For many parents in their 40’s, a loud and disturbing wake-up call is beginning to happen. This wake-up call is the dilemma between figuring out how to catch up on the savings to be able to achieve a comfortable retirement and also ensuring you put enough money away to pay for your children’s college education costs. This quandary has put an extreme amount of pressure on mid 40’s parents on how they will come up with a solution on making both of these goals a reality. Since many parent’s will not be able to fully fund a children’s college education, it can be a great time as they go through middle school into the early years of high school to teach them financial responsibility as they will likely have to service their own college debt down the road.
I think it’s important for all parents in this age range to understand that you cannot be afraid to discuss money with your kids no matter how great or dire your financial situation is at this time. I know many parents don’t want to burden their kids or have their kids worry about what may be going on financial in the household, but you know that you’ve crossed over the line when you are worried about telling your kids that you may not be able to take that Christmas vacation to the Cayman Islands. Trying to do a cover up for your kids and neighbors is only going to squeeze the financial vice harder creating more day to day pressure on you. What can you teach your kids that will allow them to help you and help themselves do better financially?
- Show them a few of the bills after you have dinner– With our busy schedules between work and kid’s activities, it leaves little time to make dinners at home. Many of us eat out at local casual fare restaurants so we don’t exactly have to eat fast food even though these restaurants still try to turn our tables over. If you have a family of four, one great exercise is to show your kids the breakdown of the cost of a bill from dinner. For a family of four, by the time you add fountain drinks for everyone, some appetizer like queso and cheese dip, and the main mean, you could be staring at a $60 or $70 bill. Show your kids how much it costs for the Coca-Cola’s, the appetizer, how you calculated the tip, etc. You can show your kids that just by ordering water at one of these going out meals a week or skipping the appetizer, just how much money you could save over the course of the year. It will be an eye opener for them.
- Plan the family vacation together– Most of us had one or two super cool trips during our childhood. As parents in our 40’s, we want our children’s experiences to be better than the ones we had as kids. This is why we feel so much pressure to have a beach house right on the beach vs. near the beach. We want the best holiday vacation in the Ritz Carlton vs. staying at a Best Western. We want Spring Break to be at the best property in Disney vs. a hotel near Disney. All of this which you and I know adds up to a ton of money out of our pockets. You can show your kids the initial stages of how to plan for a trip and where you may be able to save money. A great example is just using something like Expedia or Kayak to show them the same trip with a number of different cost options. Maybe they wouldn’t care as much if you were in a 3-star hotel vs. a 5-star hotel if you told them it could be the difference of paying for all of their college instead of giving them a head start.
- Start a savings account and teach the principles deposits and withdrawals– In the banking world everything has become too electronic today. As a kid growing up, I thoroughly enjoyed looking at my passbook savings account. Every time I went to the bank to make a deposit it was a really formal process where they took that purple stamp and imprinted the numbers in my passbook. When you made a withdrawal from those accounts, you felt it and could see it right in front of you. As a parent, you should establish early the behaviors of learning about deposits and withdrawals. Share with you kids the different ways deposits can happen including earned income, interest, gifts, etc. You should also share with them what happens if you withdraw more than you have and why credit in general is a bad idea for your personal finances. The important lesson is that you shouldn’t spend what you don’t have and money doesn’t grow out of an ATM machine!
- Set at least one ‘money’ goal– Kids always have something that they want to buy whether it be a new technology gadget or something sports related. A great idea about teaching the concept of delayed gratification is to help your child set a money goal for something they want to buy. If the new video game is going to cost $100, then help you kids make a game of what they need to do each week or each month to be able to get to this number. This can range from doing a loose change jar to storing up their birthday and holiday cash to get the goal. Make a big deal the day you go buy the new item and how proud you are of your child for saving up the money to get to the goal.
- When high school hits teach the concept of budgeting– Not many high schoolers have a real keen idea about the monthly cost of their i-phone that is on the family plan. They don’t understand just how much it costs for the auto insurance on the beat up Honda. A high school student doesn’t even calculate the cost clothes, backpacks, or supplies when it comes to your family finances. High school is a great time to teach your kids about the concept of budgeting so they can prepare themselves for the ancillary costs of college. If you can ingrain a spending plan that is reasonable, they will get a better idea what they need to earn in their summer jobs to cover the costs of their fall and spring expenses.
Parents in their 40’s truly have a lot on their plate these days. Companies are squeezing the maximum level of productivity they can get out of you. Your children’s activities leave most weekends with you as the chauffeur of sports central. Maybe you get a Friday or Saturday evening to have a cocktail with some neighbors or friends. Teaching your kids about financial responsibility could be at the bottom of the barrel when it comes to what to do’s you put on the checklist. However, educating your kids about the x’s and o’s with money management is a life skill that is just as important as grades and sports. No child will make an infinite amount of income and they will all have to learn how to manage expenses. Make a smart money move and teach them these five habits and perhaps they won’t ask you, “Dad, can we go to the ATM to get some money?”
Visit www.oXYGenFinancial.net to request a consultation on how to make smart money moves for your future.
Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder of oXYGen Financial, Inc – The Leaders in Gen X & Y Financial Advice and Services
Securities and Investment Advisory Services offered through NFP Advisor Services, LLC (NFPAS), Member FINRA/SIPC. Oxygen Financial is not affiliated with NFPAS. NFPAS does not provide tax or legal advice. This site is published for residents of the United States only. Registered Representatives and Investment Advisor Representatives of NFP Advisor Services, LLC (NFPAS) may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact NFPAS Compliance Department at 512-697-6000. PLEASE NOTE: The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. NFP Advisor Services, LLC makes no representation as to the completeness or accuracy of information provided at these web sites. Nor is NFP Advisor Services, LLC liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site. When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for your use of the web sites you are linking to.