How I’m Teaching My Polar Opposite Daughters About Money

August 25, 2017

If you’re a parent, you probably know that sometimes you can be around your kids and wonder just how in the world they are actually related because they are so different. As a father and financial planner, I have really seen that difference in my two daughters this past year. My girls are teenagers and both are now working part-time and taking on more financial responsibility. That is where the similarities end.

Polar opposite financial personalities

My oldest daughter has a great work ethic and is a practical shopper when it comes to big ticket items, but she struggles to really plan or track her daily spending at all. My youngest daughter, on the other hand, will work only as hard as she needs to in order to make money and that’s it. When it comes to spending money, she values fashion over function and plans her expenditures down to the penny. Total opposites.

So how does a dad help these two very different daughters reach the same goal of financial well-being? Here’s how I am approaching it with each of them.

Work smarter, not harder

I don’t worry about my oldest daughter working hard enough. If things get tough, I know that she will do whatever it takes to make ends meet. As a result, my advice to her is not to work harder but to work smarter. She needs to take a look at the big picture before diving in to a project or a job to see if there are ways to be more efficient or even farm out the easier, less costly parts of a job.

Letting perfect get in the way of good enough

For my younger daughter, I know that she will have analyzed things from every angle to make things easy and efficient for her. Her challenge is that sometimes she lets the perfect get in the way of the good.

For example, she had a host of reasons for not wanting to work at the pool this summer – one of the few jobs that would take her before turning 16 this fall. She eventually found a job that was more to her liking, but she ended up only able to get 20 hours a week instead of the 32 per week she probably would have been able to get at the pool, which limited her earning potential. So for her and analyzers like her, sometimes it is better to take the good opportunity instead of waiting for the perfect one.

Finding a way to keep the little things in check

My oldest daughter is pretty good about finding a good deal when it is a big ticket item, but the little things kill her. When it was time to find a car – which she had to pay half of – she did extensive research and even though her dream car is an SUV, she realized that a compact car made more sense and found a great deal on a Ford Focus that should last her well into her young adulthood.

Day to day purchases are just the opposite – the debit card and apps like Starbucks make it very easy for her to fritter away her hard-earned money on convenience and impulse buys. She needs a better way to track her money.

She doesn’t need to spend hours each week planning out her spending, but I’ve suggested that she find a “hack” to make things easier like an app on her phone or using envelopes to limit impulse spending. Perhaps one of these six ideas from my colleague Kelley might help.

When fashion gets in the way of function

My younger daughter is constantly looking for car options… and she keeps looking for champagne cars on her beer budget. She likes crossovers but the challenge here is getting her to realize that they are more expensive so she would have to buy an older, higher mileage car that likely won’t last as long. Plus they would cost more to insure and burn more gas. She may feel cooler now, but will she still feel that way having to buy a new car all on her own in her very early 20’s? The jury is still out on whether she’ll listen to me or go with her penchant for fashion over value.

On the plus side, she has planned her day-to-day spending like a pro. She has literally budgeted every paycheck she is expecting between now and March to parcel out how much will go for the car, gas and her drama department trip to New York, while she plans to use her tips for fun money.

She puts her debit card away to prevent her from using it for impulse buys and only uses the cash tips for her spending money. I have given her a lot of praise for her planning and how she is managing her daily expenses.

The challenge that I talked to her about is over-planning – an issue that I have dealt with. She doesn’t really have an emergency fund or any wiggle room, so when she doesn’t get enough hours or things happen, it puts her into a tizzy. Planners like her and I will always struggle with over planning but having an emergency fund or a “life happens” line item in the budget can help ease the stress of things not going according to plan.

Different girls, same end goal

Despite their differences, my girls are great kids and both have a lot of money skills. The different personality traits mean that they may need different approaches to get to the same goal but I expect them both to do well in life.

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The Surprise Costs of Senior Year of High School

May 16, 2017

I was recently talking to a friend of mine whose son is about to graduate from high school and she was telling me how expensive it is to have a senior and how she wishes she would have started planning earlier for all of the money she had to fork out. Below are some of the things she wished she would have saved for:

College Entrance Exam fees: Most people forget to factor in the cost of college entrance exams. The SAT with the essay is $57, although the fee may be waived depending on your income. The ACT with writing costs $58.50. Similar to the SAT, the ACT can waive fees for low income students.

College entrance exam study programs: Initially, my friend used free programs like the ones at KhanAcademy.org and her local library to help her son prep for the college entrance exams. He ended up needing a combination of online and classroom style learning, so she also enrolled him in a college exam prep program, which can easily cost over $1,000. She suggests working with your child’s school counselor to research and review different tutorial programs to find the best one to fit your child’s need and your budget. She also suggests outright asking for discounts and combing websites like Groupon and Living Social to look for discounted college prep tutoring.

College Application Fees: The average college application fee in 2016 was $42. Her son applied to six colleges so the costs added up quickly. Although my friend did not qualify, you may be able have application fees waived based on income, applying online, being an alumni, or visiting the college. She suggests you and your child talk to the school counselor early about ways to save on college application fees.

High School Tchotchke: My friend was blindsided by all the things that came up “senior.” Senior mugs, flags and tee-shirts were a few of the items her son wanted. Then she got hit again with senior pictures, yearbook, varsity jackets and the class ring. The yearbook and pictures alone can climb into the hundreds of dollars. Give your child a budget as to what he can spend.

High school events: Senior trips, college visits, graduation parties, prom, post graduation parties and the wardrobe to attend the events can easily add up to over $1,000. She had to give her son a reality check that he could not rent a helicopter for prom. She suggested saving in advance and talking to your child about your budget and start shopping early for clothes. She rented a tux for her son’s prom but his date also rented her dress. Her son and his date went to a beauty college instead of a salon to cut his hair and style hers. A little researching and planning can save hundreds of dollars.

If you’re planning now for your child to head into senior year, use checklists like the one from Consumerist.com to estimate costs and start saving monthly. If your child is planning to work over the summer, have them contribute by saving part of their income to cover expenses. This may mean opening up a savings account and having part of your child’s paycheck automatically deposited into the savings account. Ultimately, the more planning you do and the more dialogue you have with your children about how much they can spend, the better you can manage the senior year dollar drain.