Inc.com Article

A few weeks back I interviewed with Inc.com’s Tamara Schweitzer, one of the online magazines staff writers on the subject of “How to Recession-Proof Your Kids”. There were several great contributors to the article and I believe it would be worth your time to check it out (it’s linked below), and this is especially true if you have children or plan to some day.

“Aside from the usual worries about massive layoffs, foreclosures, and a tumbling stock market, what appears to be a looming recession is presenting another kind of personal dilemma: How much should we tell our children about the gloom and doom, and how can we best prepare them to face the economic monster in the closet when they grow up….” (the rest of the article)

Send me a comment after reading it and let me know what your thought of the article. I think you will enjoy it!

Kids & Money (3/3)

Hopefully, by the time your children grow into their teenage years, you have instilled in them the basic principles of money management. If not, you’ve got some catching up to do prior to them leaving the home. Either way, the teenager years are when it’s time to start letting them explore the larger financial world.

1) Basics of Loans (13-18 years old): While the goal is to teach your teens to pay for things with cash, save, and invest, it is still important to teach them the “why” behind those goals. Show them what a car loan looks like and how it works. Using a loan calculator to plug in the numbers for the average car payment and terms will help them visualize how much gets paid in principle and interest. Doing the same thing for a home loan using a mortgage calculator will also help push the point across that loans cost a lot of money in interest and they always limit your cash flow.

2) Long Term Investing (13-18 years old): Perhaps one of the greatest money lessons for a teenager to learn is how investing early in life pays huge benefits later on. Using a simple investment calculator can illustrate how investing $2,000 per year with a good rate of return can add up to millions by the time they hit retirement age. It will also help them see the value in starting earlier in life verses waiting until they’re “grown-ups” to start this process.

3) Accountability (13-adulthood): Without accountability even the greatest planners or savers will make poor financial decisions. Be honest with your teens about the importance of always having financial accountability in their life. Sharing a few personal stories about what can happen when accountability isn’t included in financial decisions is always helpful (most of us have a handful such stories!). Make it clear that accountability isn’t a friend that doesn’t care what they buy, but someone that cares enough to question the “what, when, and how” you buy.

Never stop teaching you children, even after they are grown. Too often children grow up and leave the home only to still have unanswered questions about money choices. Left unanswered, many of those questions turn into poor decisions that have long-lasting negative effects on their life. Stay involved with them over the years. Keep the communication streams running smoothly. Just knowing that they can always talk to you about their finances, good or bad, will help them avoid costly mistakes.