How to Help Your Kids Develop Respect for Money

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

The debt train is gaining speed in America, as shown by this article on Bloomberg’s website. It seems as if consumers’ love affair with living beyond their means is far from over. Part of the problem – in my humble opinion – is the lack of personal finance education in the lives of children, whether by their parents or their education system. How can we as parents help our kids to understand and value money so that they don’t head the way of so many who are deep in debt?

 

How to Teach Kids to Value and Respect Money

There are many different facets involved with teaching kids respect for money. Teaching them how to budget is one of them, but that doesn’t begin to touch the tip of the iceberg in today’s instant gratification world. Here are some ways you can help your kids understand and respect the role of money in life.

 

Teach Them about Emotions and Money

So much of overspending is rooted in the training we receive from media. Commercials show us that if we wear these shoes, drink this beer, drive this car or vacation at this exotic place we’ll be living the good life. They show happy, smiling people with perfect bodies and perfect tans, and seemingly with no troubles in life. The goal they have is to get us to spend money on their products.

We get the same messages in real life. We’re encouraged by our family, our friends, our fellow employees and our community to keep up with the Joneses. People question us when we drive older cars or live in a smaller house.

These messages tempt people to want to spend in order to impress others or make themselves happy, but most people know that the joy that comes with getting new and shiny stuff never lasts for very long. If we can teach our kids this truth, we can help them understand that true happiness comes from the inside out and not from the outside in, and help them avoid using money as a path to acceptance or happiness via ownership of “stuff”.

 

Teach Them the True Value of Money

The true value of money is rooted in freedom. When your debt load is non-existent – or at least super manageable – and you’ve got money in the bank, you have the freedom to make decisions based on other factors and not on whether or not you can afford it.

This means that you can take the lower paying job that you’ll like better, move to a different state or country, give to those in need when you feel like it or take a sabbatical from work in order to focus on yourself and/or your family.

If we can teach our kids that a healthy bank account balance and a lack of bondage to debtors equals true freedom and happiness, we can help them put potential purchases into perspective.

 

Teach Them How to Analyze Purchases

This goes along with emotions and money. It helps to teach kids to be able to analyze purchases before they make them. There are two main questions we can teach them to ask themselves before buying:

  1. What value will this purchase add to my life?
  2. Are there other things I want more than this purchase?

If the answer to either of these questions is more important that the purchase itself, that may be a sign that their money is better spent (or saved) somewhere else. Helping kids to work through the “whys” of a potential purchase will help them learn to avoid spontaneous spending that they’ll later regret.

 

Don’t Hand Them Money “Just Because”

Many parents these days give their kids money whenever they ask or buy them whatever they ask for at the store. When there’s no limit to money in a kid’s world, they’ll have a tough time developing respect for money – or for work.

In our house, the general rule is that we don’t buy them non-necessities unless it’s for birthday or Christmas presents. We also don’t give them money just because they ask or because they want to do something.

Instead, we help them figure out ways to earn money for the things they want. For instance, we have assigned chores that are done by each of our four children just because they’re a part of our family. We also have a separate list of chores they can do to earn money.

Just yesterday our second oldest asked how she could earn money to see a movie with a friend. I offered to pay her $2 for cleaning out the fridge and $5 for organizing my bedroom closet – both are jobs I’m not a big fan of doing. I got some needed tasks off my plate, and she earned $7 toward her movie excursion.

We’ve found that when our kids have to earn the money they get, they tend to be more cautious about how they spend it, and they also value more highly the items and experiences they get when they spend it.

 

Teach Them the Value of Spending, Saving and Giving

We basically have three choices with our money. We can spend it, save it or give it. All three choices have intrinsic value. Spending money on things that are important to us brings a sense of accomplishment as we fulfill our own needs and wants. Saving money teaches us discipline and helps us prepare a more secure future for ourselves. Giving helps us become detached from money and also helps us to realize the importance of helping others.

If we can teach our kids to balance the three choices they have with their own money, we can help them to develop a healthy respect for money.

Teaching kids to understand how to have a proper respect for money without idolizing it will help them prepare for a secure financial future that isn’t overshadowed by heavy debt payments.

How about you all? How do you teach your kids to respect money?

Share your experiences by commenting below! 

***Photo courtesy of https://www.flickr.com/photos/62030038@N02/8402437512/sizes/l

Helping Kids Prepare Financially for Driving and Car Ownership

The following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

One of the biggest parenting – and child – milestones is when your child becomes old enough to start driving on their own. Driving and car ownership are big responsibilities in many ways. Along with the responsibility to drive safely on the road, kids need to be taught the financial costs of driving and car ownership as well. Here are some tips on how you can prepare your kids for the financial impact of owning and driving a vehicle.

Calculate the Costs with Them

It’s important to teach your children a good deal ahead of when they get their license that driving and vehicle ownership costs money. When they become old enough to get their learners permit, sit down with them and start having discussions about what kind of car they want to drive, the costs of purchasing the car, purchasing gas, the cost of car maintenance and repair and the cost of insurance.

Since you’re spend-tracking (you are spend-tracking, right?), go over your own transportation costs with them so they can get a real-life idea that driving and car ownership costs money.

Don’t Pay for Everything

This is just my personal opinion, but I’m a huge believer in having kids pay for at least part of their transportation costs, even while they’re still under eighteen. Kids tend to hold more respect for that which they’ve worked hard to pay for.

Whether it’s a car, a college education or whatever, there can be a lack of understanding with kids regarding the work that it took to be able to pay for those things. When you give some or all of the responsibility for paying for car costs to your child, you help them to appreciate the privilege of driving, to learn real-life lessons about how the world works and you help them prepare for the transition to independent adult.

Set Rules for Driving Preparedness

It’s helpful when kids and parents have a mutual understanding of how vehicle ownership and driving responsibilities will work in your home. For instance, if your child wants to have their own car, show them how to set some money aside for a car maintenance/repair fund. Make sure they have enough money saved for an insurance deductible in case of an accident.

If your child will drive a family car, set clear rules about when they can use the car, when they can’t, and who will pay for what portion of gas, insurance, etc. It’s important too to have a clear discussion about what the consequences will be if the house driving rules are broken, who will pay the fine if your child gets a ticket and so on. When your child knows clearly how the rules work beforehand, there will be less pushback when a consequence needs to be administered or when they’re handed the bill for the increased insurance premiums due to getting a speeding ticket.

Other Driving and Vehicle Ownership Suggestions

There are other responsibilities that go along with driving besides the financial ones. For instance, one of our house rules is that we don’t push our kids to get their license right at the legal age of sixteen, instead allowing them to determine when they’re emotionally ready for the responsibility. It’s important to teach your children these rules as well:

  • Never talk, text or browse on your phone will driving. Pull over in a safe place if you have to make a call or text
  • Obey all traffic and driving laws at all times (this will be easier for kids if they see their parents doing the same)
  • The better you take care of your car, the less it will cost you
  • Make sure to insist that those who ride in your car wear seat belts at all times and stay calm while on the road so that they don’t distract you as you drive
  • Always be attentive, cautious and defensive when you drive, watching out for other drivers who may be distracted or aggressive
  • Avoid confrontations with other drivers by being polite on the road and heading to the nearest police station if there’s trouble
  • For tips on what to do if your vehicle breaks down on the road, check out this AAA Auto Checklist.

Driving and car ownership are big responsibilities, both financially and otherwise. The more you can teach your kids ahead of time on how to be prepared for those responsibilities, the better they’ll be able to handle all of the tenets of driving.

How about you all? What other suggestions do you have for teaching your kids about driving responsibilities?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/statefarm/7979445278/

What I’d Tell My Teen-Aged Self About Money

The following post is by MPFJ staff writer,Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

I’m turning fifty this year. All in all, I’m happy about fifty. Life is good and I’ve learned lessons that have helped us overcome a massive financial mess. But along with the many good decisions I’ve made, I’ve made my fair share of mistakes along with way – many of them financial ones. If I could go back in time and talk with my teen-aged self, here’s what I’d tell her about money.

 

Money is Always Available…Somewhere

I always had this thought growing up that there was a set amount of money in the world and that either you had it or you didn’t. I grew up believing that whether you were rich or poor was largely out of your control, and we were on the poor side. I’ve learned through side hustling that money is always available somewhere if you’re willing to go out and find it and work for it. The want ads are bustling with opportunities for work, as are sites like Upwork and Craigslist.

The work opportunities out there may not always be pleasing to one’s palette, but they are available. If I could go back and talk to my teen self, I’d tell her not to cling to her job as if it was the only one available, because there’s always other opportunities to earn money for those willing to work to find them.

 

Mindset Affects Wealth

Since I grew up poor and was taught (inadvertently) that we were destined to be poor, my mindset was that there was no use in trying to change things. I believed this up into my mid-forties, and then I found personal finance blogs.  As I read the stories of dozens of people climbing out from under their debt, I realized that we could too.

From there my husband and I began a long process of figuring out why we were always broke, and we learned that we were self-sabotaging our money management because we’d both been under the false belief that we would always struggle for money. We were piddling away our money on small, useless things like drive-thru meals and cable TV, not realizing the impact those “little” spends were having on our bank account.

We were so lack-minded that we’d start to feel panic if we had a little bit of money in savings. It just didn’t feel right. I know that sounds odd, but when you’ve lived with a belief long enough – no matter how wrong that belief is – anything contrary feels wrong.

We had to teach ourselves that, more than deserving “stuff”, we deserved financial security.  This is what I’d tell 16-year-old me: How you view money affects how much money you’ll have.

 

Popular Opinion Doesn’t Matter

Growing up poor in the public school system is not fun. I remember being teased about my two-dollar canvas tennis shoes and thrift store jeans. These memories convinced me that “stuff” meant acceptance. When I got my first job in fast food at 15, I spent nearly every dime I made on clothes at the local County Seat (give me a shout if you’re old enough to remember that store J ).

Eventually – but not soon enough – I learned that the pursuit of the approval of the Joneses is fruitless. If I could tell my teen self that, she’d be one rich woman right now.

 

Thinking Bigger Will Get You Bigger Results

When we were struggling for money and deep in debt, we could never think beyond making it to the next payday and hoping we’d have enough money to pay the bills. If we ended the month in the positive (which didn’t happen very often) it was a good month.

Once we started to pay off our debt, save money and manage our lives differently, we learned to think bigger. Our original goal was to simply have enough money to make it through the month. Then our goal changed to paying off some of our debt. Then we wanted all of our debt gone. Our new goal is financial independence – for the purpose of helping others.

The great thing about learning to think bigger is that it allows you to take others into consideration besides yourself. We now give away more money and “stuff” than we ever have before. We’re making an impact for good on others and aren’t so focused on ourselves. If I could go back in time, I’d tell my teen self to expect more out of life than just making it to the next payday. I’d tell her to think BIG and allow herself to imagine a better future – one where she could journey toward success and help others in the process.

How about you all? What would you tell your teen self about money?  

***Photo courtesy of https://www.flickr.com/photos/goodncrazy/4833445750/in/

How to Keep Kids’ Activities from Breaking the Bank

kids-sports-my-personal-finance-journeyThe following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

Studies show that the average cost of raising a child from birth to age eighteen is nearly $250,000, and a recent study reveals that a decent chunk of that cash is spent on extracurricular activities. In the case of elementary-aged children, it’s an average of $463 this year, and in the case of secondary-aged children, it’s a whopping $1,124 this year.

If you’re “average”, that means you could be spending nearly $10,000 on each of your children’s extracurricular activities over the 13-year period that they’re in school. And that’s simply the national average, which takes into account all school-aged kids – even those not participating in after-school activities. If you’ve got a kid involved in a serious sport such as baseball, hockey, gymnastics or dance, you’re likely spending a lot more than $1,100 a year, even for elementary-aged kids.

If that seems like an astronomical amount of money to spend on kids’ activities to you, you’re not alone. The fact of the matter is that the days when the education system picked up a large amount of the financial burden for extracurricular activities such as sports is long gone, and parents are left to foot the bill.

How can you as a parent keep kids’ activity costs reasonable but still make sure your kids can have the sport or other extracurricular experiences that help make for a fulfilling life? Here are some tips.

Limit Activities to One or Two per Year

Many parents these days feel as if their kids need to be involved in some type of extracurricular activity all year around. The truth is that even one or two activities a year for your child will benefit them and help them to grow in teamwork skills, discipline and obedience.

When considering which activities to sign your child up for, ask them to decide which activity or activities they like best, and narrow the list down to their top one or two. Not only will this save you money, it’ll save time and lower stress levels as well.

Pick Activities That Will Benefit Them as Adults

The reality is that the majority of kids won’t grow up to be professional athletes or world-class Olympians, no matter how much promise they show at a younger age. If your goal as a parent is to raise up a professional athlete, you may want to reconsider your motives and instead choose an activity that will hold life-long benefits.

Activities such as self-defense classes that will show them how to handle themselves should they get trapped in an attacker situation or school sports such as cross country that will help them develop a life-long habit of self-care through exercise are some examples of activities that will benefit your kids long after they’ve graduated from high school.

Do Activities as a Family or With an Organized Group of Friends

Many families choose to do activities together instead of being involved in school-sponsored sports. Some families train for marathons, triathlons and obstacle courses together, or bike together in charity or other events.

Planning regular activities with family members or groups of friends allows those same benefits of teamwork and training for a fraction of the cost.

If you’re set on providing extracurricular activities that do cost more than you’d like, there are a few ways to help make the financial burden less impactful.

Work the Costs into Your Budget

Just like you would with a regular bill such as your utility bill, it helps to figure out the annual amount you’re spending on activities and adding that monthly “bill” into your regular budget, saving the money in a separate savings account or envelope. This way when fees are due you won’t be scrambling to come up with the cash.

Ask if the Studio Will Do a Work-for-Pay Trade

Some sports centers will allow you to volunteer or work there in exchange for lowering your child’s participation fees. Just remember if you do participate in some type of a barter situation to check and follow the bartering tax laws for your state.

Kids reap many benefits from being involved in extracurricular activities. With a little planning, choosing and creativity, those activities can be affordable for almost any family.

How about you all? How do you keep kids’ activity costs affordable?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/luigi_and_linda/7240626210/

 

4 Money Milestones You Should Have in Place Before You Have Kids

money-chalk-my-personal-finance-journeyThe following post is by MPFJ staff writer, Laurie Blank.  Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.

With the latest reports stating that it costs nearly $250,000 to raise a kid, it might be a good idea to have your money situation in order before you think about having kids. It also might be a good idea to get your money situation in order if you already have kids.

I should start off by saying that we didn’t start getting our money in order until the oldest of our four kids turned thirteen years old. I share this to encourage those starting late: it’s never too late to start getting your money together.

I remember having a talk with our oldest one time, expressing remorse and regret that all of her years as a child had been watching us struggle for money. I didn’t want to give her that same experience that I had as a child; one where money had been a constant source of fear because we never had enough growing up. Yet my husband and I fell into the same path with our kids that our parents fell into with us. A lack of education about personal finance had been passed down throughout the generations.

Oldest daughter answered my regrets with the heart of a champion. “Mom, what matters is that you are getting it together now. Even if it takes ten years to get out of debt, at least you’re getting out. You can spoil us then.”

Kids are resilient. They often have a wisdom that adults lose in the face of trying circumstances. It’s for them that we’re working on achieving the money milestones that are best in place before kids arrive on the scene. Here are four of my favorite money milestones that you might want to think about achieving before you have kids.

Get Your Debt Situation in Order

A best case scenario would be zero consumer debt (and a commitment to stay that way) and a very manageable mortgage (say, 25-30% of the primary income earner’s take home pay). When we had our first baby, both Rick and I were working. I had a great job: part-time, they allowed me to work from home and I made really good money.

I thought I’d work forever, but after kid number two came along I really had a heart to stay home and manage the kids and the house full-time.  Kid number two had a minor but time-intensive medical condition for the first year of her life that left me wanting time to care for her more than I wanted money.

I got laid off in a group layoff at my company when kid number two was 9 months old, and we chose for me to stay home, but money was tight due to our debt situation. We had borrowed based on two incomes. If we had to do it over again we would’ve bought a house based on hubby’s income alone and avoided consumer debt altogether.

Be Contributing to Retirement Accounts Consistently

“I haven’t arrived, but I’ve left” is a good motto when it comes to combining retirement planning and kid-raising.  It’s not necessary to be fully prepared for retirement, but it’s a good idea to be consistently contributing to either a 401(k) or an IRA of some sort. It’s tempting to stop saving for retirement during the kid-raising years so you can be sure to have money to cover kid expenses, but you’ll thank yourself if you keep saving for retirement because then your kids won’t have to help support you financially during retirement years.

Make Saving a Habit

A plush emergency savings fund is always a good idea, but even more so when you’ve got kids. All expenses double and triple when you add additional family members, so it’s a good idea to set aside a specific percentage of your paycheck into a savings account that can cover a new car need, an expensive bill or repair, or that can carry your family through during an unexpected reduction in income such as a job layoff.  It’s also a good idea to carry a sizeable life insurance policy if you don’t have enough money saved to be considered self-insured in your own eyes.

Have a College Savings Plan

College costs and student loan debt numbers are rising every single year. If you’re having a baby, it’s a smart idea to research the different college savings plans available in your state and to have a plan in place for how much you’re going to contribute to your child’s college education and to work that number into a monthly amount that you can include in your budget as early as possible. Time flies even faster when kids come along. It’s a wonderfully, beautifully hectic life where one day you’ll be bringing your kid home from the hospital and then next you’ll be teaching him or her to drive.

If you get a college savings plan in place sooner rather than later, you’ll lessen the financial burden of college on yourself and on your kids.

How about you all? What money milestones do you think are important to have in place before kids come along?

Share your experiences by commenting below!

***Photo courtesy https://www.flickr.com/photos/digitalsextant/29908738/