Wednesday, April 22, 2009

Financial Distress? Focus on Family

"I don't want my kids to be stressed about our financial situation.  They're too young."  One mom said this to me at a recent event and because it has become such a common refrain, I felt that I needed to highlight a post I made about Sue Schellenbarger's WSJ article last September.  It's even more relevant today.  Many families are in serious financial distress and a common reaction to this is to shield the kids.  This is virtually impossible to do.  Your kids are going to feel your stress and if you don't explain to them what's going on, they'll make their own leaps.  

Talk to your kids about difficulties you might be having and assure them that you are working to make things alright.  Enlist them to help - they typically want to be involved.  Give them simple things to do (e.g. don't run the water while brushing teeth, turn lights off when you leave a room).  Use Ms. Schellenbarger's article as a guide for your conversations and, if you still don't believe that involving your kids is important, look at they study she cites about the importance of focusing on the family in times of distress.  Your problems are your family's problems.  Face them together as a family.

Saturday, April 11, 2009

Allowance for Obama Kids

Janet Bodnar of Kiplinger is right on the money when it comes to the Obama kids, Sasha and Malia, and how their parents handle their allowance.  Janet points out that the paltry $1 allowance they each get is likely counterproductive.  There is virtually no way that 10-year-old Sasha is going to learn about money management by receiving $1/week.  Think about it.  If she saved for one year - an eternity for someone that age - she'd have $52.  What could she buy for $52?  A pair of sneakers?  Maybe.  A videogame?  Again, maybe.  Very little that would likely convince her that the time was worthwhile.  

I hope that Janet's article makes its way to the president's desk.  I won't hold my breath waiting for that to happen, but I will suggest that it's very important for us as parents to have an allowance system that is not tied to chores and allows kids to save an amount of money that would have a stronger psychological impact on them.  

For example, imagine if Sasha were to receive $10/week and her parents incentivized or required her to give some portion to charity (say $1 or 10% per week), save some portion (minimum 10%) and then allocate the rest as she saw fit (with guidance and requirements that she would have to pay for some amount of her own clothes and/or friends' gifts).  Then, at the end of the year, she could give $50 or more to her chosen charity (think of the potential impact on other kids) and save $200 or more for a goal she set with the assistance of her mom & dad.   How about a custom bed for the new dog?  What an opportunity for the Obamas.  I know they're busy, but I hope they listen to Janet.