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Financial pressures are one of the top reasons for the breakdown of relationships. Faced with debts, mortgage payments, bills and keeping children fed and clothed, couples can become stressed and begin to take out their angst on each other. Worse, they can even blame each other for the pressure they’re under, or accuse the other of not pulling their weight. Before you start throwing plates at the walls and storming off to slam doors, check out our guide to getting through it together.

1. Work Together

If one of you is shouldering most of the financial pressure, eventually you’re going to blow your lid. Just because one of you might be the main breadwinner doesn’t mean you shouldn’t discuss your financial worries with your partner. Talking through financial problems will help share the burden, meaning that the breadwinner will feel less resentment towards the other partner. Equally, the other partner will not feel left in the dark about the family finances. Talking through issues together might also mean that you find a solution more quickly; after all, two heads are better than one.

2. Draw Up a Budget

It seems obvious, but often, a good solid budget is something that struggling couples overlook. Instead, many cut back randomly on this or that, without looking at the big picture to see where the biggest savings could be. So, it’s better to sit down and go over a whole month’s income and expenditure to figure out where the hole in your pocket is. Doing this together is vital for your relationship. One partner simply telling the other to stop buying brand-name baked beans or going to the pub is likely to breed resentment.

3. Make Sure You Both Treat the Kids the Same

If you are parents, it might be an idea to talk about what you both spend on the kids, and how. In most cases, parents pay for things for their children out of joint accounts with each other’s knowledge, but think about less formal spending. Does Daddy slip the kids extra pocket money? Has Mum been giving in to pleas for new toys before birthdays or Christmas in secret? This can be one of the toughest conversations of all, as nobody wants their children to go without anything, but you need to make sure you know how much you and your partner are both spending on them to keep it under control. It’s unhealthy for children when one parent says “no” to a new skateboard, whilst the other buys it for them. This will help your children appreciate the value of money much more in the long run, too.

4. Be Prepared for Career Changes

Different couples approach working and earning differently. In some relationships, one person is the main provider, in others, one person does not work at all, and sometimes both earn around the same. Be prepared for some tough conversations about work. One of you may have to find more or better-paid work. If one of you does not work, perhaps it’s time to start thinking about returning to the work force. This can be a delicate situation; if one partner has not been working for a long time period, returning to work can seem daunting. The partner in the relationship who has been the main provider might feel as though they have let the other down for not being able to keep the household afloat. It doesn’t need to be that hard, though; work through the conversation together with tact and without accusations, and you could find a way out of debt.

5. Get Some Help

Sometimes you can’t work out problems with your partner because you are both too close to the issues to see straight. If you’re struggling financially, see a financial advisor, and go together to hear advice and make decisions. Likewise with your relationship. If financial pressures are driving you apart, fixing the money issues might not fix your relationship, so seek guidance on that too. You’ll be relieved to know that hundreds of couples seek relationship guidance every day; and it can be done cheaply, too

Post by Frugal Dad

Many future parents are worried about the costs of raising children.  I certainly was.  However, with three little kids running around my house, my wife and I have discovered that there are some simple actions or attitude changes that greatly reduce the cost of raising children.  Since our family decided to live on one income, it became necessary to minimize our expenses.  We have practiced (or currently follow) all of the ten suggestions.  It has literally saved us thousands.

1. Consider cloth diapers

My four year old is old enough to know it’s nasty.  Recently, my four year old inquired, “Mommy, why are you putting your hand in the toilet?”  Mommy explained, “Because I need to rinse out your sister’s diaper.”  To which my daughter responded, “That’s nasty.”  It might be nasty, but it sure is cheap.  36 diapers and $50 will give you a 6 – 12 month supply.  By the way, if you are going to go with cloth, consider a Snappy (replacement for safety pins).  I never quite got the old safety pin thing.  They require focus, determination, and a lot of luck.  Cloth diapers would never have worked if a friend did not point us in the direction of a Snappy.

2. Forget your brand allegiance

Seriously, do you think your baby will be happy just because they are wearing Huggies?  Perhaps children who are washed with Johnson and Johnson body soap will be more adjusted in adulthood.  Everyone knows only Carter kids enjoy their childhood.  When it comes to babies, brands really play the trust card and leverage love.  Brands want you to ask yourself, “You do really love your kid, right?”  As a result, we feel like if we love them we need to give them the best so we somehow think spending more money on them is giving them the best.

3. Buy used furnishings

When we were expecting our first, we went and bought a used crib and change table. Some folks were concerned about the safety because standards change and we didn’t know the condition of the items.  Seriously, what is going to happen if the baby’s crib breaks and she falls a foot to the ground and lands on a mattress?  I think worse things will probably happen.  By the way, our third child is now enjoying the same furniture and it is still holding up.

4. Reuse items for all your children

I am the youngest of three boys.  I got used clothes.  Now that I am all grown up I still buy used clothes.  I don’t think I am “damaged” because of the experiences.  Until you know that you are done having kids find a place to store all your baby products, toys, and clothing, because they will come in handy again.

5. Network

You are probably not the first person who ever needed a crib.  In fact, there is probably someone at work or church who has a last child growing out of a crib.  They want nothing more than to find a good home for it to open up some space in their room.  Take notice of families who are a stage ahead of you and let them know if they are ever interested in selling used items that you would appreciate being notified.  We got our first car seat from a friend whose last baby outgrew his car seat around the time our baby was born.  Our rocking chair was given to us from a teacher friend who didn’t need it in the classroom anymore.

6. Trade services

One of the results of fatigue is increased spending. Typically, things that are more convenient cost more.  After a busy day and a cart full of crying kids you are more likely to find convenience foods.  Consider asking someone to take your kids for a while in exchange for taking theirs at a later time.  This time could be used for grocery shopping, catching up on house cleaning, and yes, just resting.

7. Skip the Happy Meal

Does a two year old really need all that food?  What we do when we head out is get a cheap sandwich, cut it in half and have the kids share fries.  The advantage is we save money, save food, and the kids leave full (which, by the way, is the goal of the fast food dining experience).  The disadvantage is that the kids don’t get a little toy that they will play with for about 6.8 seconds.

8. Focus on creating memorable experiences

Once a week we used to take our kids to a sit down restaurant because we wanted to have a special experience.  On my day off we have a family tradition of eating lunch on the porch.  One day our daughter said she likes eating on the porch much more than at the restaurant.  We learned a valuable lesson that spending more does not mean it is more important to your children.

9. Understand the relationship between toddlers and toys

Our bathtub is full of cute little bath toys.  We have a pudgy little pig that squirts water.  There is the happy hippo.  And of course, the cute cow.  In order to wash the kids’ hair we have a plastic cup we got with a meal at Olive Garden and a free promotion plastic cup I got from some event.  Want to know what the kids love to play with?  The cups!  Sometimes they also fight over an empty liquid soap container.  Kids are so creative and naturally playful that they can play without a ton of toys.  We have a Rubbermaid container where we store their toys.  The rule is that all the toys must fit in the container.  If they get new toys, then something from the toy collection must be given away.

10. Set appropriate gift boundaries

From the start, sit down with your spouse and decide on the function of gifts.  I know that sounds silly, but why do you give gifts?  What do you hope to communicate?  What does it reveal about yourself?  Gift giving expectations are created; they are not naturally there in children.  If you give large gifts (beyond your means) each birthday or Christmas, the kids will expect just as large of a gift.  You may need to cut back on gifts.  Remember, cutting back on gifts is not cutting back on love.  You can still show your children love and not give expensive gifts to them.

Post by Frugal Dad

My kids occasionally receive a little birthday money themselves, along with gift cards and other small presents from friends and family. Since it is their birthday, we let them take a little bit of money to the store and pick out a toy or game that they’ve been wanting. But we like to encourage them to save the rest of that money in a variety of places.

Local savings account. Savings accounts at a local bank or credit union are practically a financial rite of passage for kids. While they don’t offer particularly good rates, local savings accounts do offer a great way to introduce kids to banking. Take them along and let them fill out the deposit slips and update their balances at home.

Online savings account. As kids get a little older introduce them to online savings account to score a higher rate on their savings, and to take advantage of other features. I like ING Direct (read my ING Direct review) online savings accounts because they update accrued interest daily on their savings dashboard. It’s a powerful lesson on compounding interest for kids to see money being added to their bank account as they sleep.

529 college savings plan. Most kids are not worried about paying for college until it comes time to pay for college. So I think it is a good idea for them to contribute a little along the way. Invest a little of this “found cash” for your kids in the best 529 savings plan you can find.

Savings bonds. My kids received some savings bonds when they were little to “put up for college.” Later, I convinced the person that gave them to let us convert them to cash and send to the kids’ college savings funds, where I hope the money will get a better return. Sure, they are interesting and colorful and all that, but apart from novelty there isn’t that makes me want to buy and hold them for the kids over the long term.

Individual, kid-friendly stock. I generally dislike the idea of picking individual stocks because I am not good at it, and because I worry over diversification. However, I think it is safe to take a small percentage of your portfolio, say less than 10%, and invest it in a handful of individual stocks you know something about. Same goes for kids. Not long ago we invested a little money in two companies kids are familiar with, McDonalds and Disney. Later, we might add Coca Cola and Mattel to the mix. Be sure to reinvest those dividends, and hold the stock for the long term.  Who knows what a few hundred dollars invested in Microsoft twenty years ago would be worth today.

Where do your kids park their “birthday” money?

Post by Frugal Dad

I like the idea of breaking up financial lessons by age group, recognizing of course that some kids “get it” before others, despite their age. For instance, my daughter is fairly money-savvy and back when she was just seven or eight could explain in adult terms what a mortgage was, how taxes were collected, etc. She probably got that from hanging out with her frugal dad.

My son, on the other hand, at five years-old, is more interested in a shiny penny than a paper dollar.  He’s yet to recognize the differences in currency (despite our best efforts). Actually, I think he does understand it on some level; he just likes shiny coins.  Who could blame him?

I’ll include the age brackets below, along with the suggested lessons from the Money article, but as usual, I put my frugal spin on the ideas as well.

Ages 5-9: Teach Basic Money Skills and Develop Work Ethic

Assign simple chores. Chores in the frugal household have evolved as the kids grew older. When both kids were small they were responsible for making their beds in the morning, and taking dirty clothes to the laundry room. My oldest, now ten, helps set the table, unload the dishwasher and put away dishes, put away clean laundry, and is still responsible for keeping up her own room.

Start a weekly allowance. The younger kids are the more often they should get paid, because budgeting any longer than a few days is hard to do (even for some adults!). As kids get older, stretch their paydays out a bit so they get used to stretching out those dollars, too. My daughter is paid allowance every other week on the same day I get paid.

Talk about money decisions and values. My blogging colleague at Moolanomy recently shared a great thought on avoiding the phrase, “We can’t afford it.” I like the concept, and have caught myself using that same excuse with my children. Be honest with kids and tell them that if you spend money on a new Wii game, you won’t have money for the grocery store. Life, and money, is about choices and the opportunity costs of making one choice over the other.

Introduce the idea of charity. The best way to make your kids givers is to lead by example. Take them along when volunteering (when possible), and encourage them to allocate some of their allowance to giving to a cause they care about.

Ages 10-13: Kick It Up a Notch With Skills and Responsibilities

Open a savings account. Every kids should have a basic savings account, complete with a ledger for recording transactions. It’s a great introduction to banking, and the idea of compound interest. Help kids complete deposit slips initially, but encourage them to complete deposit slips themselves, keep up the receipt, and record it in their ledger at home.

Offer extra chores as a way to earn money. My kids often bring me a sales flier they’ve found sitting around and say, “I really, really want this new (insert latest Disney movie, lego set, etc.), but I don’t have enough money.” What a perfect opportunity to reinforce the idea of working for money. Find some extra chores around the house and offer to pay kids enough to help them earn the difference. My kids are familiar with the $0.05 per weed plan of helping Dad around the yard.

Raise allowance to cover more of your child’s expenses. One allowance hack my wife and I are introducing this upcoming school year is to include my daughter’s lunch money in her allowance. It’s my opinion that she buys her lunch too often, and I hope to encourage her to “brown bag” it like Dad usually does. It’s fun to eat out, or buy a school lunch once a week or so, but it is almost always cheaper (and healthier) to make something from home.

Ages 14-18: Coach Kids On Using Checking and Credit

Open a checking account; deposit allowance into it. In addition to a savings account for kids, teen years are a good time to introduce checking accounts. Encourage teens to deposit their allowance, and other found money, into checking and make appropriate contributions to their savings account.

Introduce debit or prepaid credit card and monitor (by 16). Along with a checking account, help your teen get set up with a debit card. I don’t advocate introducing teens to credit cards, but that’s a personal decision. Teens can accomplish everything they need to learn about using plastic with a debit card. Later, when they are earning their own money, they can apply and pay for their own credit card if they decide, but I would not let them use plastic and me pay for it. Kids need to understand the transaction behind shopping with a credit card, and using their hard-earned dollars to pay for the items when the bill arrives.

Encourage part-time job (by 16). I have mixed feelings on this suggestion. I’ve worked since the day I turned 16. I worked in high school, and all the way through college. While it was nice to have spending money, it was a necessity in college. Either way, it put a strain on my grades, and my social life (who am I kidding, what social life?).  The only time I didn’t work was during football season when it wasn’t possible to keep a job and practice. I would encourage my own kids to take up things like babysitting, pet sitting, lawn care, or a similar entrepreneurial service–it beats the pay from most retail or fast food outlets and they’ll have more schedule flexibility.

Ages 19-22: Set a Path for Financial Independence

Expand allowance to cover a semester (if in college). I disagree with this suggestion because a semester is a long time. Imagine if we had to budget our income on a quarterly basis, rather than month-to-month. I would extend allowances to no more than a monthly allotment which covers things like rent (if living off campus), some money for utilities and food, and a little for miscellaneous college expenses–you know, like pizza, iTunes downloads, and football tickets.

Provide financial help only if it fuels independence. We have a goal to gift a down payment to our kids when they get married (which may or may not happen outside of this age bracket). My wife and I married young, and could not afford a home for many years. I don’t agree with buying an entire home for kids, but helping them with the down payment seems like a way to help them get on solid ground early on.

Continue to encourage charity. Continue to lead by example, and encourage teens to make time for helping others. I was encouraged to hear about college students spending Spring Break along the Gulf of Mexico in the wake of Hurricane Katrina – not to party, but to help those hurting rebuild their lives. We need more examples like this, and it shouldn’t take a natural disaster to spur a giving spirit.

Post by Frugal Dad

I recently virtually met Prosperity 4 Kids creator Lori Mackey, who shares a passion for “empowering kids for a healthy financial future.”  I was immediately impressed with the quality of materials I found at her site, and she was kind enough to share a Money Mama Bank and accompanying materials with my kids.

One of the things I like most about the product is that it separates earnings into four categories, with a realistic division for kids.  After all, not many children will save 90% of their earnings and keep $1. 00 for spending – it just isn’t realistic.  The Mama Money Bank solves this dilemma by providing four coin slots for each category:

• Giving (10%) My kids are interested in a number of causes of their own, including cancer research (Relay for Life), Project Linus, and a number of school and church fund raising opportunities.

• Investing (15%) Many financial products for kids stop at saving, spending and giving.  I like that this system includes an investing “bank” because it helps kids think in a more long-term view.  I explained to my daughter that the difference between saving and investing is largely determined by the amount of time until your goal. My daughter is “investing” for her college education and her own car (which she fortunately is still several years from buying).  She is “saving” for two new music CDs.

• Saving  (25%) Again, the kids are saving for short-term needs that are a little outside of their allowance spending budget. Each week, my kids set aside 1/4 of their income for short-term savings goals.  These goals will ultimately convert to spending, but the beauty of this system is that is shows kids have to have the cash on hand before they can buy something – no debt!

• Spending  (50%) Our kids are allowed to spend what’s left.  Without allowing kids to spend some of their money they will quickly grow to resent the plan, much like adults get frustrated when they just got paid, but have no cash to spend.

*Note, the percentages above are not necessarily the suggested percentages, but work well for our family

The other materials Lori included from the Prosperity 4 Kids system included a workbook, a story book, Money Mama & The Three Little Pigs, which included a read-along CD, and an allowance chart.  All were high-quality, kid-friendly materials.  I was particularly impressed that the allowance chart included “cling-on” type stickers which makes the chart last much longer than paper stickers.

My daughter has been reviewing the workbook, Design Your Child’s Financial Future, and has provided a short review of her own:

My favorite part of the workbook is Millionaire Habit #7: The Power of Earning.  This millionaire habit is about kids starting businesses of their own. Some of the business ideas include a lemonade stand, babysitting, and pulling weeds in the neighborhood. I have helped my Dad pull weeds in our yard for extra chore money ($0.05 a weed!). To get started a child will save some money to buy supplies for their business. This part also includes a kids mini-business plan that includes a place for business name, who or what is my competition, how will I advertise, what problem does my business solve, and where will my business be located?

You will also get to ask people a feedback questionnaire which includes questions like how much you like their business and ways to improve. My friends and I are planning to open a lemonade stand in our yard now that it is summer to sell lemonade and other snacks. We are planning to use this workbook to create a business.

- Frugal Daughter

After reading my daughter’s review it occurred to me she is taking a more thoughtful approach to her business than I have in nearly two years of freelance writing!  I think I’ve found a new contributor here at Frugal Dad!

For more information, visit the Prosperity 4 Kids website, and Lori’s blog at TeachingKidMoney.com!  There is a wealth of resources at both places on the subject of kids and money.

Post by Frugal Dad

How often have you shopped with your little one and found the experience nightmarish because your child wants everything he/she sets eyes on?

My niece does this, and it gets pretty embarrassing when she throws herself down on the floor and bawls her heart out when her mom refuses to buy her something. But no matter how hard the tears flow, no matter how long the tantrum continues, it’s not good to give in to the whims of your young one. Besides the fact that you cannot afford to buy them all that they ask, it sets a bad precedent if they learn that they can manipulate you with just a few tears and tantrums. If you face similar problems with your child, here’s how you could try to convince your child to behave better:

• Mean it when you say NO: If you give in when your child begins to act up, the same routine is going to repeat itself every time you go shopping. Your kid is going to get used to the fact that a few tears are enough to make you relent and buy whatever he/she wants.

• Don’t try to make it up to them by buying something else: Besides being a financially foolish move, it does not give you the advantage you need when you go shopping. Children are perceptive, and that’s why they will soon realize that they can get something out of a shopping trip by crying hard enough.

• Forget the incident once you leave the shop: Don’t harp about it or go on about the way your child behaved in the mall or shop. This will only make them more rebellious and determined to do it again.

• Talk to your youngster: If he/she is at an age where they can understand money, tell your child that you cannot afford to buy them all that they want because of your financial situation. If he/she is just a toddler, use the line that the product they want is not good enough, and that you’ll buy something better.

• Remember that kids forget easily: Your child will most likely forget the incident once you get out of the shop and stop for an ice cream or snack or see a clown on your way home. That’s the best part about children – they don’t hold grudges.

Learning to say NO to your child, for their own good, is a great way to instill the value of money in them at a very early age. Once they know that they cannot buy indiscriminately, they will learn the art of saving and spending money more wisely.

This post was contributed by Kimberly Peterson, who writes about the accounting degree online. She welcomes your feedback at KimPeterson2006 at gmail.com.

Post by Frugal Dad

Throughout this period the idea of frugal living was but an after thought, and those who practiced it were made fun of mercilessly.  We were labeled tightwads, cheapskates, and other not-so-polite terms of fiscal endearment.  After all, people were too busy comparing their net worth to try to save a buck.

Enter the recession of 2008.  Suddenly, frugal living made a comeback.  It seemed the cover story of every major media publication featured some variation of “ways to save money” or “ways to survive the recession,” or proclaimed the reemergence of frugality.  Now (some of) those same people scrambling for bigger houses, fancier cars and higher capital gains are trying to out-do one another again by scrimping, sacrificing, and poking fun at people’s purchases.  Nothing is ever frugal enough.

Sometimes the act of scaling back is traumatic enough to a family’s finances–cutting things altogether would send them over the edge.  Take my family for instance.  Last year we decided to go one year without expanded cable television service.  I wanted to cancel completely.  My wife and kids pointed out the number of educational shows we could watch on PBS, and the poor signal reception we would get from an antennae.  We compromised, and decided to drop back to basic cable, reducing our cable bill from $46 a month to $12 a month.  We made similar compromises in other areas of our budget.  At the end of the year, we decided to resume expanded cable and cut other subscriptions and forms of entertainment.

Here lately, I’ve noticed a shift in public sentiment towards frugality, and I suspect it may be a form of frugal burnout.  When people get burned out with a trend in their own lives, they tend to resent others who they perceive to be sacrificing less than them.  Many people are made to feel guilty if they are not practicing a frugal lifestyle.  Others are so condemned for spending money that they are literally ashamed to be seen with bags from high-end stores.  Give me a break.  Have we really come to that?

First of all, frugality is not a competition.  People have different levels of tolerance for all things frugal.  Some people like air conditioning, others enjoy working on classic cars.  They choose to spend their money on things that others perceive to be frivolous.  But that is simply a personal opinion, and how you choose to spend your money says more about your personal values than your level of commitment to the frugal living movement.

Of course, many of us practice frugality for reasons besides monetary gain.  We enjoy simple living, and believe in being wise stewards of resources (natural, economic, etc.).  But what you choose to do with your money is up to you.  Bottom line:  Please don’t become a self-righteous frugalist!

Post by Frugal Dad

We are a family of four on a single (decent) income and strive to be frugal and sensible.  How much is OK to spend on the kids while we’re raising them, and when is it not OK to sacrifice financial security?

My oldest son has high-functioning autism. He is nearly five and will enter Kindergarten in the fall. He is brilliant (learned to read at two and can easily multiply in his head) but has poor social skills.The school district we live in has an OK reputation for special-needs kids and it’s overall a good school compared to others in the city. However he will likely have the usual struggles that autistic kids have in a mainstream school setting.

We have the option of enrolling him in a school for kids with HFA. The tuition is $7000/year or $777/month over the nine-month school year. This is ALL the extra money we have per month to put towards debt and savings. But the teachers are well-trained, the curriculum specialized, and the student-teacher ratio is 5:1. The kids all have soaring self-esteems which is rare for kids on the spectrum.

We also have a toddler who is home nearly full-time.

When do you go all out for your child, and when do you say no for the sake of financial security?

Thanks for your question, Susan.  This question hit home for me for a couple reasons.  In addition to having some experience coaching an autistic child in youth sports, my own son was run through the usual battery of testing and evaluations to determine if he has autism.  While no definitive diagnosis was made, we did discover a number of related issues such as sensory processing disorder, and we learned a lot about conditions such as Asperger Syndrome and other autism spectrum disorders.

I tell you this up front because my personal experiences probably taint my otherwise financially objective response.  I would do anything for my son, and while his condition is not overly disruptive to our daily lives, we have sacrificed a few activities and altered our routine to accommodate him.  Fortunately, few of those alterations involve the kind of financial obligation you are faced with.

Many parents face similar dilemmas when living in a bad school zone, and the costs of private school are prohibitive.  What makes your situation unique are the special needs your son’s educators must be able to address to help in both his social and educational development.  From the sounds of it, you are not completely confident you can find that in your public school system.

Taking emotion out of the discussion (as if that is possible when talking about our kids), let’s look at the financial implications of sending your son to his special school.  $777 a month is a significant obligation to take on.  When you break it down further, that amount represents roughly $200 a week in reduced spending, increased earnings, or some combination of the two.  While you could put your debt repayment and savings goals on hold, this would be detrimental to your overall financial plan, and could potentially place a financial burden on your kids as they get older and have to help you.

Instead, I would suggest you think of some creative ways to both come up with that extra $200 a week, and ways to cut your spending even further.  Could you cancel the cable?  Sell a second vehicle?  Take a part time job in the evenings?  Start a side hustle from home?  Adjust your tax withholding to prevent a refund?  It may take some drastic measures to drum up the extra money, but it sounds like you are willing to make the sacrifice.

I would also talk to the school about any scholarship opportunities, or employment opportunities for you that could reduce tuition (this might be particularly helpful when your youngest is in school full time).  Perhaps you could do some administrative work for the school, or substitute teach after being certified, or your husband, or another family member, could do some technology work for them in exchange for tuition. Solicit help from relatives.  Investigate options such as 529 savings accounts where grandparents, aunts and uncles can make contributions to your son’s educational expenses–and funds may be withdrawn tax free. I’m brainstorming here, and I realize some of these options may or may not apply.

The bottom line is to talk things over with your spouse and make sure you are in agreement with the decision.  That is half the battle.  Then focus on ways to make it happen, without doing irreperable harm to your own financial future.

Post by Frugal Dad

Helping children while we’re still here is one thing, but what about after we are gone?  If we have managed to build wealth throughout our lifetimes, should we pass that wealth along to our children, or is to do so to discourage them from becoming self-starters?  There is no right or wrong answer here, as much of it has to do with personal situations such as how you were raised, and how you came into wealth.

I do like Warren Buffet’s quote from a couple years ago, repeated in the USA Today article, Should kids be left fortunes, or be left out?  Buffet said about leaving money to kids, “wealthy parents should leave their children with enough money to do anything they want but not so much that they are doomed to do nothing at all.”

We’ve seen plenty examples of “doomed” kids, financially. Paris Hilton comes to mind, although she has managed to market herself as she got older to generate some of her own wealth, rather than relying solely on family fortune.  Of course, it could also be said that the last name Hilton has contributed to her success.

While I doubt I’ll ever have a fortune near that of the Hiltons, I do hope to have something to pass along to future generations.  And why not?  The money my wife and I leave our kids and grandkids could be a downpayment on a new home, or provide the seed capital for them to start a new business.  It likely won’t be enough to retire on, but I would like to think it would be enough for them to chase some dreams.

Often times we think of inheritances as opportunities for our kids to buy new sportscars, or a Harley, or a lavish vacation home.  The truth is that if we have managed to raise kids with many of our same frugal values, they will more than likely put that money to good use.  Imagine leaving enough to pay for a grandchild’s education, or the down payment on a starter home?  Imagine leaving enough for your kids to pay off their mortgage and experience debt freedom for the first time in their lives.  These are the types of things that motivate me to build enough wealth to leave behind, not just to my family, but to people and causes that I care about and want to leave a very small legacy.

What say you?  Should parents leave money to their kids?

Post by Frugal Dad

One thing that separates me from a lot of personal finance bloggers is that I have never been in massive debt. I never went through that “wake up” period where I looked at my bank account and noticed it was $1,500 overdrawn. And then only to realize my credit cards were maxed out. Sure, I have had my fair share of sticky situations where I had to step back, assess my situation, nervously laugh to myself, and then work on getting back to my yellow brick road. But never massive debt. So what could I possibly share that is worth reading?

My parents, and particularly my father (a daddy’s boy, you could say), taught me some very important financial lessons, if not life lessons. I have combined those lessons with my experiences that I have gathered from high school, college, and the past few years in the workforce since I graduated from college. I have a very analytical frame of mind so I like to breakdown situations into consumable sections. And if I had it my way their would be a lot of numbers.

I find that my posts are probably best for the 16-35 year olds out there who are looking for some useful information. And parents who are looking at ways to connect with their kids. And we have reached a full circle… this all comes back to the three most influential lessons my parents taught me. I hope some of you parents out there can use these lessons to connect with your kids. And if my peers never got these lessons from your parents, I hope some of you can also digest this information for your own betterment!

Lesson #1: Want is not need.

Photo courtesy of babasteve

I was not a particular needy child. My Christmas list usually only consisted of one or two things. My mother tells me stories from when I was a young’n. She used to love buying me gifts. And I loved tearing through them. But once I opened them all up I would take the two things I wanted and go to my room… leaving the rest of the gifts to sit under the tree lonely. I guess I was just quirky like that.

But boys will boys and every now and then I would see something in a store that caught my eye. I would demand it. I NEEDED it. I would go over every reason in the book as to why I needed it and how detrimental it would be if I did not get it. My parents could have easily purchased me these gifts. After all, I did not ask for much, right? However, I am glad they did not enable my behavior no matter how infrequent it was.

My parents always talked to me in a logical manner explaining to me why it was not something that was needed. They did this from a young age and continued it until I was an adult. A typical conversation between a 14 year old me and my pops would go:

Dad: So you need this baseball that clocks your speed for $40?

Me: Yes! How else will I know if I am ready to pitch when I get to high school?!

Dad: Do you and your coach feel comfortable with how you are developing?

Me: Yes.

Dad: Do you think you are a league above your peers when you pitch?

Me: Yes.

Dad: Then what does your speed matter? I’ll take you by a batting cage once a year and clock your speed for $1.

Me: Ugh, fine.

My dad never once said “No!” That would ensue in a fight. Teenagers, and even younger kids, are more logical than we sometimes give them credit for. My dad must have had the patience of a saint because he was always willing to discuss these little issues with me. But in the end, what did I gain?

Now when I look at purchasing an item that I think I need, or maybe just really want, I really break the item down into a bunch of questions I know my dad would ask. Are there any cheaper alternates, like the batting cage once a year instead of a baseball that clocks your speed and will probably break after 20 throws? To you this is a simple discussion. To a kid who is starting to develop his outlook on the world this is a very influential lesson.

Lesson #2: TINSTAFL, There Is No Such Thing As a Free Lunch.

Photo courtesy of D’Arcy Norman

Every now and then the aforementioned lesson would not work on me. But still, my dad never gave me an outright “No!” Every now and then he and I would discuss the merits of a particular purchase and wind up in a stalemate. And that is where we would stay. He never acted as if he had a mystical overpowering veto that would end all discussion. But at the same time he didn’t agree with what I was doing so I knew I needed to work for it.

If I trace my interest in business and entrepreneurship back I think it would all start at age 8. I wanted a new bike because my dad purchased me a Huffy and other people in my neighborhood had Specialized and Diamondback bikes. For those of you who do not know, a Specialized or Diamondback bike is usually leagues above a Huffy. Looking back I can’t blame him. I was a 8 year old who was taking my bike into the woods and building jumps that probably made my spokes shake in their sockets.

But I was determined to get a new bike. As I am sure you are used to hearing from your child, I needed it. I started informing all of the neighbors that I would do any work for them. I would shovel snow, cut grass, rake leaves, pull weeds, take out trash, or help with any other job they wanted assistance on. I once had a neighbor who paid me to lay new bricks along their front garden. It actually wound up being considerably hard work and I am pretty sure they got a bargain. I was getting money steadily. I decided to expand my business and started doing fresh squeezed lemonade and apple stands. I stole the apples from my neighbor’s tree and my dad made the lemonade for me. It was probably a losing proposition but I guess he just liked seeing me put so much effort into a goal. Sales were not good, my street had no road traffic. I went door-to-door selling this lemonade. (Note: This was a neighborhood where everyone knew everyone and my dad stayed outside as I did it)

After a few months I think I lost sight of my end goal. But I kept doing these jobs in order to get money because I liked having my little piggy bank full of money. Between all of the jobs I was doing around the neighborhood and all of the money I collected from the dryer I had enough money for a new bike within about 6 months. My dad reminded me at this point and we went to the bike store in town. I looked around and found the bike I wanted. I was sure it would be better than all of my friend’s bikes.

Let me guess what you are thinking… my dad either bought it for me or I wasted all of my money on it? Nope. I got gun shy and realized I was about to spend 6 months of hard work on a single possession that I would use to skid around (kill the tires), go off jumps (kill the shocks and spokes), crash into curbs (warp the wheels and bend the spokes), and otherwise just ruin it. I decided I wanted to save the money for something more deserving of my money. I kept my Huffy.

My dad did not make me work, he gave me the opportunity to work for something I wanted. By working I realized the value of a dollar and looked at purchases in a different way… even at a young age.

Lesson #3: The best time to plant a tree was 30 years ago, the second best time is now.

Photo courtesy of woodleywonderworks

What did my dad and I do a few days after I rejected the idea of buying a new bicycle? We went to our local bank, Bank of America. My dad opened me up a joint savings and checking account that only I would deposit and withdrawal from. My dad may have planted the idea in my head but I remember it as being my idea. I saw my dad go to the bank all of the time to get money and he had explained the concept to me plenty of times. I liked the idea of having my money locked up for safekeeping while still letting me access it when I needed it. The piggy bank was getting full, anyways.

I opened up my bank account and over the next 8 years I would give my dad money and a deposit slip anytime I earned some. He would take it to the bank when he was going for his own reasons. And that is where my life into personal finance really started… at the ripe age of 8.

My dad always made it clear that I wanted to have a safety cushion in that bank account. He would say things like “What happens when you are 16 and need a car?” Because of the TINSTAFL lesson the idea never crossed my mind that I was guaranteed a free car just for being born to the man. Now, he was not as rough as he may seem and he did wind up helping me out with a car. It was a used Dodge Neon. It also happened to be a hand me down from my sister. I got a great deal as I only had to pay for gas and insurance since the car was already paid off. Now that I look back at it, though, I am pretty sure my dad completely subsidized my insurance payments. But the idea remained constant, he wanted to make sure I understood that nothing was free.

By the time I was 16 I had a few thousand dollars saved up. This was all earned through hard work and some holiday presents. I was continuously educated by my dad that I was ahead of the game and that everything I did now was worth tenfold down the road.

How well did these lessons carry on?

Once I got my car at 16 I went on to work part-time all throughout high school. I worked at a restaurant as a dish guy, bus boy, and waiter and Best Buy as a salesman after that. I started earning actual money rather than side money for little yard projects. I, just like any kid, made mistakes with my money. I don’t think I really needed that $800 sound system in my Neon (Best Buy employee prices, have you!).

But I continued to work and continued to save.

I wound up choosing a state school, the University of Maryland. Why? It was ranked in the top 20 for my intended major and I wanted to pay my way through school. I found accomplishment in not having to ask my parents for money.

I worked throughout college. The main job that paid for my school was running an exterior painting company. I made enough money in two summers to pay for 3 years of school plus a two month trip across Europe. I also wound up working for some other companies, one of them being UPS. UPS was HARD work but it looked great on my resume.

And what am I driving? A 2004 Hyundai Accent with 86,000 miles on it. Even after being in my career for a few years I have not caved to the pressures of my neighbors with Specialized bikes co-workers with brand new Mustangs.

I would say these lessons were pretty influential, what do you think? Did your parents teach you anything that you would add to the list?

Post by Frugal Dad