As I reflect on another Father’s Day, it brings back memories of June 2019…
In May of 2019, my daughter graduated from the University of Arkansas and decided to launch into life with a move to Boston, MA – far from our home in Frisco, TX. As we packed her things and prepared for the three-day drive together, I thought about how I wanted to best spend this last bit of precious time together. As usual, my precocious daughter surprised me… but more on that in a bit. As I think about how much she has grown over the past year, I also thought back on the lessons I taught her about money, finances & credit. All of them stem from this one philosophy:
Good money skills don’t come from the financial equivalent of the tooth fairy – you don’t get them when you turn 14, 18 or when you graduate high school or even college. Money skills are developed through learning and practice. These skills are nurtured by parents as they allow for age appropriate decisions and consequences. Empower your kids with discretionary spending money (that fits your family values and budget) so they can practice, make a mistake, and learn from it. It also means being willing to admit if you don’t know, roll up your sleeves and learn something new together! Here’s how I used this principle over a few points in her life:
Start Learning Early – if they’re in elementary school, they can learn about money
By the time my daughter started elementary school, she had a few chores each week for which she got a small allowance, and she might get the odd $10 bill in an Easter card from her grandparents. Instead of a piggy bank, we went forward looking and with the ubiquity of debit cards; I created, “The Bank of Dad.” Using an old hotel key card, I made a make-believe Bank of Dad debit card and she opened an “account.” Here’s how we did things at my local branch:
- Having money meant taking care of it – while all age appropriate, she had responsibilities. When she got that Easter card or other cash, I helped her fill out pretend deposit slips and I would be the teller and “receive” her cash. I would watch her do the math to record the deposit in her account register, so she’d know how much money she had in the bank. She would have a savings account and a debit card account. If we were at Target or the like and she wanted to buy something we’d have a discussion about how much money she had in her debit account (I always had her balance noted with me). At check-out, she “paid” me with her card and when we got home, I would enter the transaction in the register, and she would have to update her balance. We would talk about what big thing she was saving for and how much it cost, and she could see the steady progress of working toward her goal.
Practice Makes Perfect – The Middle & High School Years
As soon as she was old enough, we went with her to open a set of debit and savings accounts so she could practice with a real bank.
- As a long-time Bank of Dad customer, she was definitely ready. 12-year-old girls hate having to ask their parents for anything, so to say she was enthusiastic about the idea is an understatement. With our bank, the account was connected to a parent’s account, so we had visibility into everything. At the start, we sat down and introduced the basics of a budget. We talked about understanding how much she “made,” how everyone needed savings for an emergency/rainy day, and how to also save for something “big” like those fancy new embroidered and bedazzled jeans she just *HAD* to have. We also increased her allowance so she would have more practice as well as increasing the list of things she needed to be in charge of funding. Going to the mall with your girlfriends and you want to join them for the latest Starbucks seasonal concoction – welcome to the world of deciding if that fits in your budget! Once she started driving, she had to budget to make a symbolic but meaningful contribution to the car insurance bill every month (I’m not sure any teenager could afford that entire increase, but that’s a topic for another time). We’d occasionally peek at her statement to see how she was doing, but mostly left her to learn the hard lessons of “too many Frappuccino’s with your friends, so you can’t buy those jeans” lessons.
Things can seem complicated – Don’t be afraid to ask for help
401(k), 403(b), HSA, FSA, student loans… it can be overwhelming, but just like eating that “elephant,” take it one bite at a time.
- Back to the great Boston road trip of 2019 – I had decided I’d have a whole selection of podcasts and music to listen to, and we’d just have fun on the three-day drive. Much to my surprise on the first day somewhere a few hours outside of Nashville, out of the blue she asked if I could help her fix a spreadsheet she made because she wanted to try and pay off her student loans early but couldn’t make the formulas work. If there’s anything that makes an accountant parent happier than hearing “Hey dad, will you check my spreadsheet?” I just don’t know what it is! Of course, I said yes, and we sat down, and I had her walk me through her calculations. Turns out she was very close but having her do the work and walk me through it, made fixing her error make sense to her and empower her. Spreadsheets are second nature to me, but when she came back a couple of months later with “I have to enroll in benefits at my new company, which health insurance plan should I choose, what’s an HSA, do I need a 401(k)…” I needed to roll up my sleeves as well. We learned about her company’s offerings together. We took that enrollment “elephant” and we ate it one bite at a time. I showed her the power of the 401(k) and gave her my thoughts on her health plan choices She made a spreadsheet (YAY!!), compared the costs, and took a couple of questions neither of us could figure out to her HR group. In the end, she made a great decision that fit her young life. She even sent me an updated version of the student loan spreadsheet where she now can see how much earlier she will be done with her loans if she paid an extra $20 a month! As Crosby, Stills & Nash said, “Teach your children well” indeed!
Hope everyone enjoyed a great Father’s Day this year!