Crista Huff

My youngest daughter gave me $70 recently to put into her savings account.  She doesn't receive money from relatives; all her money comes from doing chores.  And as I held the three twenties and one ten, I decided to talk about paychecks.

Flashing the $70, I said, "Honey, this is your monthly paycheck.  Here's how most adults handle the money."  

I threw a twenty down.  "This is your mortgage payment."  

I threw another twenty down. "This is your car payment."  

I threw another twenty down.  "This is your credit card payment."  

I snapped the ten dollar bill in my hands and said, "This is the money that's left over to live on."  Then I repeated the process for emphasis.

Next, I said, "Here's the same paycheck for a person who's not living in debt."  (Yes, such people exist, and they have a lot less stress than most people.)  

I threw a twenty down.  "Here are your living expenses for things like food, utilities and gasoline."  

I threw another twenty down.  "This is your fun money for going to the movies and eating at Maggiano's and shopping at Macy*s."  

I threw the next twenty down.  "This is your savings account.  You can save for retirement or a new car or a nice house or college for your children."  

Then I threw down the ten dollar bill.  "This is your charitable giving.  You can give it to anybody you like.  You can buy animals for families in Africa through World Vision, or give it to your church, or help a nearby family pay their electric bill."  (She bought clothing for children in Africa at Christmas time, so she can visualize this.)

We listen to Dave Ramsey on the radio together. Ramsey helps people become debt-free.  I wanted to show her how much less stressful and more enjoyable life is when you're debt-free.  It's painful for a debt-ridden adult to do a 180 degree turn and work towards living debt-free, but it's easy for a ten-year-old who hasn't yet accumulated debt to form a plan for how she's going to live her life.  She got the picture, and enjoyed imagining how she would spend or save all the cash that didn't need to service debt.

Crista Huff

Crista Huff is a retired stockbroker from a NYSE member investment firm. She writes about market-timing at Goodfellow LLC and is active politically.
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