Archive for the ‘Parenting Costs’ Category

Uncomfortable Subjects with Kids

Larry MacDonald asked me a few questions for an article he is working on, and it caused me to think a bit more about a subject that it is important as parents to talk to our kids about. This subject is taboo in most families and is certainly not a normal dinner table topic, and I must say that as a child growing up my parents never brought this subject up, and I must also admit that most of what I learned about it initially I learned “on the street”.

What is this taboo subject, that so few of us talk to our kids about (and heaven forbid ever want to educate them about)? No, not the one you were thinking (although my parents never talked about THAT either), but the subject of Debt. My parents did talk about Money, but mostly in platitudes about the importance of saving and knowing how much money you earn and working hard (the Anglo-Catholic work ethic).

The subject of DEBT was taboo, and I suspect it is in many houses, because parents feel squeemish talking to their kids about this important topic. Admitting to your kids that you carry debt seems almost to be like talking about whether you did drugs as a kid, or when you lost your virginity (nope haven’t talked about either subject with my kids either).

As a youngster the first time I heard about DEBT and borrowing was from a school chum, who said his Dad had got some money from HFC (Household Finance) and at the end of the month he had to pay back MORE money than what he had been loaned. This concept seemed completely foreign and weird to me, and I believe I may have brought the subject up with my parents, and they may have dismissed it with a, “Well, never deal with a company like that….”.

There was an opportunity to teach a young mind about debt, and borrowing, but an opportunity missed in this instance.

You don’t have to go into gross details about your debt to your kids, but explaining to them what debt you have, and better still WHY you have that debt may be an important lesson to teach your children.

An example would be explaining about your Mortgage and why you carry that debt. Kids think you own your house (I know I did) and I didn’t really figure out that my parents didn’t own the house until I was graduating high school and there was talk of Mortgage burning parties and such. Having kids understand what a mortgage is for (and maybe what it is NOT for as well), helps them understand what Debt is, and the more they understand Debt, the less likely they are to get themselves into a “Debt Jam”.

Too many kids I know have no idea what debt is, or worse, don’t seem to care how it can disrupt, strain or even destroy lives and relationships. If your kid grows up with the following cause and effect model:

I ask Mum and Dad for an Iphone -> They argue about it, say that it is too 
expensive -> I keep asking and finally they buy it for me -> They get mad
at me when I lose it or use it

what are these kids learning? Did you have to go into debt to buy this toy? Can you afford to pay for this toy? Does your kid value this toy? (I believe in this example the answers are: Nothing, Yes, No, and No).

Teach your kids about Debt (aka the 800 pound Rhinoceros in the room) and encourage them to learn about it themselves. Don’t let them learn about it on the streets!

I remember as a kid I loved to play games, especially with friends and family and I enjoyed hours of fun playing those games. Some of these games actually were useful in teaching me about Money and it’s use, not just about the joy of competition (and winning).

The money games I played when I was a kid were:

• Monopoly, which is an obviously good money game, in the sense that it teaches kids about ownership, money management and about some monetary concepts like Mortgages, Taxes and Going bankrupt (not too sure what Free Parking taught you, but you did learn that it was good to stay out of jail as well).
• Careers was another game that I enjoyed, because it taught you about working or at least introduced the concepts around building a career and what you might need to do to build that career.
• Life, was a great game for day to day family life teachings, where you simply lived a life and had to pay out a lot of money along the way and attempt to get rich by the end of it all (and stay out of the poor house).

The best money game when I was a kid was called Pay Day, which was actually quite simple, but very effective in teaching you about balancing budgets, paying bills and living within your means. When I started playing this game I had no idea what some of the concepts being taught were, but when I got older more and more of those concepts showed up in my day to day life and I am sure I said to my wife more than once, “This is just like playing Pay Day”.

Not sure what today’s kids do to learn about money, although I guess games like SIMS and such do have a monetary concept to them (as does Roller Coaster Tycoon, a game I enjoy playing still).

Did you have a favorite money game when you were a kid?

It’s been a busy very Long weekend for me, so I will put up a Best of posting about the very High Price of raising ‘healthy” kids, which I wrote about two years ago, I wrote two follow up stories that  you can also read:

• High Price of Healthy Kids Part II
• High Price of Healthy Kids Part III

The High Cost of Healthy Kids? (part i)

I have seen many articles posted lately in the “real” media complaining about obese kids and the implication that it is their parents fault that they are fat. I agree in some ways given that you as a parent should worry if your kid is morbidly obese, or way over weight (also knowing that some kids fill out and then shoot up in height, and there are sometimes extenuating health issues). Parents should most definitely be worried that their kids are not healthy, no argument there.

What I will write about here, is how the “real” media implies that it is a simple case of parents just not trying to get their kids healthy, and the simplest resolution to the problem is:

• Make sure the kids are active at school in sports
• Sign them up for sports at home in their spare time
• Limit their TV and Video Game access
• Limit their intake of snack foods and foods high in sugar and fat

Simple enough, and in an esoteric way, I agree, however, let’s look at this from a financial model.

The question to be answered is: is it cheaper to have healthy kids, or is it more expensive? I’ll give my opinions in the next couple of days: (see the links for those posts)

• High Price of Healthy Kids Part II
• High Price of Healthy Kids Part III

New Month Coming

September is on the event horizon folks, that means we are in the final third of the year, maybe it is time to revisit your financial plans, and also start thinking about big ticket end of year items that could broadside you if you don’t think of it. What do I mean?

• Christmas, better figure out what you are doing there, or you may as well get a pile of money and burn it.
• When do your insurance policies renew?
• What other yearly payments might come due on January 1? Do you have enough money to pay them?
• How about your RRSP input goals? Reached them yet?
• RESP Goals?
• Savings in General?

A good financial plan is a living, breathing entity, that you must attend to monthly.

House Keeping

I will be out of town for a few days this week so I may miss a day or two this week, my apologies, if I could figure out how to do THIS full time and make a living, I’d gladly do it.

Given it is a busy summer (OK a lazy summer) here is another chestnut from my early writings (2005) interesting points made, not sure I completely agree with it now, but it is still an interesting read (in my early writings I seem to rant about things, which is fun to read sometimes too).

I Should Divorce My Wife?

I read that one on the Alan Baggett news site, and scratched my head but it is actually how the tax system is set up currently. If I divorce my wife and pay her Alimony (not child support, remember that case a while back, where that is taxed in the payers hands) I can effectively split my income.

I remember having this argument that in the Government’s eyes the following scenario would be ideal:

1. Divorce my wife, and pay her half my salary as Alimony (thus sharing my income)
2. Have my children live with me, so I might be able to claim the Child Tax Credit and Ontario Tax Credit
3. Rent my wife an apartment in the basement of my house (with it’s own entrance).
4. Have my wife take care of the kids (as daycare) and write off the money I pay her on my income as well (and she does it in my home, so I write that off too).

OK, ok, this is a ridiculous scenario (and I’m sure some might even claim illegal, although I’d love to see that taken to court), but this is how SCREWED UP the entire Canadian Tax System is! I checked this with Quicktax and it was quite happy to show me the obscene amount of tax I’d save.

Alan’s tax writings are an interesting read, as are his stories (they are a little “he said, she said” which at times I am not fond of), but still interesting to read how some people are persecuted by the Tax system, while others get off “scott free”.

Please let me repeat, I do not condone the above tax sharing concept (but if you get away with it drop me a line, I’d be curious to hear).

I was discussing with someone about misinterpreting data on the weekend and remembered one of my favorite phrases for this type of activity:

If you hear hoof beats, don’t automatically think Zebras

I believe I first heard this one CSI, but I do like the sentiment. I view it as a corollary of Occam’s Razor, but I do like the idea of simplicity. Complex ideas and theories always worry me, given I am a simple thinker.

The simple answers in many areas are the right answers (especially in the area of personal finance). 

Some Simple Financial Answers

Some of the areas where I have had people hear Zebras when they should have thought horses:

Thundering Hoofs

• I am in debt because of the credit crunch. No, you are in debt because you spent more than you made, and you had to borrow to deal with this spending. For some it is borrowing money to buy a house, others borrowed money for a car but the majority, is borrowing money to pay for debts they didn’t need to incur. That ain’t no Zebra!
• It’s too complicated to stop using Credit Cards. This is a rationalization from folks who really are saying, “I like using credit cards and don’t want to give up my current lifestyle”. You can stop using your credit card tomorrow, put them in the freezer in 2 lbs. of hamburger, and they are gone. That wasn’t a buffalo, just a horse.
• A budget is too complicated to figure out. No, that is the statement, “I don’t want to use a budget because I will have to give up my current lifestyle” (again), a budget can be very simple and living to it can be simple, don’t make it a complicated thing, or you will fail. That wasn’t a gazelle, just a horse.
• I can’t save money given my current salary. How many times have all of us said this every time we get a raise? I have made that rationalization myself, you can save it just might be hard to do, that’s all. Wasn’t a wildebeest either, just a horse again.

Don’t make financial planning, personal finance or budgeting more complicated, keep it simple and listen for horses, not Zebras.