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  • Reply Jan |

    A previous blogger (Dedicated to Financial Freedom) decided that when her children were old enough to work a part time job, the requirement was they open an IRA and fully fund it before they could use any of their earnings for spending or saving for other goals. Sounds kind of harsh, but if they did that for five years between high school and college, and then never touched the IRA again, they would be set for retirement just from those five years of funding it. At least, that was her plan.

    • Reply Hope |

      I like that idea. I may have to look into this one further. I was thinking that once they had achieved a decent amount in their long term savings we would explore CDs or investments of some kind, but this looks like an alternative to that that we could pursue now. Thanks for the suggestion, I will check it out.

  • Reply adam |

    I don’t have kids and so I don’t have a suggestion out of experience, but my reaction to your plan was that it’s too complex for a teenager.

    One of my best friends growing up had the 1/2 to savings and 1/2 to spending policy, it worked really well for him. I had no policy enforced and ended up spending all my money and entered college and adulthood without much to show for my work except a crappy car and a cell phone.

    So I like the half to savings and half to spending route.

    I also suggest adding in a charitable or religious giving policy (some people go with 10% off the top) if either of those are a value you want to impart to your kids.

    • Reply Hope |

      I thought about the charitable/religious giving, but I firmly believe that needs to be a personal decision, not one “forced.” It’s something we talk about a lot, and we as a family do alot of volunteer work around our community.
      I think this comes from my background as a missionaries’ kid and feeling that religion and tithing and all that comes along with it was literally forced down my throat. I tend to lean to let my beliefs show through my actions and I think tithing falls into that category.
      I appreciate your feedback on the complexity of my idea, I will definitely keep that in mind as I evaluate how to move forward.

  • Reply Ashley |

    I’m expecting my first so I don’t have a ton of advice. I just put “smart money smart kids” by Dave Ramsey on hold at my library. I’ve heard it’s great, so I’d suggest that. My parents gave me terrible spending habits- I didn’t have to work so they paid for everything. In college they gave me a credit card and paid it off 100% every month. Needless to say, when I got married I was clueless about money and quickly racked up debt. I refuse to do that to my future kids! Good job on being so intentional!

  • Reply Kili |

    I wouldn’t consider the 3 different places the money of a paycheck goes to overly complicated for a teenager…
    I bet there are more complex things they have to deal with in your home school curriculum.

    I also believe that “forcing” them to donate cash (as opposed to “forcing” them to volounteer and thus donate time) might not lead to the results you’d hope for; I agree with Hope that this is something the boys should be able to decide themselves.

  • Reply Helene |

    I think this is a great start. I think the kids are old enough now to understand Ramsey principles so I think you should get Dave’s book for kids/parents. One of the most important things for them to understand is how it’s TIME and consistency that creates the ability to not only be debt-free but cash-rich. Show them using the online tools how the money grows like mad like if they deposit as little as $20 a month into an interest-bearing account. Saving and knowing why is important, but in today’s what’s-in-it-for-me culture, showing the kids what the payoff will be can be a whole different kind of motivation.

    How I wish someone could have taught me this when I was their age. I wouldn’t be in debt and struggling and kicking myself. I would have lived an all-cash existence and my life would be so incredibly different now. I’m committed to doing better for my son.

  • Reply Walnut |

    I think half to savings and half to checking makes sense. When they deposit checks, they can take out $20 for pocket cash.

    On the giving front, you can encourage the boys to write a check for donations if a particular cause moves them.

  • Reply Stephanie |

    It depends on how much they’re making in a year. If it’s in the $5,000-$10,000 range, and they are already paying all of their own expenses, I would definitely make a ROTH IRA a requirement. Go with something with low expenses like Vanguard. They have a few funds with a $1,000 minimum. Perfect for kids. We will be doing this when our kids are old enough to work.

  • Reply Diana |

    Mary Hunt also has a good book about kids and money. The Dave Ramsey book is good too.We have been giving our kids an allowance since they were about 6, as a money management tool. We started with the blue bank with 3 slots “spending” “saving” and “giving”. Now they are 13 and 14 and it’s a little different. They have a clear envelope, or jar and put their savings money in there. Once a month we go to the bank to deposit it. They receive their age in allowance every week. They both do babysitting and dogsitting, etc. to earn extra money. We still pay for outings, etc for youth group, but they need to budget their own spending money. We give them clothing allowance of $10/wk but they need to add their own money if they go over that. When oldest turned 14 we opened her checking account. She has her debit card in her own purse. She has access to her money but is very good with how she spends it. I put her clothing allowance in her account and she spends it how she sees fit. She is quite a fashionista but always looking for a deal.
    When they get a car, we will help them learn to budget for car maintenance, tires, etc. I think with their first car, we will take care of yearly tags and taxes, and insurance, but when they start working they will take on more and more of that.
    I definitely feel that we are helping our daughters to be better with money than we were. We hope to help them get scholarships so they won’t have to take out loans for college. And we don’t have college funds set up for them.
    14 yr old is taking photography at school this year and we let her pick out a camera and we paid half. She wanted a good one but said she couldn’t afford top of the line. Bought a Nikon with 2 lenses. She loves it and takes great pictures.
    Funny story. She is a cross country runner. We buy her a new pair of good running shoes every season. She has high arches and the ones that work best for her are $120. We try to get her to run in the offseason but she doesn’t. Season just ended so I said. This offseason we will pay you $1 per mile to run and you use that money to buy your next pair of running shoes. That will motivate her to run. So she has a jar on the bar and we are adding money to it as she runs.

  • Reply debtor |

    I think the fact that you already make them save for short term wants is GREAT! No kids here but I wish my parents had done that. They just paid for everything and money was this wondrous thing I thought was magic and promptly racked up 18k credit card debt as a senior in college (it didn’t seem REAL to me).

    Anyway, I def. don’t think that plan is too complicated. Teenagers are smart, we’re not talking 5 year old here. The only thing is I would probably make some of the savings something high interest. A roth IRA or maybe even a CD to start off if you/they are not yet comfortable learning about investing. You could do 50% of savings to savings account and the other 50% to stocks/ira/investment. They might end up loving to read about companies and such and learn a lot about the financial market.

    That compound interested would be bananas! I think some places waive fees for young investors so look into that too. As someone said, some of your plans would be determined by how much they are making.

  • Reply Lizzy |

    I like this plan. But I learned yesterday, when I took my teenage daughter to open a checking account, that it would have to a custodial account! A joint account might have been one thing, but a custodial account is too limiting. I was really surprised. I would check different banks’ policies before setting out.

  • Reply Mary from SC |

    Hi Hope – just wanted to say you have been missed these past few weeks. Hoping all is going well for you. Looking forward to some updates on your settling in, sale of house, etc. Wishing you the best!

So, what do you think ?