I'm not the first person to say it -- it's expensive out there. During these challenging financial times we live in, when a coffee "on the run" can cost you anywhere from $2.00 to $7.00, how do we as parents, ever expect to be able to the cut the financial umbilical cord with our kids?
As the mother of three young women, all in their 20s -- this stage has not proven easy to tackle. Our 27-year-old has recently moved back in to help her save for her upcoming wedding, while she pursues different job opportunities. Our middle daughter, who is 26, and works as an assistant stylist in LA, resides in our second home there -- free from paying rent (although she pays for her other expenses). The youngest, who is 20, is in her third year university and living off campus with roommates. We're helping out while she's in school by covering her rent, and her tuition. She covers her day-to-day necessities with money she's saved from summer internships.
As you can see, we're currently on the hook for a lot with our girls, and I know I'm not the only parent who feels this way. Younger kids these days no longer just have part time jobs. The emphasis is on a competitive sport or two, music lessons, after-school tutoring -- all to assist them with their GPAs so they can get into that Ivy League School, or college of choice. While these are all important skills, and assets for them to have, what good is it for them to have academic intelligence, but not financial intelligence? The short answer: it's no good.
If you're like me and you want to be able to cut the financial umbilical cord with your kids, start when they're young. Help them procure a part time job -- even if it's just one shift a week at first. Have them open their own bank account, and teach them how to balance their account.
Back in the day -- I sort of abhor using this phrase, because it makes me feel old and sound like my mother, which I always swore I wouldn't do when I grew up and became a parent -- I was 12 I started my first job. I was hired to be the pizza girl at a "restaurant" in the mall food court. My wage was $2.10 per hour.
I felt a wonderful feeling of independence. I could buy what I wanted with my hard-earned money: jeans my single mother could not afford for me, lunch with friends, or I could take myself to the movies, something I loved to do.
It's not like our daughters aren't trying to make their own way, it's just that most jobs for young people leaving post-secondary school, are unpaid internships. I'm not kidding you when I tell you, it is a bit bleak as a parent to visualize the day when our girls will be wholly, financially independent of us.
So how can we help our kids find financial stability while we "cut the cord"? Show them how to budget. Show them how to save for items on their "must have" lists, and how to save long-term for a "rainy day." What I will say is this; if you do the work now, if you teach them to have respect for your money, and their money as they earn it, you're much less likely to end up with a 30-something year old kid living in your basement, while you continue to foot the bill for them.
Giving them the tools they need to not only understand money, but also develop a healthy relationship with it, is your best bet to getting that financial umbilical cord cut -- sooner than later. Do your part in getting them on their way to financial independence; they will thank you, and your marriage will thank you too! Less money spent on your adult children is more money to spend on romantic holidays, and "couple time" or "you time" -- and how can that be bad?
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You may feel like saving is impossible with that huge pile of debt sitting on your back, but unless you take care of it first, you won't be able to plan out a clear financial future. "High debt levels will slow down your saving and investing abilities when you start working, so do everything you can do to stay out of debt," says author and financial coach David Campbell Lester. Obviously, this situation isn't ideal for everyone — especially students who take loans during the school year and don't find full-time work right away. Once you graduate, talk to a financial planner to figure out how much you should save each month, and if you're a student, talk to your school's career centre for part-time work or look for grants or scholarships.
This can either be someone who works at your bank or someone you know who is really good with their money. Meet with your mentor once a month and discuss your challenges and successes thus far in terms of your career and finances, Lester says. And although it may be a little embarrassing to share your savings and debt numbers with someone you know, remember, we've all been there at one point.
"When in school, get a part-time job that will complement your career when you graduate, and give you cash to keep out of debt," Lester says. Although getting part-time work can be tough during the school year, try looking at jobs on campus that can work around your schedule, and give you more skills in your preferred field.
If you love your credit card and treat it like a best friend, make sure you're using it for the right things."Build credit by paying your mobile, cable, internet, and other fixed costs on your credit card and then pre-authorize a full payment at the end of the month," he says. Don't make of habit of paying for everything on credit — especially if you can't pay it off. Also, when you are looking for a credit card, choose one (or two) that will benefit you with either points or a cash back feature. Credit can be your friend, as long as you don't create a hole of debt.
If you know you have $100 a week to spend on food, coffee, entertainment, etc. then leave that amount in a "spending account," or take it out in cash every Sunday, Lester says. If you are the type of person who is more likely to spend cash if they see it in their wallet, start with a small amount, like $20 to $40 per week.
Make your own coffee that day, pack your lunch, stay in and watch Netflix, and make your own dinner. Start this challenge by bringing your lunch every day, for example. Turn it up a notch by implementing financial-free weekdays at least three times a week. "Going out only once a week will save you a ton of money," Lester says.
Have your bank transfer 10 to 20 per cent of your paycheque into a savings account every time it goes in. Over time, it will grow and you won't even miss the amount. If you're worried about spending it, try opening up a separate bank account without any fees or invest in a TSFA. Remember, once you get comfortable, you can move up the percentage.
Looking into the future, start thinking about investing in property. "Real estate has gone up in the long run and there isn't a single better investment for retirement than a home that is paid for," Lester says. Although this may seem out of reach for most millennials, start saving early by putting away a certain amount of money each month for a condo or house, live with roommates to decrease your own rent costs, and keep an eye out for new buildings or units in your area.
"I know it seems boring, but once you have a portfolio of investments pumping money into your account, you'll see it as fun too," Lester says. Join an investing group, watch the news for the latest numbers or pick up some investing books from the library.
Take a minute to actually figure out where your money is, including how much money you have in each account, money you owe and money you have invested, if any. "You don't have to cut out expensive coffees, shop with coupons, and live like a hermit to be a money champ. Spend less than you make and save 10 to 20 per cent for your future," Lester says. If your net worth is increasing year after year, you're on the right track.
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