I can't tell you how many times people have told me, "I wish someone would have taught me about money when I was a kid."

What a great thought! Think about kids that learn a new language after moving to a new country or kids that learn to play a musical instrument and become protégées. Things are easier to learn when you are young, right?

If that's the case, let me ask you a question. Have you taught your kids about money?

For most Americans, the answer is no. Why? I think we have a hard time with this, because we don't want to feel like a hypocrite. Most people do such a horrible job managing their money that they don't dare try to teach their kids. Kids have a built in B.S. detector and can sense when we are talking about things we don't really know or do.

The fact is kids need to learn about money. In a world that says student loans, car payments, and credit cards are a way of life, someone has to help them understand they don't have to live in bondage. Last year, the fastest growing segment of bankruptcy filers were those under 25 years of age. So how do we teach our kids about money? Here are some helpful tips.

1. Manage your money. The best thing you can do to help teach your kids about managing money is for you to manage your money. Kids learn by osmosis. When you have a game plan for your money it will be natural for your kids to follow your example. It works the opposite way also. If you don't have a game plan, neither will they.

2. Commission System. Put your kids on a commission system. Throw away the "chore and allowance" mindset. Teach your kids that work equals money and not working equals no money. This is known in the financial world as being broke.

3. Kids Budget. Once the kids earn money from the commission system, help them budget the money by breaking it into three categories. Giving. Savings. Spending. At the Clark house, our kids put at least 10% in giving and 20% in savings. They are then free to spend the other 70%. Imagine if you had lived those percentages in your adult life. Our youngest started with an even simpler, more generous plan. She received $3 total. She gave $1, saved $1 and spent $1.

4. Matching Program. Help your kids buy things they want with a matching program. Take that new video game little Timmy wants that costs $50. Tell him that if he really wants the game, he is going to earn half the money. Once he has his $25, take a trip to the store. Have him hand the cashier his $25, and then you pay the difference. Make sure to tell him how proud you are once he reaches his goal and then help him set a new one. You reward them for making the money to save and having the discipline to save it, and you don't have to buy the video game which you probably would have done anyway. (I wouldn't share this last benefit with them.)

5. Education. Take them or send them to a class about money. Why not? This one, I can help with. I will be teaching a study for young adults called generation change. This is a 4 week study that helps teenagers learn how to budget, the dangers of debt, how to plan for large purchases and the importance of giving. This class is limited to 20 people, so sign up today.

The point here is that you need to do something. This is too important to leave to chance. You can do it. Change your family tree.

Casey Clark

Financial Counselor

801-414-4524

This email address is being protected from spambots. You need JavaScript enabled to view it.

I recently met with a family who couldn’t make all their payments. When we put together a budget, they were over $600 dollars negative every month. This had been happening over a year, and none of the payments were behind. When I asked them how they had been able to stay ahead, the answer was depressing. Every month after they paid all their minimum payments, they would then use the credit cards to purchase items like food and gas. This meant that every month, they were going more and more into debt. They waited to see me until they got to the place where they couldn’t borrow any more. They had no other option than to deal with the problem. So what can you do if you have more payments than income? Follow the tips below. 

Stop the Madness. Stop going further in debt. You can’t dig your way out of a hole. It would be better to get behind on a credit card than to make the minimum payment and end up going further into debt because you didn’t leave yourself enough money to live on. 

4 Walls. Always start your budget by allocating enough money to cover your basic necessities. I call these the four walls. These are food, utilities, shelter, and transportation. No credit payments should be paid until these four areas are covered. Now, of course, I don’t want you spending money in a restaurant if you are behind on payments. Put just enough money into these categories to make it. 

Pro Rata Plan. If there is enough money to pay some, but not all, payments, then use a pro rata plan. In this plan, each creditor will get some money based on the percentage of the debt and how much money you have left after you cover your four walls. If you have 3 debts of $7000, $2,000, and $1,000, then your total debt would be $10,000. That means that the $7,000 debt would get 70% of the money left after the four walls, the $2,000 debt would get 20%, and the $1,000 debt would get 10%. This plan will not work forever, but it will buy you some time until you increase your income. 

Income. First cover your four walls. Then, use the pro rata plan with any money left over. Look for ways to create more income. This is the long term solution. It could be as large as a second job like delivering pizzas or as simple as asking for overtime at work. You could grab your lawn mower and start cutting grass or look for babysitting opportunities. Don’t think you are above this type of work. You don’t have to do it forever. Just until the debt is paid off. 

Settlements/Bankruptcy. In extreme cases, you may not be able to outrun the mistakes you’ve made. You may need to do something more drastic like a settlement or bankruptcy. In these cases, you need to meet with a counselor before making any decisions to ensure you fully understand what you are deciding. The key is that you have to do something and fast.