A Broke NationAmericans are up to their eyeballs in debt. USA government debt tops $18 trillion (that’s with a “T”!). Student loan debt is almost $1.4 Trillion. Personal consumer debt hovers close to $3.5 Trillion. Car loans: $1 Trillion. Mortgages: $8.25 Trillion. Total household average debt is over $130,000. If we Americans can finance something—from sofas to sea crafts—we will!A disturbing side trend is the paycheck-to-paycheck living of many American households. The average American family has only around $4000 – $5000 saved, with 25% of households having no “rainy day” funds at all, and over one-third of households having no savings at all for retirement.
I look at this trend and immediately start thinking of my kids, twin sons aged 9 and a 5-year-old daughter. As a Good Dad, what do I want my legacy to them to be, and how can I train them to make wise money decisions?
I’ve found three lessons I want to be sure my kids know, so that when they grow older they will prosper and be able to help others regardless of what happens in the future.
Money Comes from Work
My kids don’t get an “allowance.” Allowances are made for those who cannot help themselves. My kids are all healthy, vibrant, and able, so there’s no need to make an allowance for any of them.
In our house, we pay commissions. Work equals pay. No work equals no pay. There are also chores they do for no pay. They’re part of the family and contribute time and talent because that’s what Whitings do.
Let’s not kid ourselves: the value of the work young kids do probably isn’t worth what we pay them, but that’s not the point. The point is to teach them that money comes from work. That always means trading something of value whether it is time, skill, labor, thinking, or a special talent to someone else in exchange for the value offered to another person.
Money is a Tool
Money by itself doesn’t do anything. Financial advisor Dave Ramsey says that money is “amoral;” it isn’t good or evil. He illustrates this with the story of a brick. You can pick up a brick and smash a plate-glass window, or you can lay it together with other bricks and build a hospital. The brick doesn’t care; it’s just a brick.
Good Dads don’t want their kids to be caught up in accumulating money for the sake of having a fat bank account, and we certainly don’t want to see them using money to hurt themselves or other people. We want them to learn that money is a tool that has many worthy purposes. It’s up to them to decide how to use it wisely.
Using the “Money Tool”
Ask my kids what are the things we do with money and they’ll respond, “Spend some, save some, and give some.”
Spending includes daily, weekly, and monthly expenses. At their age, it’s mostly just fun stuff or special treats. We still feed, house, clothe and provide them all the other standard daily living expenses. What I hope to teach my kids is that there are choices to make when buying things they want. Good Dads want to see their kids make wise, thoughtful choices on how they spend money, because we hope some day they’ll move out and we can turn their bedrooms into a nice office or media studio! Well, maybe not, but we all want to see our little eaglettes fly and be free.
Saving is still at a fairly simple stage. My kids have piggy banks at home, and every time they save up around $50 we move that into a bank savings account. This is for bigger ticket purchases, such as a new video game system or an i-Gadget. What a great teachable moment! We talk about how banks work, how interest accumulates on the balance, and the difference between deposits and withdrawals. Most importantly, however, the kids are getting into the regular habit of saving a portion of each “payday.” As they get older, we’ll start talking about the more complex aspect of saving, such as investing to grow wealth.
Giving needs to be taught. From an early age my kids have learned that part of each commission payday is set aside to give. My wife and I discussed it and set the giving amount at $1 out of $5. That’s 20%, a pretty hefty chunk! Amazingly, my kids still have a healthy cushion of saving and spending money. Generous people are kind, thoughtful, and not self-seeking. I believe people with those qualities will enjoy more opportunities in life because they learn to focus on other people, and that trait is rewarded whether one works for an employer or serves his or her own customers in a business.
As Good Dads, we want our kids to use the resources they’ve been given to provide for themselves and to grow into generous, kind people. This kind of training doesn’t happen by accident, so it’s up to us to give them the solid foundation of financial responsibility.
Sid Whiting is the father of three and the husband of one. He lives with his wife Gail and their children in Springfield, Missouri. He also enjoys real estate investing, serving in the 135th Army Band as a percussionist and bass guitarist, and plays in the Praise Band "Soul Purpose" and the "Hallelujah Bells" hand bell choir. He can be reached for comment or question at firstname.lastname@example.org or on Facebook (www.facebook.com/WiseSteward).