A Frugal Family

In the midst of this “Great Recession,” a good number of Americans have resorted to ignoring money matters, clinging to hopes that they can begin saving, investing, and moving toward prosperity once the economic downturn ends.

Not true of Janice and Mark Blake. While the state of the economy has made them more cautious in their approach to household money management, the Blakes–Mark, 39, a New York City health department supervisor, and Janice, 36, a health administrator–have a frugal philosophy that they employ in fruitful economic years as well as in uncertain times. “We believe our parents gave us a step up, and our goal is to give our kids a step up,” says Janice. It’s a promise to their children, Christopher, 4, and Mikayla, 2.

The Brooklyn, New York, couple still applies the lessons they learned in their youth. When Mark was a child, his parents gave him an allowance along with money for completing chores.

His parents used the earnings as a way to impart lessons about saving. Similarly, Janice gleaned two important financial principles from her parents: “Don’t lend what you can’t give, and don’t borrow what you can’t buy.”

The Blakes are putting those early lessons to work today. The family’s first rule regarding money: No debt. “You shouldn’t buy anything you can’t afford to pay for,” says Mark. As a result, the couple has no credit card debt and is working diligently to wipe out what remains of Janice’s student loan balance, roughly $2,500. The Blakes are sensible and live within their means, and because of the uncertain economy, they are even more conscientious about their shopping habits.

Now, if it’s not on the shopping list, they simply don’t buy it. Lately, they have become even more frugal, packing their lunches and preparing more meals at home. To avoid overspending, the Blakes keep an expense book where they document all their spending. Renting out an apartment on the first floor of their two-family home brings in additional income.

The Blakes’ strict money rules extend to their children as well. If Christopher says “I want that” when he sees something in a store or on television, Janice will ask him why he wants it, encouraging him to think about his request. She then references their shopping list to see if the item that he wants is there.

Alternatively, she challenges him to give up a toy he already owns in order to get a new toy. The Blakes use this approach to help their children differentiate between needs and wants, and it has the added value of teaching Christopher about charitable giving. To get their children started on the right financial footing, the Blakes opened bank accounts for them when they were born. The parents contribute approximately $50 a month, which is sometimes augmented by financial gifts from relatives.

As

ass="amp-ad-wrapper amp_ad_1 ampforwp-incontent-custom-banner ampforwp-incontent-ad3"> they save by being disciplined consumers, the Blakes can put their income to work. Earning a combined income of $140,000 a year, the couple are growing two mutual funds (his stands at $14,000; hers, $12,000) along with a 457 retirement plan and Janice’s personal retirement account. They maintain two brokerage accounts for stock investments. One is a joint account and the other is Janice’s alone. They both invest 10% to 12% of their income each year.

For Janice, investing isn’t just a financial necessity. It’s also a fun social activity. Eight years ago, she started a women’s investment club to help friends who were intimidated by money management and needed encouragement. “As a community, women of color are not as involved, aware, or learned about stocks and bonds. It was a way for me to learn more and a way for my sister-friends to learn more.” The investment club encourages family involvement; one of Mark’s cousins is a member, as well as Janice’s sister.

Money is not a delicate topic at all for the couple. They both believe strongly in not making major purchases without talking about it first. Mark can’t go and secretly spend, say, $700 on fishing supplies, and Janice can’t buy $400 worth of shoes on a whim. “The financial steps or missteps you make affect your family,” says Janice. The Blakes discuss things as they arise, Mark says. “It can be any time of day. We’ll be driving to work or to the train station; we don’t have a set time to talk about money.” The discussion extends beyond the immediate family unit: The Blakes ask family members to purchase savings bonds for the children’s birthdays. It’s an effort to prevent the children from seeking their identity in material things, while encouraging family members to give in a different way.

This story originally appeared in the June 2009 issue of Black Enterprise magazine.