Kids & Money: A 15-yo’s Financials

To my reg­u­lar read­ers or those read­ing through my posts in a chrono­log­i­cal man­ner, I apol­o­gize for not fol­low­ing a more lin­ear path when dis­cussing how I’ve han­dled my approach to chil­dren and finances.  Events hap­pened recently to bring our cur­rent finan­cial poli­cies for The Daugh­ter to the fore­front of my think­ing.  I thought, too, that this cur­rent “snap­shot” might pro­vide some bal­ance to last week’s Kids & Money post:  Putting Baby on a Bud­get?.

As I wrote last week, due to my edu­ca­tional philoso­phies I chose to delay my children’s expo­sure to finan­cial mat­ters.  To recap, we waited until our chil­dren were 7 before start­ing an allowance and we waited until they were 8 before allow­ing them oppor­tu­ni­ties to spend money.

Let’s fast-forward to what my now 15-yo daughter’s finan­cial edu­ca­tion and expo­sure looks like.  Is it still delayed?  Are the strong lines of “adult” and “child” still in place and still so defined?

Her finan­cial assets: 

The Daugh­ter cur­rently has a check­ing account with a check­book and a debit card, a sav­ings account earn­ing 4.75% APY, and a tra­di­tional CD earn­ing 4.95% APY.  Between these three accounts, The Daughter’s cash assets are approx­i­mately $2,500.00.

All three are co-owner accounts since The Daugh­ter is still a minor and I couldn’t find a bank that would let her open her own indi­vid­ual accounts.  In fact, it took a bit of look­ing to find a bank that would even allow co-owner accounts instead of cus­to­dial accounts.

Apart from a sav­ings bond we cashed out 1–1/2 years ago for ~$850.00, The Daughter’s cash assets are solely the result of her own income (see below) and sav­ings habits. 

Her rev­enue streams:

The Daugh­ter has three main income sources –

1. Her Allowance:  The Daugh­ter receives $6.00 per week, paid monthly.
2. Her Job:  The Daugh­ter is paid $10.00 per week by the church to pro­vide child care dur­ing the adult ser­vices.  The arrange­ment is that she gets paid every week whether there are chil­dren to watch or not.  How­ever, on the weeks when she doesn’t go to church (hap­pens occa­sion­ally, I sub­sti­tute), she doesn’t get paid.  The Daugh­ter landed this cushy child care posi­tion last summer.
3. Gift cards and cash on birth­days and hol­i­days.  Cash gifts are a rare occur­rence (in fact, I can’t remem­ber her receiv­ing a sin­gle cash gift over the years) but gift cards are fre­quently at the top of her wish list and fam­ily often obliges.
4. Some­times, though rarely, The Daugh­ter earns extra cash by babysit­ting.  Her extracur­ric­u­lar (sports) sched­ule and home­work work­load pre­clude her from being able to accept most of the job offers that she receives.  She does babysit more fre­quently in the sum­mer than dur­ing the school year but sum­mer vacation’s only 2 months long and last sum­mer she was gone for half of that time.

A fifth source of “income” that at this point involves no cash is The Daughter’s monthly cloth­ing allowance.  The cur­rent arrange­ment is that she gets $100.00 per month to spend com­pletely at her dis­cre­tion.  What­ever she doesn’t spend in one month car­ries over to the next month.

Her finan­cial responsibilities:

I do not place any sav­ings require­ments on The Daugh­ter.  She is free to spend as much or as lit­tle as she chooses on, for the most part, any­thing she chooses.  And she is not required to tithe or make char­i­ta­ble dona­tions.  Almost with­out excep­tion, she is free to spend her cash, her gift cards, and her cloth­ing allowance in what­ever man­ner she chooses.

The Daugh­ter is respon­si­ble for pay­ing for all gifts she pur­chases for friends and family.

At the begin­ning of this school year, The Hus­band and I signed a per­mis­sion form that allowed her to go off cam­pus dur­ing lunch.  If she chooses to walk with her friends to the cof­fee shop or local Mom & Pop gro­cery store, she’s respon­si­ble for fund­ing those forays.

She pays for her own music down­loads and for any books pur­chased for leisure-time reading.

She pays her own library fines and most of her inde­pen­dent recre­ational pur­suits (ie, if she sees a movie with her friends, she pays; if we see a movie or go to a con­cert as a fam­ily, I pay).

Although her cloth­ing allowance is still hypo­thet­i­cal (it exists as a bud­get cat­e­gory), she alone is respon­si­ble for mak­ing all cloth­ing and clothing-related pur­chas­ing decisions.  Anything that she puts on her body has to come out of that allowance includ­ing all ath­letic gear (shoes, ankle braces, warm-ups, etc), inti­mates, and the daily-grind prac­ti­cal stuff (win­ter coat, socks, etc.).

Her finan­cial awareness:

In addi­tion to being com­fort­able with bank state­ments, checks, and debit card usage, The Daugh­ter is gen­er­ally fis­cally savvy.

She under­stands the dif­fer­ence between a debit card and a credit card.

She knows what an NSF charge is and how to avoid ever hav­ing to pay one.  She is aware of the dif­fer­ence between the inter­est her money is earn­ing and the rate of inter­est she’d have to pay if she bor­rowed money or used a credit card and didn’t pay the bal­ance in full.  She does not view credit cards as evil but, then too, she does not view credit as free money.

The Daugh­ter knows what a mort­gage is.  She knows how pre­pay­ment works and she knows that some loans come with a pre­pay­ment penalty.  She’s famil­iar with home inspec­tions, clos­ing costs, bro­ker fees, ARM’s, interest-only loans, VA loans, mar­ket value, appraisal value, and sweat-equity.

She under­stands com­pound­ing interest.

She knows about income tax, sales tax, and Social Security.

She knows what a pay­day loan is and why she should never get one.  She knows what usury is.

Tal­ly­ing her finan­cial score:

In all hon­esty, I couldn’t be hap­pier with The Daughter’s finan­cial atti­tude and aware­ness.  She has, thus far at least, suc­ceeded in find­ing a bal­ance between fru­gal­ity and the strong attrac­tion she feels to clothes, fash­ion, and all things bling.

She has an excel­lent grasp on the dif­fer­ence between her wants and her needs and seems able to derive long-lasting plea­sure from small indulgences.

She appears to be devel­op­ing a strong sense of when to buy for qual­ity and longevity and when she’s bet­ter served by going cheap.

She’s extremely gen­er­ous and is a first-class gift giver.  She isn’t extrav­a­gant but never pulls her punches when it comes to giv­ing qual­ity and mean­ing­ful presents to friends and family.

She has, quite inde­pen­dently (though I take credit for giv­ing her that first strong taste for watch­ing her inter­est earn­ings grow) set up an aggres­sive sav­ings plan with her tar­get being to save 50% of all earned income.

Although her good finan­cial habits are no guar­an­tee of future fis­cal respon­si­bil­ity, I have every rea­son to expect that she will con­tinue on her cur­rent path.  There will, in all like­li­hood, be mis­takes made along the way.  All of us even­tu­ally have a finan­cial mis-step or two.  Still, I find her nat­ural finan­cial acu­men to be com­fort­ing and encour­ag­ing.  I believe that her cur­rent finan­cial habits result from a com­bi­na­tion of nature (her own per­son­al­ity) and nur­ture (the exam­ples set by The Hus­band and myself) and I feel fairly con­fi­dent that when she heads off to col­lege in just over two years, irresponsible finan­cial behav­ior will not be one of my main wor­ries.  

Although I might well be delud­ing myself, I believe that despite our delayed intro­duc­tion to money and spend­ing (or, in my per­sonal estimation, quite pos­si­bly because of it), at 15 The Daugh­ter is way ahead of her peers regard­ing per­sonal finances.  None of my peers’ chil­dren are as respon­si­ble for their own per­sonal finances as my daugh­ter is.  And from what I’ve learned about her cur­rent class­mates, she’s light-years ahead of them in this regard as well.

Related posts:

1. $$: No-Spend
2. Updated Allowances
3. A Son’s Epiphany and A Mother’s Lesson
4. $$: Allowance, Food, & Supplies
5. Dou­ble Dipping