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Spending and Saving

People use different strategies to manage their money. Some people plan their spending for today and tomorrow. Others prefer to spend their money without planning, which may result in financial problems.

Ideally, everyone would have savings funds that help make short-, medium-, or long-term goals a reality. Unfortunately, many have a hard time meeting daily needs, let alone saving for the future.

No matter your situation, the following resources will help you manage your spending and savings to better meet your goals.

Tips and Tools

Discounted Entertainment for Families — Get ideas for discounted, low-cost, and free entertainment options to get your family out and about in your community. English | español

Plan to Save: It's "Paying Yourself First" — Saving money is "paying yourself first."

All About Prize-Linked Savings Accounts — Prize-linked savings accounts are now available through participating Minnesota credit unions. These accounts encourage saving by giving customers a chance to win cash prizes.

Holiday Spending — Develop a game plan ahead of time to avoid holiday debt.

Planning for Non-Monthly Expenses — Learn to set spending target goals and determine what to put aside for unplanned expenses.

Wants Versus Needs — Before you go to the mall or a favorite online store, understand the difference between wants and needs.

Are You the Owner of Unclaimed Property? — Right now, the state of Minnesota is holding millions of dollars in unclaimed property, or more precisely, unclaimed funds. Find out whether some of that money may belong to you.

Download and Print

Have You Started to Save? (207 K PDF) — This Financial Literacy Guide provides tips and links to additional resources for starting to save, reducing debt, avoiding scams, and more. A collaboration of the Minnesota Department of Commerce and University of Minnesota Extension.

Adjusting to Suddenly Reduced Income (9.87 MB PDF) — Take into account the financial, emotional, and social aspects of sudden income loss.

Compounding is Like Magic

Rosemary K. Heins, Extension Educator

January 2014

Albert Einstein is often cited as saying, "compounding is the greatest mathematical discovery of all time." And we are cautioned, if a deal is too good to be true it's probably not true. However, the magic of compounding is true.

Simply the money you save earns money. Then the money your money earned earns more money and so on...the longer you save the better compounding works for you. In fact, saving a little for a long time generally adds up faster than saving a lot for a short period of time and it's easier to do.

Here's an example: If you save $100 a month, or only $25 per week, at the end of one year, you could have $1,212.96, assuming only a 2% interest rate. Keep saving at this level and after five years, you could have more than $6,300. Only $6,000 is what you've set aside, and the rest is due to the "magic" of compounding. This is what you want to work for you in a retirement plan.

The longer you can keep your money growing for you, the faster it will add up. Now you may not earn two percent per year, depending on when you start and where you choose to invest. You could earn more at times, and at times less. However, in a very real sense, time is money when it comes to saving for retirement or other long term goals such as a child's future education or a special vacation. The impact of compounding over time is magical.


American Savings Education Council, "The "Magic" of Compounding", [no longer active]

Prepaid Debt Cards vs Bank Account Debit Cards

Rosemary K. Heins, Extension Educator

January 2014

Carrying “plastic money”, like a credit or debit card, is easier than carrying cash and often considered safer. There are two main types of “debit cards” and each type has advantages and disadvantages.

A bank account debit card is connected to a bank or credit union account so deposits are insured. Payments come directly out of the account. Usage history is reported to a credit bureau.

For a prepaid debit card, funds are loaded on to the card and only the funds on the card can be used. This can be a way to control spending. These cards don’t require a credit score or bank account to be purchased; they are sold online and in stores. Prepaid debit cards typically carry a network logo, like Visa or Master Card, and can be used anywhere that network is accepted. Some are reloadable while others may be specific to a retailer. People without bank accounts may receive their pay through payroll cards and public benefits are issued through reloadable cards, as well.

Banks or credit unions are more likely to “bundle fees for services” for a bank account debit card. For example, one monthly maintenance fee that covers online banking, in-network ATM withdrawals and transaction processing fees. However, with some prepaid debit cards, each of these types of transactions creates a separate fee which could add up in a month.

Reading and understanding the terms of the card, whether prepaid or a bank account card is important. Using “plastic money” can be handy but think about how the card will be used and look at the total costs to find the best option for you.


Pippidis, M., PrePaid Cards Abound this Holiday Season — But are they cheaper than checking accounts? Two Cent Tips (November/December 2012) University of Delaware Cooperative Extension,

Gift Card Use Tips

Rosemary K. Heins, Extension Educator

January 2014

During the recent holiday season, eight in ten consumers planned to buy gift cards. Gift cards have become a practical and acceptable way to give. Since 2010 gift certificates, store gift cards and general-use prepaid cards have come with consumer protections.

There are limits on expiration dates. The money on the gift card will be good for at least five years. If your gift card has an expiration date you still may be able to use unspent money through requesting a replacement card, at no charge. Check the card to see if an expiration date applies.

All fees must be clearly disclosed on the gift card or its packaging. And there are limits on fees. Generally, fees can be charged if:

  • the card hasn’t been used for at least one year, and
  • only one fee per month can be charged.

These fee restrictions apply to inactivity fees for not using your card, fees for using the card, fees for adding money to the card and maintenance fees. A card disclosure will list fees that can be charged to purchase the card or to replace a lost or stolen card.

These rules do not apply to reloadable prepaid cards not intended for gift-giving, such as those being used as a checking account substitute. The rules do not apply to cards given as a reward for part of a promotion, such as a $15 gift card given by a store for a $100 purchase. You must be clearly informed of any expiration dates or fees for these cards.

Gift cards can be great to receive since you can purchase what you want. And consumers do have protections to get the full use of the card.


What You Need to Know: New Rules for Gift Cards,
Gift Card Spending Reaches All-time High, According to NRF Survey, [no longer active]

Opinions on Middle-Class Description Change

Rosemary K. Heins, Extension Educator — Family Resource Management

September 2013

During political campaign seasons, we always hear about what ‘the middle-class’ wants or needs. But what does the term ‘middle class’ mean? It depends on your viewpoint; there is not just one agreed upon definition.

Recent research by the Pew Research Center indicated a change in the American viewpoint on the characteristics of the middle class. Having a secure job replaced homeownership as essential to being in the middle class. Nearly nine-in-ten adults said a person needs a secure job to be considered part of the middle class, while just 45 percent say the same thing about owning a home. Having health insurance topped home ownership, too, as a characteristic. The other two of the top five characteristics were a college education and having stocks, bonds or other investments.

This is much different than the viewpoint expressed in a similar study done in 1991. The top five characteristics of the middle class then were homeownership, having two or more cars, a college education, owning stocks, bonds or other investments and having a white collar job.

The recent recession and higher unemployment rates plus survey wording differences may help explain the differences. In the earlier survey the wording used was ‘white collar job’ whereas the 2012 survey wording was ‘a secure job’.

The definition of the American middle-class varies and through time can and will change. What is your definition?


Drake, Bruce (9 August 2013) “Having a secure job replaces homeownership as the key to being middle-class”, Pew Research Center, retrieved from

Study Finds Households Need Emergency Funds

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

Would your household be able to come up with $2,000 in 30 days if the "rainy day" did arrive? The National Bureau of Economic Research published a study in May 2011 that shows that 50% of Americans would struggle to come up with $2,000 in a pinch. This could be for an unanticipated car or home repair or a large medical bill. Only a quarter of Americans said they would be able to come up with the funds.

Approximately one quarter of Americans reported that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans.

This finding was more severe among those with low educational attainment and no financial education, families with children, those who suffered large wealth losses, and those who are unemployed. A sizable fraction of seemingly "middle class" Americans also judged themselves to be financially fragile.

The study examined the coping methods people use to deal with shocks. While savings is used most often, relying on family and friends, using formal and alternative credit, increasing work hours, and selling items are used frequently to deal with emergencies. Most surveyed said they would need to use more than one method to come up with the funds.

What does this study mean for you and me? It means saving, even small amounts, is important for developing our own safety net to deal with emergencies. For ideas on ways to save, even small amounts, check out the University of Minnesota Extension website,


Lusardi, A., Schneider, D. J., & Tufano, P. (2011, May). Financially fragile households: Evidence and implications (NBER Working Paper No. 17072). Washington, D. C.: The National Bureau of Economic Research.

Talking to Children About Spending Cutbacks

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

Money can be a complex topic — when money is tight. It can be tough to explain to children why you can’t buy them what they want or what they’ve always had. How can you share with them that the family needs to cut spending?

Here are some ideas for getting the conversation started.

Start by explaining it’s not just us. Explain that families everywhere are trying to cuts costs.

Be honest, but appropriate. Telling a child "no" to a request to buy something without explanation won’t help but you shouldn’t place the burden of worry on your child, either.

Answer their questions. Avoiding the conversation might lead to your child to imagine things are far worse than they are. If you are worried about a job loss, tell them — but at their level. Help them understand that you are taking steps to improve the family finances and encourage them to help. Enlist the entire family in coming up with ideas for saving money.

Teach by example. It’s not fair to tell your child they can’t have a candy bar because it’s not in the budget as they observe you buying a latte every day.

Let them earn their own money. If your child is old enough to get a job, encourage him or her to work to earn their spending money.

And finally, watch your words. When discussing money troubles with your spouse, don’t assume your kids are tuned out. If you need to speak privately, wait until you’re truly alone or until the children are asleep.

When money is tight, life can get complex for all family members, for both parents and children.

Pre-wedding Money Talk

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

"Tying the knot," or getting married, means tying a financial life together. Before walking down the aisle couples need to have money discussions that affect what comes after the honeymoon. Doing so before the wedding may prevent challenges down the road.

Couples need to know each others’ financial beliefs and practices, including money management skills. Here are questions couples could ask each other to learn this vital information:

  • What are your view on spending and saving? Do you spend cash as soon as it comes in, or do you put money into savings each pay period?
  • Do either of you have individual financial goals in addition to your shared financial goals? For example, an individual goal may include paying down credit card or student loan debts.
  • What about short-term and long-term goals such as saving for a home purchase, children, college funds, or retirement? Are there goals you will need to compromise on, such as how much you think you should save up before a purchase or spend on certain items?
  • What kind of assets or debt are you bringing into the relationship? What is your plan for managing those assets for paying off the debt? Yes, couples need to talk about the student loans!
  • How will you divide financial duties such as paying bills, managing bank accounts, or investing? Who has strengths in handling these issues? When are will we schedule regular "money talks" to make sure both partners know what each is doing?

These are just a few questions. The bottom line is that couples need to communicate. Money can be a major source of stress in relationships. Open and honest lines of communication, sharing knowledge, ideas and information as well as compromising about finances will help couples reach goals as both individuals and couples.

Check for Billing Errors

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

Opening the mail everyday is one of the financial management tasks that can help manage dollars better in any household. If you have signed up to get monthly billing electronically it’s still important to open it! Take the time to review the billing and ask yourself a few questions:

  • Is this charge accurate? This is especially important if you’ve missed payments. Even if it is accurate, are there some ways it could be lowered?
  • Have I already paid this bill or a part of it?
  • Was my payment credited to my account? To cut down on clutter, once the previous months payment is shown as credited, it’s okay to shred the billing. However, make sure it’s a billing statement not needed for taxes or other important records.
  • Are there fees that are not warranted? For example, if it’s a cell phone bill and you went over your minutes limit, examine how much extra you’ve been charged.
  • Has my interest been increased? Was it increased because of a late or missed payment? With the new credit card rules, six successive months of on time, minimum payments, will help get you back to the previously lower interest rate.
  • Did I approve this charge? Did another family member or a friend make this charge without my permission? This could be a sign of fraud so examine the situation carefully.
Reviewing your bills for errors is an important step in managing dollars better. There may not be errors but it reminds us of what our behavior costs.

Online Shopping Safety Tips

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

Shopping online can be a great way to save dollars and time for many items. However, you do need to protect your identity and private information. To avoid hassles in online shopping, follow these tips:

  • Get the details by knowing who you’re dealing with, what you’re buying, and what it will cost. Check out the terms of the deal, like refund policies and delivery dates. Anyone can set up a business online under almost any name. If you get an email or pop-up message that asks for your financial information while you are browsing, don’t reply or follow the link. Legitimate companies don’t ask for information that way.
  • Pay by credit card. If you pay by credit card online, your transaction will be protected by the Fair Credit Billing Act. Under this law, you can dispute charges and temporarily withhold payment while the creditor investigates them. If your credit card gets used without your permission, your liability is generally limited to $50 in charges. Your credit card may have other guarantees that protect you, too.
  • And keep records. Print or save records of your online transactions. Check your credit card billing statements to make sure charges that you don’t recognize don’t show up. It’s also suggested that for online transactions you only use one credit card.
  • Always remember — never share financial information, like a social security number, credit card or checking account number in an email. If you begin a transaction for which you need to give personal information, look for and "s" being added after the http in the URL. The "s" means secure.

These are just a few basic online shopping tips to safeguard your identity. More can be learned at a new Federal Trade Commission website with address:


Federal Trade Commission. (n.d.). Washington, D.C.: Federal Trade Commission.

Understand the Rules of Layaway Shopping

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

In recent years, retailers have brought back the concept of layaway shopping. For many households it’s a way to stretch out payments on merchandise they want to purchase for the holiday season. Items are selected at the store, and kept at the store while regular payments are made on the merchandize. The best part for the shopper is that their item is paid for before they take it home. It can be one tool for managing spending and not going into debt.

However, the shopper needs to understand the rules of the layaway. They will differ with each retailer offering the service. Often they entice the shoppers to start early by dropping certain fees for shopping between certain dates. Each retailer can charge a different fee. Some can be as high as 5% of purchase price of the total layaway. Others might charge a flat fee, say $5, which isn’t refundable.

Some fees are per purchase. This means that if you decide at a later date to add on to your layaway purchase another fee is charged. Layaway purchasers also need to know if there is a cancellation fee, which could be $5 to $15 dollars, depending on the retailer.

It’s worth asking if there will be a price adjustment if the item put into layaway goes on sale for a lower price. This could happen for items put on layaway before the December sale season. You may not get the adjustment but if it’s a popular item, you do have the item.

Layaway shopping can be a method to take the debt stress out of holiday purchasing, but check the rules of layaway ahead of time.

The Benefits of Using Cash

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

There are some businesses that won't accept cash anymore. For example, airlines that insist you pay by credit card if want to buy a drink or sandwich on board. This is unfortunate since there are definitely benefits to doing business with cash.

Number one on the list is that people spend less. People spend more using credit cards. If cash is used, there are no splurges when the money is gone.

Cash makes budgeting easy. When we spend cash, we count what's left over after a purchase. Hardly any credit card buyers check their available credit after a purchase.

Buying with cash reduces indebtedness. Credit cards were originally designed to be used for convenience but now users accumulate debt. If the balance is paid in full every month, using a credit card is a management tool. But if not, the purchases cost more in the end because of the interest paid.

Cash makes people think about how money is spent and why. A trick used by some people to help determine whether to purchase an item is to calculate how many hours of work the item costs. It great way to discipline one's self.

Cash minimizes identity theft potential. Cash purchases don't have accompanying numbers that put personal information at risk.

And cash helps local people since it stays with the merchant. This helps their bottom line since it's less expensive for them to do business.

You may not be able to avoid needing a credit card to purchase certain items, but think again about how using cash for other purchases may help your finances in the long run.

New Gift Card Rules

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

For many reasons people like to give gifts. For many givers and receivers a popular gift option is gift cards. One of the problems with them in the past though has been unexpected declines in card value if not used within a certain time period and fees for usage.

New Federal Reserve rules provide protections when you purchase or use gift cards. Here are some key changes that have been effect on cards sold since 2010. The rules cover both store gift cards and gift cards with a MasterCard, Visa, American Express or Discover brand logo.

There are four main protections.

First, money on a gift card will be good for at least five years from date of card purchase. If money is added at a later date, that too must be good for at least five years.
If your gift card has an expiration date you still may be able to use unspent money that is left on the card. You can request a replacement card at no charge if the card expires and there is unspent money. The consumer needs to check the card to see if expiration dates apply.

The third protection is that fees are disclosed. All fees must be clearly disclosed on the gift card or its packaging.

The fourth protection limits fees. Gift card fees typically are subtracted from the money on the card. Under the new rules, many gift card fees are limited. They can be charged if the card isn’t used for at least one year, but you only can be charged one fee per month.

More information on Gift Card Rules is available from the Federal Reserve Consumer Information site at Know the rules of gift cards and enjoy their use.


Board of Governors of the Federal Reserve System. (2010, April 30). What you need to know: New rules for gift cards. Washington, D.C.: Board of Governors of the Federal Reserve System.

Lifeline Telephone Plan Assistance Requires Annual Certification

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

Most people would agree that having a telephone is a necessity for accessing emergency help. However, having even basic phone service is difficult for those who are low income. Since the late 1990's, telecommunications companies have had to contribute to a fund to provide service to low-income consumers. You might notice a "universal service" fee item on your phone bill; some companies choose to recover this fee from their customers.

The main program is called Lifeline which provides an average discount of $9.25 per month for one Lifeline service per household. To participate in the program consumers must either have an income that is at or below 135% of the federal Poverty Guidelines or participate in one of the following assistance programs:

Medicaid, Supplemental Nutrition Assistance Program; Supplemental Security Income (SSI); Federal Housing Assistance, Energy Assistance, Free School Lunch, or Head Start Programs; and similar programs for tribal communities.

In 2013, new Federal Communications Commission rules are being implemented by telephone companies that require telephone service providers to annually re-certify their customers eligibility for the program. This process maintains the integrity of the program by confirming that the benefits are only extended to those who truly qualify.

There is concern about some qualifying individuals, like an elderly or disabled person who depends on Lifeline assistance, not completing the re-certification process. Telephone companies are responsible for notifying customers of how this can be done. If you do provide assistance to low-income family members with handling their finances, you may want to check that this process has been completed. Remember, the goal is for all to be able to call for help in an emergency.

Minnesota Cold Weather Rule

Rosemary K. Heins, Extension Educator — Family Resource Management

October 2013

Minnesota is known for cold winters and that means utility bills for heating go up. What’s a household to do if they are struggling with heating bills? The Minnesota Cold Weather Rule is available to help but the help must be asked for by October 15.

Some people think that heat cannot be disconnected in the winter. Yes, it can be. You must make and keep a payment plan arrangement with your utility to receive Cold Weather Rule protection. If you make and keep a cold weather rule plan, you are protected until April 15.

To apply you need to contact your utility or utilities to request a payment arrangement. All natural gas and electric utilities must follow some level of the rule. If you need electricity to keep your heat on you can get this protection with your electric company. Delivered fuels, such as fuel oil, propane and wood, are not covered by this rule.

If the combined income from all household members is below 50 percent of the state median, you are not required to pay more than ten percent of your household income. Currently, for a household of four that is $43,642 or for the last three month’s income of $10,910. If your income is higher you can still make payment arrangements with your utility.

Contact your utility or utilities for more information and application. The Minnesota Public Utilities Commission website has information as well. Winter means cold weather; stay warm by being prepared for paying the higher energy use cost.

Source [no longer active]

Financial Capability Study: Minnesota Findings

Rosemary K. Heins, Extension Educator — Family Resource Management

Reviewed June 2013 by the author.

Recently the state-by-state 2012 Financial Capability Survey results were released. This study was conducted by the FINRA Investor Education Foundation. The results revealed that Minnesotans are close to the national average in the results.

There were five major result categories. The first category was Spending versus Saving. 39 percent of Minnesotans reported spending less than their household income. The national average was 41 percent.

In the category Unpaid Medical Bills, 22 percent of Minnesotans said they had unpaid medical bills. This compares with 26 percent of nationwide respondents.

The third category is Rainy Day Funds. 55 percent of Minnesotans reported not having rainy day savings to cover three months of unanticipated financial emergencies. This compares with 56 percent of Americans nationwide.

In the category Credit Card Problems, 32 percent of Minnesotans reported paying only the minimum payment during the past year, compared with 34 percent of all Americans.

The final category was Financial Knowledge which was based on five basic financial literacy questions. Minnesotans answered on average 3.02 financial literacy questions correctly. The national average was 2.88 correct answers.

These results show that Minnesotan’s were just slightly better than the national average so there is much room for improvement. Residents of California, Massachusetts and New Jersey scored the highest of all states. For more information on this research and to test yourself on the Financial Knowledge questions, go to the website. And to increase your financial knowledge on many topics check out the Extension website.


FINRA Investor Education Foundation. (2013). National financial capability study. Washington, D.C.: FINRA Investor Education Foundation.

Listen and Learn

Compounding is Like Magic — What does compounding mean and how does it help you save money faster? Transcript and audio (1:45)

Prepaid Debt Cards vs Bank Account Debit Cards — Using "plastic money" can be handy but think about how the card will be used. Transcript and audio (1:55)

Gift Card Use Tips — Gift cards have become a practical and acceptable way to give. Transcript and audio (1:50)

The Benefits of Using Cash — People spend more using credit cards than cash; there are no splurges when the money is gone. Transcript and audio (1:56)

Talking to Children About Spending Cutbacks — It can be tough to explain to children why you can't buy them what they want or what they've always had. Transcript and audio (1:46)

Check for Billing Errors — Reviewing your bills for errors is an important step in managing dollars better. Transcript and audio (1:43)

Pre-wedding Money Talk — Before couples walk down the aisle, they should have money discussions about what comes after the honeymoon. Transcript and audio (2:04)

Online Shopping Safety Tips — To avoid hassles in online shopping, follow these tips. Transcript and audio (2:15)

Understand the Rules of Layaway Shopping — Understand the rules of the layaway; they will differ depending on the retailer offering this service. Transcript and audio (1:50)

New Gift Card Rules — Federal Reserve rules provide protections when you purchase or use gift cards. Transcript and audio (2:09)

Study Finds Households Need Emergency Funds — The National Bureau of Economic Research published a study in May 2011 that shows that 50% of Americans would struggle to come up with $2,000 in a pinch. Transcript and audio (2:02)

Financial Capability Study: Minnesota Findings — Find out how Minnesotans rate with making ends meet, planning ahead, and more. Transcript and audio (2:04)

Lifeline Telephone Plan Assistance Required Annual Certification — If you are a low-income consumer who receives the Lifeline service, don't forget the annual re-certification process. Transcript and audio (2:09)

Opinions on Middle Class Description Change — The definition of the American middle-class varies and through time can and will change. Transcript and audio (1:46)

Minnesota Cold Weather Rule — Understand how to protect yourself from having your heat turned off. Transcript and audio (1:51)

Related Resources

Strategies for Spending Less — When your family faces reduced income, take immediate action to stop all excess spending. Part of the Getting Through Tough Times series.

Shop and Save — Stretch your food dollars with our tips and resources. English | español

The Financial Side of Family Transition — Even if you are comfortable with all of the changes, you will still probably experience financial upheaval after a divorce or separation. Get tools and information on specific financial situations that you may encounter after a family transition.

Disaster Recovery — Offers families new or additional resources following a disaster. Includes the Recovery After Disaster: The Family Financial Toolkit.

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