Thursday, April 09, 2009

Money Lessons

Interesting blog-phenomenon...everyone who commented basically agreed with my hatred of bridal showers. However, I got at least three emails in defense of bridal showers, and two more that were at least defending the relatives who want to throw one. Maybe people feel better disagreeing in private? I dunno...I certainly never mind people telling me that they think I am full of it, publicly or privately. Anyway...

So, Munchkin now has at least two jobs for the summer. Not only does she have her aforementioned ice cream scooping gig (combined with the golf and tennis lessons, she is gonna have forearms like Popeye!), but she has also been enlisted by a friend of the pretend family to babysit a couple days a week.

Actually, it is more "mother's helper" than babysitter, since the Mom will usually be around. The family has kids that are 8, 6 and newborn, so I imagine that she will do a lot of hanging out with the older ones. I also imagine that she will be recruited to babysit for a lot of people...and she is going to have to learn how to say "No";-)

This gets me to another parenting issue: it is time for some lessons about money. I don't think that we do a very good job teaching kids about money, either in school or at home, and now that she will be earning her own paycheck I want to get her started on the right track. She is gonna learn about taxes very quickly...hee hee...but I would like to teach her some basics about budgeting and saving. We can probably leave the intricacies of limited partnership investing until at least next year;-)

So, let's call this kind of an open topic... Have any of you gone through this with you kids and have any advice? Should I force her to save a certain amount of money? Or am I better off letting her waste some of it to learn how unfulfilling that can be? How much should I make her save and let her spend? How about making her give a portion away? How about making her give some of it to Papa Bear, Big Sis and Smoking Hot Roommate as a contribution to her tuition (yes, dears, I know you won't take it...just shut up and let me make my point!)? Or making her pay for some part of either her soccer camp or the (pending) trip to France?

Mostly, I want her to learn about budgeting and setting priorities and having to go without things sometimes. To be honest, she kinda gets whatever she wants, so she doesn't have a whole lot of recent experience with "no". She doesn't really ask for that much, and no one who meets her would ever call her spoiled or unappreciative, but it might be good to push some of this on her to make her think about it in a little different way.



Kari said...

The rule growing up was that I had to put at least half of what I earned into a "for later" savings account. Basically, I wasn't to touch it until I was in University. Actually I didn't touch it until I was in Grad School (and most of it went into Retirement saving). I am a big fan of "matching funds" for trips, etc...just be careful to put limits on my uncle found out the hardway when my cousin had saved 10K for a car and he had agreed to match the funds!
Some of my friends make their kids "tithe" 10% of their earnings to a charity, World Vision, etc.

laurwilk said...

We've discussed this already but I have a few more things to say. :) Haha, big shocker there!

Great idea to have her pay for a portion of soccer camp or trip to France (or something similar - it doesn't have to be those things). I'd keep on that idea...let it marinate.

What we did growing up was a bit different but we were also selling huge cattle that brought in a pretty penny.

A quarter of every paycheck (or cow, ha!) was spending money. We used it for the movies or candy or whatever else I bought when I was 14. Another quarter went into 'short term' savings. It usually bought clothes before school or a new bag. Then half went into a mutual fund or IRA or CD or something more long term. We're still not really allowed to touch that money (although I totally did senior year spring break) and are still expected to invest money into those funds monthly.

I'm not sure how to relate this to Munchkin's life, but anytime we sold a cow, we did have to pay my Dad for the price of the calf, all feed and transportation. It ended up being about a quarter of all money we made.

And maybe this summer you can just focus on one lesson. This summer could be saving. Next summer could be more long term investments. The summer after could be borrowing when she wants to buy a car or something.

As far as volunteering/charity, I'd let her decide how she wants to go about that. Some people prefer to donate money to make a difference, others want to actually volunteer, and some do a combination of the two. I wouldn't push her to necessarily give her money away at this point but at least encourage her to think about how fortunate she is compared to others. I think having her work for NO money is a greater lesson than having her give away something that she will probably have in surplus from here on out.

And I'm off to gchat!

SoMi's Nilsa said...

Re. the bridal shower thing. I'm not a hater in private. I just didn't comment yesterday. =) I think there are a lot of things about weddings that have nothing to do with the couple and have everything to do with their friends and family. Anyone who has gotten married experiences it in some form or fashion. And we each get to decide whether it's worth the fight or not. Your thing is bridal showers and I get why you hate them - totally justified.

As a child, I wasn't ever really taught about money. But, I think one of the greatest lessons I learned was when I wanted to return to an expensive camp for a second summer. My parents agreed to let me go so long as I paid part of the cost. It meant I thought about why I wanted it and whether it was worth the money. In the end, the answer was yes. But, it helped instill the idea that money doesn't grow on trees.

erin said...

AM! It's been a while since I've commented on anything- Darn new job w/ a shared cubicle and nosy coworkers! Ha.

Anyways, I came from a double whammy of a situation- a religious family and my dad is a financial advisor. 10% of our paychecks always went to the church. I can definitely say this taught me to be generous with what I had- and whether it's a church or charity, I definitely recommend encouraging Munchkin to donate to some cause.

As far as savings, we didn't have a specific amount we were required to put away, but we all had savings accounts and were encouraged to save "what we thought was the right amount." This usually was about 25%-50% of paychecks and gift money. Or- when I worked in a restaurant, my paychecks went into savings and the cash was my play money.

Another important lesson that was driven into our heads was: Don't spend more than you earn!!! To this day, I'm OCD about paying off credit card bills each month.

This lesson along with knowing the importance of saving is also why I have absolutely no debt right now and have been able to live comfortably for the past 4 months despite not have a job or anymore severence pay coming in. Munchkin seems to have a good head on her shoulders, and though some of these lessons are hard to fully understand at 14, teaching her the basic principles now will ensure that she will understand the value and importance of saving later on. Good luck!

Scotty said...

I think the key thing to teach her, is saving.

You already proposed a few ideas of how to do it, I think any of those (or combination of them) would probably be good.

But yes, you're right, lots of folks don't learn this type of stuff growing up.

JE said...

I also was never told "no" growing up and would never have considered myself spoiled or unappreciated. But later in life, I figured out that being told no wouldn't have been so bad. Because the reality is that no one can go through life never being told no.

We were taught a TON about money growing up and it has paid off in spades. We got a $5/week allowance (I think it started off less than that). $1 went straight to savings; $1 went to charity or church (we got to pick), and we got to keep $3 and spend it on what we wanted. The percentages for the savings and charity are probably a little high for real life, but we did not have to use our money for things like sports or camps or gas, etc.

It's never too early to teach kids at least a little something about money!

Accidentally Me said...

Kari - That is sort of what I am thinking. She has a long-term investment account already, so it would be easy to have her add to that.

Laurwilk - I gotta work on the cow analogy...she is a city kid, her livestock knowledge is lacking!

Nilsa - That is what I am thinking about camp or France...glad to hear that it works!

Erin - Where have you been?!?! Did I ever tell you that you look super hot in your little profile picture? Anyway...good for you for being so disciplined! That is what I want her to learn.

Scotty - Amen. As long as you spend less than you make, you are in a good spot to start with.

JE - Amen, ditto:)

Woolly said...

I wouldn't worry about it too much...
I would just make sure that she doesn't go into debt.

I know when I got my first job as a teenager, they handed me a credit card and overdraft protection on my account and it was the worst thing that could ever happen.

Lori S-C said...

I would say that she should save some of the money/maybe half of it. Some can be mad money and the rest should be used for something she wants, but has to save up for. (Not impulsive buying). She also should start thinking about how she wants to give back to the world...whether it would be doing some volunteer work, helping others somehow, or donating financially. I'm more in favor of giving effort, rather than money, because I believe that the work hours mean more. Perhaps, as a thank you to the pretend family, she could gift them with time and do some volunteering for a cause that is important to them.

Ys said...

I always had to save up for things. So I was taught that you don't get what you want now, you have to save up for it first. Which is why I've never had a credit card and still to this day prefer to save up than get it and then pay later.

If your lucky enough to be able to give Munchkin everything she needs and wants then I think encouraging her to save a little as she goes along is a great idea and will probably help her appreciate money in the long term :)