The Worst Mistake a Young Couple Can Make

Monday 3/15/2004


Here’s what happens.  They get married.  June is coming, right?  They buy a house.  Somehow when all the house expenses add up, it totals more than half their income.  They ‘need’ furniture and tools to fix the car and stuff for the kitchen and a washing machine and dish washer and on and on and they acquire it all in about three years  - things it took their parents a half a lifetime to accumulate.  They’ve maxed out their credit, they have zero home equity and then they decide to have a baby – after all, they’re not getting any younger.  So they either subtract one salary or they add in $800 a month for daycare.

How do they get into such a mess?  Pride?  Foolishness?  Their parents not teaching them about money – or teaching them bad lessons by example?  Their real estate agent – or the banker who actually approved the loan on the ‘too much house’ they bought?  An attitude of entitlement?  An easy life as a child?  A hard life as a child?  Too much TV?  Actually buying into this ‘you deserve it’ stuff we hear constantly.  Lack of responsibility?  

If you are a young couple with credit card debt you are spending more than your income.  If you continue like this you will always be one step ahead of the bills and in deep trouble if a job lay-off happens. 

If you are a young couple who is moderate in their spending and has no debt – but not much savings – you are a little better off.

If you are a young couple who has no debt other than a moderate house mortgage and you are saving 10% through retirement plans – that’s great.  If you also have an emergency savings fund of 6 months expenses, you win the prize.  Life will be your oyster.


Tuesday 3/16/2004

Do you believe everything you read?


Do you believe you have to own a house to be happy?  Do you believe you have to have your own apartment to be happy?  Could you be happy renting a room and saving your money for a ‘stake’ – your backup and opportunity money? 

Will your expectations keep you from being financially successful?

In the book Rich Dad, Poor Dad, author Kyosera talks about the two very different lessons he learned from his dad and his ‘adopted’ dad – his friend’s father.  Recently I had a call from a woman business owner who has been a client for many years.  Her 13 year old son read the book and wanted to come in and work for me as an intern to learn more about financial management.  I was a bit awestruck by this and then intrigued with the possibility of having an impact on some open-minded young people.  Maybe 13 is the right age – not high school seniors.  You remember last week I was lamenting the lack of practical financial education in our schools.

Anyway, we decided that Lane would come up with 4 or 5 questions from Rich Dad, Poor Dad, he and his mom would get a small group of young teens together – with their mom or dad – and we’d have a pizza seminar at my office.  We’d sit in the round and discuss finances from the perspective of 13 year olds - who are the target of many of today’s ad campaigns.  I’m kind of excited.  I’ll let you know how it turns out.

Is it too late to teach the kids about money?  Never.  Even if they’re 47.




Wednesday 3/17/2004


They’re about to graduate from college.  Have you had the money discussion yet?


The issue is communication and drawing a boundary that is visible to all.  Have you warned you soon to be college grad that they should be looking for a job – because your support stops this summer?

Most parents end up supporting kids much longer than anticipated.  I’m sure they feel it’s necessary, but it actually sets young people up for failure. 

What I mean is, for years – probably 21 – you have been seen as the source of financial support.  There is a difficult period of readjustment for every young person – even if they are anxious to be on their own – when they move over from YOU being responsible for them to THEM being responsible for themselves.  If they don’t make this transition, you will still be supporting them when they are 25 or 30 or older.  It is difficult but it has to happen.

Don’t do this precipitously.  You’re not looking to permanently damage your relationship with the child by telling them on May 15th – OK now you’re on your own for the first time.

Give them some warning – some time to plan.  Time to go to the career office and do some job interviews, to network with friends about whose mom or dad owns a company they might be interested in working for.

It’s time to have “the talk”!





Thursday 3/18/2004

What can the grocery store teach your young child about money?


Deferred gratification.  You know there have been studies done about this that show that very young children who understand the concept of deferred gratification are more successful in life.

Have you observed this?  Young mom in the grocery store with 3 kids in tow.  One little one has her own shopping cart.  Smart marketing!  Get them started early.  The little one in the regular cart seat is eating the remains of a donut or an apple or something they just had to have right then. 

A few days ago I observed a young dad and his 4 year old child in the grocery store.  I suspect dad was not the usual grocery shopper, but he seemed pretty at ease with it all.  Junior was pouring it on for some things he wanted.  What did dad do.  In a kind but firm way he said “no.”  I heard him say it several times.  Did he give in later when I was not nearby?  Maybe, but I hope not.

What lessons are these two parents teaching?  Don’t get me wrong, I know how difficult it can be to shop with young children.  I’ve done it.  They want everything and we love them so much we’d like them to have it.  We also just want to get through the aisles and out of the store in some semblance of peace.  You can just say no, you can engage them in the hunt for the items you need, you can shop with reinforcements.  Maybe you and your spouse need to talk about this and develop a strategy.  After all, grocery shopping could be setting your kids up for future financial failure.



Friday 3/19/2004

The college years.  The wedding. The house down-payment.  Help buying a new car.


Is this a list of good and wonderful things or a list of ways we can either teach or sabotage our kids?

Are you paying 100% of your kids college education?

Is there a limit on the wedding cost?  Have you considered just giving them money and letting them take responsibility for it.  Young people can be so gullible, they haven’t had much experience  – is the wedding planner going to bankrupt their future?

One of the best lessons a young couple can learn is what it feels like to hunker down and save a 20% house down-payment from their own incomes.  It is a feeling of accomplishment and a lesson that may serve them well in the future.  Don’t make it easy for them.  You’ll be cutting them off at the knees.

Buying a car.  Does every young person really need a new car?  Does everyone really need a car?  If you knew you would not have a car would you make better or different choices about where to live?  Like maybe renting a room from a family living near your work instead of laying out $8000 a year for a place of your own?  The first year I was working I walked to work.  It was one of the healthiest years of my life.  If they really need a car counsel them to consider buying a loaner car from one of the local dealers of high-end cars who have free loaners for their car repair customers.  Or direct them to one of the car rental companies who sell their fleet off every few years.  Or suggest they save the money for the car and take public transportation or car pool to work for awhile.  They’ll probably look at you as if you had two heads – but it is great advice.

Sometimes you have to shock the kids to get them to realize the ads they see on TV exhorting them to buy are only meant to make some else rich – not them.

Monday 06/28/2004 Property Exchanges

Monday 06/21/2004 Selling Your Business

Monday 06/14/2004 Investment Thoughts From A Nobel Prize Winner

Monday 06/07/2004 Money Can’t Buy Me Love

Monday 05/31/2004 IRA – Your Biggest Asset - Or Your Biggest Tax Bill?

Monday 05/24/2004 Retirement Blueprints – What’s Your Game Plan?

Monday 05/17/2004 Planning for Death

Monday 05/10/2004 The New Retirement Challenge – Healthcare

Monday 05/03/2004 Taking on The Risk of Loss

Monday 04/26/2004 Is a House a Good Investment?

Monday 04/19/2004 Attorney Selection, Personal Education and Divorce Agreements

Monday 04/12/2004 Estate Planning Curve Balls

Monday 04/05/2004 Can Reading Be Dangerous To Your Future?

Monday 03/29/2004 Mistakes that Cost Us Money

Monday 03/22/2004 Financial Truths

Monday 03/15/2004 The Worst Mistake a Young Couple Can Make

Monday 03/08/2004 More on Money Attitudes

Monday 03/01/2004 Statistics

Monday 02/23/2004 Why Do You Make The Decisions You Do?

Monday 02/16/2004 Empowering Caregivers – What You Need to Know

Monday 02/09/2004 Pay Now or Pay Later: Rules for IRAs and Other Retirement Plans

Monday 02/02/2004 Maybe We Should Call Them Million Dollar Clubs

Monday 01/26/2004 Women on Their Own Face Financial Challenges

Monday 01/19/2004 What Will Happen When You Get There?

Monday 01/12/2004 They’re Closing the Loopholes for Retirees

Monday 01/05/2004 A Fresh Start