Diary of a mother, Jayne, who is also author of Kids and Money: Giving Them the Savvy to Succeed Financially (Bloomberg Press), and her son, Ryan, who just turned 14. I will mostly discuss financial parenting issues, as they come up -- what works, what doesn't, what drives me crazy, what drives Ryan crazy, discussions with his friends, what I'm reading, people I meet as I give workshops, etc.
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This is where you stick random tidbits of information about yourself.
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Saturday, March 25, 2006
Wow! It's sure been a while. Mostly, I've been going through the crazy college search, applications and now endless waiting with my son, Ryan. So far, he's been accepted at three schools, received no rejections -- but his first choice, Berklee College of Music, should let him know in a week or so if he's been accepted.
By the way, GOOD NEWS: the dreaded Free Application for Federal Student Aid (FAFSA) form was not as hard to fill out as I'd feared.
JUST OFF THE PRESS: USA Today's March 24th edition included an editorial by founder and publisher Al Neuharth about how he has structured allowance for his children. I was asked to write a short response, which I did:
"Al Neuharth deserves an “A” for financial parenting! Letting them manage some expenses helps kids learn to make trade-offs, delay gratification and distinguish between wants and needs—critical skills for future financial success."—Jayne Pearl, speaker and author, Kids and Money.
Meantime, I've been busy with my freelance work and my workshops. Recently I created a special program at the request of a local inner-city church youth leader, for at-risk teens. The workshop focused on convincing the teens that the choices they make on consumption, spending and investing will determine how comfortable their lives will be in the future.
First each group of 5 students was asked to list all the clothes, electronic gizmos (iPods, cell phones, computers, etc.), and other categories of purchases they'd made in the past year -- and the estimated cost of each item. Then they added up their combined purchases. The price tag of the groups ranged from $1,500 to $5,000. Then I explained that if they invested that money -- and never even saved another penny -- how much that money would grow over the next 5, 10, 25 and 50 years -- which corresponded to possible milestones they may experience such as college, marriage, raising children, paying for their kids' college tuition, and retirement. We used an historically conservative 10% long-term average stock-market return. They were astounded to see that many of their groups would come away with a milion dollars.
We then looked at some stats from the great book, "The Millionaire Next Door" (by Thomas J. Stanley and William D. Danko), that showed how the vast majority of millionaires did not inherit their money or get rich quick, but had mundane jobs such as teaching, plumbing, contracting, or owning a small business. They did not buy fancy cars or homes or clothes or vacations. The only thing they spent a lot of money on was education for their children. By not falling into the pattern of constant consumption and credit-card debt, and investing modest amounts every paycheck, they accumulated their wealth.
The youth leader later told me that the teens were still talking and reacting to the session. Instead of oohing and ahing when one of them walked in with, say, new $175 sneakers, now the group will put down kids who flaunt new clothes or jewelry or other possessions.
This is a lesson for all of us, at any economic strata.
More later….!
10:29 AM
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