Read Clark's Big Book of Bargains Online
Authors: Clark Howard
Clark's Big Book of Bargains (7 page)
• Internet •
www.safekids.org
www.fda.gov
It’s hard to teach children to have good money values. Children often see their parents as the bank, the source of unlimited withdrawals for whatever they want. They don’t understand that there are consequences for spending too much money. And they don’t understand the idea of making deposits.
Parents have to overcome that by teaching addition and subtraction, and they can do that by using a reward system. The fundamentalist Christian community promoted an idea that’s now become more mainstream, and I love it. The idea is to have three jars for money. You give your child a certain amount of money, and it’s split among the three jars—spending, saving, and charity. In the fundamentalist model, 10 cents of every dollar goes to charity, and the child gets to choose the charity. So if your child loves animals, you could designate that 10 percent to the Humane Society. The other 90 cents is split in half, with 45 cents going to savings and 45 cents to be spent however the child wishes. The savings jar could be for a stereo system, a bicycle, or some other long-term goal that eventually will give the child a reward for saving.
The next question is how that money is “earned.” Some parents like to give it in exchange for the child completing certain household chores. Others believe the child has a right to share in some of the family’s income. Or it could be a combination of both.
When your child reaches his or her early teens and starts earning their own money for baby-sitting or mowing lawns, you can give them an incentive to save by matching every dollar they save. Give them a dollar for every dollar they put into a CD at the bank, instead of a CD at the mall. They’ll see that $20 they don’t spend becomes $40, and they’ll start to understand the benefits of deferred gratification, as opposed to current gratification. In time, they’ll become dedicated savers.
Software designer David Hunt has a different approach to this. He created a program called Family Bank (www.parentware.org) that helps teach children ages six to sixteen about money. Parents deposit the child’s weekly allowance in an “account,” for the child to spend and save. If the child needs more, they can borrow money, but they have to pay it back with interest. So instead of getting $10 a week, they might receive $8.50 a week until the loan is repaid. It’s an early lesson in the dangers of credit card abuse.
Hunt’s oldest daughter, Alicia, uses Family Bank to manage her clothing budget. So she knows that spending $200 on a pair of Nikes will break the bank, whereas spending $30 on a pair of shoes gives her more options. It’s a great idea. When you give a child a set amount of money, or they earn a set amount of money, then you have the rewards and consequences that will help them become a better shopper.
What doesn’t work, as I’ve learned with my thirteen-year-old daughter, Rebecca, is trying to get her to understand that something is too expensive. When I ask, “Do you really need to spend that much on a shirt?” she’ll just give me this puzzled look.
At some point between ages eight and twelve, depending on the child, brand-name mania starts to take over the minds of young shoppers. This has been a terrible challenge for me and many other parents, because most children don’t understand the consequences of spending so much additional money to wear what the other kids think is “in.” It’s been a very hard thing for Rebecca. And this is a case when you’re going to be unhappy with what I have to say, because we have a “Don’t ask, don’t tell” rule in the family. I’m not allowed to go on the shopping trips for her clothes now, and I have no idea how much money is being wasted in the name of fashion.
I don’t know yet whether Rebecca will become a frugal adult, or anything close.
I do believe strongly that, by teaching a child about money, you can develop an adult who has good money values. When you give a child money again and again, the child never learns the logical consequences of unchecked spending. When they become a young adult, living independently, they pick up the same habits they had living under your roof. That’s why you do them an enormous favor teaching them the value of a dollar while they’re living with you.
Some parents make the mistake of trying to give their children everything they didn’t have when they were children. I know a fellow whose parents were immigrants and had struggled to provide for him. Eventually he did very well financially, and he showered his three children with everything. Whatever they wanted, they got. No one ever said no. Now the three kids are adults, and there’s not a dollar they haven’t spent.
I talked with a college student once who told me that the money his parents sent him never was enough. And he asked me how he could get his parents to send more. I told him that even if his parents could afford to give him more money to spend on pizza and beer, he couldn’t afford to take it. Because if he didn’t learn right away that money doesn’t come from an unlimited source, he was going to have a lot of trouble in his life.
A lot of parents will buy a brand-new car for their child when he or she turns sixteen, and that’s an awful idea. Young drivers are going to get into fender benders, and it’s crazy to let them learn these lessons with an expensive new car. It’s fine to let the child use the family car, but even better is to provide a child with a recent used car. The child gets the responsibility for gas, maintenance (including oil changes), and insurance. That’s a fair amount of money for a teenager, but I think it builds responsibility. When they do get a new car, they’ll respect and appreciate it more and take better care of it.
• Internet •
www.parentware.org
I wish I had a dollar for every time I got a call from a parent who was upset about signing a contract for karate, music, or dance lessons for his child. Well, maybe I do.
Parents sign these contracts, and then a child’s interests quickly change. Or the child might think they want to try karate, and then realize they don’t like it. This is a disturbing phenomenon I’m hearing more about with kids. Our children are over-scheduled as it is, and now these places are trying to rope them into long-term agreements before they’re even in elementary school.
One of my callers, Karen, wanted to know if she should sign a long-term contract for her son to learn karate. The school she was looking at wanted her to commit her son to a three-year program, which would cost her thousands of dollars over those three years.
The people who run these schools know that what a child is interested in today may not be what they’re interested in tomorrow. The school has an incentive to get the parents to sign, so that, whether or not the child sticks with the lessons, the school still gets its money.
Schools like this also go out of business frequently, so your money is at risk if you pay in advance. Even if the school is financially strong, the service you receive will be better if the school has an incentive to earn your money and your loyalty. If you have already agreed to pay them for three years, there is no incentive for them to do a great job.
I strongly encouraged Karen to look elsewhere for a karate school that would both teach her son and earn her business month after month.
It’s great to want to enrich your children by getting them involved in some cultural or physical activity, but it’s important to know that your money is at risk. If you can find a place that will let you pay lesson-by-lesson, that’s the way to go.
Sometimes your city or county will have good programs available, and they’re never going to involve a contract. You pay a lot of money in taxes, so why not take advantage? Schools often have after-school programs that provide an affordable way for you to try something new for your child.
A lot of privately run schools won’t take your child unless you sign a contract. They’re okay to consider, but don’t sign a contract for any longer than six months. That’s a long time in a child’s life. A year is too long.
Don’t rely on the salesperson or the sales literature to decide whether a place is good for your child. Ask other parents which places they’ve had good experiences with.
• Tips on Lessons •
Look for enrichment programs that don’t require you to sign a contract. If you have to sign a contract to enroll, don’t agree to a term of longer than six months.- Check with your city or county to see if they offer such programs.
- Schools often have after-school programs that provide an affordable way for you to try something new for your child.
The advice you get from a dentist, or any doctor, may not always be correct.
I did a TV report a few years ago that showed just what a variety of opinions you can get. We took a “patient” who had absolutely nothing wrong with her to six different dentists, complaining of a toothache. What they recommended was unbelievable, ranging from major invasive work to the best answer: that she was just fine and might be having a temporary problem.
My nephew had problems with his teeth, and the dentist his parents trusted went as far as to wire his mouth shut for six months. It turned out that it not only wasn’t what he needed—it was the wrong thing.
I get a lot of calls from people asking about the prices dentists charge. But what I’ve learned is that price isn’t the most important factor in dentistry. Although dentistry is a science and a skill, there’s also a lot of art involved. There’s a range of opinions as to what the right treatment is for a particular patient. If a dentist recommends a root canal and people trust the dentist or orthodontist they go to, they say okay. But that’s not what you should do. If a dentist recommends a serious treatment for you, it is so important for you to get a second, even a third opinion. I don’t care if the dentist is a family friend or the dentist your family has been going to for three generations. Go get a second opinion before major work is done.
We’ve had calls from people who have root canals done who were told later that they weren’t necessary. One fellow I spoke with went to a dentist to have a gap in his teeth closed, and wound up having more than $10,000 in unnecessary dental work done. The dentist convinced him that it would be better to wear a bridge than to wear braces to correct the problem. The doctor pulled several teeth that he had not told his patient were going to be pulled, and the bridge ended up being a poor fit—it was very uncomfortable and loose. So the dentist then removed that bridge and replaced it with another one, which didn’t work either. Finally, the fellow had to go to another dentist to have the bridge removed and have another one put in. The second dentist told him that braces would have been fine for him, and that he should not have gone through this as a twenty-one-year-old.
I had a caller once who was one of the most thorough consumers I’ve ever spoken with. She took her child to five different orthodontists, and their unanimous opinion was that the child needed braces. The range of prices she was quoted was huge, and she couldn’t figure out which orthodontist was the right one to use. She was worried that the lowest-priced orthodontist was going to cut corners and do inferior work, so she was thinking of choosing the mid-priced orthodontist. I told her to get a written description from each orthodontist of what they were going to do, and if the descriptions seemed equivalent, choose the lowest-priced provider. I never heard back from her, but it surprised me that such a thorough consumer would be willing to pay more without a good reason.