As hurricane season is approaching (it is that time of the year!), another kind of storm comes to my mind – a financial storm. I am not talking about a hurricane scale (like the GFC (global financial crisis), for example), I am talking about a much smaller scale – a personal finance storm, perhaps, or a family finance issue. Please, leave your comments at the end of this post: in your opinion, do we prepare our children well to weather financial storms?
I was listening to a conversation a group of teenagers were having before their sport’s practice last week.
I was actually impressed how proud one of the girls was to share with her friends that she is buying a new cellphone “on her own savings!” When asked about source of her savings, she told her friends that she earned the money cleaning her parents’ cars and saving her birthday money. Financial discipline – very impressive! It is music to ZillionMom ears to hear when the kids are practicing “financial foundation 101”: spend only what you have; save ahead for a purchase of big ticket items.
When I asked the girls if they put something aside in case their sports equipment breaks, though, they looked puzzled. I asked them: ” Is that an emergency when the sports equipment breaks?”. “Yes, of course” – was the answer.
I asked how they will take care of this “emergency”. “Oh, my parents will get me the new equipment”. “How soon will you need it?”- I asked. “Right away! I practice twice a week and have games.”
I ask my fellow parents to comment below: how much do you think an average family should set aside for broken cars, appliances, torn or lost clothes? Are these things emergencies or expected (although unwelcomed) events of our daily routine? Do you think we give our kids a good example of how to plan financially for the fact that “stuff breaks” and “few things are made to last forever”?
As ZillionMom, I recommended the already-quite-financially-savvy teenager from my earlier example to postpone the cell phone purchase by a month or two and instead put 10% of the new gadget cost into a “future broken sports equipment” account. With holidays right around the corner and gift season, this does not seem like a big sacrifice. Perhaps she will save even more during the holidays in that “future broken sports equipment” account. And I hope her parents will be very proud of her paying for her own broken equipment in the future.