Help Your Child Earn Financial Freedom
By Mark Colgan
Achieving the American dream is becoming more and more difficult in today’s world. The comfort Grandma and Grandpa’s obtained from their iron clad pension plan is passé. Today our children will be growing up in a new world where jobs are harder to find, corporations offer fewer retirement benefits and the “buy now” mentality fueled with easier credit has escalated debt to staggering levels. Here are a few tips on how to protect your children from the financial perils of today’s competitive world:
- Encourage Entrepreneurial Spirit
Give them a hand with finding odd jobs in the neighborhood such as walking dogs, raking leaves, babysitting, delivering papers or even creating a little business like the good old lemonade stand.
- Define Allowance
Don't pay your children for household chores - it sets up power struggles. What happens when the child is feeling too lazy to feed the cat or take out the trash and says, ''OK, don't pay me the allowance this week''? On the other hand, some parents swear by this system. If you do it, you have to be consistent, require your child to be the same, and make sure he understands the monetary value of the particular chore – what it's really worth. I would point out that nobody pays you to clean the toilet or buy groceries! I think chores should be linked to being a citizen, rather than an employee of the household.
- Help them Understand the Value of a Dollar – in their Terms
When you go to purchase a new set of tires for your car, instead of telling them the tires cost $400 tell them the tires cost about the same as 100 happy meals at McDonald’s.
- Teach Responsibility
Have them pay for school lunches, church offerings, and birthday presents. Keep track of what you spend on their needs and desires over a couple of weeks, and then come up with a reasonable figure to base their allowance on. Tell kids, ''You're in charge and you have to make this money last.'' By age seven or eight, they're ready to start with savings incentives, learning tradeoffs, and delayed gratification.
- Give them Incentive to Save
Encourage your child to save by matching every dollar they put into their savings account, with this stipulation: The dollars you contribute go towards long term savings.
- Encourage Charitable Gifts
Sit down with your children and make a family decision on where and how much to give to charity. Individuality may spawn the desire to fund multiple charities. Once the goals are established create some sort of system, perhaps a weekly collection box that all members of the family contribute to.
- Prioritize Each Dollar
Teach your child early that expenses don’t come one at a time and that one expense may be more important than another. Have multiple piggy banks – one for discretionary purchases such as toys, another for mandatory expenses such as lunch food and another for giving to charity or buying gifts.
- Curb their Temptation to Spend
Don’t let them get brainwashed by the buy now, pay later marketing.
- Let them Fail
How better to learn than from your own mistakes? If your child overspends on something and then realizes s/he ran out of savings let them suffer the consequences.
- Lead by Example
As always set a good example. Children absorb the habits of their parents.
Following these simple suggestions should help your child learn fiscal responsibility and avoid getting lost between designer clothes, the latest i-pod, a cell phone and an empty nest egg.
By the way…on a personal note I thought you might like to see some recent pictures of Christopher. The first picture was taken in December just before his baptism and the second just recently – when he made his first debut in the high chair. He is a beautiful and happy baby.
