In the past week, two things happened that made me think of using buffers or “lines of credit” as a strategy for reducing pressure, both financial and emotional, and keeping ourselves sane, while being better parents for our kids.
The first thing was Eden’s presentation of her research on corporal punishment. You may remember we invited our readers to participate in this research, which examined the links between parents’ disciplinary methods and things like the number of children in the family, age differences, financial situation and more.
When she analyzed parents’ and children’s’ responses to her survey, it occurred to Eden that stress may be a mediator between the various characteristics of each family and the amount of physical punishment used by the parents. Turns out, it is. She found that when parents experience more stress in their life, due to having more kids, having them close together and/or not having enough money to support them, they used less positive reinforcement with their children and were more abusive towards them, both verbally and physically.
The second thing was an email I received from Queensland Motorways, the company responsible for the tolls on some major roads around Brisbane. The email advised about a new feature of the toll system, which uses different sequences of beeps to notify car owners when their account is running low on funds and when it has a negative balance.
Initially, I dismissed the email, thinking, “What’s the point of sending it to us? We use Direct Debit and our account is never too low and certainly never negative”. But then, I remembered that I am often asked at checkouts, “How would you like to pay – check, savings or credit?” I am also often advised of various small fees that I might be expected to pay, along with the explanation that I should know about these fees so that I can plan how I spend money.
It occurred to me then that Ronit and I have a very good system in place, which most people do not use, apparently. Maybe why they have so much pressure in their life, then. Maybe if I write about it, lots of people will be able to relax. Great. I think I am going to write about it.
Financial buffers
The idea is simple, really:
- Sometimes, you have more than you need – more money and more happiness – and sometimes, you do not have enough
- Having a place to store the excess allows you to use it when you need it. That place is your buffer or credit line, which prevents financial and cushions you from emotional shocks and protects your kids
- Having one buffer is enough, so draw everything from it. It can be a positive balance in your main account, a deep enough credit card account or withdrawal limit. Whatever it is, you only need one
- Have all your bills automatically deducted from your buffer
- Whatever you buy, pay for it from that account. If you pay from another account, say a credit card, cover that from your buffer automatically at regular intervals (such as the credit card payment due date)
- The buffer only needs to be as big as your fluctuations. If an average month costs your family $3,000, but you have had months when the cost was as high as $5,000, then a buffer of $2,000 should ensure a smooth sail through life
Well, it all boils down to the pain of payment. Assuming you have to work to earn money, recall any payment you have made in the past few days. Did it hurt? Did you feel a twinge of grief about parting with your hard-earned dollars (Euros, Rupees, Dinars, etc)?
Seeing the results of your work and dedication flow out of your pocket and disappear is hard. Seeing this happen every day, sometimes more than once a day, is even harder. Using a financial buffer and automatic deductions does not change the amount of money you have to pay, but it makes these payments invisible and therefore almost painless (you should still check your account at least monthly).
It also means saying goodbye to one of the worst nightmares of any family: interest payments. When you have sufficient funds to cover your expenses by the time they arrive, you actually spend a lot less. Credit card debt is a huge burden, which grows rapidly over time. It is also pointless. Paying your credit card bills in full you save tons of cash in the long run and puts your family ahead of most people.
Once you build everything around a single account, tracking your income and expenses and planning become way easier, which adds even more to your peace of mind. Imagine the difference between having no idea what will happen tomorrow and knowing that next week you will definitely have enough money for your annual family camping trip.
Initially, you can check your money reservoir every day until you can be sure everything is humming along nicely. Then, you can gradually let go and check weekly and then even monthly.
Other buffers
Of course, buffers can be used in other areas too. For example, whenever you face a deadline, say in 5 weeks, you can put a time buffer ahead of it. You can organize all your work to complete in 4 weeks. If it does, you get a week to chill. If it does not, you have a week to catch up and still make it on time.
If you are in business, investing in marketing and having a few more leads in the pipeline means that if any of your clients leave, you still have a business. For the same reason, it is better to have more than one client than to have a really big one that would devastate your business if they ever chose to go somewhere else.
So pad yourself with money, clients, knowledge, tools, skills, friends and love, make your journey through life a smooth one and be happy.
Gal
