Life Insurance: The Ultimate Gesture of Love
So many of you tell me you would do absolutely anything to protect your children, yet when I ask about your life insurance policy you look at me sheepishly and admit you don’t have one. That is an unacceptable act of hypocrisy. If you love your children and if those children are financially dependent on you to provide them food, shelter, and education, then you must have life insurance. There are no ifs, ands, or buts here. If your death or the death of your spouse or partner would leave your family unable to continue to pay its bills and maintain the lifestyle you help provide today, it is your obligation to have life insurance. And I do mean obligated. Life insurance is a must when you have dependent children.
Purchasing that protection is neither hard nor expensive. In the vast majority of situations all your family needs is a term life insurance policy. Just as an example, a 40-year-old male in good health could purchase a $1,000,0000 policy—meaning his survivors would receive $1 million tax free upon his death—for a monthly premium of $80 or so.
Go to
www.suzeorman.com
:
In The Classroom you will find a detailed explanation of how term life insurance works, what features you want in a policy, and resources for working with top-notch insurance agents.
SET THE RIGHT TONE
Your family will take its cues from you. If your words and actions telegraph that you are scared, or sad, then that is exactly what you are going to transmit to those who depend on you.
Do not apologize
. There will obviously be instances when standing in your truth requires saying no to spending you previously said yes to. Be compassionate. Be patient. But please do not ever apologize. There should not be any regret. That is not respectful of yourself, and it also sends a message to your children that you feel bad about these changes.
Focus on what will be gained, not lost
. Make sure your family understands why you want to make changes. When you present your truth in the context of wanting to move toward realistic new dreams, you set the tone that this is not about loss or defeat. This is a triumphant step forward into a new life where you can build lasting financial security for yourself and your family. Every spending cut is an appropriate measure that moves you closer to your family’s greater goals.
Be patient but strong
. I am not going to pretend this is going to be in any way easy if your kids have grown accustomed to having everything they want, when they want it. They are going to be upset. There will likely be tears. I realize that can be excruciatingly hard to impose—on all parties—but please focus on your long-term goals. You are not punishing them. You are not punishing yourself. Just the opposite. I think you will be surprised at how quickly your kids will adapt to your new ways, but you need to summon the strength to stand firm during the transition. Resist caving. Keep reminding yourself that by standing in your truth today you are creating a better future for your children, and you are also instilling in them an attitude toward money that will help them reach their dreams when they are adults.
IMPARTING GOOD VALUES WHEN IT COMES TO MONEY
Talk about what you love
. The first and most important money lesson you need to teach your children is to put money in its place. Ask your children—even children as young as four or five—what they love most. Do not guide them, just listen to what they value. Is it people or is it things? Did they talk about loving you, and their grandparents, a sibling, a pet? A favorite food? Or was their list about possessions? It is perfectly natural for every human being—child and adult—to desire and enjoy material possessions. But you need to make sure you are raising your children to have a broad view of what is important in life. Many of you know my motto:
People first, then money, then things
. If your child has moved things to the front of the line, that’s a clear sign you have some work to do. I would start by making sure you communicate, through words and actions, what you love most. If you are clear that you care most about your family, about the well-being of others, rather than what you own, you are telegraphing an important lesson.
If you don’t particularly like what you hear, I have to point out that you are the issue here. Kids don’t do as you say, they do as you do. They are watching and mimicking your behavior. If you are constantly shopping, or ordering things online, or focusing on your latest mall conquest, what else can you expect than for your young child to assume that is the absolute best way to behave? After all, you are the all-knowing and all-wonderful parent they worship and take all their cues from. Including your cues about how to value material possessions.
MONEY LESSONS FOR YOUNG CHILDREN, AGES 3 TO 6
Establish the work-pay-purchase connection
. As far as I am concerned there is no age too young to start learning that money must be earned to buy the things your family needs.
Explain why you work
. It makes me absolutely nuts when I see parents kiss their young children goodbye in the morning and say, “I hate that I have to leave you to go to work, but I need to make money.” All that does is teach your child that work and money is a bad thing. What your children need to hear from you is that you are incredibly grateful that you get to go to work and get paid money and that that money enables you to take care of them. Also let them know that you personally get satisfaction from your work.
Explain how you earn money and what it does
. Unless you make a concerted effort to explain how money is earned, your children will think it is simply something anyone can get by punching a few keys at the ATM. Or worse, they will have no concept of real money—actual dollar bills—because you are always using a credit card. You must explain that your work earns you money, that money goes into the bank, and that you can only take out as much money as you have earned at your job.
Explain that the groceries in the refrigerator and the toys in the playroom were bought with the money you earned. The electricity that keeps the computer humming has to be paid for too. Once your child is old enough to understand the concept of dollar bills, I want you to have them join you on your errands from time to time, and have them pay the cashier with real dollar bills. Physically connecting to money—real dollar bills—helps us focus on what we are spending. That is a lesson you should be teaching your kids from an early age.
Teach giving
. Two times a year sit down in your child’s room or the playroom and together sort through all the clothes, toys, books, and crafts that they no longer use. Whether you give these away to a friend, a charity, or a thrift store, I want your child to be the one to make the physical transfer. It is such an important lesson to learn the power of giving. A friend recently made her five-year-old’s birthday party into a pajama party, asking children to come in ther PJs and to bring a new set of pajamas instead of a gift. The pajamas were donated to the Pajama Program (
www.pajamaprogram.org
), a charity that gives new pajamas and books to children in need, in the United States and around the world. I thought this was a great idea that created a real opportunity to teach small children about our obligation to help those less fortunate.
Have a clear toy/gift policy
. This is one area where I see so many parents completely drop the ball. Instead of reserving gifts for special occasions such as birthdays, they have become your go-to solution to help you get through your way-too-hectic day without an upsetting meltdown (yours or theirs). So you promise a gift for good behavior, or you hold out the carrot of a stop at the toy store if your child behaves well while you are running other errands. Toys—big and small—have become pacifers at home. When your child starts to get a little cranky and your first line of talking it through doesn’t work, you pull out a “little something” from your hidden stash in the closet to shift their energy and attention.
I am asking you to think about the message you are sending your child: If they act up, you will give them a toy. Then you wonder why when you are at the toy store your child has a meltdown because you have just said he can have one (less expensive) toy, not the big toy he has his eyes on. Your kid is doing exactly what I would expect him to. He has learned from you that if he gets cranky he will get what he wants. You are the problem here, not your little one.
I understand how overloaded your life is; trust me, I know how exhausted you are after a full day. But please try to find your way through to a better approach to how you use toys and gifts. They are for celebrations. Not behavior modification.
And if you do find yourself in the midst of an in-store meltdown, I am asking you to please find the courage not to cave in. Your first impulse, understandably, is to make the spectacle stop. But if you don’t deal with this properly, it is just going to keep happening. My hope is that you can take a deep breath, usher your child to a quiet corner—or out of the store—until they are calm enough to listen to you explain—clearly and gently; no scolding—why it is you are saying no. Will a lightbulb miraculously go off inside that little head and everything will be instantly okay? Not likely. At least not on the first try … or the second … but try you must. You have to start somewhere. I am asking you to stand in the truth of how your actions affect how your child sees the world.
I would also suggest that one way to reduce the likelihood of those unfortunate meltdowns is to set expectations before you head into a store. Talk about what you are going to be shopping for. Set parameters—in an age-appropriate way. Then, if your child’s eye wanders off to something inappropriate, you have that conversation to turn to as a reference point for both of you to “discuss” the situation.
MONEY LESSONS FOR CHILDREN, AGES 6 TO 10
Introduce work-pay into your family
. I am vehemently anti-allowance. In my opinion, it is such a disservice to your children to mindlessly hand over money week after week, just because they are your kids. And the notion that their allowance should increase just because they get older breeds a ridiculous sense of entitlement. You have an opportunity to instill a work ethic in your children, even at this young age. Tell them that you will pay your children for doing household chores. I recommend you substitute the term
work-pay
for
allowance
. They work, you pay. The more work you do, the more you get. And the
better
you work, the more you get. That’s how you earn a raise in real life; why not introduce that concept now?
I have a few important ground rules:
MONEY LESSONS FOR TWEENS AND TEENS
Stretch out their work-pay payments to every two weeks
. And add in money for specific expenses you will expect them to cover out of this payment: after-school pizza, movies on the weekend, etc. The idea here is to give them more responsibility for handling money. By paying them every two weeks you are requiring them to make that money last for two weeks. It’s an introduction to budgeting. Will they probably run through all of the money in the first week when you start this system? Of course! But don’t punish them. Teach them. Agree on extra chores they can take on if they need money before the two weeks are up.
Have them pay the bills
. Until your kids see the cost of the gas and electric bill or the credit card bill they have no way of comprehending what it costs just to keep your family going. There’s no need to lecture here. Show them. If you don’t yet use online bill-pay, get it up and running right now. (It should be free.) Then sit down with your kids once a month, hand over control of the mouse, and have them pay the bills with you. It will be a great conversation starter.
The great utility challenge
. Pull out your utility bills and make your kids an offer: If you are able to reduce your monthly costs by at least 15% you will split the savings with them. So if this April’s bill is 15% lower than last April they will get 50% of the savings. You will be amazed how quickly the lights are turned off in rooms they are leaving, showers miraculously shorten, and everyone is happy to put on a sweater and cozy pair of socks in the winter so the thermostat can come down a degree or two or three. It’s a fun challenge that also connects your child to how it takes money to live, and how they can have an impact on your family’s expenses.
Set a seasonal clothing budget
. Before you step inside the mall or sit down for some online clothes shopping, give your child a firm dollar amount they can spend. Then have them pull aside everything they want—or put it in the virtual shopping cart—and write down the cost of every item. If you’re at the mall, ask the salesperson to put the clothing on a hold rack for a half hour and find a place to grab a drink or snack and talk through the list. Again, this is not a test. Help them decide what they need to let go of to come in at your predetermined budget. This is their first experience with living below your means, but within your needs. If they want more than they need, that’s fine. They can either pay for it themselves or you can spell out extra chores and responsibilities they must complete to earn the extra money. If they spend less than the agreed-upon amount, deposit the money they didn’t spend into their savings account as a reward.