8/15/2013 5:15 PM ET|
3 signs your kid is a money disaster
Does your child want to buy everything he sees, or is she always late turning in homework? These could be signs your offspring needs some money lessons.
If you're mired in credit card debt and have no savings, you may occasionally look back and wonder where everything went wrong.
That's why, if you're a parent, you can do your kids a solid if you figure out whether you're raising a future saver or a future shopaholic -- and try to subvert the latter by teaching them the ins and outs of how money works. It's worth a try.
Of course, it's impossible to know the future and it's unfair to your kids, who may well surprise you, to take any of the following red flags too seriously. Still, if you do wonder and worry about how they'll manage money in the future, here are some possible signs that, yes, you're raising a financial disaster.
Red flag: Your child is easily swayed by television commercials and friends' opinions. If he or she sees something cool, he or she wants it.
This could mean: Your kid will be an impulse shopper.
Possible solution: That may not be so bad, of course, but it all depends how often your kid impulse-shops.
If your child gets an allowance, and you're out shopping, consider letting your kid buy the first thing he or she wants immediately with his or her money, even if you know it's stupid, and, really, especially if you know it's a stupid purchase. Then continue shopping, and when he or she wants something else but doesn't have the money to buy it, this can be that teachable moment. It's an especially useful exercise in, say, a toy store, where there are plenty of items your child wants.
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"Five minutes later, you know you're going to go down another aisle, and your kid is going to wish they had bought something different," says Amy Rosen, president and CEO of the Network for Teaching Entrepreneurship, based in New York City, which teaches entrepreneurship to mostly low-income high school students. Rosen is also the vice chair of the President's Advisory Council on Financial Capability, which lasted from Jan. 29, 2010, until Jan. 29, 2013, and was tasked with, among other things, finding new ways to improve Americans' bottom lines through financial education.
"It's really all about guiding kids when they're making shopping choices," adds Rosen of the toy-store teaching moment. "It's kind of a no-brainer."
And, of course, if you feel sorry for the little guy or gal and you really hate the thought of that allowance money being wasted, you can always then teach your child how some stores have return policies.
Red flag: Your child is always forgetting to do homework or give you important school papers.
This could mean: Your kid is going to constantly pay bills late.
Possible solution: Yes, you might want to get your child a calendar, or a better one, to help him or her keep track of important school dates and hope that leads to better grades, a good college, a decent job and salary, and someday, better money-management skills. That said, when it comes to teaching your child about money, the most important thing is to simply talk to your child about it.
Parents aren't doing that enough, according to the fifth-annual Parents, Kids & Money Survey, recently released by T. Rowe Price. On the plus side, 73% of the 1,014 parents sampled reported that they have regular discussions with their kids about short-term financial topics like back-to-school shopping, but only 39 percent said they talk about long-term financial planning.
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Fourth sign your kid will be broke: His/Her parents (you) are broke.
Poor financial habits are learned.
It's hell to try to live on minimum wage. It's more hell to live on 25 hours of minimum wage.
Those are today realities of many seniors and nearing seniors, so if one happens to hear
your tales and reply, take their input seriously. You can't eat you cake and have it too.
Adults who've been there, often been there VERY BEYOND, have often even DOWN
THERE too. See the thing with "down there" experience is that you never want to go
there again EVER, so you do what's necessary to avoid DOWN THERE AGAIN, even
if the pain is awful! If you should somehow 'rise' from the ashes (quit smoking/eating
poorly/rationalizing), you're a formidable force with which to be reckoned.
My sister was a Marine married to a career Marine and they had a son. In the Fifties,
military were paid very low and female military were required to resign upon pregnancy.
(The occupational expertise of an enlisting military candidate was often zilch, so low
pay was not unjustified.) But my sis was eligible for GI Benefits and by God (you know
who God is, right?), she made sure God was with her as she took the educational
portion of GI benefits. At the time I lived with her, she had a 3 year old son and military
spouse newly stationed in the Far East for two years. (After work, he took university
extension courses in his leisure hours.) Neither sis nor spouse had attended college
prior to enlisting. Spouse's pay was low yet he sent everything home to his family.
Sis went to work 9-5 with a publisher (potential, glamour and little pay but where are
you going to maximize six years of formal Latin and marching for compensation
Since I'd moved in with, I sat the son after 2:00 daily. Sis enrolled in the university, took
night classes 3 nights, carried 9 units and worked her 40 hours. My sitter services offset
my board/room costs. Sis religiously studied to 3AM three rights weekly, continued to
maximize PX discounts (combat experience helped ferret bargains), didn't fool around,
mended her meager wardrobe, studied and worked, worked and studied for 2 years until
hubby returned. She shopped Goodwill, took no leisure/vacations, ate no fats and drilled
those texts. Eventually, she and my brother-in-law secured a very good life. But they had
lived long on near minimum-wage for about a decade. Revenge of the nerds one might say.
If given a reversal of fate, many down-trodden don't forget to continue to manage better.
When they view the excesses of the wasteful privileged, they crunch down harder to do
more with much, much less because fate intervened on their behalf. But make no
mistake, they are less forgiving of others' indulgences, excuses, laziness, sloth.
I've seen many young people whose parents never explained budgets or expenses or where money comes from (etc.) to them. So it's no surprise when they make financial mistakes. If you want your kids to be responsible then you need to teach them, and set a good example.
If you routinely give in and just give your kid everything he wants whenever he wants it, you've trained him that stuff should come to him only for the asking (or demanding) and he has no concept or care about what it took to provide it. Then you've done him and the world a disservice.
When my children were in grade school they didn't get an allowance since usually that is associated with chores and we wanted the kids to do things around the house as being part of a member of a family. But we did give them "budget money" each week to help teach them about budgeting needs and wants. Budget money was a set amount they got at the beginning of the week and they then used to buy their school lunches (or pay mom to pack their lunches for a slightly less than school lunch price), donate to church or charity, save a little and it give them a little extra for "pocket money" to by any extras they wanted (an ice cream treat during the week, or candy at the supermarket, or just to save for a bigger treat like going to the movies, etc.). As they got older the "budget money" increased but it taught them to live on a fixed income or salary and to be able to save up for bigger ticket item wants and to give back to charities or church to help others.
Today my children are in their 20's and they are great money managers and have been ever since they started with budget money. Even managing college and the financial challenges that come with it, my children always managed to come through it and usually sighted the "budget money" experience with helping them make good financial decisions.
I tell My kid every purchase is considered an investment. When you buy food, you invest in your health. However, It's just a matter of giving your kids a course of economics 101. Teach them about the 'needs' and 'wants'. Teach then to buy what they really need, and guide them to make a sensible decision on what they want.
How to save a kid when he sees the Americans making millions and spending millions.
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