Raising Cash Smart Kids

I read a great blog post yesterday from Dave Ramsay, which started:

Some people say, “Timmy’s so young. I want him to enjoy being happy and innocent.  Money is a worry for grown-ups, not kids.”

I say, “We’re raising a whole generation with ’sucker’ stamped on their foreheads because we’re not teaching them.”

Your job as a parent is not just to keep your child happy. You’re raising a future grown-up who needs to be able to deal with grown-up matters. If you teach little Timmy how to handle money responsibly, then grown-up Timmy will be better equipped for a richer life.

Read the rest of Dave’s post at daveramsay.com.

I think Dave makes a very good point here – we are all questing for happiness, and we all operate on the assumption that is life is easy, we will be happy. Therefore, we try to make life easier for our kids, in the expectation that they will then be happier.

The truth about happiness, however, is that the ease or difficulty of life is not the issue. The issue is how we deal with life. Competence breeds happiness. The ability to handle one’s responsibilities breeds happiness. A sense of self-reliance and self-direction breeds happiness.

“Cotton wool kids”, who are sheltered from “harsh reality”, never have the opportunity to learn how to deal with life and manage responsibilities in a gradual manner, with parental support. They remain infantilised until the day that parental safety blanket is ripped away – by death, divorce, or the need to move away from home – and then they are suddenly, shockingly, exposed to situations for which they are woefully unprepared.

Needless to say, there are not happy at that point.

However, even during the “cocoon” phase, studies show that kids who have everything done for them suffer from anxiety and depression at a greater rate – and as the post-war generations have progressively shielded their kids from more and more of life’s harsh realities, the rates of depression in the population have soared.

Human beings instinctively know that life takes effort. We enjoy the moments of rest and freedom, but we enjoy them because of the contrast with “real life”. In the absence of major challenges from the outside, we hunt for “problems” amongst the minor ups and downs of daily life.

Kids as young as eight are worrying that they will have to support their parents financially when they grow up. These are comfortably middle-class American kids I am talking about. Suze Orman wrote an article for the Readers Digest in which she recounted the story of visiting a third grade class and asking them what their financial worries were. One child piped up with “I am worried that Mum and Dad will run out of money when they are too old to work and I will have to take care of them.”

Expecting this to be a rare thought, perhaps due to a particular family situation, Suze said “Does anyone else have that worry?” – and about half the class raised their hands.

Data shows that the greatest risk factor for bankruptcy is being middle-class and having children. These are some of the most pampered and protected children on the planet. These are the kids whose parents want them to “just be kids”.

These are the kids carrying huge financial worries – and unable ever to talk to anyone about it.

“Run along and play, don’t you worry about that” won’t cut it.

We need to prepare kids to deal with money from the day they first want to spend it. We need to talk openly with kids about financial issues – at an age-appropriate level. Most importantly, we need to recognise that they can and do think very responsible thoughts about money issues – but without the perspective or knowledge required to feel confident about that responsibility.

We don’t shield kids from problems when we tell ourselves “money is a worry for grown-ups, not kids” – we just isolate them from the solutions.

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Following on from last week’s conversation about “helicopter parenting”, I was thinking about some of the other, unintended consequences of pouring so much energy and effort into making life easier for our kids.

Kids are far more savvy than most of us give them credit for. If their parents are running themselves into the ground, pouring all their energy and focus into providing every possible opportunity and advantage for their kids, the kids know that they are darned-well expected to return that investment in the form of material success – getting good marks, getting into the right college, getting a good job, even marrying the right kind of spouse.

The more effort the parents put into their kids at the cost of pursuing their own interests and dreams, the more pressure the kids feel to follow the path their parents have laid out for them, whether or not that path is a good fit for them.

Even when the path is a good fit, and the young person would have chosen it of their own volition, pressure to perform can leach the joy and self-expression out of what might otherwise have been a satisfying and fulfilling career.

Kids can feel this pressure in their business activities, as much as in their schooling.

If you are encouraging your kids to branch out into business, or they have started of their own accord and you are supporting them, it is vitally important that you, the parent, do not get focused on results and accomplishment.

The greatest value from running a business is not the income, or the accolades, or the value it adds to a resume. The greatest value from any business journey is the fabulous growth and learning opportunities which arise from the journey – and the confidence and self-reliance that result from making use of those learning opportunities.

Just as your child can benefit from a few years of ballet training, even if he or she doesn’t ever progress beyond the end-of-year concert at the local church hall, because of the habits of good posture, grace, and core strength it develops, your child can benefit from a few years of running a business, even if that business never makes more than nickels and dimes.

Focusing on the journey, and the lessons learned along the way, will free your child from the burden of parental expectations, and allow him or her to blossom according to their own design. It is this freedom which the children of helicopter parents do not have, and it is this freedom which we yearn for when we look back to the time when kids were left to be kids while parents got on with their lives.

Our kids can have the best of both worlds – interested, involved, protective parents and the freedom to make their own choices and learn from their own mistakes. As long as parents are aware of the downsides of anxious hovering, parents can curb their tendencies to overprotect and work on checking the training wheels and then letting go.

Photo: carf

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Today we welcome back Amanda Van Der Gulik, Mompreneur and enthusiastic advocate of teaching kids good money habits from an early age.

“Money Doesn’t Grow on Trees!”

Does this saying sound familiar to you?

I bet you are probably one of many who heard this often growing up, right?

If not, you were lucky.

Let’s turn a new leaf and start raising our own children a little differently.

How about we change the way we answer our kids when they want something that requires money that we do not have or refuse to give.

For example:

Jonny wants a new pair of brand-name, high-endurance, running shoes.

“Dad, I really need a new pair of ‘brand-name’, running shoes. They are the coolest and all the kids have them. I want a pair too! If I don’t get a pair of them, then Shawn’s going to beat me at basket ball and you know, I’m 10 times better than him at basket ball!”

Here are two different replies:

Dad replies with,

“What do you think I’m made of?  Money doesn’t grow on trees you know!“

or

Dad replies with,

“Well son, if those shoes mean that much to you and you truly feel that Shawn will have an unfair advantage over you in basket ball, then what is your plan? How do you plan to buy those shoes?

Can you think of something that you can do, or make, or service, that can raise you the money so you can buy your own pair?

If you really want those shoes, son, then you’re going to have to come up with a good way to buy them. I believe you can do it.

Come back to me when you have a plan and we’ll see if we can work it out together.

Good luck kiddo.”

In Dad’s first reply, Dad shuts Jonny’s hopes down but ALSO teaches him, although unintentionally, that life is all about ’scarcity’. Jonny learns from these negative replies that money is hard to come by. That it is difficult to get what you want in life. That other people will always have more than you.

And the list goes on and on…

On the other hand in Dad’s second reply, you can see that Dad is turning on the creative juices in his son’s mind, “okay, so I want these new shoes,  how can I go about making the money to get them myself?”.

And as well as getting Jonny’s creative juices flowing on some easy ways for kids to make money, Dad is also teaching some other incredibly valuable life lessons.

Like: Abundance, Optimism, Faith in his son to find a way to fulfil his desire.

He is teaching him to be responsible for himself as well as encouraging him to come up with a plan and then to work together on making that plan come to action.

This alone will diminish any thoughts of theft as an option.

So how are you talking to your own kids when it comes to money?

See if you can pay attention to the next time your child asks you about money.

Listen to your own reply and then meditate on it for a minute or two.

How did that answer come across to your child?

Was your child turned off of money, or encouraged to take responsibility to come up with a creative way to attract their desired goods?

I hope you have enjoyed this thoughtful session, and I look forward to writing the next. If you have any specific topics that you would like me to talk about please just leave a message and I will do my best to answer your topics of interest where concerned with kids and money.

Cheers…Amanda van der Gulik…Excited Life Enthusiast!

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For 50 Free Money Making Ideas for Kids click here!
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Ben Casnocha posted an interesting link on his blog last week, to an essay by Joseph Epstein. Epstein is a university professor, and in his essay he was reflecting on the shift in parenting styles among middle-class parents, and the effect of that shift on the behaviour and attitudes of the “Millennials”, or Generation Y – the kids currently in high school, college, and up to about age 25.

Those kids have grown up with an unprecedented level of parental attention and involvement, and they continue to expect a high level of attention, praise and affirmation from other adults as they enter college and the workplace.

Epstein’s observations echoed those in that fabulous ode to the kids of the 50s, 60s, and 70s – the kids of yesteryear who had lead-based paint on their toys, rode in the back of station wagons without seat belts, and went out to play on the weekends – unsupervised – without a mobile phone or any expectation that they would be dropped off, picked up, or in communication between leaving home after breakfast and returning at sunset.

Epstein’s essay also evoked a longing for those simpler times, when parents were just parents, and weren’t expected to also be their kids’ chauffeur, best friend, counsellor, performance coach, careers advisor, and lender-of-first-resort. Back before the advent of encounter groups and “inner child work”, kids got on with their lives and adults got on with theirs.

I’m not advocating a return to that lifestyle – there were some major disadvantages to living in families which simply never discussed or acknowledged emotions.

One advantage of those times, however, could be reclaimed.

We could return to thinking of kids as capable.

The pendulum has swung so far in the direction of protecting and nurturing kids that there is a reasonably widespread phenomenon called “helicopter parenting”. This refers to the form of anxious hovering and over-helping which flowers, in the fullness of time, with parents phoning their college-aged kids who are living in dorms to wake them each morning so they are not late for class.

The message kids get from this type of parenting is not that they are loved and respected. The message they get is that they are incapable, and that the world is too much for them to handle on their own.

One of the greatest benefits to my kids from their business activity is the sense it gives them of being capable – of being able to do adult tasks in way that adults respect and acknowledge.

Business activity also breeds emotional resilience. Kids who have active businesses have all tried things that didn’t work out, processed the disappointment, and moved on to try something else. In most cases, they get accolades for trying, whether or not they ever make much money.

Who is better placed for a life of accomplishment – the child who has tackled adult challenges, and learned that failure and disappointment are part of life, and part of the process, or the child who believes they are incapable of getting out of bed without outside assistance?

Image: silver.and.gold

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It is sometimes really difficult being a parent.

Who am I kidding? It’s OFTEN very hard being a parent.

We had one of those difficult situations at our place last week. My oldest, who has been quite sick and unable to work on her business for the past few months, is basically trying to keep up with her friends and their lifestyle on her “sickness benefit”, aka her allowance of $20 per month.

This weekend was a three-day weekend, and her group of friends has planned two trips to the movies and a shopping trip to the city. She didn’t have any money, and she asked if she could borrow some.

Now, as you know, we don’t do loans. And especially since this loan would have been an advance of three months worth of allowance!

I explained to her that she has to live within her income, even when it’s small.

We have a close friend who came down with chronic fatigue a couple of years ago, and Sam is well aware that we give this friend money each month because the government sickness benefit is not enough to cover her basic rent and food needs, let alone pay for medical treatment.

I pointed out that Sam is in the same situation, and her friends need to understand that she simply can’t afford to do these things. The real friends will understand.

This developed into an interesting conversation about another girl in her group of friends who is getting a job because her parents won’t just keep giving her money any more. This girl would rather not be doing the expensive stuff, either.

It seems that there is a whole group of kids doing expensive things like going to the movies and ice skating, spending money they don’t have, all because they don’t want to be “left out” of the group. I suggested that it might be a simple thing to turn the whole group around to low-cost activities, if my daughter and the other girl just took a stand.

Of course, at fifteen, that’s a scary prospect. Being accepted is everything.

But, to her credit, she went off to talk to this other girl, and in the end three of them opted out of the movies and did something low-cost instead. Along the way, they stopped on at a local indoor playground and filled in job applications.

She has wisely decided that working for someone else is lower-energy and more manageable for her than being entrepreneurial right now. I think it’s the right decision, and an enjoyable job is a good stepping-stone to bridge the gap until she is fully well again.

It would have been so easy to lend her the money.

I mean, she has been sick, poor kid.

But what a benefit she gained because I didn’t – she has taken steps to change the culture of her group of friends from pointless spending and keeping-up-with-the-Joneses to being on the lookout for low-cost fun. The benefits will not only flow to her, but to all her friends who get the message.

In the long run, she will have a group of friends who are much more supportive of her goal of financial responsibility, and the confidence which comes from challenging a group norm and shifting it. For the rest of her life, she will know that she doesn’t have to do what everyone else is doing, just so they won’t reject her. She has learned that if she leads, others do come with her.

Absolutely priceless lessons.

And if I had lent her the money, she would have had none of those lessons.

It was emotionally very difficult at the time, but she and I are both glad now that I stuck to my guns and didn’t lend her the money.

Shonika Proctor offers her unique perspective on one way to escape a life that’s, like, whatever …

Get a Teen Life Coach or Just Get a Life?

There they go again – your parents, hounding you to go see a teen life coach.

Maybe a teen life coach can help you find happiness, they say.

Maybe a teen life coach can help you find direction.

Help you get out of this rut, this funk you seem to be wasting your whole life away in these days.

Don’t They Get It?

When your parents were your age, they were being primed to go out and get a job when they graduated. But you don’t live in your parents’ generation – and you know it.

You’re not blind. You watch television. You hear the stories:

• Skyrocketing Unemployment!
• Economy Takes a Nosedive!
• Layoffs Layoffs Layoffs!
• Worst Job Market Ever!
• Job Turnovers Faster

There is no such thing as job security anymore, and you’ve already given up hope that there will be any social security money left for you when you retire. If you retire.

Screw that!

No wonder you’ve gotten so apathetic about your future. Don’t they see it? What the heck do you have to look forward to? And how is a teen life coach supposed to help?

Well I’ll tell you:

Doing Your Own Thing

You’re no dummy. You know the only real way to make it in your generation, in this world, not the world of 50 years ago (or even 15!) is to work for yourself. Numero uno.

Like you keep saying – you’re the only one you know you can count on 100% of the time. So, for a life that’s more than scrimping and saving and breaking your back to make ends meet and still not getting by, you need to forge your own way. Blaze your own trail. Not live out the fantasy of a life laid out for you by parents, teachers, counselors, civic and religious leaders, people who may or may not love you, may or may not have your best interests at heart, who may or may not realize the life they’re talking about is a fantasy!

It used to exist. But it doesn’t anymore.

The old way is dead. The new way is you. Or, put another way, whatever you want enough to make it be.

Now a teen life coach might possibly be able to help. But there’s someone else who is likely to be able to help you even more than a teen life coach – and that’s:

A Teen Business Coach

Plainly put: self-employment, freelancing, going into business for yourself is your best shot of living the kind of life you want to live. The kind you may or may not have already given up on.

There is a future for you. And a business coach can help you find it.

If visions like these fill you with dread

• a long daily commute stuck in traffic with thousands of other poor slobs like you, on your way to or from a job you hate working for someone you despise for a pittance of a paycheck that (for an extra kick in the face) the government takes half of anyway -

then it’s no wonder your parents want you to seek help. You’re probably already miserable about it all, and it hasn’t even started yet. And you’re certainly not trying to hide it. What would be the point?

But a therapist or a shrink isn’t what you need. You’re not crazy. And you’re not sick. You’re just disturbed – and as well you should be.

To whom much is given, much is expected. That hasn’t changed. But what are you supposed to do about it?

A teen business coach can help you take that festering knotted mass of frustration and confusion, and turn it into something that could give you a life that you deem is worth living. A life lived on your own terms. In charge of your own destiny.

The Clear-Cut Difference

There’s no shame in seeking help, guidance, and support. There’s only shame in letting your vast potential go to waste.

School can be a fantastic resource if learning is happening there. But sometimes the learning you need simply isn’t being offered there. And that’s when you need to look elsewhere to get your needs met.

One way to look at it is like the difference between the two types of coaches being described in this article is like this:

A Life Coach helps you get

your you-know-what together.

A Business Coach helps you figure

out what your you-know-what is!

Whether you opt for a teen life coach or a teen business coach, the mere fact that you’ve decided to seek help and support in taking charge of your life is an enormous step in making that change happen.

Shonika Proctor, aka the Nika’Nator, is a youth and teen entrepreneur coach. She helps aspiring and emerging young entrepreneurs to demolish drama and build dreams. www.renegadeceos.com.

I have recently been chatting to an amazing woman, Shonika Proctor. She volunteers her time to work with disadvantaged kids – helping them to start businesses! Her story, and the stories of her kids, are just incredible, and I hope to be able to share some with you over the next few weeks.

In the meanwhile, however, Shonika has been kind enough to pass on some of her mentoring tips. These are the principles she has used to take some of her kids from disaster area to role model in an incredibly short timeframe. With kids from luckier backgrounds, her methods are bound to bear fruit.

Apply these tips with the dedication and commitment that Shonika has, and your kids could be the next big young entrepreneur success stories!

10 Tips For Parents of (Pre) Teen Entrepreneurs by Shonika Proctor

For teenage entrepreneurs, it’s not just homework or hormones and friends or fashion. For these exceptional young people, it’s all of that – plus finding funding, building business and securing their futures at an early age.

And it’s important that their parents understand and appreciate their struggles and offer them support every step of the way. These 10 tips are a great way to help young entrepreneurs start down a path toward success.

1. Start early.

By exploring interests at an early age, it encourages children to take an active pursuit of their passion – and perhaps eventually turn it into profit. Visit museums or parks, check books out of the library – anything to help cultivate their genius.

2. Try different stuff.

“If at first you don’t succeed …” It’s a good quote for a reason. Help potential profiteers learn this for themselves by encouraging learning by trial and error. Keep trying plans or products until they find the one that excites them into entrepreneurship.

3. Discuss values.

Equip them with the tools they need to make important decisions by discussing ethics and the importance of playing fair and being honest – on the field, in life and in business.

4. Make a business plan.

A business plan needn’t be long – a one-page plan should work for most efforts. By answering the below questions, teens will be able to clearly define their products, customers and advantages:

-What business am I in?

-Who are my customers?

-How will my customers know about me?

-How am I different?

5. Ask questions.

Enforce the need to think everything through early by asking questions – even if they may be hard for young people to answer. And remember: Be careful to come across as a partner, not as a nag! During this step, you should discuss materials, inventory, funding and budgeting.

6. Use the Internet.

From research to retail to advertising, the Internet is an important tool for fledgling businesses. Many teens have a marked advantage here, as they’re better online than any generation before them. Remember, always monitor site usage and message board posts!

7. Serve others.

It’s important that children have a plan that includes giving back to the world. Does the business offer a product or service that those less fortunate would benefit from? If so, work or product could be given away for free or at cost. If not, discuss setting aside a portion of the profits for a reputable organization that helps those in need.

8. Film a commercial.

This step is fun, and the confidence that children get from being on screen is amazing. Brainstorm ideas – from serious to silly – write a script and enlist the help of friends and family to round out the cast.

9. Develop a marketing plan.

Even the youngest entrepreneur should be actively involved in sales from day one. Ask them to develop a plan – and encourage them to think big (”no” should not be a part of this step!). Guide them to consider promotional or partnership opportunities; community stores or leaders who would allow advertising/product placement; advertising activities and more.

10. Define a style.

All children are leaders: They just have different styles and a unique selling point. Help fine-tune that style by building a leadership platform based on individual strengths and weaknesses.

These 10 tips are a great way to kick off what will hopefully be a long and successful business endeavor. But remember: Just as every child is unique, so is every business and every plan. There are no rules – other than to have fun, work hard and continue to learn and grow along the way. Good luck!

Shonika Proctor, the Nika’Nator, is a youth & teen entrepreneur coach who helps aspiring and emerging young entrepreneurs demolish their drama and build dreams. If you enjoyed these tips, you can get more like them at the Renegade CEOs web site.

Today’s post is a guest post from Amanda van der Gulik, from TeachingChildrenAboutMoney.com. Amanda emailed my daughter Rachael recently, asking if Rachael would do an interview for Amanda’s blog, and I liked Amanda’s site so much I asked her if she would share some of her material with my readers, too.

Stay tuned for news of when Rachael’s interview will appear on Amanda’s blog. In the meanwhile, enjoy Amanda’s great motivational tips for kids and adults alike.

Hello Fellow Parents of Kid Entrepreneurs,

I was honoured to be asked to write a post for Jenny.

I really like what she teaches. And her kids are amazing!

A little about me: who is Amanda van der Gulik?

I am a homeschooling mompreneur who is dedicated to helping parents raise their kids financial IQ’s.

Jenny and I seem to have a lot in common and plan to work together to help give our kids the best start to their financial lives that we can.

Did you know that the main reason young couples today divorce is because of financial stress?

Did you also know that the majority of bankruptcies today is with young adults under the age of 30!

We can give our kids a better chance in life with both their finances as well as their relationships with their future spouses by simply giving them a good financial foundation to grow from.

I will be writing a series of posts for Jenny and she will be doing the same for me on my own blog. Today I will begin by talking to you about the Law of Attraction. We achieve what we conceive and believe.

In other words you first need to dream, then you need to believe that you will achieve your dream from the depths of your soul and then you will achieve your dreams.

I highly recommend you get your child started on creating their own ‘vision board’. This is a board that they can hang on their wall in their bedroom somewhere where they will see it on a regular basis.

I suggest hanging it in front of their desk or even attach it to their ceiling above their beds. If they have their own bathrooms then I suggest hanging their vision board opposite their toilet so that while they visit this important room on a continuous basis they can digest their vision.

So what is a ‘vision board’?

Okay, a vision board is a board that you create a collage on with picutres drawings of the different goals that your child would like to achieve or have.

Here are some steps on how to help your child create his or her own vision board:

1. Plan a special time to sit down as a family.

2. Have each family member make a list of all the goals they would like to achieve or have or be. Here are some questions that may help your child to come up with some of his or her visions:

• What kind of house would you like to live in?
• What kind of car would you like to drive?
• What kind of clothes would you like to wear?
• What places would you like to visit?
• Would you like to have a private jet or space ship?
• What kind of boat would you like to have?
• Who would you like to meet?
• Who are the people you would like to hang out with?
• What about your body, how healthy would you like to be?
• Are there any sports you would like to be good at?
• Are you interested in the arts, is there anything that you
  would like to achieve there?
• What kind of person would you like to be? Would you like to
  be more confident?
• Would you like to be more kind?
• How much money would you like to be earning every month,
  automatically?
• Which charities would you like to make a huge impact on?
• How many children would you like to have?
• How many and what kind of pets would you like to own?
• What does your future spouse look like and what kind of
  character is he/she?

3. Now get some old magazines or look online for photos (just make sure to set the search engine to ’safe search’ mode first before asking for any photos or else you may have your child seeing photos that you would otherwise not like them to see.) I recommend using www.Google.com photo search or www.flickr.com.

4. Let your child have some fun being creative and encourage them to dream BIG!

5. Now choose a spot to hang the board where your child is most likely to see it many, many times a day.

6. Every morning have a look at your child’s vision board and go over their goals by having them say out loud,

“I am so happy and grateful now that I have ….built my dream house….. and/or…..filled my
closet with the most beautiful clothes…..and/or…… I am the best player on
my school’s baseball team….helped 50 people on my favourite charity by giving them the opportunity to eat healthy food….etc.”

The key is to have them say it as if they have already accomplished their goals and dreams.

They need to make their subconscious minds believe that their goals have already been achieved to make it become a reality. No one is ever successful until they absolutely believe from the depths of their souls that they are a success already!

It’s amazing how this simple vision board can make your child’s dreams a reality.

It serves as a constant reminder of why they are doing what they are doing to achieve their dreams. It will help them keep their focus when the rough days approach.

I highly recommend that you also create your own vision board.

Being a role model really makes a huge impact on your child. They will take their vision boards much more seriously if you also have one. And it’s fun to see your dreams as if they have already happened!

I recently found a website www.ActLikeARichKid.com that havecreated a system for you to make your
vision boards turn into a movie that really makes your dreams come to life! I have used them to create my own mind movie which I watch every morning when I wake up and every evening before I go to bed. The movies use moving photos and emotional music that really bring your dreams to your heart centre.

Here, watch mine to get an idea:

As you can see in my mind movie above, I created that one for my whole family, my kids love seeing their new bedrooms and are constantly asking me to watch our mind movie. My 6 year old daughter has even come up with a business plan because she wants to have a water bed, so she’s decided to start up her own face painting business to pay for it!

The power of the law of attraction and the usage of vision boards and mind movies is absolutely incredible.

Have fun, and let Jenny and I know how successful your own vision board and mind movie become!

Cheers…..Amanda van der Gulik….Excited Life Enthusiast!

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FREE E-BOOK: “50 Easy Ways for Kids to Make Money”

To claim your free copy, visit: www.TeachingChildrenAboutMoney.com

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Companies are always on the lookout for new customers, and they know that the younger they can get a consumer, the more likely they are to keep them for a long time. Particularly worrying for parents these days is the way cell phone and credit card providers are targeting teens.

Even debit cards can cause problems – my fourteen-year-old saves half of her earnings religiously into a high interest account. Once she had a debit card, though, and was being paid by direct deposit, she found that she had overspent her budget without realising, and didn’t have the full amount left that she had meant to transfer into her savings account.

Cell phones just chew through money, a few cents here and a few cents there for text messages or listening to voicemails, and suddenly the bill is enormous, or the prepaid card runs out long before the end of the month.

Credit cards are the worst of all, because it is so easy to build up a debt that you can’t repay all at once, and the interest rates on those things are so high it’s amazing they are legal. Once you get behind, you just get further and further behind.

Load up a high school or college kid with a cell phone and a credit card or two, and you can undermine the foundations of their financial life completely.

Student loans are bad enough, but many kids just shrug and add a bit of credit card debt on top, figuring “in for a penny, in for a pound”. We live in an instant gratification society.

Credit cards have become a fact of life on college campuses. With a reported $13 billion in discretionary income, college students represent a huge market for credit card companies (Kara, Kaynak, & Kucukemiroglu, 1994). Students often receive incentives, such as t-shirts or mugs, to apply for cards, and requirements, such as previous credit history, are often waived (Kara et al, 1994). Due in large part to these marketing efforts, a recent study reported that approximately 70 percent of college students possess at least one credit card–a number much higher than previously thought (Manning, 1999), while another study reported that 93 percent of college seniors have acquired at least one card (Markovich & DeVaney, 1997).

With companies lining up to seduce our kids into debt, the only protection we can offer them is a good, solid financial education, and a grounding in good money habits.

Images by PT, The Consumerist and B Francina.

Most of us have heard about the longitudinal study of Yale graduates conducted in the late 1900s. Researchers followed a graduating class through their entire working lives to age 65, and generated the following statistics.

By age 65, 36 out of 100 people had died. Now these days, with modern medicine, and extended life expectancies, that number may well be lower, but we can expect the proportions among the rest of the categories to be about the same.

Just 1% (one in a hundred) people were wealthy at age 65. Just one in a hundred Yale graduates – what would the statistic be for those who didn’t have a university education, I wonder?

Another 4% were financially independent. That is, they had passive income (income they didn’t have to work for) which was enough to comfortably cover their living expenses.

That accounts for 41% of the total sample.

The other 59% were in financial trouble. Some just had to keep working, because they couldn’t afford to stop. Others were dependent on government hand-outs or the charity of relatives.

More than half!

Do you think those fresh-faced young graduates believed that more than half of them would be struggling financially at age 65? Do you think any of them, through their working lives, planned to be broke, or dependent on others, in their retirement?

Of course not. They were as optimistic as we all are today. We all confidently expect to be financially OK, just like they did. We’re all working hard, paying off mortgages, and saving for retirement, like they did. And we are headed for the same kind of statistics as a result.

The situation for today’s workforce is no easier than it was for the Yale class of ‘32. If anything, times are tougher. Fuel prices are higher, work is harder to come by, and less secure, and financial traps like credit cards and upside-down mortgages have come into existence.

While it’s daunting to think that we, who are of working age now, are likely to find ourselves facing similar statistics – or being similar statistics – when we reach the age of 65, have you ever stopped to think about the other impact of lengthening life expectancy?

Not only will we have to come to terms with our own successes and failures in financial management sooner than we think, we will also live to see the effects of our parenting in the financial successes and failures of our children. We will, many of us, live to see our children reach the age of 65 – financially independent, or still struggling.

What are you doing, right now, to ensure that your child is one of the successful few?

(Photo by pedrosimoes7)