Where Should My Child Park His Money
Q. Our son is 13, and he has been doing some part-time work for a friend of the family. He makes $40 to $60 a week, and he would like to begin investing the majority of what he earns. Do you have a suggestion?
A. Well, here’s the thing. At this point in his life, the goal of this investment isn’t wealth. Number one, it’s not a lot of money. Number two, well, it’s not a lot of money. The goal is to create knowledge, reward his interest in the subject and teach him how to handle his finances as an adult.
I’ve got no problem with you helping him open checking or savings accounts at a local bank or credit union. There are lots of good lessons to be learned in reconciling a bank statement, and the value of spending, saving and giving. Then, you could get with a good financial pro, one with the heart of a teacher, and let him open a mutual fund for $50 a month with you as the custodian. He could learn about compound interest, how to calculate the value of his shares and other things, and all that would be a good learning exercise.
We did these things with our kids. But keep in mind that over the course of a year—and when you’re 13, that’s an eternity—there’s not going to be a lot of action on the investing side of things. It could be kind of boring for him at times. But he’s better off to learn now that good things don’t always come with flashing lights and whistles. Slow and steady wins the race!
It's Always a We Thing
Q. My husband recently approached me with an idea for our money. He wants us to set up an account where we both put 10 percent of our income for discretionary spending. My husband makes more money than I do, and because of this, he says it is fair that he would be able to spend more than I would. How do you feel about this?
A. I’m sure deep down he’s a decent guy and he loves you very much. But he’s looking at this all wrong. Right now, he’s being pretty immature and selfish about the situation.
Let’s look at this from another angle. There are lots of families where only one person works outside the home and generates an income. Would it be fair, then, to say only the person making money is allowed a little cash to spend for fun once in a while?
When two people are married, they are pronounced “as one.” That means even if you only have one person with an income, it becomes our income. If you have kids, they become our kids. Marriage is not a me thing, it’s a we thing. Always.