| It wasn't until about the fourth time that I gave | | | | it? No way, was her reply, and it was clear that |
| my teenager an allowance advance that I realized | | | | she grasped my point. |
| I was nurturing her to become a bad credit | | | | I then asked if she was a company president, |
| consumer. Living free at home with no bills to pay, | | | | would she hire a person who squandered paydays |
| how would she balance a budget when she | | | | to manage her company's funds? No way, she |
| moved out on her own? Would she continue to | | | | responded again. |
| borrow money in advance because she spent it all | | | | We then used a budget calculator to estimate |
| between paydays? Worst, would she constantly | | | | how much money she would need to earn per |
| borrow money from me when I retire and live on | | | | month to buy the big home, sports car, and to |
| a fixed income? | | | | take Hawaiian vacations every year. We also |
| Over the years I had lectured her on the value of | | | | added other monthly expenses (groceries, |
| money, but I never explained to her the impact | | | | clothing, insurance, utilities, etc), and totaled these |
| spending freely can have on her future needs--- | | | | figures. An easy way to do this is to use the free |
| getting credit for a home or auto loan, a low | | | | budget calculator at: |
| interest credit card, and even for securing a good | | | | After seeing how much money she would need |
| paying job. | | | | to earn, I asked her how would she achieve it, |
| So when she asked for the latest allowance | | | | with her current bad credit history of borrowing |
| advance, you can imagine the shock on her face | | | | money in advance? Who would give her a good |
| when I said it would cost her 20%, or she would | | | | paying job, and who would loan her money? |
| have to wait until her next allowance. Naturally she | | | | Naturally she thought life was unfair and that it |
| asked why, and how I proceeded to educate her | | | | shouldn't cost so much to live and to buy things. I |
| may be helpful to other parents. | | | | assured her she could achieve all that she desired, |
| First, I asked her to describe the home she would | | | | but not to rush. She had to live within her budget, |
| live in, the car she would drive, and how she | | | | save money instead of squandering every |
| would spend vacations when she was grown-up | | | | payday, get a good education and prove to |
| and on her own. After hearing her detail the | | | | employers and creditors that she responsibly |
| enormous home, fancy sport cars and tropical | | | | handled money. |
| vacations, I knew I had a task ahead of me. I | | | | She now uses the budget calculator to estimate |
| needed to educate her without extinguishing her | | | | her future financial and lifestyle abilities when she |
| aspirations. | | | | works her way through college, and when she |
| I asked her if any of her fellow teenagers | | | | gets her first career job. She knows that initially |
| constantly borrowed money from other | | | | she won't be taking as many vacations as she'd |
| teenagers. She said yes, and I asked her if she | | | | hoped and the sports car may have to wait, but |
| ever loaned money to any of her friends. She | | | | she's still motivated to achieve those luxuries. And, |
| stated no, because it was hard to get the money | | | | just like a grown-up consumer rebuilding bad credit |
| back. I then asked her if she were a bank | | | | into good, she asked if I would pay HER interest |
| president and one of her money-borrowing friends | | | | whenever I was late paying her allowance. |
| came to her for a home loan, would she approve | | | | |