Living Below Your Means
We Finally had "The Talk"

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By musicmama
January 3, 2005

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No, not THAT talk!

DS 2 (age 18 and a recent HS grad) and I've been talking recently about learning to manage his money, so he can avoid some of the mistakes DH and I made. So all during Christmas vacation, HE's reminded ME "we need to sit down and talk".

Finally, we did it! He gathered about 5-6 pay stubs, a piece of paper, receipts and his thoughts.

First off, he agreed that he wants to save 10% of his GROSS income (and now he understands the difference between gross and net) for the long-term. Part of this goes to Sharebuilder to buy stock--he sat right down at the computer and signed up, then read the Fool's "Investing Basics" for a better understanding--and part goes to his existing ING Direct account, perhaps to go to his IRA later. Plus, as soon as he turned 18 last March we opened a Roth IRA and plopped his income tax refund in it, and he plans to make a habit of that. If he never gets used to spending it, he won't ever miss it!

Second, we budgeted for immediate needs/wants (gas, auto maintenance, and just hangin' out money, etc.) As a new college student at the local community college he lives at home, and we've promised to pay his auto insurance as long as he does well in school (which so far he is.) His actual "needs" aren't too great...We don't intend to charge room and board as some might suggest (some of his friends' parents do now that they've graduated) and he's welcome to eat with us or help himself to food at other times (within reason...he IS still a growing boy!) We buy his clothing necessities just like for his younger brother. Extras he buys himself.

Third, we allowed for short-term goals (probably 10-15 months), such as saving for a new car, saving for computer "toys", etc. With Christmas having just passed, he agreed that he would start his own Christmas club as a sub-account to his existing ING Direct account. (He added up what he spent on gifts, adjusted the math for maybe adding a couple of people, and divided it by the number of months left before he anticipates shopping.)

We were able to make most of this automatic by selecting the dates and amounts to put into ING and Sharebuilder, which he likes. He already has his paychecks directly deposited, so the money will be there. And he's dead set against credit cards after watching and listening (and I guess learning from) our continuing battle to get out of debt. So I feel pretty sure he'll avoid THAT pitfall at least.

We agreed to formally meet again in about 3 months to sit down, assess his progress and re-adjust as needed. WOOHOO! I'm so proud I'm bursting my buttons! Better still, DS 3 (15) has been taking it all in, and has already decided to emulate his brother when he actually starts making some money! :) NOW if only we could get DS 1 on board...but that's another story for another day. :(

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