Prepping Kids (Part 3 of 4)

Essential Money Skill #4: How to manage bills and other paperwork.

I can’t believe the number of people who just throw their crap in a drawer, never open their bills, or leave everything until the last minute. It’s no wonder financial institutions are making a fortune off NSF fees and overdraft protection. If you want your child to be one of the fools who ends up paying too much in bank fees, then let this lesson just slip on by, like those unpaid bills.

Having a system for money management isn’t hard, but it does take some discipline. But Gail… I hear it now… I can’t get him to put his dirty dishes in the dishwasher… I can’t get her to pick her clothes up off the floor… I can’t get them to (fill in the blank with this week’s tick-off). I know, I know, they are messy thinkers and messy livers. But that doesn’t negate the need for you to teach this lesson.

If you’ve already taught the budget lesson from EMS#1, then your child already knows how important it is to keep track of every penny. What she may not know is the consequence of missing a payment on a credit card, being late with a bill payment, or not keeping track of her paperwork.


  • Give your kid a small office in a box so he has everything he needs in one place. Review the process for getting financially organized. You can use this as a guide.
  • Explain what a credit history is, and how missing payments can mess it up.
  • Create an employment file. This is where Molly will put her paystubs and tax forms. Talk about taxes, the fact that certain expenses can be a write-off and save money, and how to keep track of those expenses.
  • Have Junior make a Personal Property Inventory including photographs and serial numbers for everything of value that will be leaving home with him.
  • Create a Student Loan File which includes all student loan information, a projection of how much student loan debt she will have when she’s finished her degree, how much her payments will be when she begins her loan repayments, and when those repayments start. If Susie has already finished school and is now striking out on her own with student debt in tow, this is still a very useful exercise.

    Whether your son or daughter is living in residence or living in an apartment, (s)he should know what it’s costing. Create a file that contains all the pertinent paperwork for the lease/rental/residence. Make sure your kid knows this is being paid with “NET” income. Go through the exercise of figuring out how many hours of work it will take THEM to keep this roof over his head and food in her tummy.


Essential Money Skill #5: How to save for a goal.
Everybody needs to learn to set aside some money for the future. Most young adults have NO interest in retirement planning. They’re coping with making it to the end of the week, never mind the end of their working careers. But without a sense of how important “saving” is, they could end up never figuring out this very important lesson.

Even when they are small, kids need a reason not to spend. Whether it’s saving up to buy yet another pack of Pokemon cards, a new bike or an iPod, learning to set money aside for the future is an important skill. NOT SPENDING is a tough lesson, but one that can be nurtured.

As kids get older, the idea of having to delay gratification comes more naturally to them. It’s amazing just what teenagers will do to get what they want. Of course, “want” is an important part of the equation.

I know a young man who never wanted much. With little desire came a small amount of ambition. Despite being very bright, he never excelled at school. He never much cared what kind of job he had or how much he made. He sort of just coasted, eking out just enough. He had been taught this lesson by a stern mother who made it clear from he was a tot that he shouldn’t want anything because he wasn’t going to get it. The lesson stuck.

There’s nothing wrong with wanting. It’s what drives us to get a good education, to save for a home, to achieve some level of success. Whether you want to earn buckets of money, want to make a difference in people’s lives, or want to live peacefully in the world, ambition is a good thing. And since money gives us choices, teaching the lesson that having some makes achieving what we want easier is important.


  • Whether your child is eight or 18, show her how to set a goal, break that goal down into small, measurable steps (go read the blog on milestones) and prioritize to achieve those steps.
  • Talk about establishing an emergency fund. How have you had to use your emergency fund? How might an emergency fund save your goose? How might it save his?  Help him set the parameters for building his emergency fund.
  • Explain the difference between long-term saving and planned spending.  Read Piles of Money.
  • Find an on-line calculator and show her how long-term compounding makes saving easier. Using a retirement calculator, demonstrate the growth of $100 a month starting at 22 compared to starting at 32 and 42. This not only demonstrates how to put time on your side, it also shows how even a little saved for a long time can make a big difference.

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