The following is a guest post.
There is so much information that a parent imparts to their child. From learning how to walk to riding a bike, there are an unlimited number of tasks to teach children. Often, the concept of money, how to spend it and how to save it can be overlooked.
In order to give your child a head start financially, begin teaching them about money and how to save it.
Why is it important to save money? Kids need to learn why the idea of money is such a big part of their financial future. Younger children may not question the practice. If they have always been saving, they may just assume that is what they need to do.
As they get older they will wonder why they are putting money away that they just can’t use right now. This is a great chance to talk to them about why they are saving.
What should they be saving for? Depending on a child’s age, there are several ideas you want to touch on. The first is saving money for something special. For most kids, this is an understandable concept.
When they walk into a store they immediately look for something that they want. Explain that saving makes it possible to go into a store and be able to pay for something that you want.
Older kids will understand this concept as you mention purchases like a vehicle to drive, college books and tuition or even a new laptop computer. These are expenses that may be coming up soon and they want to have enough money in the bank to be able to make these purchases when the time comes.
It may be possible to explain the idea of saving for an emergency as well to older children. Let them know that as an adult there are always unexpected expenses that come up.
From a car repair to a home repair, these things happen and you want to be prepared. Saving money makes it possible to handle these unexpected moments.
How can they save money? Teach your children to put away a certain amount of their money each and every time they receive it.
Older children may be able to understand the concept of saving a certain percentage.
Younger children just need to be given an amount that they should save each time they come into some money. Whether it is a birthday check from grandma or their weekly allowance, show them that each time that money comes in, some of it is saved.
Where should they put the money they are saving? Money that is saved doesn’t usually go in an easily accessible place. Piggy banks have a slot on the top to put money in, but it takes forever to take the tab out and shake out all of the money.
CFM comments: I remember saving my birthday money, money I got from cutting grass during the summer, and from part-time jobs in high school. Having my dad drive me to the bank and deposit the money and writing the total in a passbook was fun. Those were the days when savings accounts would pay up to 7% interest. I didn’t know as much about inflation or “real interest rates” then.
I wasn’t going to mention this, but since Crystal over at Budgeting in the Fun Stuff has a dog with serious allergies, I thought I would add my little rant to the pet pity party. My mother-in-law had pugs for a long time so I know how crazy those dogs can be. But I suppose I should really start at the beginning.
It all started when our 7 year old cockapoo got killed in a tragic car accident. It happened about 14 months ago. My wife and a couple of the kids were on the way home from the groomer with the window down. They were at the entrance to the neighborhood and who knows what goes through a dog’s head (maybe he recognized the area), but he jumped out the window into oncoming traffic. There was no way for the car to avoid him. My wife scooped him up and rushed him to the vet, but you can guess that it was moot. He was dead at the scene as they say.
Of course, the family was devastated so the search began for another cockapoo. No big deal. During this whole escapade, the kids (maybe with some encouragement from my wife? Not exactly sure how it all happened) got the idea that getting two cockapoos and having puppies would be some great adventure. So that is what happened.
The First Litter
Fast forward to this summer when, in August, the first litter of 4 puppies was born. We got 3 boys and 1 girl who are mostly black. The little girl went to some friends but the others are ending up for sale, although one puppy will be going to a fund raising auction at my daughter’s school.
Puppy #3 is the one being donated and is also the runt of the litter. Well, he is the one that just happened to be underfoot when my 12 year old son stepped backwards while taking them outside to do their business. Fortunately, he says he didn’t step down all the way, but the damage was done. Puppy #3 didn’t look too hot afterwards. He was breathing hard and making some funny noises.
At the vet, he was found to have broken ribs (5 of them) with a bruised lung. He was gulping a lot of air while struggling to breathe which made his belly big (I learned that at the hospital). He looked like he had swallowed a grapefruit.
This is what we found out at the first vet which is our local vet. Unfortunately, they close for the evenings and puppy #3 needed to be closely monitored over night. So after paying the first vet bill of $400+ for xrays, blood work, pain medicine, exam, etc, I transported him in a little cardboard box to the animal hospital on the north side of town.
They confirmed the diagnosis and at least didn’t feel like he needed an abdominal ultrasound for his big belly (at $200) but felt that he was gulping air.
ICU Care and Oxygen
It turns out that the puppy had to stay for almost 48 hours at the animal hospital plus had to stay in the ICU with oxygen therapy that first night. I took the kids to visit and he looked so pitiful in a little oxygen aquarium looking device. He looked bad enough that I thought he might not make it, and the vet was unwilling to commit to what he thought as well.
The next day, he was breathing a little better but still wasn’t really interested in eating or drinking. He was off oxygen but everyone involved felt that it would be better for him if he stayed in the hospital another night. At least now, it seemed like he would survive.
We took him home the next day after paying $900+ to the hospital for 48 hours of care. Ouch! But, I am pleased to report that he improved greatly while at home and as I write this just 7 days after the initial accident, he is running around and acting just like nothing ever happened. We have allowed him to spend a little time playing with Puppy #1 who is not much bigger but have been keeping him away from the other dogs due to the size difference.
Even though I don’t have an emergency fund per se (I need to work on this), I was able to take care of paying the cost. But it still hurts to have to deal with the expense. I had hoped to put that money toward some debt. At least my son isn’t too bothered by it. He felt really bad initially and that first night in the ICU but at least the puppy is doing well. I told him that it isn’t that much different in cost from when his sister wrecks the car and we pay the insurance deductible of $1000. I think that helped him feel better.
So, there is my pet rant.
Readers: Feel free to add to the rant and expense of raising pets.
I was hoping to write a post in the near future on how my next goal was to establish a real emergency fund in order to have cash set aside for car repairs, home appliance repairs, or medical emergencies. Having six kids means lots of potential emergencies so it would really pay to be prepared. Plus with the credit crunch, it really isn’t a good idea to depend on credit for an emergency fund.
Of course, I bet you can see exactly what is coming. It is just like any overworked plot on television. The air conditioning stopped working yesterday morning. I woke up, and it seemed awfully hot in the house. I checked the thermostat. It was reading 83 degrees at 5 am. Not good! The air coming out of the vent was lukewarm and my heart sank. I just knew what the writing on the wall said. It said, “Your air conditioner is 10 years old. Major appliances will only last about ten years. You will need a new one. (Evil laugh).”
Of course, the repairman that came out could read the same writing and suggested that I could get a new compressor for $2500 or a new unit for $4050. Well, it only made sense to spend a few extra dollars and replace the unit that will need replacing anyway. Why spend $2500 this summer only to need a new one in the next year or two because something else goes?
While I don’t have an emergency fund per se, I do like to keep a month ahead on my fixed bill checking account. I do this since I only get paid once per month on the 5th and have most bills due in the early part of the month. Without the cushion, the due dates and time it takes for funds to clear can be cutting it dangerously close. Well, the money has been transferred, and we will be getting a new air conditioner on Friday right as the weather starts to heat up a little more. In the meantime, fans and the basement are OK. Of course for me, being at work is COOL (literally)!
Despite this temporary and ill-timed set back, I still need to put together a true emergency fund. Initially, I was thinking about $5000 which seems just about right for a major household appliance like the furnace. I also know that having a transmission rebuilt on a minivan is about $2200, but I have already done that.
I have been reading lots of posts about emergency funds and Dave Ramsey’s $1000 start. While that might be good for a baby step, I really think it needs to be more. Squirrelers makes a great case for a bigger emergency fund, and I would have to wholeheartedly agree given my recent experience. So rather than be able to share that I accomplished my goal of creating an emergency fund, I will have to lament my lack thereof and save that post for another day. You can bet I will be working on it, though.
Any comments or sympathy would be appreciated (wimper).