Your Money_ The Missing Manual - J. D. Roth [155]
In her book Miserly Moms (Bethany House, 2001), Jonni McCoy notes that because childcare is so expensive, there's frequently no financial advantage for both parents to continue working. Between the cost of childcare and the cost of working (food, transportation, clothing, and so on), the second salary may be effectively negated. But how can you know if you're one of those couples that can afford for one parent to stay home?
The Parents.com stay-at-home calculator (http://tinyurl.com/SaH-calc) may help. Enter your income, expenses, and what you spend for childcare and work, and the calculator estimates whether living on one income is feasible.
If it's a priority for one parent to stay home with the children, how can you make that happen? It's important to discuss these questions early: Will you need to make cutbacks? How big will your emergency fund need to be before one partner leaves the workplace? Will you have enough insurance? You may need to scale back your lifestyle so one parent can stay home with the kids; many folks are willing to make these sacrifices because they feel that being a parent is the most rewarding career they could ever have.
Raising money-smart kids
Teaching your children about money is one of the best things you can do to ensure their success. Financially aware kids become financially aware adults.
In order to raise money-smart kids, you need to be open about your family's financial situation. Some parents try to shield their kids from the family finances, but this does more harm than good. Teach children about money from a young age by letting them see how and why you make various financial decisions. If they see the challenges you face, they can prepare for them in their own lives. Here are some other tips:
Set an example. Model the behavior you want your kids to learn: If you want them to save, save. If you don't want them to become compulsive shoppers, try to curb your own impulse spending.
Be prepared. Have answers before you need them. Know how you're going to handle specific situations like allowances or begging for candy in the grocery store. (I know one couple who turns their kids down by simply saying, "Sorry, but that's not in the budget.")
Be consistent. Kids do best with clear, consistent expectations, so think carefully about your family's money rules before setting them. Don't be so rigid that there's no wiggle room—be willing to mold your system to fit your needs—but once you've set a policy, apply it consistently and fairly.
Be honest. Share your successes and failures. Tell your kids what you did right and what you wish you'd done differently. Explain your thought process each step of the way.
Most of all, make this learning process interactive. Involve your kids in frugal activities that teach them self-sufficiency, like gardening, baking, home repair, and so on. Teach them to comparison shop by having them help at the grocery store. As they get older, make them financial apprentices: Show them how to pay bills, check a credit score, and buy a car. Teach them that managing a household is a team effort.
Allowances
A regular allowance teaches children how to handle money. When kids have their own money to manage, they're better able to learn the value of saving and the difference between wants and needs.
You can dole out allowances in a zillion different ways. How much do you pay? What age do you start? Do you stop once your child is old enough to work after school? How often do you pay? Some parents pay big allowances and expect their kids to buy their own clothes. Others pay small allowances but pay for their children's clothes and school activities.
Most of these decisions are beyond the scope of this book, but there are two topics that deserve special