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Okay, in the pursuit of teaching lessons about responsibility and contribution, I am wondering if I am being cheap. As a bit of background, my kids do not get an allowance but they do earn money for doing chores. For the most part, I buy them what they need and some of what they want. However, they have to spend their own money for whimsical extras, such as craft items du jour and videogame downloads, above and beyond what they get for their birthdays and holidays. In the past, when they have won money from competitions, they have always kept all of it. Most recently, DS and DD both won merit scholarships that partially paid for music camp. When I told them to apply for the scholarships, I offered to give them 20% of the scholarship amount as inducement since there was quite a bit of writing (essays to support their selection over other applicants) required. The reason why I am not giving them all the scholarship money is because I still have to pay a substantial amount of money for the camp, which makes it a different situation from previous competition winnings. Anyhow, from DD's perspective, she would like to keep the full amount, which I kind of see as not unreasonable.

Again, she is also the child who tried to lobby for money for grades. Some of her classmates get insane amounts of money for A's, B's and even C's so DD has been somewhat indignant that she gets nothing for always earning straight A's. On that issue I told her tough luck - it's too bad their parents aren't hers. However, she always gets a small end of term present that isn't tied to grades.

What are your stands on these issues?

Portia, I love it!

Quantum, could you please remind us of your DC's ages?

Portia, I just made my husband read your post, and we may be using your model soon. That is really good!

Portia wins post of the day!

DD10 gets a fixed, weekly allowance. It is not tied to chores. In addition, we do pay-for-play in specific areas where we want to see her work harder, because we've found that it's an effective counterweight to self-sabotage... working harder to earn the money, she sees positive results, and though the money is no longer needed as an incentive, we continue the program until some logical stopping point. Previously, we've done this on soccer and school grades. I think the next generation will be household chores.

If DD10 wants something, she's free to pay for it from her own money. She has learned to save and manage her money very well for her age.

Unfortunately, DD10 has figured out the power of saving AND getting her parents to buy her the things she wants. It doesn't work so well on me, but DW is a pushover.

So this might or might not work so well with some of your budding litigators/negotiators, but we do something like this (inspired by my mother's parenting):

No allowances or birthday/Christmas money. All your necessities are paid for (this includes certain extras that your parents think are necessities, like learning an instrument). Want items or experiences need to be justified. Whining in checkout lines is not rewarded. Requesting in checkout lines (for example) triggers a series of questions:

1. Are you really going to use this?
2. For how long? Will you still be using/enjoying it a day from now? A week? A month? A year?
3. What future opportunity(ies) are you willing to sacrifice for the sake of obtaining this now? What cost in time, money, or other finite resource is this worth to you?
4. Will obtaining this create undue inequity among your siblings? If so, do you have a proposed solution (that must, of course, meet all the other criteria as well)?

If you can answer all of these questions to parents' consensus satisfaction, and it fits reasonably into the family budget, then yes.

Although I must add that I do throw in occasional unrequested small treats, because nearly everyone enjoys a little surprise. And, of course, perishable items don't usually need to be justified a year out.

We do a hybrid of aeh's method and that of the OP's; this probably works out to be roughly like the pragmatic endpoint on Dude's system-- and I suspect that we have similar children in this respect.

DD has a healthy sense of the value of a dollar, and she is a great saver of money.

Similar, and we add questions about where it will be kept, "... a place for every thing, and everything in its place."

I'm pretty impressed by all of these systems. We don't do allowances (I would, but none of us can remember). I pay for necessities and activities. If they want something "big" they have to earn it through extra chores--I pay for occasional treats. My kids aren't much into stuff (except electronics) and would not be incentivized by money for grades (don't think I'd do that anyhow).

My daughter will not spend a DIME of her own money without thinking it over for so long she forgets. My son will save his until he has enough for a video game.

I'm sure it would be really good for them to have some of this structure.

I do not and will never pay for grades.

The kids get a small allowance that is tied to household responsibilities. If they want extra money, they can do extra chores (a list and amounts is on the fridge). Only one child has ever done this with any vigor, to get an app I refused to buy (plenty of free apps in the sea, and this one was utterly w/o merit in my mind). Nobody in our families ever gifts money--I am not sure why this is, but it may just be cultural--so they never have very much money. Some of their peers have $100+ at home in their banks at a time; ours are lucky to have $20. I don't know whether to be perturbed by this or not. They aren't real "materialist" kids and that isn't something I want to nurture anyway, so for now, I'm letting it be. Families on both sides gift very nice "things" at holidays instead, such as beautiful colored pencils, hardcover book sets, etc. We spend quite a bit at Xmas and on birthdays, but do not tend to buy "just because." I guess it's the Puritan in me.

I do anticipate DD wanting to spend majorly on clothes--soon. She has a strong and definite fashion sense. So, that should get interesting. Shs also wants a Kindle right now, and it's not gifting season, so that's a discussion.

dd is only 5 so I only have limited experience, but it sounds like we are on par with most others.

We will move to Portia's model around age 10 - hopefully by age 17 DD will be responsible for all of her expenses.

In the meantime she gets $1 per year of age not tied to chores, so much as being helpful. She then has the chance to earn cash for over and above jobs (cleaning up her baby brothers mess etc)

I think first figure out what you want to teach and go from there!

This is an interesting topic!

Our view is that each member of the family has jobs to do to keep the family running. This includes income generating work as well as non-remunerated, but equally important, tasks for the household. DDs primary job is doing well in school and she also has chores to do around the house.

In exchange for being a member of the house, each member gets a monthly allowance for personal purchases. This allows each of us to get the things we want without a lot of discussion or negotiation.

DD12 receives an allowance which is $1 per week per year of age. This is for gifts, personal purchases, snacks / Starbucks when shes out with friends, music, makeup etc. Wants basically. We don't specifically pay her for grades or chores though because with our little future lawyer we'd never hear the end of the negotiating. Instead, if she does a bad job (which at this point is more likely to be "forgetting" chores rather than bad grades) she can be penalized by losing allowance.

This year we got her a checking account and a check card for that money. If she overdrafts (which she has not because she's very careful) she has to cover it. We also started giving her a specific clothing allowance in savings. I still buy coats and boots, but she buys the rest (she's a much better shopper when it's her money). This has greatly reduced the stress of shopping with her because if she wants to spend her whole amount on one cool item, that's her prerogative. Gift money (from grandparents typically) and earnings (babysitting) go into her savings. It tends to build without her noticing until a trip or something else large she wants.

We do still buy things for her from time to time without insisting on payback. Books, for example, but it's a surprise and gift rather than an obligation.

Funny that I've not met anyone irl who has a similar pocket money scheme to us yet it seems common on this board. Guessing others don't have to worry so much about negotiations/ have kids capable of operating on this type of model

How did you go about that? I've been contemplating that for the future but it seems like the kid has to be 16 or 18 to qualify. Does she write an actual check or is it a debit card?

Our family is just kinda weird when it comes to money, I guess. No allowance, but all clothes, food, and basic necessities are paid for. As are occasional treats, and field trips. No one ever really goes to the mall with friends or sees movies, so I guess that's a moot point, and clothes are just...clothes.

I don't really think about it, but I guess the way it ends up is that discretionary spending is just fairly low for us. However, we do spend money on larger things like summer camps without expecting reimbursement. So...there are few things asked for and, therefore, they are just paid for BUT there isn't any allowance or anything. On the other hand, they get a lot of cash gifts instead of presents, but the money usually (unprompted) goes into the bank.

However, the question becomes what will happen when the want arises for a car, or something more objective.

I don't know if it's got anything to do with giftedness or not but there's always a certain...reluctance in my family to spend money. It's not exactly being cheap, it's just... I don't know. Maybe we're just overthinking or overanalyzing but we don't spend money on "unnecessary" things without a lot of internal questioning. I don't really know how to describe it.

We have opted to sell one of our meticulously maintained 8yo family cars to DD16-- on a structured payment plan that will last two years, but will result in her having a paid-for car that belongs to her on her 18th birthday-- AND the pressure of having a large, structured loan. Well. Large for her. The concept of "regular monthly payments" was pretty intimidating.

She was very concerned, in fact, and ELATED to have landed a summer job that will cover the entirety of this year's payments.

As long as her grades are good, we'll cover her insurance and will help with gas.

This way-- she's driving a VERY good car (safe and reliable), and she isn't paying anything like market value for it (we're selling it to her for 1/5th of its Bluebook value).


She's had her own bank account since she was 12.

My kids are only 6 and 8. So far the only thing is when you are 7 you get $2 a week paid fortnightly. They usually get a $20 voucher or note from their father's parents at Christmas and birthdays as well. I will give a small voucher if ds8 is saving for something. Ds6 still has the $5 someone gave him on his 5th birthday so I haven't been asked for anything by him.

With regards to the OP's question. Your offer to give part of the scholarship money was generous. It is reasonabke to expect your children to want to assist in paying for activities if the opportunity arises. Scholarships are intended to make things more affordable and I assume if you could easily pay the whole price you wouldn't have asked her to apply.

One of the most tax-efficient ways to subsidize youngsters is to lend them the money to put in a Roth IRA once they have earned income: Should Your Child Open a ‘Kiddie’ Roth IRA? . They can pay you back when they are working full time.

It is this way here too. There is also a Parental Bank where if you leave savings on deposit rather than spending your allowance right away, you earn compound interest (at a higher rate than banks now offer, to make it visible to the child). This encourages saving.

Bostonian's Roth IRA idea is excellent advice.

I think our standard is most in line with aeh's. We don't give allowances and we would never pay for grades. Our kids rarely whine or try to negotiate, because that drives me insane (ds13 has probably negotiated the most, perhaps because he's 4th and I wasn't as good at nipping it in the bud, lol??). We have two adult children who are both doing a great job of budgeting/paying for what they need, so it has worked for us. From the beginning, our philosophy was that they needed to do things because - because they are part of the family, because they should care about their grades, etc. We are not big spenders or gift givers. One dd got her first smart phone at college graduation, one got it after. Only one owns a car (bought by herself when she was working after college), although we lent 2nd dd one of ours when she needed it. One has a TV, one still doesn't. My older teen has a phone, but younger doesn't. Neither has a laptop, tablet, tv, iPod, car, etc. We're not poor by any means, but our priority has been having one parent at home, paying for college, etc... My kids are very money conscious, but not in a paranoid way, in a good way. Older dd had all tuition paid for, and we paid room and board. Younger dd had about half tuition paid. She finished college in three years because she didn't feel comfortable having us spend money we didn't have to, even though she might have liked to go abroad, take additional classes, etc (she did already have a double major/minor/honors certificate). We didn't ask her to do this, but she did. We are very open and honest with the kids about how much we make, what our expenses are, how we make financial decisions, etc...I think they see us being good money managers and they do the same. That said, they absolutely know that if they need anything, really need anything, we are there for them. I imagine we will be financing some of 2nd dd's move across country for law school, and when the 13-year old car we had lent her started having troubles, we gave her one of our two newer cars and kept the faltering junker, since dh has the option of bus/train to work and she doesn't. We have also paid for enrichment classes through AoPS, summer camps, private music lessons, etc.. although I will say that when the kids have won partial or full scholarships, we never discussed whether they'd keep the money or contribute (it was just assumed by all that they would contribute to the cost). I think most kids today get way too much money and way too much stuff.

I just called our credit union and they set it up. It's a custodial account, so we are ultimately responsible, but it's her own account number with a checking and savings. She could have checks, I guess, but we just gave her a debit card that she can take to the ATM or use as a Visa. I also have a credit card with a low limit (we typically use it for safe online purchases, that kind of thing) and I got a card with her name on it (it's still our card though and attached to our credit). This is expressly a "to be used only in an emergency" card (if she ever got stuck someplace and needed to grab a cab for example). This has never been used so far but she's entering the realm of class trips and activities outside our direct supervision.

Camps, classes, lessons, etc. come out of the household fund at this point and we have discretion on what we can and will pay for. As she gets older, this might change depending on what she's requesting.

I have to say that this reduced the amount of negotiation and bickering a huge amount. If she wants to blow her allowance on starbucks and expensive lipstick, she can... but will have to give up something else later. These are teaching her lessons in a way my lectures never did.

DeeDee, I love the parental bank idea and may incorporate that into her savings account (at the end of the month, I could transfer an additional x% into the account as interest).

For Chase Bank customers, HS checking is an option for 13-17 year olds (can keep until they turn 19). If it is linked to a parent account, there is no fee. It comes with a debit card. We have one for ds15 and will probably open one next year for ds13. I think it's good experience, and it was nice when he received a few checks for his confirmation. He's learned to electronically deposit, pay for things with a debit card, set up a credit/debit card online (on his Amazon account) etc...

Great! I see lots of great posts and some ideas to try! I am not wed to our current system but it has worked well overall during these tween years. Once DS and DD hit the teenage years, it may make sense to implement some modifications. It is mainly with DD that I foresee possible struggles. So far, money for grades was the only argumentative exchange and that was a couple of months ago and I think she has accepted that I won't budge on that particular issue. DD is a spender and always wants stuff, particularly if she doesn't have to pay for it.

Anyhow, I feel better now and not so much a scrooge. It appears that my approach is fairly middle-of-the-road, at least among the responding parents here. Some of my kids' classmates are given far more than I am comfortable with providing. It seems excessive, to me at least, for 6th graders to walk in with a Starbucks drink every morning. I do believe that it is appropriate for my kids to contribute most of their merit scholarships to the costs of the camp even if I had already paid. However, I also wanted to reward them for the extra effort of preparing a strong application since that would affect the outcome. To be fair, DS was completely fine and even DD wasn't actually whining since she knew upfront - it was more a look of of longing and jokingly attempting to appropriate the funds.

Regarding savings and checking accounts, I had both as a minor and they are fairly common. Since minors do not have the legal capacity to contract, an adult will have to sign the paperwork as well. Some banks will automatically convert these trust accounts to a regular account while other banks will make you get a new account number.

DD thinks that Starbucks is wonderful (and why wouldn't she when they are basically sugar and caffeine bombs). One of her aunts would get them for her (decaf, because that's SOOO much better, right?). I refused to buy them -- for her or myself -- because they are a) ridiculously expensive and b) terrible for you. Since we formalized her allowance and refused to pay for random snacks / drinks she went through the following stages of budgeting:

1. Joy -- I can buy what I want!
2. Shock -- How much do these cost?
3. Grief -- I can't go to the movie with my friend now.
4. Acceptance -- I think I'll just have a little coffee from the pot in the morning.

I think it's nice of you to share the scholarship. I wouldn't have, but would have pointed out that the money we saved was still in the household fund and available for other things in the future.

Older DD13 puts too high a value on cash - she never spends any at all. So I hand her money to go on field trips or out with her friends, because she needs to work up the courage to interact with cashiers and waiters. DD8 loves to spend and isn't shy at all. She spends her own money. It all depends on the kid.

LOL - I love your stages of budgeting! Actually, I have observed the same reactions in DD. As she has gotten older and started wanting more, I really have to harden my heart and not jump in to save her "pain".

Another way to work on those interactions would be to hand over store/restaurant transactions whenever they crop up and you're with her. Even if they're not cash transactions, your child can do everything except sign the slip (she could also enter a PIN if you're doing it that way, but I wouldn't advise it!). And in a restaurant, she should be ordering her own food.

Yes. She is very slow to become comfortable with this kind of interaction, but I've learned she will do it when in a group of her friends who are doing the same thing, so that's where we are pushing it right now. She's also still discovering that she has desires that can be satisfied by spending money - I have to point out that if she wants a hat, and has money, she could solve this. I was the same way - I first bought something for myself in late high school, and didn't do it routinely until the end of college. I'm not sure why it's so slow for her, but it isn't for her sister, so I'm pretty sure it's just an individual difference. DD8 has been placing her own restaurant orders and fluently spending birthday money since she was 3 or 4.

Maybe it's a sort of sticker shock? Exposing her to it like that is a great idea -- a ten dollar movie ticket seems like a lot to her because it's all her spending money for the week.

Thanks for all the info re:checking accounts.

However, about merit scholarships: I would let them keep any money they won or money from, say, an essay contest, but I feel like if they specifically win the money FOR a camp it should be used for that camp or another educational expense. It depends on the parameters of the application. Giving them money for applying is totally fair game, though. :-)

We have a fluent spender, too! I will say that he is generous to a fault with whatever money he has -- including mine. He offered to pay my (small) library fine the other day. I gave him the money, he came back and I asked him where the change was -- he said, "Oh, I told them to keep it to help the library."

Given how much we use the library, it made sense, but that did spark a conversation!

I also have a generous fluent spender. She has a hard time saving up for anything at all unless we artifically impose that. At the same time, she is the first to donate to any cause, will buy things for her brother (and they don't get along that well), and even wants to buy things for us. I find it fascinating to see her natural money "style," since it is not mine.

I'm not so sure that the particulars of handling money are so important as the message, the important message being...

Work=Getting paid
No work=Not getting paid

After that lesson, teaching that debt is dumb and robs the vast majority of people of their earnings shifting them to those who have learned to manage their money well.

There are a lot of effective methods to do that, so long as the lessons are actually learned.

Dave Ramsey's book, "Smart Money Smart Kids" is a good resource for common sense about teaching kids about how to handle money.

Generally speaking, this is one of the biggest differences between wealthy and not-wealthy parents. The wealthy tend to teach their children about debt using the positive term "leverage," and instruct them in how to use it to their advantage. Among other resources, the book "Rich Dad, Poor Dad" expounds on this difference in depth. Debt for acquiring liabilities is bad, debt for acquiring assets is good.

We just did a refi to reduce our rate and DD12 had a lot of questions about it. It was a great opportunity to talk about owning versus renting, debt (both bad and better), and the details of the mortgage industry.

These points may generally be true in a free society and a capitalistic economy, however many are witnessing pressures to change our country's culture and economy to one of socialism.

For example, paradigm shifts in classrooms may report equal outcomes regardless of number of repetitions to mastery, and may provide collective punishment. Some schools seek to minimize the role of parents in educating and rearing their children. Similarly, teens may accept federal "financial aid" loans for college, not fully realizing their job prospects, likely salary range, and years to repay this debt upon graduation.

Parents may wish to acquaint their children with as many different theories of personal financial management as possible. Like many risk-taking strategies, leveraging debt may be controversial with strong views on both sides.

We'll have to agree to disagree on this one. Everyone I know who is very wealthy labels staying out of debt as the number one priority to get there.....but we live in different areas no doubt too.
The other grand thing about teaching your children to stay out of debt is knowing they won't be shouldering the stress of it. Great thing about being out of debt....you don't have to be in a hurry to do anything and you make wiser choices.

I think you both have valid points, Dude is pointing out the steps to wealth creation which if course comes with risk, Old Dad looking at financial stability which may not come with the reward of "great wealth" but does have many other benefits. Which way you go depends strongly on your own family's social/financial viewpoint.

Personally I'll be teaching my kids to treat their money with respect and learn to speculate when they have proven they can manage what they already have. Of the few wealthy families I know, they have all been bankrupted at least once and would have been ruined if they did not have they skills to drag themselves out of debt. Nor would they be where they are now without some element of risk taking.

If one takes stock in the Bible, perhaps using it to educate their children, although there are about 2500 passages that discuss money, debt, and possessions, not a one of them has God using debt to bless his people, in fact, rather the opposite, instead it states:

Proverbs 22:7

The rich rule over the poor, and the borrower is slave to the lender.

Proverbs 22:26-27

26 Do not be one who shakes hands in pledge
or puts up security for debts;
27 if you lack the means to pay,
your very bed will be snatched from under you.

Romans 13:8

Let no debt remain outstanding, except the continuing debt to love one another, for whoever loves others has fulfilled the law.

Exodus 21:7

If a man sells his daughter as a female slave, she is not to go free as the male slaves do.

This relates to teaching your children about money in what way? You'll have to educate me on this, I'm missing the point.

Here is a Financial Literacy Quiz with results that have been found to correlate with wealth. One can take the quiz and have it scored at http://www.usfinancialcapability.org/quiz.php and also read about research employing the quiz. I wonder where a more advanced quiz can be found. A good site for savers and investors is Bogleheads.

Suppose you have $100 in a savings account earning 2 percent interest a year. After five years, how much would you have?
(A) More than $102
(B) Exactly $102
(C) Less than $102

Imagine that the interest rate on your savings account is 1 percent a year and inflation is 2 percent a year. After one year, would the money in the account buy more than it does today, exactly the same or less than today?
(A) More
(B) Same
(C) Less

If interest rates rise, what will typically happen to bond prices? Rise, fall, stay the same, or is there no relationship?
(A) Rise
(B) Fall
(C) Stay the Same
(D) No Relationship

A 15-year mortgage typically requires higher monthly payments than a 30-year mortgage but the total interest over the life of the loan will be less.
(A) True
(B) False

Buying a single company's stock usually provides a safer return than a stock mutual fund.
(A) True
(B) False

I think it was off-topic, but presumably the point being raised is whether the presence of morally objectionable passages in a book (or more broadly, teachings in a religion) means that the religion or its book have nothing to say to us.

Thank you for your interpretation Bostonian.
I think a couple of points important to realize here...

My prior post started with the following sentence...
(quote)
"If one takes stock in the Bible, perhaps using it to educate their children.....
(End quote)

I realize not all believe the Bible to be God's word or even that God exists, the post was written for those who do as evidenced by my opening statement.

Secondly, the passage quoted (Exodus 21:7) should be read in context with understanding of the events surrounding it's speaking and also understanding that slavery of the time was not slavery as we frequently refer to it in modern day. Slavery of the time was most often closer to an endentured servant.

If one feels that religion has nothing important to say to us about morality, they'd probably best understand that the basis of the majority of laws in modern society are taken from Judeo-Christian laws.

It's a financial transaction.

However, based on my clients, the current issue with sale tends to be for underage marriage, where you need parental consent to get married.

So, the potential husband and the mother of the underage girl may enter into negotiations, such that, for example, the man offers payment to the mother for her signature on the consent form.

I also do not see the connection between this passage and the topic at hand.

That said, it is my understanding that the passage refers to laws and culture of the tribes being addressed, in which male "slaves" were indentured servants learning a skill or trade (akin to modern day internship), and went "free" in the seventh year.

I agree this post and passages are apt.

In considering Bostonian's point, most modern day contracts contain a severability clause. Some may say a similar thought may apply to ancient texts: if part does not stand or is no longer applicable, the entire work is not negated.

There are many theories of personal finance, and it may be beneficial to be familiar with a wide variety of views on the subject.

It involves kids and money, whereas your quotes only involved money. I'll leave you to interpret it as you see fit, since you seem to be experienced in such matters.

Here's another one, since JonLaw brought up marriage contracts (my previous quote didn't cover marriage, just traditional slavery):

Deuteronomy 22:28-29

28 If a man happens to meet a virgin who is not pledged to be married and rapes her and they are discovered, 29 he shall pay her father fifty shekels of silver. He must marry the young woman, for he has violated her. He can never divorce her as long as he lives.

It's interesting for you to be claiming moral superiority while simultaneously saying "this flavor of slavery wasn't that bad," and also completely ignoring the fact that the quote provided guidance on selling one's daughter into permanent (i.e. not "endentured" [sic]) slavery.

I think it's also important to be familiar with statistics about such things as credit card debt, college loan debt, and market reasearch on job availability in the field of study a student wishes to pursue, as well as divorce rates of people who are in various stages of debt (Money fights are listed as the #1 predictor for divorce)

Financial leverage is a kind of like fire - it isn't good or bad, just something that can both burn you or help you get a tasty steak. I am in the Old Dad camp with regards to debt, but this is only partly rational. Some of us are temperamentally unsuited to the stress of being debtors.

Oh, I'm not saying I agree with how "Rich Dad, Poor Dad" describes leverage, I'm only reporting on the difference. Whether we're talking about tulip bulbs, stocks, or houses, we've seen time and time again how the reckless use of leverage to acquire assets tends to end. Excessive limitation of leverage will restrict growth, excessive availability creates disaster, and as in most things, moderation is the only reasonable path.

From a household perspective, moderate use of credit promotes a rise in your credit rating, which makes debt far cheaper to acquire. This can mean huge savings when buying a home, or when you can't step back from the precipice and jump into $200k of college debt per child. A young person might start out on this journey by financing a car, and end up paying several thousand extra in financing fees, then use that debt to acquire credit cards (which get paid at the end of each month, costing $0), and finally translate that into a home loan (an appreciating asset that doubles as necessary shelter) that saves tens of thousands over the life of the loan due to superior credit.

Of course, you're not going to get wealthy this way. To get wealthy, you need to take big risks, preferably with somebody else's money.

I have to step in quickly here and ask that you please move away from the religious/Biblical discussion. I understand the context in which it was introduced but this is not the proper venue.

Post deleted to keep in line with request

Agreed. A quick web search shows many resources for teaching kids about credit and loans. The most timely market research on job availability in a field of study may be the US Department of Labor, Bureau of Labor Statistics, Occupational Outlook Handbook (OOH). The "Big Future" feature of the College Board also provides information about majors and careers.

The assumption being that one needs a credit rating. The only reason to have a credit rating is so that you can aquire more debt.....so you can have a better credit rating....so you can acquire more debt....

There are still mortgage companies that manually underwrite home loans at reasonable rates for people with a zero credit rating. Everything else (and preferably the home too) save up and pay cash, everywhere I know stilll takes it.

To be rich doesn't take big risks, slow and steady also wins the race....and a lot more often than taking big risks. I might suggest the book, "The Millionare Next Door"

Yes, there are a lot of thought patterns to possibly teach your children concerning money. All I ask is that you look at how many times people have gotten into deep trouble with debt....and how many times they get into deep financial and marital trouble with debt, and how man times people get into deep financial and marital trouble by having no debt. Seems and open and shut case to me but you're free to apply your own logic.....their your kids you're teaching for the future.

This is fundamentally untrue, because one of the most important factors in a credit score is the ratio of accessible debt versus utilized debt. This means as your long-term debt is paid off, and you don't acquire new debt, your credit rating improves. If you get a new credit card with a $25k limit, and carry a $0 balance, you just bumped your credit score up, and it didn't cost you a dime.

Of course, you have to use the card every once in a while, or they'll close your account. So, you use it to pay for dinner a couple times a month, and pay off the balance when the bill comes.


Who? And what rate will they offer, say, a household earning 1.5x the local median? Because I'm well aware of loans to people with nonexistent credit backed by significant assets, but if you have those types of assets, you're kinda already rich to begin with.


Except that life happens. There's an accident, medical bills are coming in (medical bills are the #1 cause of bankruptcy in the US), your rainy day fund gets used up, and your car fails... now what? You lose your job, and now you're riding the bus and standing in line for a block of government cheese (is that still a thing?).

Credit is an economic shock absorber.

Also, the thing about "saving up" is that you get less than 1% a year if you put your money in a savings account (which won't even keep up with inflation, so your savings lose value day by day), but you can get far better returns putting that same money in appreciable assets, though it may not be immediately available. So you can continue to use credit on a situational basis, while your nest egg continues to grow. This is an important path to acquiring wealth.


You won't get any argument from me on the point that many people are bad at managing credit, but we're a gifted forum here, so we expect our children to be smarter than most. Teaching financial literacy is essential to that, though.

For more information about a zero credit rating mortgage you can start here:

https://www.churchillmortgage.com/c...s.aspx?CID=1&RLID=0&SCID=0&HLSID=&SLID=0

Rates vary depending on numerous factors as with any mortgage loan.

As for the rest of the prior post, you of course can teach your children anything you wish about money. If you want to teach them that debt is a smart idea....go for it.

As for me and mine, I'll teach them to spend less than they make, save up for their purchases, stay out of debt, save 6 months of wages for an emergency fund, and let their income be their biggest wealth builder.

USA TODAY has just published an opinion piece which touches on the subjects of money, the economy, employment prospects, and unpaid internships. Although the specific internship experience is with a political campaign, therefore the article has political overtones, however it can also be read simply for information about money, the economy, employment prospects, and unpaid internships.
When teaching children about money, it may be wise to touch upon the realities they may face in a shrinking economy.

Pew Research publishes recent numbers from the US Bureau of Labor Statistics, in an article by Drew Silver dated June 23, 2015, and titled The fading teen summer job. Graphs depict that in a strong economy, about 55% of teens worked summer jobs while in recent years about 32% of teens have summer jobs (ranging by ethnicity from about 19% to 23%, 25%, and 34%).

Some may say that in a strong economy, individuals have a choice to stay in the workforce longer... entering the workforce earlier and retiring later; Meanwhile the softening economy resembles a game of musical chairs.

So now it's like everyone is choosing to go to law school!

There is really no point in debating Old Dad on the merits of his debt-free absolutism. He's promoting the Dave Ramsey plan. Dave Ramsey is a personal finance guru who targets Evangelical Christians with his biblical financial advice. He teaches things such as the "debt-snowball method" in which people pay off smaller balances first instead of their debt with the highest interest rate because he assumes that his audience is too stupid and lacking in motivation to stick with a plan that takes longer to see results, but saves them money in the long run. He may be right with regard to his assessment of his target audience, but his methods really have no place in a discussion about what to teach highly gifted children who are capable of understanding more complex financial strategies.

https://en.wikipedia.org/wiki/Dave_Ramsey
https://en.wikipedia.org/wiki/Debt-snowball_method

Don't knock it till you've tried it

"Nonetheless, Ramsey has made a convert out of a secular journalist with one of the pricey M.B.A.s he likes to poke fun at. I have never felt as serenely in control of my finances as I have during these months of knowing that every single dollar is where it is supposed to be: either in the bank, or on a well-chaperoned date with our envelope organizer. The process has been surprisingly painless but, even more surprisingly, pleasant."

http://www.theatlantic.com/magazine/archive/2009/12/lead-us-not-into-debt/307751/

You assume that smart finance is all about math, in reality it's largely about habit. If you get into the habit of debt, it becomes more and more a part of your life and more and more acceptable, that's human nature.

Simply because one "understands more comlex financial strategies" doesn't mean they're disciplined enough to execute them wisely without falling into the debt habit that the financial companies are selling you......you didn't think they were willing to give you a loan to help you out did you? They're giving you a loan to make money off of you.

If paying off debt was simply mathmatical, one wouldn't be in debt so far they have to figure out strategies for paying it off.....it's about habit...but being in a Gifted Forum, I'm certain you already knew that discipline, habit, focus, and persistence always play a much bigger role in sustained success than ability to understand a complex concept.

Agreed. On the forums we frequently read of children who can answer correctly but not demonstrate a specific form of knowledge in context. Executive function (EF) issues may be common, and remediation, re-training, and learning to compensate may be vital life skills.

Helping children become familiar with a wide variety of personal finance information may be key.

Please read your own reference, because it basically makes my point for me. The first thing they talk about in getting approved is the need for an established credit history, with bolding added by me for emphasis:


Their summary says it all, really:


Their example is a very cheap $125k home, with 20% down. It takes most people a long time to save $25k, and those savings are losing value every day. If you're buying something closer to the national median house, you're saving even longer, and have even longer to depreciate. One thing that is going up, on the other hand, is your rent, because you have to live somewhere while you're saving all this money.

So a path to wealth building, this isn't. This is a perfect example of how wealthy and not-wealthy parents teach their children different values around money which help sort their children into wealthy and not-wealthy adults in the future. This sort of financial illiteracy more often leads to downwards mobility than the other way.

Straw man. I assume nothing of the sort. Please don't say absurd things and attribute them to me.

Sensible debt management is a habit, too.

This is strike 2. Everyone please stay on-topic and civil with each other, or I will lock this thread.

It appears that OldDad may have been addressing another poster, one who spoke of "complex financial strategies", as he used that same verbiage in his reply.

Warren Buffett's shareholder letters are available online. They are pretty funny and educational.

This summary of no-credit-score loans is nearly analogous to gifted kids... square pegs, round holes. We persist nonetheless.

Some may say the inflation rate (which causes savings to lose purchasing power) may still be less than interest paid if one borrowed the $25K. If it is difficult to set aside $25K, how much more difficult some may find it to repay principle of $25K plus interest. For some, the dilemma has become a matter of being able to choose only one: paying for college, home ownership, starting a family.

Current national median home price, according to Zillow, is $179,200, and has not recovered since the dip in 2008. The graph showing the dip deep in home prices underscores that many who purchased their homes at higher 2006-2007-2008 prices may now be underwater on their mortgage loans (owing more money than what their home could most likely be sold for, given the current supply and demand in the residential real estate market).

Yes, many are taught by varied and diverse life experiences, yet all may be following what they perceive as "The American Dream".


When it comes to kids & money, parents may wish to explain how an individual's decisions may impact and be impacted by the decisions of others. Here is a link to a website of information by Ray Dalio, economic principles. Here is a link to a post on another thread.

I'm going to be done with this thread as most viewpoints have been presented numerous times with their reasoning. Thank you for taking the time to share you opinions and best of luck to you and your children in their financial futures!