Alyse Benoit, 39, always received financial help from her late dad and 64-year-old mother, no matter the situation. Her stepdad passed away last year, and now the widowed mother ensures she has affordable housing for her kids with bills like internet and utilities taken care of. Over the years, Alyse's mother gifted her cash and vehicles and even loaned money as she navigated dead-end relationships and multiple career choices.
Alyse mentioned in an Insider post feeling "immense shame over being in midlife and heavily reliant" on her parents, especially because her mom, at 40, was already planning an early retirement. Alyse started strong, becoming a homeowner at 19, with her parents as her guarantors and contributing $35,000 in deposit, which she paid back. She had three jobs and decent money saved before a series of life decisions landed her in debt. She dropped out of university to get married and start a family in 2009, only to get separated five years later with two kids. The $20,000 that went towards college education came from a registered education savings plan her mother had set up. The divorce cost her home and considerable money due to the debt the couple shared, which left her scrambling for minimum-wage jobs. She decided to pursue nursing for a better livelihood, but 18 months of full-time studies and household chores depleted her mentally and financially. The challenge didn't deter her from pursuing further education in psychology. However, an unexpected pregnancy dimmed her chances of managing nursing shifts and studying simultaneously, ultimately leading to unemployment and debt.
Rising Inflation Strained Household Budget To The Limit
Alyse's dwindling savings were further affected by record inflation levels and high interest rates that rapidly lifted living and borrowing costs in recent years. Expenses ranging from car repairs, maintenance, and dental fees to the costs of raising kids led her to rack up debt on two credit cards, which she would pay off upon receiving her student loan amounts. Everyone has a breaking point, and Alyse's was when one of her credit cards reached $12,000 in outstanding debt. Her mother helped repay the loan. She has had a budget for years but often exceeds the limit, as most Americans do, according to a NerdWallet survey. Elevated inflation and high-interest loan payments prevented the family from achieving their savings goals and debt repayment plans. As high living costs became unsustainable, the kids decided to help their mom revamp the monthly budget over the last two years, which helped them save an extra $450 monthly and control the spiralling money situation.
1. Profit-Sharing With The Kids
Alyse made budgeting rewarding for her two daughters, who'll soon be in high school. She adjusted the budget to accommodate their changing needs. They receive a fixed allowance alongside bonuses for helping around the house or outperforming in school. On top of that, Alyse shares profits with them if they underspend, which further encourages the kids to manage money responsibly. Over time, they became debt-free and tripled their savings every month. Alyse acknowledges that the kids' money habits have significantly improved. She believes helping children become aware of how money works early on by involving them in household budgets and helping them understand the consequences of their decisions could go a long way in building steady wealth.
2. Weekly Credit Card Repayments
Many Americans use credit cards for points and rewards, and so does Alyse. She later realised that missing a single payment can be very easy when budgets are strained, but the negative impact on your credit score and report alongside late charges can have a long-term effect on your creditworthiness. While Alyse always strived to repay all she spent on credit cards within the month to avoid interest payments, sometimes they had a balance that ruined their budget for the next month. As control over finances gradually improved, the family cleared all outstanding credit card balances every week. Hence, they stay out of pending debt and find relief in breaking down a hefty monthly payment into smaller chunks.
3. Big Savings On Food
Americans spend a large part of their income on food. The latest USDA data revealed that in 2022, Americans spent 11% of their disposable income, a 31-year high, on groceries and restaurants as the effects of the pandemic began to fade. Due to high inflation, consumers paid almost 20% more for the same grocery items during 2023-end compared to 2021. Alyse worked with her kids to significantly trim the monthly grocery bill to an average of $650 from $800 through conscious meal planning, strictly buying things on the list, and cutting down on dining out and deliveries. They also leverage several smartphone apps for coupons and discounts.
4. Shopping For Deals Aggressively
Alyse is always looking for coupons and rebates beyond groceries, using websites and apps that scour the internet to find and automatically apply the best deals on products from diverse brands. The family looked for deals from streaming services, cellphone companies, and car insurance firms, which helped them find several money-saving offers. For instance, they shopped for new car insurance as interest rates hovered around 50-year highs, which saved them almost $600 bi-annually.
5. Monthly Meeting With Family Members Over Subscriptions
While revising their years-old lazy budget, the family realised they were spending way too much on apps and streaming services with over 20 active subscriptions. The average US consumer is estimated to pay nearly $1,000 yearly for at least four subscriptions. With 20 subscriptions, the family needed help accurately tracking the monthly costs. They decided to sit together and review each subscription monthly to determine if they require it further. Alyse made several other changes, such as going from bundles and annual packages to month-to-month subscriptions for the flexibility to cancel or adjust plans anytime. After slight adjustments and regular monthly reviews, they saved over $200 monthly on subscriptions alone.
6. Developing A Daily, Simple Budgeting Habit
Alyse understood that budgeting had to be part of her daily routine for meaningful change. She reviews her family's spending every morning because skipping a few days becomes overwhelming when managing the logs, significantly increasing the risks of falling behind on payment goals. She suggests that families start patiently with a simple budget for a clear picture of their spending habits. Given the family's variable medical and miscellaneous costs, it took Alyse several months to understand the budget. She used budgeting apps to prioritise savings, chalk out debt repayment plans, and ensure everyone gets their share for contributing to household finances.
