Summer’s here, and along with the children at home, long days, and outdoor grilling come additional expenses that have the potential to bust a family’s budget.
If not properly planned, a summer’s fun can leave parents paying off out-of-school debt before the back-to-school sales even start.
Yet if handled well, parents (this also applies to grandparents) can not only survive the summer without adding any debt but also use its dog days to teach their charges valuable lessons. First, the ultimate source of money is not mom’s purse, dad’s wallet, or the even the U.S. Mint, but rather to work. Second, since money stems from work, work stems from time, and time is limited, so too is money. Third, limits require choices. Although no one can have it all, through smart choices we can maximize our financial and non-financial resources.
That’s just what’s in it for your children. If handled properly, us adults can get valuable work accomplished for money that we would have handed out anyway.
Many parents trade an allowance for a set of chores. This is admirable and advisable, as it ties money to work and teaches children to chip in around the house. It falls short, however, as the cure for the summer-time blues because summer often requires additional money for camps, movies, vacations and other activities.
Consider providing a summer bonus. Put children in charge of a summer clean up and sale. Most of us have plenty of junk around the house that we somehow never seem to get around to organizing, giving away, igniting or selling. One person’s junk is another person’s treasure. Explain to your children that your household detritus is in fact their summer bonus pool. All they must do is collect it, get approval to sell it (this is very important, as you don’t want your new computer sold at a deep discount), and find a way to make a deal with a willing buyer.
Common venues are the standard driveway tag sale, local flea market or now days the virtual Craigslist or Facebook Tagsale. Explain that any money earned is your child’s to keep—this will give them an incentive to price it correctly. Make it clear that this is the summer fun budget, a soon to be determined fixed amount of cash to pay for their supplemental fun. They’ll be no open access to your purse or wallet.
Parents are free to sweeten the pot. A 401K-like match works well. For every dollar they earn getting rid of your stuff, perhaps you’ll match it with $1. You can use this to teach the value of savings. Let your children know that they’ve earned the money, then put it in an account where they can’t get at it. Invest it wisely and show them the statements.
Many parents will be surprised at their children’s reaction. We are all creative, and once people understand there’s money to be made in making smart choices, they quickly discover prudence. All of a sudden a book from a library rather than from Amazon doesn’t seem like such a bad deal. Children who understand that they get to keep the difference, will suddenly quit complaining about not being able to make regular visits to the $25 water park and instead enjoy a public pool or even better, a free neighborhood one.
With a little luck, both parents and children may end the summer with a little extra cash.
Mike Lynch CFP® is a financial planner at the Barnum Financial Group in Shelton, CT. He can be reached at mlynch@barnumfg.com or 203-513-6032.