Tag Archives: grad

Back to School Financial Tools For Ages 5 to 25

Hurray for most parents this back to school week. Likely, not so much for students…

This might be a good time of the year to talk about financial tools for your kids or grandkids from elementary school to university age.

However, we should start with parents: Almost 80% of them do not talk to their kids about finances or money at all. That’s a failsafe recipe for dooming their financial success as adults – period. If you don’t – who will? If you need the tools and what-to-do, go to Mosaic or Amazon and invest the $20 in the Money Tools book. Start with the chapter of “For parents of kids aged 4 to 40.”

If your child is going into elementary school, you’re around the age when they’ll start to get an allowance. I believe the only way to do that is to have them earn it. Set it up with whatever chores match their age and ability. Do not give them free and unearned money. News flash: That’s not how real life works as an adult. Do that now and it’ll be a decade of pain, debt, and borrowing from you until they learn that hard lesson for themselves. You get what you earn. Non-negotiable rule number two is that one-third goes into savings, one-third into giving, and one-third for spending.

Going into Junior High, it’s time for the just about teenagers to learn financial responsibility for themselves. Ask other parents what they do when your 12 to 14 year old loses their backpack or something else for the fifth time? The parent buys the sixth one. That’s insane! Stuff costs money – money you had to earn. Before the start of school, make the rule really clear that the second or third time (that’s your call) whatever they’ve lost is going to get replaced with their allowance money. They’re also now old enough to set up a savings account and an investment account under your name. Now is also the time to start talking about saving for a car, and make it clear you’ll match whatever they save up to a certain amount.

In High School, your child is now just a few years away from being an adult – whether you think of them as such, or not. Financial stuff will get really serious in just a few years for them. Most of the predictors of how they’ll handle that are fixed already, based on the last decade. Since a car is just around the corner, give them the Money Tools book and pay them some money for a book report on the car buying chapter. Knowledge is power – and way more powerful if they have a stake in it and are treated as semi-adults in being the driver of the research and purchase decision.

Going into university is a whole different world for both parents and students. As parents, I’d make absolutely certain, and in writing, that the financial ground rules are really clear. For example: We will let you live at home as long as you’re a full-time student, we will pay x amount of money every semester for your books and courses, a certain amount for this or that, etc.

For students, it’s really difficult for them to visualize themselves five or ten-years out. It’d be incredibly insightful to have them meet a few 30-something graduates that have huge student loans and what that financial pressure is like, and what they have to forego, even a decade after graduation. That’ll impact whether pizza and beer is coming from their student loan money. Yes, over 50% use it for vacations, eating out, and the likes. If you have the Money Tools book, there are lots of insights for kids going into, now in, or just graduating students that are incredibly powerful.

George Boelcke – Money Tools & Rules book – yourmoneybook.com

It’s Grad Season – But From School and Not Financial Reality

If you’re between the ages of 17 to 21 or so, or have a son or daughter that age group, banks, car dealers, and especially credit card companies are salivating to meet them.

Those companies will do whatever it takes to get their business. Banks, and especially credit card companies, have THE best marketing minds in the country and want your teenager in debt to them – really soon and really deep.

We have a huge emotional attachment to our first credit card. It’s the reason they’ll do whatever it takes to be front and center in your teenager’s wallet. Once they’re first, they own you, and the memories and loyalties are way bigger than the teenager’s first boyfriend or girlfriend – and last a lot longer.

On average, we keep our first credit card for over 15 years. It doesn’t matter that the rate hasn’t been competitive for years, that the perks are junk, or the fees they add on. For this group, the default rates are below average because, in most cases, parents will step in and pay the balance, or at least make the payments.

Why do they target your age group? Because they can’t market much to your parents. Adults already have all the credit cards they need or want. So they can’t grow their business unless they get to you. It’s millions of fresh customers, and bonus: You don’t know squat about credit and the dangers of credit cards, but you do love to impulse buy.

The same applies to banks wanting to get you hooked on an overdraft or line of credit once you have some income. That overdraft will be there for decades, and it’s not like you know how to shop around for the best loan deal or rate.

Car dealers also can’t wait to meet you. How many cars are you going to buy in a lifetime? Five, or six, maybe? Well, the average salesman sells that many in a week! So who do you think knows stuff and totally has the upper hand? It’s like bringing a plastic knife to a gun fight – you’re gonna lose, even if you bring one of your parents or a buddy.

So you’re all set. You’ve got your student loan payments for two decades, you’ve got the credit card, an overdraft, and that car payment. Grade five math says that majority of your income is now going to pay all that every single month – forever. So someone telling you save some money is just a pipedream.

Now you’ll be thinking about how to get rich for the next 40 years. But you’ve already forgotten how easy it really is to actually GET rich, instead of just wishing it. When you were still in high school you probably had a summer job. You worked hard, had a goal of what you wanted to do with that money, saved like a dog, and paid cash for stuff. Plus, because you had so little money, you were careful how you spent it, right?

But that was when you were young. Now you have a paycheck and access to borrowed money, so you’ve forgotten how to get rich already and you’re just getting started. Let me remind you again and maybe, just maybe, you’ll do these things to actually get rich, instead of that coming 40-year dream:

Pay cash for stuff
Don’t buy crap you can’t afford and don’t need
Save at least 10% of your money right off the top

In your high school class maybe one or two people will do that. The rest will just be the people hoping to get rich, looking to the government to lend them a hand, or maybe the lottery will come through for them. I don’t know which group you’re in: The going to be rich, or the just ‘wanna be rich’ group.

Maybe someone in your family will print this out for you. Maybe I’ll see you at the top, or maybe I’ll get an e mail from you in 10 years or so to help you with some of your financial mess.

You’re an 18-20 something who is about to make a lot of financial decisions which will impact you for a lifetime – literally.