Tag Archives: kids and money

Someone Actually Did a Written Budget! Wow

Good morning George. I’ve just finished your Money Tools & Rules book! Thanks so much and well done on a great book!

We have two kids between 7 and 10-years old. I have done up a budget and I have reduced my monthly expenses a reasonable amount to add to my payments towards my credit card and line of credit debts. I have that goal of paying off those debts to be able to buy a house in the future, while also looking to gain a foothold in investing.

Part of my reply that relates to (this portion of) the email: I only ever answer questions of what I would do since I never have all the information. Plus, caring isn’t telling someone what they want to hear, it’s caring enough to be honest and direct.

Nice that you’re one of the rare people that put their spending on paper to be able to see it AND reduce it a bit – that’s pretty impressive. And remember you’ll be way over here and there – just keep tweaking it for the variable bills and DO have some “me” money in there and some “kids” money. And tell them in an age appropriate way some of the budget stuff!

When they know the rule of what their “me” money is AND what it can go to (clothes, field trips (?), school extra billing (?), dollar store, snacks, etc) they’ll learn to live within their own budget and it’ll take most of the hassle out of shopping with them. Make it cash in an envelope for each of them so that they can “see the money,” or lack of it, towards the end of the month! This, however, is not their (hopefully) earned allowance! That’s their money to invest – give – spend as you’ve defined the rules for it.

Your investing goal is confusing as it states opposite things in your full email: If you’re NOT adding to your investments,  you just need to follow the step up plan in the book to the letter, which would be credit card only – minimum payment on LOC. Then the LOC with the minimum you paid all along AND all the money you’ve paid extra on the card that’s now cleared.

If you meant ADD to your investments as well: Unless you’re a doc, vet, or someone else making maybe $150k or more, you’re doing the exact opposite of what works. I hope you’ll email me in a few years that you’re in roughly the same position, just a few years older. Plus, you won’t meet the debt ratios, etc. of the Trudeau stress test for debt load, total debt service ratio, etc. if and when you want to qualify for a home purchase.

A Family With 13 Kids AND Saving 35%

Rob and Sam Fatzinger have 13 kids, one income, and a free and clear home just outside of Washington, DC. If you want their full story, just go to the Washington Post and type in their name.

Here’s their story in short: Rob made $40,000 a year just a decade ago, but now earns $100,000, plus, and mows lawns in the neighbourhood for a few extra bucks a month. His stay-at-home wife home schools their 13 children with assistance from a tutor. In 2000, they bought a fixer-upper foreclosure with $50,000 down and paid off their 15-year mortgage early, and Rob will retire early at age 62.

They had a lot of help from the community in renovating and expanding the home. The Fatzinger’s also receive a lot of support, where friends and neighbours have helped with gift cards for food, and even used vehicles over the years. Their biggest cost is their food budget that was running $1,600 a month. Today, their savings rate is 35%.

All kids have long ago been educated to know they will not receive help with college costs. Yet, several of them have already graduated from college with part time jobs, scholarships, and ZERO student loans!

But that’s not the story. If you’re really quiet, you can hear what most listeners are thinking right now: That none of that could ever happen in their life:

Judgment and strike 1: I couldn’t buy a place for $150,000

Strike 2: I could never take on a part time job

Strike 3: I wouldn’t accept donations from people or ask for help

Strike 4: I could never do a 15-year mortgage or pay extra on it

Strike 5: I can’t save 5% of my pay, never mind 35%

Strike 6: He makes $100,000 –I don’t…

Strike 7: I couldn’t tell my kids I won’t contribute to their university costs

Strike 8: I’d never be able to retire early

Your attitude determines your altitude. Instead of the judgments and saying “I couldn’t do that” change the wording to: I’m not prepared to do that. Then at least you’re being honest with yourself. Because, people who say it can’t be done should stay out of the way of those who are doing it!

Updating Four Previous Stories

Mortgage deferrals this spring: It’s nice to know that many times our Wednesday stories are ahead of others talking about it. May 6th we talked about a heads up that you need to check your credit bureau if you had a deferral on your mortgage or line of credit. BNN finally had it on their website August 13th – three months after us. To make sure your deferral hasn’t shown up on your credit report as arrears, go to Equifax.ca for the form to get your free report or it’s in the Money Tools book chapter on credit reports.

Solar panel payback: Last year we talked about the cost versus savings of adding solar panels to your house. It might be great for the environment, but it’s horrible for your wallet. The savings will only be your actual energy consumption cost. You will still have all the fees on your bill. Here is my last utility bill as an example. My actual gas cost was 14 cents. I know it’s summer, but even a really low $10,000 solar install will save me 14 cents a year, or around $50 in the winter. The other seven charges were over $67 and you’d pay no matter what.

Car rental reminder: If you didn’t hear it last year, this is your reminder: It may be weeks later after you return your car that you’ll get a bill for damages to your rental. It will be a bill in the mail or they may already have charged your credit card. All rental agreements state that it’s subject to final inspection. Many times, especially at airport rentals, you just hand in the keys and they never look at the returned car at the time. That’s happening more and more as you can see on travel blogs. So take pictures, it’s digital so it’s easy to do. One of the windshield, and one each side, front and back! That way you’re protected…just in case…

Teaching kids about money: We talk about this at least once a year. Here’s a beautiful reminder that kids DO understand if there’s financial trouble. If Mom or Dad are off work because of the covid pandemic, you can, should – actually must – talk to your kids about it. Make it age appropriate, but do make it a conversation. This beautiful note is from one boy for his Mom.

What Are the Odds You’ll Win At These Financial Issues?

Let’s set some odds of whether these things are likely to happen:

-The Canucks winning the Stanley Cup next year?

-Your son, daughter or grandkid getting a good deal on buying a vehicle? The typical sales person sells three or four vehicles a week. Your son, daughter or grandkid buys three or four in a lifetime.

OK, how about getting a good deal in the dealership finance office? There are usually two business managers, so they see 3 or 4 customers a DAY. They’re former sales people who are 100% on commission and your 18-30 year old has no idea of what they need to avoid, or ask, or even understands a lot of what they’re being told or are signing.

-What are the odds they’ll get a better than most people deal with anything at their bank? I bet the odds are tiny. If you don’t believe me, just google all the bank investigate reports of rip-off under: CBC Go Public. You’d be amazed how easily they can sell them an overdraft they’re stuck in for a decade or more, a service charge package that’s overpriced, or a line of credit they’ll have for an average of 16 years.

A new JD Power survey found that eight out of 10 people want financial advice from their bank. That’s way too many and from the totally wrong source! The staff of financial institutions are on commission or bonus pay! They are sales staff – period. That is not the people from whom you should want – or should get – financial advice if you want it to be of benefit to you versus them! Big commissions, big fees, annual fees, low returns, selling you an overdraft, or another credit card, aren’t likely what those eight out of 10 people are looking for, especially your 18-30 year old.

-Credit cards: Millennials tend to use their debit card more than a credit card, and that’s a great thing. But what are the odds they’ll shop around for the right credit card versus just being sold the one from their bank?

Credit card marketing staff consists of some of the best marketing minds in the country…your graduate has never had a credit card in his or her life… Having one is so convenient and always lets them buy today and pay…well – whenever…until they reach their limit and then their statement will show that little line hidden on there: At minimum payments, it will take 27 years to pay off your balance.

Victory doesn’t happen in the game – it happens in practice. The same way, financial wins aren’t in retirement – they’re in your today actions.

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

Can You Check Your Adult Kids’ Credit Card Statement?

Last week, I was asked a really good question: Does a parent have the right to see their son or daughter’s credit card statement and get personal financial information from them?

Well, that depends. How did you raise your kids? Will their mindset be that my parents care, or that you’re just going to go nuts on them? Do they trust that you’re non-judgmental and coming from a mindset of wanting to help or just criticize? In my opinion, if they don’t want to show you – you have all the answers you’re looking for already! If it were me having an adult kid living in my home, eating my food, sleeping in my house, it’d be part of the written (yes – written since they have memory problems at times..) rules for living at home!

If you want to make sure they will share financial stuff, you need to make money, budgeting and savings a conversation starting at age 5 or 6. You need to start at age 15 or so by showing them one of your credit card statements. OK, maybe not the big one, but one of the smaller ones. Show them the limit, the rate, balance, minimum payment and that box which shows: at minimum payments, your balance will be paid in full in 28 years!

There was a study a few months ago that showed 75% of parents don’t and won’t talk about money with their kids. That’s just stupid as it’s setting them up for guaranteed failure as adults. So this 75% of parents just set them loose at age 18 and wish them luck figuring out financial stuff?

Before it even gets to that, make sure they read the It’s Your Money book chapter on building credit. If nothing else, it’ll make sure they do it right, do it inexpensively, and do it without you risking everything you have to cosign for them!

Teens and Money (Or Lack Of)

Your money rules in the house and for your teens will set their template for decades to come. That is, if you have a backbone, you mean it, and enforce it. That’s even more critical when parents are separated or there are grandparents with money around.

When you have rules for money, there’s no confusion because the rule is set. If you rob a bank, you’re going to jail. That the societal deal. It’s not confusing, it’s not a sometimes thing, and it’s pretty black and white and everybody knows it and abides by it – there’s no confusion.

With your teens, especially girls, there needs to be a clothing budget. You set the number and that’s it. It’s YOUR money. $100 a month, every two months, or whatever you pick. If you kid wants to bargain shop, that could buy four, five, or six things. If they want to impulse shop or buy the latest and coolest, the money will be gone in 30 seconds.

You need to remember that the best sales people in the country aren’t born. They learn at home manipulating their parents! Every teen has a wish list of 50 things they absolutely have to have. If it’s your credit card, why not. If you give them a $100 Visa gift card, watch how magically 45 of these things aren’t important anymore – because it’s their money and it’s a fixed amount! Try it – you’ll be amazed how their thinking and priorities totally change.

When it’s an expensive purchase, give them the option of buying it right now, with their money, or waiting until Christmas. You’ll see that waiting will become a lot easier if those are the only  two options. Plus, if they’ve paid for it themselves, they’ll be a lot more careful with it and it’ll probably double the lifespan before it’s wrecked or lost. Last year a lady from Penticton emailed me that her son had busted his phone screen for the third time. She was asking what to do? Well, she’s paid it three times – so keep paying…If the money rule is that she buys the phone and he pays for downloads and fixes, watch how careful he’ll be with it. If not, that $100 fix will just happen once…with his money.

Even if you can afford to buy everything your kid wants, you’re destroying their financial future if you do! In their 20s and 30s, they won’t be able to afford that lifestyle with their own money. That leaves two choices for this generation: Get it with borrowed money or you keep sending them a cheque. Because the third option of radically changing their lifestyle is almost impossible if you’ve set the template for over a decade at home.

Set the limit, set the rules, communicate them clearly and stick with them. The real gift you can give your kids or grandkids is not this one purchase or another. It’s the lifetime gift of teaching them how to handle money, budgeting and priorities.

Adult Graduation – To Financial Success

We’ve talked about graduating high school and graduating out of college in the last few weeks. Today, let’s talk about adult graduation. It’s not about school – it’s about graduating to financial success. You may be 30 or 55 and haven’t really gotten to the point of managing your money and finances – instead of your money running your life. When you graduate is up to you – the sooner the better. There’s a great Chinese proverb: The best time to plant a tree was 20 years ago. The second best time is right now.

Adult graduates make a financial plan and follow it. Kids do what feels good in the moment. It’s called delayed gratification.

Adult graduates have discipline in choosing between what you want now, and what you want the most.

Adult graduates actually practice what they teach their kids or tell coworkers at lunch that they ought to do. News flash: Your kids emulate what you do and not what you say and have you ever noticed it’s all the broke people that want to give you financial advice?

Adult graduates don’t just focus on the immediacy. They don’t get conned by the 0% headline.

Financially successful grads live on less money than they earn. That’s Money 101 – if not – they’ll never graduate. They have a game plan and serious goal of getting out of debt, starting with their smallest bill and working their way up. These graduates slowly start changing over from paying everything on the planet by credit card to moving over to a debit card. That’s changing their life from living on debt to living off their chequing account balance.

An adult graduate will have read at least two books on credit, finance and investing. It’ll make them more money-smart than 95% of the population and yes – smarter than most bank employees – honestly!

And a small group will graduate with their financial PHD: They’ll have at least one week of net pay in an emergency account, and set aside one-twelfth of their annual bills for Christmas, property tax, car insurance and the likes in a separate savings account.

Are you graduating one financial class or a bunch of them? Is this the year you want to get your financial PHD? I’ll never know how many adults will graduate sometime this year. I hope it’s you – you’re worth it – it’s worth it. But I can’t fight harder for you than you’re prepared to fight for yourself…

Happy New Year – But Will This Year Be Any Different?

If you haven’t made many or any New Year’s resolutions – congratulations. There’s a good chance that those who have, are half way done breaking them in the first week anyway. It’s a bad time to make them based on societal pressure. But you do need some goals, at least for your financial life.

Write down some financial goals for this year. Whether you start them this week or next month is up to you. They’re goals and a game plan and not throw-away New Year’s resolutions. However, your goals have to be in writing. To paraphrase a quote from Larry Wiget: Nobody ever wrote down a plan to be broke, overweight, or lazy. Those things are what happens when you do not have a plan.

This year, write at least five benefits with each -that’s the part which will motivate you to stay on track. For instance, if your goal is to be credit card debt free, it’ll be pretty easy to come up with five huge benefits that’ll come as a result: No more monthly payments, it’ll be like getting a $300 raise in not making those payments. It’ll save you x amount of interest a month. It’ll boost your credit rating that’ll get you lower interest rates on other borrowing, frees up all that money to now go into savings or towards another debt that’ll get cleared off a lot faster now. That’s six easy blessings right there.

Things only change when you change, and not when the year and the calendar changes.

A huge 2014 gift to give to yourself is to set up a savings account for your annual bills: Add up your property tax, insurance, what you spend on Christmas, your vacation and whatever bills you only have once a year. Have your credit union take one-twelfth of it out of your chequing account automatically and transfer it to this new savings account. You can’t imagine how much financial and debt stress that’ll relieve when you’ve always got the money for these.

The gift of not being stupid and thinking before buying or signing: That so-called free cell phone is over $1,000 when you’re forced into a two-year contract. Get a free TV if you just sign this three year contract. Stop and think that the ad should say: Get a $290 TV when you spend over $3,000.

A gift that will keep on giving for more than 60 years: Teaching your kids about money and savings. But it’s about what you do, not what you say. Start today away and give them three jars or piggybanks: Whatever money the receive goes equally into the three jars: One for saving, one for giving, and one for spending. As they get older you can change the distribution, but start somewhere and sometime soon!

You’ll only achieve your goals if you have a written and specific plan, and if your drive to achieve these goals is stronger than your excuses or thoughts of failure.

What I wish you for 2014 is that you choose to opt out of the North American way of life: Spending money you don’t have, buying stuff you can’t afford, to impress people you don’t really like.