As our oldest child traverses his high school years, I wanted to have a plan in place that would help him begin to take his first steps into managing his own finances so that he didn’t find himself overwhelmed with the changes and unsure how to manage financial responsibility during his college years and early professional years. It was that very sense of unsureness coupled with more money than I had ever had before that gradually led me down a dangerous financial path in my 20s, and it’s a pattern I don’t want to see my children repeat. I want my children to have the financial tools and mental models in place to make good day-to-day financial decisions from the very start of their adult lives.
So, what exactly does that translate into as my own child begins that transition from childhood to adulthood? Here’s the plan that we’ve developed over lots of conversation and lots of reading. I want to give a particular nod to Raising Financially Fit Kids by Joline Godfrey for being the biggest source of ideas for our planning, though our plan incorporates ideas from a lot of sources.
We’re starting off with lots of conversations about goals.
The biggest thing we are doing right now is talking about goals. Since it’s really hard for someone that young to be able to assess thorough life goals, we’re talking about generalities.
What kinds of things are you good at? What subjects do you enjoy most at school? What subjects are easy for you to succeed in at school? Then, when you take that pool of things you enjoy and things you’re good at, what are some career paths that this might lead to? Perhaps most important, what things do training for those career paths all have in common?
So, for example, with my oldest son, he’s clearly into engineering-type things. He likes building things, planning out how they come together and assembling them. He enjoys math, but he really enjoys it when the math becomes more hands-on and he is building things. He doesn’t particularly like writing but will do it to convey information.
This points toward a lot of things that he might want to do with his time. There are a number of engineering fields that line up well for him. He also might be suited for a number of trades like electrical work or carpentry.
The question then becomes what he can do during his high school years to filter through those areas and figure out what meshes well with his skills and what he might reasonably enjoy doing. Are there any places where he could get some hands-on experience with basic electrical work? Basic carpentry? Are there any summer programs that might give him a healthy dose of engineering?
Not only does this allow him to start shaping ideas for what he might do in terms of a career as an adult, but it also allows us to start working together to figure out what educational tools he might need to pull this off. For example, he will have more than enough put aside for trade school, but not enough for an engineering degree at a good engineering school.
Knowing what things he might be doing helps us have much better conversations about the variety of possibilities before him.
These conversations are great to start nice and early. The goal isn’t to herd him into a career path, but to get him to start assessing what he actually enjoys and where his actual skills are and how those things might translate into career options that he’s choosing on his own. Those skills and interests may change in the future, but what we’re really teaching him is the ability to self-assess.
We will be maintaining a small allowance for him until he graduates, mostly as a tool to help teach money management.
The allowance will always remain pretty small. He won’t be able to make car payments with it, but he might be able to buy gas with it occasionally (we’re still working out exact amounts).
We’re not trying to financially reward normal household chores, which is why we don’t tie our allowance to chores in any way. Household chores aren’t done for financial reward. Rather, they’re done because they’re an element of being part of a household.
Rather, our goal is to teach him basic money management skills — but also the process and mindset behind them. We want him to know how to use a checking account and a savings account — and why you use them. You use the checking account to hold money for short term expenses, while you use the savings account to set aside money for medium-term goals. We want him to be able to assess those personal goals, even if they’re extraneous ones like saving up for a video game or something. We want him to learn the value of being selective on what you spend money on right now so that you have better options later on.
I will say that he already has experience with many of these things. We’ve been giving our children a small allowance since they were young — again, to learn basic money management — and strongly encouraged them to save the money for medium-term goals, and they’re actually all really good at doing this. What we want to do is slowly transfer the act of putting cash in a piggy bank or asking mom and dad to hold that allowance money to the self-control necessary to leave money in a savings account. The real underlying lesson here is self-control.
During the summers, we want him to either work, build a side business of some kind, be really involved in meaningful extracurriculars, or some combination of these for a significant portion of his time.
In short, we want him to spend the summers doing something that either improves himself or improves his future options, and most of those options achieve both things.
Our goal is to instill in him a sense of work ethic, that you need to work for things that you want. If you want something better than what you have in life, you have to work for it.
We’re not expecting or requiring him to work constantly or to have a miserable job. Rather, we’re going to be guiding him each spring toward coming up with a summer plan largely of his own choosing, but we’re going to expect him to stick with that plan.
If he wants to spend the summer trying to build a small business, at a job, doing some kind of internship, working on some kind of big independent project or focused on organized activities, good for him. We’ll support all of those.
What we won’t support is an idle summer or one that’s merely full of “fun” activities. We want him to have fun and spend some time with his friends in the summers, but another valuable lesson we want him to learn is a healthy balance of different areas of his life. We want him spending his summers doing something that builds towards his future.
During the school year, we will be encouraging academic work from the perspective of encouraging good study habits and time management skills.
For the most part, we will be discouraging work during the school year. We’d rather have him focus on grades and useful extracurriculars and independent projects while getting plenty of rest.
We understand that there will be a strong pull for him to get a job so that he has some pocket money for various things he may want to do. Our plan is to supplement his allowance during the school year if he maintains good academic performance and public behavior.
We are less interested in rewarding grades, as we view those as inevitable outcomes of good study habits and time management skills. If you put in the work, you will get good grades. Rather, our goal is to instill in him study skills, self-learning skills and time management skills. Those things naturally produce better results, which will be reflected in good grades. We want to reward the process, not the results.
What does that look like? Simply put, if we observe him studying regularly and participating in extracurriculars and behaving in a socially positive way, we’ll help pay for things that he wants to do. The exact mechanism for this is still under discussion, but we want to avoid putting him in a situation where he has to choose between a minimum wage job and good academic performance.
What about saving for education after high school?
As I noted earlier, we anticipate that our son will want to have some form of education after high school. We have been funding a 529 college savings plan for him since he was a baby and intend to keep funding it until his graduation day.
The final balance in that account will easily pay for trade school and should pay for the tuition of a couple of years of community college followed by a couple of years at a four-year university. It may pay for four years of tuition at a quality public university. It won’t come close to paying for full tuition at a private school.
This will be the extent of our financial support for him. Additional funds for additional education will have to come from student loans or scholarships, with the understanding that he’ll be paying them off later on in life.
Our approach is that we will pay for $ X of his post-secondary education, whatever it is. We won’t persuade him one way or another — rather, it should be based on his own goals, as described earlier. If he chooses a path that requires more money, then that’s up to him. If he chooses an expensive path, then he will have to figure out how to finance that extra expense himself.
This is already clear to him, and will be made more and more clear as time goes on. Eventually, we plan to transfer ownership of the account to him in full, with the suggestion that, if there’s money left in the account when he’s finished with his own education, he use that money for descendants, for his own future education, or for promising youngsters in his life (nieces, nephews, children of friends, etc.), though the choice will be up to him.
We will buy a used car largely for him for his birthday, pay for upkeep and insurance, and occasionally buy gas for it if we need it to run an errand.
So, what about a car? Our son will turn 16 during his high school career. Will we buy him a car? Will we pay for the additional costs of it?
Our current plan is what we think of as a compromise solution. We intend to buy a used car for him for his birthday with a few strings attached. These strings mostly revolve around running some errands for us, giving his siblings rides in some cases, and other such things. In exchange for that, we’ll pay for the maintenance, registration, insurance and sometimes gas.
We are going to be extremely open with the cost of the car with him. We want him to see not only the initial cost of the car, but the cost of maintenance, the cost of registration and more. We will strongly encourage him to handle the basic maintenance, including doing oil changes and washing it and keeping fluids topped off (with us buying the materials). My tentative plan is to pay him for the cost of an oil change at an oil change place and let him handle it. If he’d rather do it himself he can keep the savings.
The purpose here is for him to deeply understand the cost of a car to the greatest extent that we can without forcing him to have a job solely to pay for the car. As we noted earlier, we would rather have him focus on his studies and valuable extracurricular activities during the school year and even if he has a summer job or side gig he won’t necessarily be able to afford all of the expenses of a car. At the same time, we want him to deeply understand the costs involved, so we’re going to show him every cost and have him “pay” for much of it in the ways described above — he’ll run some errands, he’ll give rides to his siblings, and so on.
Our plan is to buy him an older reliable car — something that will take a lot of miles but isn’t flashy. If he wants a nicer car, then it is up to him to save for such a replacement when he can afford one.
We won’t be “helicopter parenting,” as it stands in the way of building communication skills.
We are not helicopter parents. My wife is a teacher and is familiar with the problems that it brings. Our communication with teachers is mostly for clarification of classroom issues.
The reality is that our son will have to learn how to effectively communicate with supervisors and with clients in his career path, almost regardless of what he chooses and that communication skill really begins to take shape in high school. It is up to him to understand those expectations, to communicate clearly on the aspects that he may not fully understand, and to meet those expectations with his behavior. Supervisors will expect it in the future. Clients will expect it in the future.
A big part of our reason for avoiding helicopter parenting is to encourage our son to develop communication skills and time management skills to get things taken care of. Again, we’re not so much worried about the outcome here as the process. What he’s really learning here is how to communicate and understand requirements and how to manage himself to achieve those requirements. That is a skill he will draw on for the rest of his life. The material he learns on top of that is valuable, but that underlying skill is truly essential.
There are going to be times where communication is very difficult for him, and we’ll help with figuring out how to communicate better, but diving in and “fixing the problem” teaches him little. This is particularly true in a quality public school system, where teachers will work flexibly with students that show initiative.
What about after graduation?
Our plan is to allow him to live in our home if he so chooses as long as he is still actively pursuing an education or actively seeking a job after completing that education. If he’s not doing one of those things, we will be strongly nudging him out the door. If he chooses, he can move out before then.
As long as that situation persists, he’s welcome to live in our home rent-free, with food and meals provided for him.
We would be willing to discuss a low-cost rental situation for him once he’s earning an income after his education is complete, depending on the situation, but the expectation is that he would move out at that point to find his own path, and he would likely want to do so. We believe that if we do everything we can to help him develop core skills and values for independence, he will naturally progress into that independence or, at least, that transition will be easy for him.
All of our plans are oriented toward building core values and skills.
The biggest thread you’ll notice throughout all of these things is that they’re oriented toward building core values and transferable skills. Our entire plan is oriented around having him prepared to make good decisions with his time, money and career when those decisions start to fall more fully under his control, and we do that by looking at many of those decisions as early as possible and focusing on preparation and process rather than results.
We want to put tools in his hands for success and the freedom to learn how to use them in a situation where a mistake won’t have disastrous consequences so that when he’s actually independent in the future, he feels confident with those tools. Money management skills are a big part of this, but so are communication skills, time management skills, self-learning skills, and information management skills. If he has those skills as a foundation, he will be able to achieve lots of things.
A big part of all of this is conversation. We’re talking about these things now, both with him and without him, so that everything is clear. I remember my own teenage years, in that the more clear my parents were with the reasons behind the things they did, particularly before moments of conflict, the better things went.
Obviously, this plan won’t be perfect. We’re not perfect, and neither is he. He’s a teenage boy, one who will continue to grow into personal and emotional independence from us. All we can do is give him the best lessons we can as he starts to prepare to fly on his own.
That’s all any of us can do.
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