Category Archives: Kids & Money

Misdefining success can crush you

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“Here’s the deal, Pete. I’m a successful guy. I make over $200k per year, I drive a BMW, and live in a $500k house. But we can’t get ahead financially. It’s a constant struggle. We are actually racking up debt. What are we doing wrong?”

I get some form of this question at least twice per week. It comes in different forms, but I usually hear “why don’t my high income and superior intelligence result in financial stability?”  It’s actually a pretty simple answer: high income and superior intelligence have nothing to do with financial stability. They can, however, provide you things that you can mistake for financial success. And this is where the party begins. And by ‘party’, I mean ‘misery’.

I’m about to ruin a Dan Brown book for you. But if you’ve read one, then you’ve read them all. In The DaVinci Code the characters are looking for the Holy Grail (the cup used at The Last Supper). Loooooooong story short, the Holiest of Holies…wait…I think that’s different. Okay, the long-sought after cup isn’t actually a cup. The “big secret is different” than what the characters were expecting. (This isn’t where I reveal that I am actually a descendent of Jesus Christ. Although I did grow a beard this week). My point? You can run all over the world trying to find what you are looking for, but setting your sights on the wrong prize will lead to failure every time. The same can be said for your financial life.

Take a moment and ask yourself “what does financial success look like?” Does it mean that you have the perfect job? Does it mean that you make $300k per year? Let’s define success for you, and then make sure that it makes sense. Let’s make sure that your definition won’t actually lead you to a financial catastrophe. I think through my own journey of “success” discovery, and I shake my head in awe. I almost screwed up badly.

Over the last 12 years, I have defined my own idea of personal success in several different ways. I’m going to share these with you. I’m embarrassed by some of them, but I’m pleased with my current definition of success.

The earliest and saddest success goal that I had was to “make more money than my dad did.” I shuttered having just typed those words for the first time. I’ve done several a-hole things over my lifetime, but trivializing my father’s life’s work by setting my income against his, is as bad as it gets. I truly feel shame for this. My dad reads my blog. Pops, I’m sorry. Dick move by me. Thank God my brain has continued to develop.

Next was a $1000 watch. I wanted to buy a TAG Heuer watch. Every successful person that I knew had either a Rolex or a TAG Heuer. I’m not much of a Rolex guy, so the TAG was the watch for me. I set a sales goal in the first year of my career, hit the goal, took $1100 cash into a jewelry store, and bought the watch. I was so proud. I was a success. What a dick. I’m so embarrassed by this time in my life that I can’t even bring myself to wear this watch anymore.

My next definition of success was to “be able to afford whatever I wanted”. Okay, that’s not terrible, but it’s not great. This definition had me “chasing dollars” to accomplish my goal. I have found that to be a fruitless journey. Being “able to afford whatever I want” doesn’t really work because my idea of “afford” is pretty subjective. Most people get into financial trouble because they buy things that they subjectively think that they can afford, when in fact they objectively cannot.

My current definition of success has me feeling very peaceful. To me, success is not striving to have more, but constantly needing less to feel satisfied with my life. I don’t want to strive to have more. I want to strive to be comfortable with less. Since I have taken on this definition, my income and wealth have grown substantially. For example, several people have complimented me on my wedding band. It cost me $12. I tell them this. Mrs. Planner gave it to me for our 10 year anniversary because it’s the one I wanted. People don’t believe me that it costs $12. It’s a very cool looking ring. They are in even more disbelief when they see that I have no shame over wearing a $12 wedding band. This wedding band has taken on dual meanings for me. First and foremost, it’s my sign of commitment to my marriage. But second, it’s my daily reminder that money WILL NOT define me.

What are you striving for? Will it lead to financial ruin? My current definition of success may not work for you, but that’s okay. Create your own definition.

Your kid deserves the best. Give it to them, for once

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Would you rather listen to this post? Here is the audio of me reading it to you. Your kid deserves the best as read by Pete the Planner

 

At some point in the last 5 years I have found that I feel responsible to say things that no one else really wants to say or hear. This is mainly because the truth hurts. I feel like we are letting social pressures ruin our kids. We aren’t standing up for their futures because we are too caught up trying to appease them in the now.

***Disclaimer of the day*** If you do any of the things listed below, then that doesn’t make you a bad person. I don’t think you are a bad parent. I’m not the judge of you, nor am I trying to be. I simply believe that we have socialized ourselves into a corner. We have allowed really strange things to become okay. Just allow the following text to enter your brain objectively. If you still disagree, great. And yes, I will most likely be guilty of one of things too someday. But I sure as hell hope not.

If you are anything like me, then you believe entitlement issues are getting worse as the generations progress. It is increasingly common for younger Americans to feel like the world owes them something, when in fact, we are owed NOTHING. I have more of an entitlement issue than someone in their 40s. Someone in their 20s is worse than me. And the 10 year olds are really jacked up. This is because every generation is loosening their grip on sensibility. It’s getting worse. We have to start asking uncomfortable questions in order to stop this awful problem. So you gotta start asking yourself why. Why does a 12 year old think it’s their God given right to have an iPhone? Why does an 8 year old enter you into a Worst Parent of the Year contest if you don’t buy them a Nintendo DS? But what is worse is, why do people think that banks are obligated to give them a mortgage that they can’t afford? Or why do people think that their parents should financially assist them deep into their 20s?

I have identified a few random pop culture occurrences that are ruining the financial sensibilities of our youth. There are thousands of these things, but here are the first four that came to my mind.

  1. High end doll company- I’m angry, but not stupid. I’m not going to name the line of AMERICAN made GIRL dolls that are at the heart of pre-adolescent opulence. Why does a child of any age need a $100 doll? Seriously, just evacuate your mind and ask yourself “what good can a child learn from owning a $100 doll that has $14 shoes and a $50 coat?” People keep telling me that I, too, will eventually buy my daughter this type of doll. “She’ll want one, and you’ll want to make her happy.” Man, I hope I’m better than that. Yes, we all want to make our kids happy, but why does that mean that we have to buy a $100 doll? Why is that socially acceptable? Well, because we allowed it to be. Are you a bad person if you have done this? Not at all. But I believe that you are helping to perpetuate an unnecessary reality: buying luxury items even brings status to 8 year olds. Step back, what are we saying to our kids when we buy them something that is this ridiculously priced? We may be trying to say I love you, but I believe that the heinous financial decision casts a cloud over our expression of love. This cloud will rain over their brains longer than your “I love you” will. In retrospect, I’m now more appreciative of my parents for the things that they DIDN’T buy me versus the things they DID buy me.
  2. Electric lunch money- ”Here Billy, take this lunch money,” I hypothetically say. “I don’t need it. Just fill up my cafeteria card and the balance is deducted from the account that you fill up electronically,” Billy says with 21st century sass. Nope, that won’t give then a skewed concept of money at all. Yes American education establishment, let’s teach our children about money by giving them mock credit cards. Let’s COMPLETELY desensitize them to money. Save all of your “convenience talk” and “safety issues” BS for someone else. I’ve been a Nancy-ass my entire life, and no one ever took my lunch money. Okay, so there’s an opportunity for our kids to make a purchase up to five times per week using real money, and we choose to squash this opportunity and instead teach them how to use plastic? Really? Come on. This stuff happens because we let it happen.
  3. Endless activities- Taking your child to 15 different activities per week isn’t a sign of your love and devotion. It’s a sign that you can’t say no. It’s also a sign that your kids have found themselves to be the puppet master of your world. The higher we lift our children onto pedestals, the farther they will fall when they aren’t the center of the universe anymore. Should you leave them at home in a drawer? No. But when did spending 20 hours a week on your children’s activities start making sense? The reality is that it has never made sense, but we did it anyway. Why did it ever seem sensible to drive three hours to play another 10 year old basketball team? At what point did spending hundreds of dollars per family in travel, food, and hotel rooms to play a “tournament game” against a random group of kids that is 300 miles away make sense? Does your 10 year old really need travel experience? My hand to the sky, I have seen countless middle class families put themselves in terrible financial decisions in order to “be on the travel team.” Not only is that a bad financial decision, but it offers up a terrible decision-making matrix for the impressionable children. If you are trying to support your kids’ dreams, just make sure you aren’t doing it at the cost of their financial future.
  4. Don’t lie to yourself, video games do absolutely nothing positive for your kids- ”It improves their dexterity.” “It keeps them off the street.” “It’s their passion!” Just stop. Stop it. I can’t think of a single item more responsible (in the year 2011) for preventing children from learning the value of dollar than video games. How is it that not only do children have several $40-$50 video games, but in many cases they have several $200-$500 gaming systems. How does this make sense to anyone? Really? Answer me out loud, right now. Ignore your coworker, and answer the damn question. What are we doing? Sure, it’s wasteful. But the damage it does to your kids’ sense of money is worse. And don’t start with the “they save their own money for the game” stuff. Your job is to prevent you kids from wasting money on stupid stuff. If you let them spend their money on whatever they want, then they will do that FOREVER. Forever ever? Forever ever.

I’m am NOT a parenting expert. I am a financial expert. I fix the poor financial parenting that can be traced to the behavior above. Your kid deserves the best. Give it to them. Don’t give them things. Give them parenting.

My goal is to make this post a discussion. Do you have a different perspective on this? Please leave a comment below, and let’s have some intelligent discourse.

Why divorce/breakup is so difficult on a financial life

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Some of my posts are (meant to be) inspirational, some are (meant) to make you laugh, while others are (meant) to show you an aspect of the financial world that you have never considered. Today we will dive into the latter. I want you to know what divorce looks like from a financial perspective. Why would I do this? Because I have to see it everyday, and I want you to see it through my eyes. Think of it like the person that says “This tastes like crap!! Taste this.” So here is the cost of a split.

How much does it cost to run your household? And you thought running one household was expensive. As it stands pre-divorce, both of your incomes (no matter what they are) go into one pot to pay all the bills. So what happens when that income is forced to fund two households? All hell breaks loose. Let’s take a look at what that looks like:

Pre-divorce hypothetical net monthly household income: $5000
  • Mortgage $1250
  • Transportation $750
  • Utilities $500
  • Debt payment $600
  • Food $750
  • Everything else $1150

Post-separation hypothetical net monthly household income : $5000

  • Mortgage $1250
  • Rent $800
  • Transportation $800 (potential insurance price changes)
  • Utilities for home $500
  • Utilities for apartment $200
  • Debt payment $600
  • Food $900 (this almost always increases across the two “new” households)
  • Health insurance (one person usually loses coverage) $300-$1000
  • Everything else $1150

Net difference $1,600-$2300

 

You don’t have to be a math genius to see that two households costs nearly 25% more than one household. I’m not suggesting that this should/will prevent your divorce, I’m just suggesting that you know what will happen to you financially when the two households split. But wait, there’s more.

Who gets the house? Rarely do two people in a household make the same amount of money. This causes major problems when you consider the next two common normalities. Women, on average, make less than men (don’t blame me. It’s just statistically true). And here is the stunner: women tend to try to “get the house” in a divorce. This means that the lesser income earner is funding the largest expense. This is a disaster. Yes, there are stability considerations especially when children are involved, but I find that divorcees fights way to hard to keep the houses that they can’t possibly afford. A fresh financial start is possible if you don’t “fight for” the house.

Health insurance is still important.  Just because you aren’t married anymore doesn’t meant that you don’t need health insurance. And since one person typically provides the coverage through his/her employer, the other person gets the health insurance shaft in a divorce. This is a problem. It’s a HUGE problem if the person without coverage has health issues.

Kids get extra expensive in relation to two households. The reality is that you will still want to buy your children gifts, clothes, toys, etc. That’s what parents do. However, you have less money to do this. Both parents generally still make these expenditures. That costs more in totality

My point in all of this is that you need to know what your financial life is going to look like if you are considering a divorce. Believe it or not, good or bad, this has prevented many people from getting divorced. If you do get divorced, then you need a plan. I put one together for you. It’s my divorce recovery guide. It’s free. Let me know if you have any questions.

 

 

 

 

 

 

The financial implications of pregnancy

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Repete, Peterson, Malcolm Jamal Warner, Little Peter. All rejected names for Mrs. Planner and I’s child that is due in the spring. Yes, the spawn of Planner is nigh…again. So what happens next? What are the financial ramifications of bringing a child into this world?

I can only write this post from a male perspective (despite what my high school football coach might think). My first two emotions after finding out that we were expecting another child: absolute joy and financial panic. Now, the financial panic came about two days after the joyful discovery, but it came nonetheless. I, as you might imagine, have my financial shiz together. Yet this HUGE life change sent my confidence and gameplan into a tailspin. How can we afford this? How am I going to pay for college? How can I provide my family all things they need when the family just keeps growing? All fair question, but of course the answers are much easier once you step away from the excitement.

So, here are Pete the Planner’ top 10 tips for understanding and preparing for the financial ramifications of having a child. Say that 10 times fast.

  1. Expect irrational panic- Not to be a narcissist (right now), but I am pretty level headed when it comes to my financial future. But I lost SEVERAL nights of sleep by panicking over my financial viability. I think this is just mother nature’s way of letting you know that you are an animal, and you have  survival and defensive instincts. It’s okay. Just relax, and find your confidence again by going over the facts. Cost: A few sleepless nights
  2. Stop wasting money RIGHT NOW- You usually have about 7.5-8 months to get your financial house in order, upon finding out that you are expecting a child. Use every second of this. I know that you know what you waste money on. It’s time to eliminate the BS. This baby is going to change your finances. Are you dining out too much? Are you spending traveling too much? Do you have a boot collection that can fill the child’s future room? Cut the fat. Cost: A few lattes
  3. Come to terms with the medical costs- It costs money to extricate the child from the lady. Much in the same spirit that it took effort to extricate Luke Skywalker from the Tonton Am I comparing a womb to a Tonton carcass? Possibly. But I just laughed out loud, and that’s justification enough for me. The most pressing financial issue during your pregnancy is the cost of literally having the baby delivered. Below you can see the “payment plan” that Mrs. Planner and I are using with her doctor’s office. In a nutshell, we are putting the spawn of Planner on fetal layaway. I have to be honest with you (as if I’m not all the time), if you can’t afford this part of having the child, then you might be in trouble. This is why I think it’s so important for you to cut out your wasteful spending right away. As you can see, we have insurance. This is helpful in reducing the costs.  Oh, and don’t forget that you have to pay the hospital too. The cost below is just for the doctor. Add on another  $1,500-$5,000 for the hospital. Cost: $4000-$7500
  4. You are going to need some new clothes- Not you, non-pregnant significant other. The pregnant lady will need some clothes that fit her growing body just a bit better. Guess what. Unless you plan on bartering for the clothes with a spare goat, then you are going to have to spend some money on maternity clothes. This will most likely cost you at least a couple of hundred dollars. Cost: $200
  5. You probably need to prepare a room for the kid- Everybody loves babies, but no one wants to sleep in a room with one. In the olden days, babies used to sleep in drawers. Okay, I made that up. But it’s a funny image nonetheless. It’s pretty common to paint the room (please use low VOC paint), furnish the room, and babyproof the house. This costs money. Figure AT LEAST, $150 for this. The most likely scenario for a middle class is family is that you spend close to $1000 on this part. The good news? Once you have one child, then you don’t have to spend the money again. The really good news? You get a kid out of the deal. Cost: $500
  6. Baby clothes, the great destroyer of budgets- This is the most variable expense on this list. Gifts and hand-me-downs go a long way. Some people want their children to look like Anna Wintour dressed them, and some people just don’t care. I’m not judging. Okay, maybe a bit. But just take it easy. Cost: bare minimum $200 for pregnancy through the first year
  7. Gear- Why do parents have SUVs and Minivans? Because kids require that you travel with a tremendous amount of stuff. I can’t believe the amount of equipment that it takes to raise a baby. You would think that a baby doesn’t need much stuff. Pack and plays, strollers, bouncy seats, Boppies, car seats, gates, play yards, etc. Hopefully, you have a great group of friends and family that can shower you with these gifts via a baby shower. However, that isn’t always a reality. You can expect to spend at least $500 on this stuff from pregnancy through the end of the first year. Cost: $500
  8. Feed them food, catch their poop- One of the most vivid memories of staying at the hospital when we had Ollie (pictured above in her big sis t-shirt) was when the lactation consultant offered her services to us. A lactation consultant? A breast milk specialist? Pete the Lactation Consultant. How’s that sound? Sorry. Anyway. I’m not dumb enough to get into the breast feeding versus formula argument. So we will just talk turkey. If you don’t breast feed, then expect to fork over about $80-$120 per month for formula. And if you don’t plan on using cloth diapers, then expect to pay about $80-$120 on diapers per month. In their mouth, out their bum for a mere $240 per month. Cost: $160-240 per month
  9. Figure out a child care plan yesterday- Child care is expensive. And good child care is really expensive. Let’s say that you are entertaining the “it’s cheaper to stay home and not pay for childcare despite forgoing your paycheck” idea, cool by me, but you better employ math. It’s a pretty simple activity. Either cut the cost of child care out of your spending, or your entire income out of your spending. Cost: A freakin lot
  10. Be reasonable with your family and friends- My good friend Raquel once told me that when it comes to accepting gifts for raising a child, always say yes. I have to agree with her. That means if someone wants to let you borrow a crib, then say yes. If someone wants to buy you a stroller, then say yes. If someone wants to give you a sensual massage, ask your baby-daddy first. All of that being said, don’t ask for stuff. It’s unsightly. Billions have babies have been born. Your baby is not the first and only child of humanity. Be reasonable. I have seen SEVERAL people lose perspective and ask the world of both their family and friends.

Just plan. This will be one of the most exciting times of your life. You will be excited, scared, clueless, and hungry. Just embrace it.

The total cost of being pregnant through the 1st year of life, per my calculations: a few sleepless nights, a few lattes, $8500 or so, and a freakin lot for childcare. Okay, I’ll do a bit more math for you. Everything combined, will cost you between $8,500-$20,000 depending on whether or not you receive baby gifts and/or you need to pay for child care. Looks like you better stop resisting my advances, and start budgeting.

Want more advice on affording your pregnancy and baby? Sign up for this special Pete the Planner I’m Having a Baby Newsletter.

 

The downside of an inheritance

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Inheritance, a reward for doing jack squat.

Of all the financial concepts that I have encountered over the last 14 years of my career, there hasn’t been anything that has surprised me more than inheritance. Prior to diving ginger-head first into the financial world, I thought that getting an inheritance was a wonderful positive thing. Um, I’ve never been more wrong in my life. And I’m not even talking about the whole “waiting for someone to die so that you get their money thing”. I already addressed that here.

****Disclaimer. I am not talking about anyone in particular. If you are a client reading this, please know that this isn’t about you specifically. Seriously*******

Inheritance is the great magnifier. It’s like your goofy friend…but when he is intoxicated. He is goofy times ten. An inheritance magnifies your “issues”. If you have shoddy financial habits, then an inheritance isn’t going to fix them. In fact, the inheritance will super-feed your dumb dumb Jones. Are you brilliant and charitable with your money? Great, then an inheritance will just give you more tools to do your thing. But let’s dig deeper, and, of course, get a bit more uncomfortable before we go too much further.

Why does an inheritance exist? Because someone died. My point? You didn’t earn the money. The money has NOTHING to do with you or your decisions. In many instances a sizable inheritance is the result of proper financial planning by the dead person. Now, you can take this disassociation with the earning of this money and run with it in a bad way, or you can allow it to change your life for the positive. But the reality is that you will be using the same brain that got you in your current financial standing in the first place. So be careful.

You would not believe (or maybe you would) how many people I have seen use their inheritance to give themselves a second chance…only to need a third, fourth, and twentieth chance. But the twentieth chance is asked for without access to a chunk of money that wasn’t purposeful in the first place. I guess this is the part of the post where I give you some tips. Okay, here you go.

Consider the following things if you happen to receive money that you never deserved…errr..an inheritance.

  1. Save the “he/she would have wanted me to do ____ with the money” crap- Really. While thinking what the deceased would want you to do seems like a reasonable and thoughtful thing to do, it is often used to justified stupid decisions. “Dad would have wanted us to finish the basement.” Really? That’s what Dad would have wanted? I think your dad would rather be alive in your unfinished basement. Yeah, harsh. I know.
  2. Adopt a “preserve the money for future generations” mindset- You got money you didn’t deserve. While it is currently your money, there is nothing wrong with handling it responsibly and growing it for your kids.
  3. Talk to a financial advisor- Most financial advisors will try to talk you out of stupid stuff. They do this for your benefit. You need this sort of person on your side. Employ one.

Feel free to leave a comment and let me know how misguided you think my thoughts are. We learn by discussing, right?

3 things that you should have learned in high school econ

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Cal Ewing is the patron saint of high school economics. He was my high school economics teacher, my 7th grade basketball coach, and an assistant coach for several high school sports teams that I was a part of. He had a TREMENDOUS impact on my life in so many ways. I loved his econ class. I honestly feel that it is a cornerstone of my financial content. Basic economic principles are the reason behind so many things in our financial lives.

You may not have had an amazing teacher like Mr Ewing, so I’ll give you the Cal Notes version of his class.

  1. Supply and demand- Is there any one concept more elementary yet so all encompassing than supply and demand? The concept of supply and demand can be used to explain just about any economic event. Get laid off? Low demand for workers vs a high supply of workers. Get something on sale? This is an attempt to create demand to liquidate a supply. Cash for clunkers? A disaster. Oh and it severely shifted the demand curve. (Side note: I think Cash for Clunkers was one of the biggest disasters of all time. Creating artificial demand can screw up on economy. Free markets ride or die.)
  2. There is no such thing as a free lunch- I vividly remember trying to stump Mr. Ewing on this one. He taught us the concept, and then we would fire off scenarios in which we felt there was a “free lunch”. He would inevitably prove us wrong. Nothing is free. Nothing. That free t-shirt that you received by signing up for the Care Bears credit card? Yeah, that wasn’t free. That free helmet phone that you got for signing up for Sports Illustrated? Yeah, that wasn’t free. The drug rep that comes into the doctor’s office and brings the nurses a free lunch? Yeah, that isn’t free. Nothing is free. Those airline miles, credit card points, and Groupon deals? Yeah, those aren’t free. You pay for EVERYTHING one way or another. Are you a chronic shoplifter (I was curious about that bulge in your pants)? Then prices will increase at that store eventually due to “store loss” (you stealing). So when you do pay, you will pay a higher price. Trust me. You can’t stump Cal Ewing.
  3. Distractions- I refuse to name names. But one of the most important concepts that I learned in high school econ didn’t come from Cal Ewing. The lesson came from the young lady that sat next to me. She taught me that no matter how much you care about the material (econ), and no matter how much you want to achieve and do well, distractions can take you off course. The distraction? Her. Whether she was whispering something into my ear or passing me notes, my love of econ was no match for a lovely high school girl (this isn’t as pervy as it sounds. Take it easy. I was a high school boy). This is how the world works. No matter how bad you want something, not the girl, econ, distractions can take a toll on you if you left them. Saving for a down payment on a house? That spontaneous trip to Chicago can be a distraction. Need to pay down credit card debt? The stock market can be a distraction, if you let it. You can’t eliminate distractions. You can only be aware of their potential, and then cope the best you can. I REFUSE to name names. And no, don’t comb through my Facebook friends to try to figure this out. I haven’t left a single clue for you, you perv.

What did you learn from high school econ?

The 3 best tools for teaching children about money

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No one is financially perfect. This fact varies in importance as life progresses. Sometimes it doesn’t matter. But sometimes your financial imperfections can create a problem that you didn’t see coming. One of the worst cases of this sneaky suckiness is when your children pickup your bad financial habits. This really happens. This isn’t an after-school special sorta life lesson that I’m trying to give you. This is real. If you have financial “issues”, then your child will detect this, and your money garbage will flow into their kiddie brains via osmosis. Don’t freak out. Well, you can freak out if you don’t plan on addressing this problem. Other than that, don’t freak out.

You can affect change by being intentional with your parental money lessons. If you have learned nothing else from this blog on a daily basis, I would have hoped that you have learned that financial success and clarity comes to those that are intentional. Be purposeful. The three financial lessons described in the video above, and the three lessons listed below are great ways to reverse the damages that your unintentional money school has had on your children.

Best money tool for children 7 and under: Piggy Bank

While there is nothing more cliche than a piggy bank, there is also nothing more effective. A piggy bank adds excitement to savings. It allows your child to have a physical representation of their net worth. Want a new action figure? Well, does the piggy bank feel heavy enough to afford it? Did your child break something of yours after they were told not to touch it? Remove the money from their piggy bank. The piggy bank is a VERY POWERFUL parenting tool. Don’t ignore it.

Best money tool for children 8-13: Lemonade Stand

Whether you like it or not, we live in a capitalistic society. Yes, sometimes this brings out the worst in our fellow Americans. But it also brings out the very best. Learning commerce is a must. Your child must understand: cost, inventory, profit, marketing, and discipline. The best tool to accomplish this is a lemonade stand. Since my days of installing air conditioners for our family business as a teenager, I have been visiting as many neighborhood lemonade stands as I can. I love them. The lemonade is often terrible, but the interaction is always worth the money.

Best money tool for children 14 and older: Cell Phone

I used to think that teenagers shouldn’t have cell phones. I mean, who the hell are they talking to all the time? Just invite the person over, and stop being so anti-social. But then I realized that a cell phone, when properly administered by an intentional parent, can be the perfect tool to teach teens about budgeting. Cell phones involve time and money. You pay a certain amount of money for a certain amount of usage time. Your teen will learn to budget both of these things if you allow them to. Unlimited texts and minutes for your teen? Sure, if you want to teach them how to be a financial disaster in their 20s. The financial world isn’t an all you can eat buffet. You can’t learn resourcefulness when there are unlimited resources. Be intentional about your teen’s cell phone usage, and their money skills will flourish.

 

5 skills that your dad should have taught you

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I firmly believe in the importance of intentional parenting. I believe, as a parent, that it is your responsibility to ensure that your children walk this planet with a minimum level of financial common sense. The unfortunate part of this is that your parents may have done a crappy job teaching you financial common sense. Okay. Fine. I’ll step in and do some late-stage parenting on their behalf. Before I go much further it is important you know that when I say “skills your dad should have taught you”, what I really mean is “skills your PARENT(s) should have taught you.” I’m worldly enough to realize that we didn’t all grow up in two parent households. Hell, some of us had two dads. That’s cool with me. But my job is to teach you things that “whoever” didn’t teach you.

If you understand and practice these five things, then I’m relatively confident that you will have a pleasant financial. Don’t currently have a pleasant financial life? That might be because you never learned/practiced one of these five essential financial tenets. These literally are the elementary basics of money. Some of my posts are complicated, some are quirky, this one is simply basic. If my children learn nothing else from me, I’d like them to learn these five things.

1. Save first- Do you want to know why you (may) live paycheck to paycheck? It’s because you don’t save first. If you are juggling your bills in order to pay them on time, then it’s because you never set money aside for the future. I know it sounds bat-shiz crazy to think that you will have more disposable income if you eliminate some of that disposable income from the get-go, but you will. Please trust me on this one. If you never have any money, it’s because you have created a psychological dependency to spending all of it. You need to employ scarcity. You do this by removing some of your resources (income) from the jump. You can’t wait to see what’s leftover at the end of the month, and save that. It doesn’t work that way.

2. Tip well- I have never really understood the rationale behind being a bad tipper. I believe that your understanding of the customer/server relationship says a lot about you. I often take potential hires to a business lunch and let them do a majority of the interacting with the waitstaff. I then observe their interaction. If you value every single person in a restaurant, no matter how small the perceived role, then you will inevitably value your assets more. I think it’s a self-awareness thing.

3. Don’t even get started with credit cards- As President Obama so eloquently said in late July of 2011, “Now, every family knows that a little credit card debt is manageable. But if we stay on the current path, our growing debt could cost us jobs and do serious damage to the economy.” Thanks, Barry. Why don’t you just say that obesity is healthy too? If your parents struggled through the trials of credit card debt, and hid the pain associated with it from you, then you probably have experience borrowing issues of your own. It’s a pretty simple formula. Don’t want to get eaten by your pet tiger? Don’t have a freaking pet tiger!!! Don’t want to get into credit card trouble? Don’t even get started with them. They aren’t at all necessary.

4. Don’t gamble, but if you do, pay your debts- My dad always told me that he worked too hard for his money to risk it gambling. This always stuck with me. Yes, I know that I’m a killjoy, but I can’t imagine betting on the ponies when I don’t have my daughter’s college fund fully funded. You and I both know several people who care WAY too much about insignificant football games because they have money on the road team. It’s unsightly. I’m just sayin. But if you make silly wagers with you buddies, pay your damn debts.

5. Life insurance isn’t about anything other than love- I remember when my dad explained life insurance to me. It was weird. He said that he paid some random company money every month in order to make sure that if he died, mom wouldn’t lose the house and have to go back to work. I had to have been like 10 or 11 or something. At this point I still thought that money grew on trees. Plus, I was pretty sure that my dad was invincible. Twenty some years later, and nine deceased clients (less than 40 years old) later, I’m glad that he had that life insurance conversation with me. You don’t buy life insurance because you are afraid of dying, you buy life insurance because you love your family. End of story.

Do you have any important lessons that your dad (parents) taught you?