do well, make money, and increase their standard of living.  Many of these people would simply not have had the same level of success in a bad economy.  The reality is that the economy is not always a tailwind that pushes us to greater levels of prosperity.  It can be a headwind meaning it is difficult to get ahead.  It can take grit and determination to be successful.  Young people should not assume that the economy will always create opportunity for them.  You have to find it yourself and work for it.

Lesson #5 – The American Dream / Middle Class that we are accustomed to might go away

Some very credible people believe the idea of the American middle class is going to be changed forever.  Unfortunately, most of the middle class in America is broke.  The idea of having a huge suburban house, with two BMWs in the drive way and expensive vacations every year as a standard way of life is most likely over for many people.  What we have witnessed over the last years or even the last decade or two is a bubble middle class.  Don’t assume that our futures will look like the middle class of recent years.

Do you have any lessons that you can add to this list?  Are there any potential benefits that you see as a result of going through this terrible economy at a young age?  Add your comments below.

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1747Comments (3)http://20smoney.com/2010/02/22/potential-benefits-of-going-through-the-great-recession-while-young/Potential+Benefits+Of+Going+Through+The+%22Great+Recession%22+While+Young2010-02-22+09%3A14%3A36Kevin

To start this article, let me say that I’m 100% a capitalist.  I believe it is the best economic way that the most people gain the most.  I believe in the power of millions of individuals making individual decisions versus central economic planning.  With that said, in this system the rich always get richer.  Many of you will use that as the reason why capitalism is bad.  But, why is this a negative result?  I don’t think it is.  Let me explain further.

You Need Capital To Make Money

In capitalism, capital is king.  In order to invest, start a business, whatever, you need capital.  The problem is that due to our over-consumption culture, nobody has capital.  Because every body is in debt and has no capital, instead of working to get out of debt and build up savings to be used as capital, many people choose to blame the system (capitalism) and demand entitlements and other things.

You Lose Ground Each Day You’re In Debt

The debtors in a capitalistic society are unable to build wealth.  As Jacob at ERE explained in this great post, getting out of debt merely gets you back to ground zero, to the starting line.  I’m not diminishing the great value of getting out of debt.  I commend anyone who turns the corner and gets out of a huge debt hole.  You absolutely need to get out of debt.  But, understand that getting out of debt is just step 1 in the journey to build wealth.  Everything is on hold until you’re out of debt.

When you have assets, your money is working for you.  When you have liabilities or debt, your money is working against you.  Wealthy people have assets.  Poor people have liabilities.  In order to make progress you need to eliminate the liabilities and start building assets.

What To Do Now

1. Make a plan to completely get out of debt – Eliminate your liabilities
2. Start building your assets – whether it is stocks, bonds or a business – I’d recommend not including real estate in your asset list – it is an asset, but its your residence and is not cash flowing.
3. Monitor and tweak your game plan over time – how are you coming along?

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1563Comments (0)http://20smoney.com/2010/02/09/the-rich-always-get-richer-in-a-capitalist-society/The+Rich+Always+Get+Richer+In+A+Capitalist+Society2010-02-09+10%3A58%3A02Kevin

We could all afford to buy less stuff, that’s a given.  But, what about the things that can be potential assets to you and your family?  The key is to buy these things when they’re completely out of season or when there is very light demand for such products.  Not only can you get great deals but you can also find plenty of people selling perfectly good products for dirt cheap prices through places like Craigslist.

Recently, I’ve gotten into preparation / safety mode and I’ve decided that a generator is a great thing to own.  I live in Florida and we get hit by hurricanes rather frequently.  Loss of power is both a very real threat to Floridians, but also something that can be prepared for by owning a generator.  The problem is that when people see a hurricane coming to the area/region, everybody does out to buy a generator.  Stores usually sell out and sometimes jack up the prices to make a few extra bucks.  This is the wrong time to buy one.

We haven’t been hit by a hurricane in a few years, and also, people need cash these days.  The result is a huge selection of generations that have hardly been used for deals like 80% retail.  Beautiful.  I’m currently in the process of shopping several options through Craigslist.

This is a great way to acquire long-term, durable items that can be expensive but are also things that can last you decades.  The key is to buy low and then take excellent care of them.

To sum up the point here, a wise money management strategy is to allocate as few of your dollars as necessary to quality items that will provide value for many years.  You can make a list of items that fall into this description and a list of items that do not.  For example, the latest gadget that will either break or be obsolete yet commands a premium right now is not in the list.

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1559Comments (0)http://20smoney.com/2010/01/28/buying-low-purchasing-items-that-are-out-of-season-or-out-of-style/Buying+Low%3A+Purchasing+Items+That+Are+Out-Of-Season+Or+Out-Of-Style2010-01-28+10%3A50%3A57Kevin

Despite the fact that we hear the economy is recovering, there is still economic misery all over.  I’ve recently read a few interesting reports of families that are really struggling.  Now, my initial reaction to these stories is one of compassion.  I believe in charity and giving to those in need, and I do.  But, there’s another side that IS necessary to discuss.  The other side is one that shows the complete failure of so many people to prepare for a time when things would not be so good.  By ignoring this other side of the equation, we will fail to be better prepared for the next economic downturn (assuming we get an “upturn” first of course).

Paycheck to Paycheck

A few years ago, with very full levels of employment and a booming economy, still there were insane amounts of people living paycheck to paycheck.  This meant that they were spending everything they made, and in some cases, more.  Assuming “boom” times would go on forever, hardly anybody prepared for a rainy day.  The appropriate course of action of course would have been to be saving money diligently.  So many people could have easily put enough money away to fund their lifestyle for months, maybe even years.  Most people opted for granite counter tops instead.

Idle & Unemployed

Moving to today, many people who are unemployed are diligently working towards finding a new job.  However, there are also many people who are doing the bare minimum to find a new job.  As if somebody is going to find it for them.  Not only that, while they wait for a job that they may or may not get, they sit idle instead of getting out there and earning some cash on a part time basis while you wait for employment.  I don’t care if you have to do some really crappy jobs.  They should do what it takes to put cash on their table.  Unfortunately, this is a side of government assistance for the unemployed that prevents people from actually working hard to get some cash flow going.

What if unemployment stays high around 10% for years?  Most people think that the government has this giant warehouse of money ready to be distributed and therefore, unemployment payments are no problem.  We could potentially be  paying for people’s lifestyles for years on end.  Inflation anybody?

Furthermore, isn’t it interesting how many unemployed people still buy a pack of cigarettes a day?  Or, talk on their iPhone each day?  Or, go out to eat?  They could drastically cut their expenses and get by on much less, but they choose not to.  Again, maybe a byproduct of unemployment assistance.

Conclusion

Again, my point here is not to tell you that all unemployed people are losers.  They’re not.  But, I’ve witnessed with my own eyes the things that I discuss here.  Sadly, I think it’s a symptom of the disease that is rampant in this country that somebody else will take care of me and I’m entitled to this or that.  Self responsibility or the concept of working for what you have is a rare commodity these days.

Furthermore, I’m not saying we shouldn’t help unemployed people.  But, there’s got to be a better way.  Any ideas?

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1486Comments (7)http://20smoney.com/2010/01/27/an-insensitive-look-at-unemployed-americans/An+Insensitive+Look+At+Unemployed+Americans2010-01-27+09%3A49%3A22Kevin

I would venture to say that gym memberships are easily one of the biggest wastes of money for most people.  If people were to calculate the cost per visit to the gym, it would be outrageous and they would likely cancel their membership.  I’ve recently come to the conclusion and cancelled my Y membership, saving approximately $75 per month.  Let’s look at some alternatives to this spending.

A Regular, Healthy Lifestyle

Americans typically live in extremes.  We’re either slobs who get zero exercise and eat like crap or we go on a health binge and kill ourselves in the gym.  If we could find something in the middle and then do it consistently, we’d be better off.  This might mean pushups and a few jogs a week.  Or maybe it means taking the stairs each morning rather than the elevator as you go 10 floors up to your floor in the office building.  Find the little ways to get your heart rate up during the week, then eat some actual nutrition in your diet.

Home Gym

You can easily get  some good home gym equipment off Craigslist these days.  Clear out some space in your garage and put some basic equipment in there.  Then, get rid of the gym membership.  You really don’t need equipment, however.  You can stick to pushups, situps, lunges, and a lil running in my opinion.

What do you pay for your gym membership?  How many times do you go each month?

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1347Comments (5)http://20smoney.com/2010/01/05/alternatives-to-expensive-gym-memberships/Alternatives+To+Expensive+Gym+Memberships2010-01-05+10%3A20%3A31Kevin

Much of this blog is typically about getting started early in work, career, saving, investing, blogging, whatever.  Just as important as these areas is the area of life.  If you’re like me, you graduated college (which we call the fun/free days) and then “got serious” about a career.  Sure, I still had and have tons of fun after college even while focusing on a career, but it is very easy to get wrapped up in a job or a financial situation and lose track of living life.  I want to comment on this a bit further…

The decade of our 20s brings many new things, a career, major financial responsibility, potentially a marriage, maybe even kids.  At this point in life, it’s not like we don’t know how to enjoy life, it’s more that we’re starting to encounter new distractions that get in the way of life.  Some of these are necessary, some aren’t.

Financial Stress

A major obstacle to life in our 20s is financial stress.  Some of this stress is a good thing (i.e. wanting to save money), but much of it is brought upon ourselves.  We can all but eliminate this stress but accepting a more frugal lifestyle.   Live in a cheaper apartment, don’t go out to eat as much and don’t spend as much money on things.  Instead, be smart financially by putting away a good amount of money each month and then enjoying yourself as a result of not worrying about your finances.

Pursuing Other Satisfactions

Since much of our energy goes into our budding career, and for single people, the rest goes towards a social life, we find it hard to put energy and time into other areas that bring us satisfaction.

For me, I would like to spend more time with my family, more time on my own business ventures such as this blog and more time pursuing physical training such as running and maybe a triathlon.  Don’t get me wrong, I’m able to enjoy these things to a large extent, as much as is possible working a normal 9-5 job, but my goals are to be able to have a flexible lifestyle where I can pursue them even more.

For individuals who can’t really budge in terms of how much time is spent at work, I encourage you to maximize your time outside of work.  You can do this by not watching as much TV, not spending as much time at the bar, and waking up earlier (so you can do stuff before work).  These are all strategies I implemented while living alone, single and working fairly long hours.

Employee vs Entrepreneur

Most people ignore work when talking about pursuing life.  I think that work can be a major part of your satisfaction that you receive in life.  A major way to increase the satisfaction, at least for me, is to transition from employee to entrepreneur or business owner.  Being my own boss is a major goal of mine.  Not only does it allow me to work the type of schedule that I want to work, but I would love to see a direct relationship between my results and my own effort and being an entrepreneur is the best way to do this.

While most people won’t become an entrepreneur in their 20s, it’s important to just keep the goal present as you move forward in your career so that you can maximize your opportunities to learn skills and build relationships that will help you down the road towards this goal.

What are the ways that you pursue life in your 20s?  How do you connect with people and find ways to be more satisfied?

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1262Comments (2)http://20smoney.com/2009/12/22/pursuing-life-in-your-20s/Pursuing+Life+In+Your+20s2009-12-22+09%3A11%3A19Kevin