Teaching your kids financial responsibility

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tRidiot

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My son is about to turn 10 and we just bought a program for him from Dave Ramsey for kids to begin to emphasize financial responsibility and learn how things work. We have explained to him that we have a massive amount of debt that we never wanted or intended but allowed ourselves to get into through some poor decisions. We've explained to him that credit cards are a bad idea for any reason and we intend to teach him to manage his money and work hard so he never "needs" one or uses one. Also we've explained he should never have any need for student loans, which I also feel are a predatory lending tactic similar to credit cards and that he should be able to pay for at least undergraduate degree(s) without going into debt - through our current college savings account, scholarships and hard work while in school. He is beginning the grasp this - I used the illustration that without student loans, we could take a large family vacation to Disney World and stay at the resorts for an entire week every single month if we didn't have student loan debt. That kinda opened his eyes a bit!

So what did you guys do to teach your kids this stuff? Specific examples would be great.

Our neighbors recently went out of state for a week and they asked him to feed their dog and cat (no catbox, it goes outside through the pet door or uses the toilet) and water their plants while they were gone. They initially offered him $5/day to do this, but we told them we thought that was way too much for such a simple task and negotiated downward to $3/day. They eventually ended up paying him $40, which is even MORE than $5/day. <sigh> We didn't want him to get into the idea that it is "easy" to make big money ($40 to him is a FORTUNE), we want to instill a work ethic.


Currently he gets $5/week for doing some simple chores - NOT an allowance! and when he's begun asking for some bigger toys, we've started offering him options of additional tasks to do around the house to improve his income. So far, he hasn't done much of that, but I'm hopeful that as he finds more things he wants, he'll take to work a bit more. He spent $30 on a crappy remote control helicopter from WalMart which I warned him was a bad idea and it would be a disappointment - and it was. It didn't work for crap, which is what I warned him. So now he's taking it back, and I hope he'll learn a lesson from that.

So hit me with some ideas.
 

tRidiot

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Oh, we make him put 50% of what he earns into savings for college. And we also make him go through before birthdays and Christmas and clean out a good portion of his toys which we either donate to the Angel Tree or take down to the local shelter. Or give to friends who could use them. He's pretty good with that and it isn't a hassle. He loves to give his old stuff away. He knows he's making room for new stuff! lol
 

Okie4570

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The Dave Ramsey for kids is good, there's a middle school and high school version too. It's being taught as an elective class at my daughter's school starting with 6th grade. We've just been open with our kids on why we work, spend, save, invest what we do........as much as their age allows. Every personality is a little different too, I'm more of a spender than my wife, as is my son than my daughter.
 

tRidiot

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The Dave Ramsey for kids is good, there's a middle school and high school version too. It's being taught as an elective class at my daughter's school starting with 6th grade. We've just been open with our kids on why we work, spend, save, invest what we do........as much as their age allows. Every personality is a little different too, I'm more of a spender than my wife, as is my son than my daughter.

I'm definitely more of a spender than my wife, too... as the guys at Fat Boy Tactical can verify!
 

swampratt

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Sounds like you are doing the same exact things we did for our children.
Made them work and save and they purchased their wants like the crappy wallyworld toys.. Figured they learned .
Both kids had saved into the thousands before they were able to drive..
Then they met girls and friends that smoked.. They do not read the fine print in rental contracts. They will now before signing.
And you can change things in the contracts you sign if the other party signs it also.


School of hard knocks teaches them well. I think always having money kind of spoiled them (they worked for it).. once they got out in the real world
Things got tough or their priorities were off kilter when the girls and bad influence friends came into the picture.

Teaching money sense is easy. Teaching the fit in to the crowd people are users type of thing will need to be taught even more.
I never gave into peer pressures, never had a crowd I felt I needed to fit in with.. I floated my own boat down my own river.

Good luck to ya!
Teach him well.
 

Cohiba

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#1. That money is not the root of all evil, it's what people do with or how they use tue money in a negative fashion that's evil.

#2. Unless you're a millionaire, you need credit. What I mean by this is; unless you have an almost unlimited amount of money, you need credit. You need a good to great credit score for loans (homes, cars, farms) and to maintain low interest loans and credit cards. If you have a lot of money...then you can have a low to no credit score..because you have the reserves to back up no credit.

#3. Learn, learn,...did I mention learn patience and temperance with credit. Know the difference between a want and a need. Know that if you put it on a credit card pay it off.


Credit and credit cards are like owning guns. Use them when you need to (at the range or protection) but don't go wild and crazy with them...it will get you in trouble.


****Always pay your debts****

In my life, by having excellent credit I have been able to negotiate low interest loans, low interest credit cards, and avoid loan insurance on several loans I've made to buy homes.

Good...well really excellent credit is like a seat belt in a car. It's great to have, use, and when you do need it you've git it.
 

vvvvvvv

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#1. That money is not the root of all evil, it's what people do with or how they use tue money in a negative fashion that's evil.

#2. Unless you're a millionaire, you need credit. What I mean by this is; unless you have an almost unlimited amount of money, you need credit. You need a good to great credit score for loans (homes, cars, farms) and to maintain low interest loans and credit cards. If you have a lot of money...then you can have a low to no credit score..because you have the reserves to back up no credit.

#3. Learn, learn,...did I mention learn patience and temperance with credit. Know the difference between a want and a need. Know that if you put it on a credit card pay it off.


Credit and credit cards are like owning guns. Use them when you need to (at the range or protection) but don't go wild and crazy with them...it will get you in trouble.


****Always pay your debts****

In my life, by having excellent credit I have been able to negotiate low interest loans, low interest credit cards, and avoid loan insurance on several loans I've made to buy homes.

Good...well really excellent credit is like a seat belt in a car. It's great to have, use, and when you do need it you've git it.

This.

A huge advantage of great credit is lower home and auto insurance rates.

The only real disadvantage is the dozen or more credit card offers in the mailbox every day.
 

donner

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#2. Unless you're a millionaire, you need credit. What I mean by this is; unless you have an almost unlimited amount of money, you need credit. You need a good to great credit score for loans (homes, cars, farms) and to maintain low interest loans and credit cards. If you have a lot of money...then you can have a low to no credit score..because you have the reserves to back up no credit.

#3. Know the difference between a want and a need. Know that if you put it on a credit card pay it off.

Agreed, this. Credit and loans are only bad if you let yourself get into trouble.

Also, i disagree that students loans are bad per se. There are very real needs for them and the vast majority are used without penalty each year. The problems come in when they are used to pay for school, rather than assist in paying for school. By that i mean that having a realistic understanding of how much a loan will cost over time and how much that cost will burden you is part of being good with money (and really isn't much different than a home loan).

I had a roommate who took a low-paying internship one summer in college. He used a student loan to offset money he would have made to pay for the upcoming semester. But he was smart and realized that the loan amount was manageable and that his internship would put him in a better position to get a job after graduation (which it did).

My other roommate took out loans to pay for school and the promptly got caught up in 'college' and failed out of school. He is saddled with a good amount of debt and worse prospects for repaying it.

The loan is a tool and can be used correctly or incorrectly.
 

SPDguns

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You are of to a good start. You will need patience. The Wal-Mart helicopter was a good learning experience. Part of teaching them is to let them fail and learn on their own, a lesson they can only learn themselves.
 

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