Financial education for kids

by Finn

Having a kid who’s close to graduating from HS, this article caught my attention:

5 Financial Concepts To Teach Your Teen Before High School Graduation

What do you think? Do you agree with the five concepts? Are there any others you think should be added? How do you plan to teach these concepts to your kids?

On a related note, do your kids’ schools offer classes in personal finance? My kids’ school offers one, but DS tells me he won’t take it because he’s already maxed out on the number of classes he’s allowed to take, and doesn’t want to give up any of them.

Next year they plan to offer some short courses, with personal finance being one possible subject. With the PSAT being moved from Saturday to a school day, the school decided to cancel classes on PSAT day, and instead offer things like personal finance seminars for the freshmen and seniors. Another possible time for some short classes is the weeks after AP testing.

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242 thoughts on “Financial education for kids

  1. Are there any others you think should be added?

    1. Take the savings out before you get it (401k, direct deposit into brokerage or online savings account, etc.) and you’ll never miss it.

    2. The goal isn’t to spend less, the goal is to make more.

  2. These are the basics, and that’s fine, but that’s really all they are. DW’s cousin and fiancé who feel trapped in their apartment because the rent is too expensive to save for a down payment, and the terms of their lease require 60-day termination notice and they couldn’t face the uncertainty, and they can’t do any of the most basic physical work for themselves; well, I’m sure they’re well-versed in how to write a check and avoid overdraft fees. But otherwise, they’re kind of fu(ked. It’s not just this situation, it’s their whole mentality.

    A counter-example might be my BIL, who chose an odd career field and had a difficult time establishing anything through his 20’s, but kept working at it and living in the cheapest arrangements possible, and then when he did get on the path of stability, bought a run-down duplex in which the rent on the lower half almost covered his entire mortgage after he did a lot of painting and other things. (There’s no way I ever would have considered buying that place, but DW’s Cousin’s parents would probably have called the police if they found out she was even in the neighborhood.) And he no longer lives there, so now both units are rented at rates that have steadily increased.

    The most important factor is whom you marry, even more than your career choice. My mentality is definitely more MMM’ish because of DW and my in-laws. If my parents knew or cared about all the details, they would probably think we’re all overly conservative.

    So to answer your question, I think it’s more important for your kids what you model vs. what personal finance seminars they sit through at school.

  3. Other things to add:

    1. Wants v. needs

    2. The basics of long term investments (stocks v. bonds, mutual funds, etc.)

  4. “The most important factor is whom you marry, even more than your career choice.”

    So true!

  5. For easy reference the 5 things are:
    Budgeting Credit Cards Bank Accounts Savings Credit Scores

    Generally agree. Maybe credit scores can slide till later in college, assuming the kid is going to college.

    My kids are pretty well exposed to these. For his living situation, DS1 has a pretty good income and has been making regular weekly auto-transfers from checking to savings to build that good old emergency fund. Recently he’s worked a bunch of overtime and has made a big ($500) lump sum transfer to savings. He’s even been looking around for places that pay better interest on regular savings (Ally Bank seems to be tops right now for small amounts). He, of course, has his own credit card which he manages pretty well mostly by not using it. He likes the no-future-liability accomplished by using his debit card to keep things simple. He is very up to speed on his credit scores and he says he checks every month when it’s updated. Related to savings, he became eligible to participate in his company’s 401k recently and they match 1:1 up to 5%, so he immediately jumped in at that level (after tax Roth 401k). He wants to go higher, but I told him it’s better to just build the regular, no strings attached, savings account till he has ~2-3 months net in there (with no home equity line of credit to use as an emergency short term cash source like his parents have, he needs an actual savings account for that purpose). Better not to tie up more than what gets the full company match until his life gets more settled.

    In Senior year at their HS, all students get a unit on this. The teacher asks the students to bring in their family budget (no names on the paper), he aggregates the data across all the sections he teaches and uses the averages to give the kids an idea of the “average” family at the school income, expenses, etc.

  6. Houston – DW and I met at the end of November. When we were going out for Valentine’s Day a couple months later, and she brought a coupon to the restaurant (even though I was paying), I knew she was a woman to keep.

  7. Milo, that’s awesome!

    Another life lesson: learn to like cheap things. If you get your enjoyment from a modest lifestyle, you will be happy spending less money. Visiting a national park v. a luxury resort. Cheap ethnic restaurants v. sushi. Hondas v. BMWs. Hiking v. scuba diving

  8. “If you get your enjoyment from a modest lifestyle, you will be happy spending less money. Visiting a national park v. a luxury resort. Cheap ethnic restaurants v. sushi. Hondas v. BMWs. Hiking v. scuba diving”

    More WCE, less Rhett. ;)

  9. Yes, but I’m a big fan of Rhett’s $ per unit of effort calculation. Life changing.

  10. Another life lesson: learn to like cheap things.

    If that’s the case then the calculus track doesn’t matter. I can’t quite wrap my head around the totebag obsession with academics and the reluctance to turn that into a exceedingly comfortable lifestyle.

  11. “The most important factor is whom you marry, even more than your career choice.”

    I agree. So many marital problems caused by incompatible views on money, and your spouses financial sins are yours too even if you get divorced. Although, I will say that DH & I both made a lot of the same stupid mistakes when we were in our 20’s and grew together into better habits. So it’s not as if we necessarily had to be on the exact same page when we first met. We worked together to pay off credit card debt, shore up our finances, and set long-term goals. Maybe it’s easier because we changed together vs. him being a high-saving cheapskate taking on a free-spending wife/gf with credit card debt or vice versa.

    Houston – I like yours too.

  12. “If that’s the case then the calculus track doesn’t matter. I can’t quite wrap my head around the totebag obsession with academics and the reluctance to turn that into a exceedingly comfortable lifestyle.”

    Is that even true though? Most Totebag commenters have a pretty comfortable lifestyle, just not quite as comfortable right now as it could be if they saved a little less. Maybe not a “flashy” lifestyle, but that’s different.

  13. quite as comfortable right now as it could be if they saved a little less.

    Or made a little more.

  14. If I could revise my comment, I would say that marriage is probably the most important factor you can reasonably control. Health issues, a child with special needs, destitute parents that need support are some of the many factors out of your control.

  15. Rhett: For me, the academic focus is part cultural (ethnic and Totebag), but also part situational. My kids do better in school than sports. Neither of them tinker or want to start a company. DS1 cares deeply about his GPA/SAT/course selections. Thus, my focus is a reflection of their strengths and interests.

    If my kids were more interested in inventing things or coding instead of school, or if they were amazing athletes, my focus might shift.

  16. Great topic. Our kids haven’t taken classes in this. We’ve explained these things soooo many times and hope they have paid attention and taken in our example.

    My kids each have frugality down well except for some categories that they choose to overspend on. I think that’s not a bad way to live, really. And now that I think of it, their father and I are the same way (though my idea of splurging is far different from his)(perhaps in line with our pro rata incomes though) so I suppose it’s an example they’ve seen.

    Fred – how do you handle budgeting with your college kids? I mean, how do you teach them to stick with a budget or else? I’ve had DS name a reasonable monthly budget (that we can negotiate if necessary) for both summer (low-paid internship, thus we supplemented) and school year, but things always come up, and since he has the money in his account, I’m not inclined to say, “Sorry, you neglected to include it in the budget so you can’t do/have that.” But the alternative is that this college account is like a huge money tree that’s always there, and it means he can be wildly inaccurate with his budgeting and face no consequences, which isn’t something he will have again be able to get away with in life. There is also the matter that the account is the result of his parents’ years of hard work and not his, so while I feel he’s quite frugal and considerate, and he’s making choices with a mind to preserving a large remainder in his account (not squandering), the bottom line is that he’s not getting a feel for watching large sums of *his own hard earned money* float away each time a tuition invoice is due, etc.

    I do give both my kids credit for making their college choices with a view to having plenty of money left over. But in terms of real life day-to-day “can I get the steak or do I need to settle for ground beef this week because that transmission needs work this month” sort of budgeting, I feel like their post-college lives will be a rude (albeit necessary) awakening no matter how much “money talk” we have with them now.

  17. My kids do better in school than sports.

    The alternative to academics doesn’t have to be sports, it could be nothing. If you want the simple life then just relax, hang out, watch TV, get B’s and go to Angelo State University.

    DS1 cares deeply about his GPA/SAT/course selections.

    There has to be a decent amount of nurture in that.

  18. #3, about bank accounts, is the one DS knows best, but he is just 14. I think we are on track for him to be familiar with all of these in the next four years.

    Speaking of school, when do y’all’s start? Next Wed is the big day here, and I have friends in Southern Ga who posted “back to school” pix Aug 1st already. Makes me decidedly uncheerful

  19. “There has to be a decent amount of nurture in that.”

    not necessarily, or at least doesn’t have to be from the parents

    “Speaking of school, when do y’all’s start?”

    DS started back in July!

  20. “Another life lesson: learn to like cheap things.”

    I’ll add…so you can splurge on what matters to you (travel, restaurants, concerts,house , car, etc as Milo mentioned before in the other thread)

  21. “My kids each have frugality down well except for some categories that they choose to overspend on.”

    yes, learn to like cheap things so you can overspend where it is important to you

  22. It can be hard for kids raised in comfortable homes by parents who share the fruits of their labors to become accustomed to living less comfortably as adults. At least at first. But ours have learned fast. It helps oldest DS that his DW was raised less comfortably and is extremely frugal. She would have brought a coupon to dinner too.

  23. I looked at that list, and honestly, I didn’t know a ton about those topics when I graduated high school. I mean, I knew them in the abstract – I had a teeny savings account so I knew how that worked, and of course I knew how compound interest worked because they always make you calculate that in school classes. In my day, teens didn’t have credit cards – the chic kids might be allowed to shop with their mom’s card, but they didn’t have their own. I mainly thought of credit cards as evil because using one meant you didn’t have enough money in your bank account to pay for what you needed. I didn’t have a clue how people funded retirements, had never made a budget, and only knew about taxes to the extent of filling out that EZ form that you do when you don’t make enough money to owe taxes. Yet, I had no problem handling my finances in college and beyond. In college, I was so poor that if I decided to buy the nongeneric shampoo, it might put a serious dent in my ability to buy my evening RingDing, so I quickly learned to make that choice. Since I didn’t have a credit card (and no one I knew did), I couldn’t really spend beyond the amount I made each week at my library job. Later, when I went to grad school and had a TA position, I suddenly was making tons more money. I remember my amazement when I realized I could AFFORD a grinder at the pizza place more than once a semester. But I guess I just figured out what to do as I went along. I knew that even as a TA, I wanted to put money into the TIAA/CREF retirement account. I knew when I went to buy a car, that I wanted my monthly payment to be low enough that I could still buy grinders. So how did I figure that out with no formal school class, and no discussion on the part of my parents? Maybe common sense?

    I think one difference today is that kids have the ability to get into trouble more easily. Of course all college students have credit cards nowdays. And they are able to rack up student loans in ways I can’t quite understand. And, I dunno, it seems like college kids today live a lifestyle that is quite different from the college lifestyle in my day. So maybe they have more temptations?

  24. My kids get a balance of both sides. I emphasize the education and making enough money to lead a comfortable life. DH is more about looking at the expenses. Both of us, talk about savings. We discuss the lifestyle and career choices people around have made. What to expect if you choose certain professions, choose one income vs. two incomes and so on. Similar discussions on choices of vacations, cars, saving or spending an inheritance, meal planning etc.

  25. I’m in the minority with Rhett perhaps but when I say the kids have frugality down well, I only mean they are quite good at making do with certain things *so that* they can spend their money in various luxuries. There’s nothing frugal about them, really – it’s just a matter of their choosing how to proportion their limited cash.

    We are not strapped for cash, nor do we find our satisfaction in declining to spend money on things we really want. Because it’s not how I live myself, I haven’t instructed the kids on frugality. I’ve talked to them about choices. We have always spent money on plenty of big ticket items but have always made a point of saying, “But we did NOT spend $ on x or y, and that’s how we can afford this.” I haven’t wanted to teach them to do without – I don’t have that self-deprivation streak on me. Instead, I’ve taught them to decide what they want most, whether it’s frivolous or luxurious or not, and make their spending choices accordingly. My dad was always very good with money while also being very much of the reward-yourself mindset. I’ve been following his example.

  26. “The alternative to academics doesn’t have to be sports, it could be nothing. If you want the simple life then just relax, hang out, watch TV, get B’s and go to Angelo State University.”
    We can add live in a simple house and if you can manage to get a beach house in which to relax & watch tv, don’t expect to go out to eat much.

    Houston, I love your idea of teaching long-term investing, am having a hard time figuring out how you do it in a school where a lot of the kids are not expecting to have money “left over” for that. With some jobs, no amount of careful budgeting will result in long term savings, and they’ll be lucky if they can get together a safety net for a few months. Likewise the class project of averaging family budgets. Sounds to me like an exercise in demonstrating the difference between mean and median, and all the different ways to set priorities within an income.

  27. Rhett – That looks like Buddy Garrity’s house!!! (Friday Night Lights). “Now, Eric, I’ve been talking to some of the boooosters…”

    I have an old HS friend I stay in touch with on FB. She’s a nurse who married a (non-college educated) U.S. Border Patrol agent and moved down to Texas and had five kids. Their house, in a very nice subdivision, is brand new and gigantic with a big pool in the backyard.

  28. “it’s just a matter of their choosing how to proportion their limited cash.”

    well said Risley, personal finance is all about choices and opportunity costs

  29. Good topic. I need to start these topics with my kids and haven’t. They are in early elementary school. We haven’t started allowances or anything.

    We aren’t frugal (anti-Totebag). We spend less on some bigger items like having a smaller house and cheaper cars, but we spend a lot more on things like education (private school, nicer daycare) and restaurants. My mom died at 61, which has influenced me and my DH more to balance enjoying now with waiting for retirement.

    I think it was Milo who mentioned MMM’s blog, and I’m really grateful he did. I’m nowhere near MMM, but I appreciate his outlook about how we already have enough and can live big on not as much as people think. He also reminds me that I choose to work vs. staying home. I would never want to do some of the things he does and am happy to work to pay for other people to do it.

    I’ve been thinking more about what I want to do to help my kids get a good financial start in life. Paying for college obviously, although I could see having them pay some student loans as a good thing. One of the things I plan to do is to fully fund their IRAs when they start working as teenagers. Does/did anyone do that? The other things I want to help them with are getting used to saving in a 401k and emergency fund (possibly helping them fund that) when they graduate and to talk about limiting their overhead when they first start out so that they have more flexibility and options to pursue different opportunities. I don’t think I’d help pay for a down payment on a house though.

  30. Tying in with the other thread…my kids have noticed a Blue Apron Box on my neighbor’s doorstep and were asking me about it. Apparently, the neighbor kid told them that his Mom likes it, but he doesn’t :-).
    My kids wanted to know about the service – what it provides, how much it costs and trying to decide if it was something their adult selves would pay for.

  31. emergency fund

    I continue to wonder about the wisdom of an emergency fund vs. index funds in a brokerage account and/or index funds in a maxed out Roth IRA and/or ROTH 401k. It sure seems that if you did the math the cost of keeping $50k in cash for 30 years would be far greater than the cost incurred with some credit card interest or selling some SPY into a weak market.

  32. Ris – DS1 is a different case, as I have shared. I view him as a working man, even though he really is still pursuing a college degree and will be a full-time (unit wise) student in the fall semester. So we sat together when I helped him move into his apartment over Memorial Day weekend and we went thru his projected finances in some detail so he would be comfortable that he wouldn’t feel broke all the time by continuing to fund his savings acct and when the time came his 401k to capture the company match free money. Turns out, a la the Rhett principle, his income has been greater than expected (plenty of OT, return of security deposit, some b’day $$) so he’s been able to save more and maybe spend more where he thought he’d be very limited.

    DS2 is a traditional college student. We pay the tuition + housing directly to the school; he has a ‘bookstore’ scholarship so usually there’s $zero out of pocket for books; he mostly cooks for himself and just buys groceries at the grocery store and TJs. I tell him to keep the grocery costs reasonable and he just charges those on his authorized user copy of my Visa card. Reasonable has worked out to be in the $60-$75/week for everything. Maybe there’s beer in there since I don’t ask for the receipts. If he’s above the $75 for a couple of weeks in a row, I’ll ask him if the pattern has changed or were these stockups, did you throw a big party, etc. I’m not worked up about the overage per se, but it’s important for him to recognize small changes over many occurrences will equal a potentially large amount when he gets out in the work world in a couple of years. We won’t directly fund e.g. spirit wear, dining out, game/concert tix, but we do deposit $100 in his checking acct every month that’s for his discretionary use on those things and stuff like haircuts, gas, minor car repairs (oil changes). The college fund is not in his name (yet) so he cannot view it as a money tree to fund offset frivolity. I suppose I’ll have the same ‘real’ budget discussion with him when he graduates and starts working that I had with DS1. He actually has a pretty large bank account from HS and college jobs, so he can fund most of his fun from that.

  33. Louise – Blue Apron is hit or miss with my kids. We often have to supplement with an additional dish I know they will eat. They are very anti-sauces and spices, (and salads) other than ketchup and BBQ.

    Another factor to consider is how much time it saves.

  34. “One of the things I plan to do is to fully fund their IRAs when they start working as teenagers. Does/did anyone do that?”

    Because of my college choice, my Dad maxed out IRA contributions for me for four years.

    “I don’t think I’d help pay for a down payment on a house though.”

    I’m not criticizing at all, but that just reminds me of the arbitrary way DW’s aunt (the mother of this infamous cousin) who always wanted to hold on to all this crappy old furniture to save it for their DD, and she would always mention how young college grads are going to be starting out with nothing, so old hand-me-down furniture was so important. When the grandmother died, DW took a dining table and we used that until we bought our current house. And Grandma was a very working-class person; this was not nice stuff like PTM’s desk. It would go for $10 at a yard sale, if you were lucky. But DW still felt obligated to ask before we got rid of it, and then we stored it in the basement for a couple years until we were finishing the basement, at which point aunt came down to load this old piece of junk wood veneer table into the car because it’s so important that kids will have hand me down furniture, so then they stored it in THEIR basement waiting for when they could pass it down. It was like a point of morality that THIS was going to be her instructive deprivation.

    All the while, they’re buying her the latest phones all the time, and Coach and Kate Spade purses and brand name clothes, and new cars for safety, and she never did a single thing for pay until a real job out of college, and they always had to take a beach vacation after exams (summer and winter) because she *needed* it to unwind, and I’m not saying any of that’s necessarily wrong or right, but just drop the stupid charade about old furniture, already. I seriously doubt they’re even using that table.

    Aunt grew up in the same working-class Appalachian town that FIL did. I think she’s always been conflicted about passing on this idea of frugality vs. being able to provide their one and only child with the things she didn’t have. And Uncle grew up much more UMC, so of course his DD shouldn’t lack anything, particularly at the fancy high school where it’s par for the course.

  35. “I think it’s more important for your kids what you model vs. what personal finance seminars they sit through at school.”

    It seems this statement from Milo has been brought up in earnest. It’s awesome that Totebag and Totebag wannabe parents can be the shining examples of what to do. But, there’s a slew of kids who see what not to do. And they don’t understand that it’s not the “correct” path.

    Take my BIL and SIL. They take all the OT they can. Great, you think, Rhett’s advice – increase income. Except that income seemingly goes to keep them in a frivolous lifestyle without savings. Every year they get nailed with a large tax bill because one employer can’t figure out how to do withholdings. They never have the savings to pay it and wonder out loud how they will make it. My MIL has bailed them out more years than I can count. When my MIL suggested they take additional taxes out post-tax, or divide the tax bill by 12 and save that amount every month for next year’s bill, they looked dumbfounded. My MIL has said they are a few thousand dollars away from financial disaster.

    This is the model their daughters have to emulate. The oldest works part time and goes to college part time. I’m not sure she even has a savings account, or figures out how to allocate her money to make sure she can make her expenses.

    My little family is not the picture of financial beauty, but we are in a decent position. I plan on being open and honest with my kids. I hope to give them little head starts here and there so that they can be better at saving than we are.

  36. Fred – thanks. Yeah, DS’s 529 isn’t in his name (though his UGMA is) but since I told him what amount I had saved for him and said it was up to him whether to go to private and have none left or public and have lots left, it’s effectively viewed by both of us as his. He isn’t using it for frivolous stuff but the fact remains it’s a big account and if he spends $150 vs $75 on something one month, or $2500 more than anticipated over the year, it’s no big – they money is there. He could pretty much outspend his anticipated budget every week and never have it matter. That’s a bit of a concern for me because most of us just don’t have a source of funds like that (that we didn’t sock away ourselves).

    But it sounds like your DS2 is the same, and your response is to let him know he went over, ask a question or two about it, and then drop it unless it goes on over and over. That’s basically what I’ve done with DS and it works fine on this end, too – I’m seeing no abuse. I guess there’s no way (and no reason) to artificially create a monetary limit when there isn’t one (within the bounds of an individual college account). They have more money ear marked for them than they can use, so they won’t feel the pinch of wk seeing if they’ll run out (while they’re In college) and I guess that is just how it is.

    It’s not that I wanted DS to feel a pinch so he could “enjoy” the experience of being stressed about money like a “real adult” – I didn’t have that kind of parent and I’m not that kind of parent. It’s only that I want him to learn to not rely on this temporary money tree.

  37. Besides modeling, it is important to explain to kids what you are doing with funds, especially things that go beyond automatic payroll and EZ tax forms. Those things are everywhere and easy to pick up on.

  38. Cheerful: I talk to my kids all the time about finances. When I put money into the market, I tell them what I’m doing and ask for their opinion. I talk to them about their college funds and their asset allocation. The conversations get more detailed as they get older.

    Now, we’re talking about college expenses. They have a pot of cash that they can use for college. If there are funds left over (by selecting a cheaper school), they can use them for grad school, overseas travel, etc. It is their money.

    They also got a very good financial education from Boy Scouts. Stocks v. bonds, how to budget, keeping a budget for several months, credit cards v. debit cards, etc. Excellent program.

  39. Speaking of school, when do y’all’s start?

    We still haven’t even left on our big trip. DD starts the 18th, DS on the 22nd. I still think starting in August is sheer madness.

  40. We’re still a month away from school starting. We’re heading off on our Canadian trip this weekend.

  41. Rhett – I”m speed reading today because I’m super busy… but that article you linked pretty much says “throw your emergency fund plus 30% into an index fund with 40% stocks and watch it grow”.

    What if you need your fund? Don’t you run into fees closing it out, or withdrawing a large percentage? Forgive my stupidity

  42. What if you need your fund? Don’t you run into fees closing it out, or withdrawing a large percentage? Forgive my stupidity

    The typical fee in a etrade, ameritrade etc. account is $9.99. So, if I need $20k, I could sell 100 shares of SPY and it would cost me $9.99. If I wanted to sell it all, it would still be $9.99.

  43. We are at the summer midpoint. 5 weeks in, 4 weeks to go. In tragic news at to Ada household, one child got sent home from sleep away camp yesterday for an infectious disease outbreak. Busses and busses of sad campers and stressed parents (they emptied the camp). DD has looked forward to this for 11.5 months, so it’s a pretty big dissappointment.

    I don’t have much to add on money. A friend’s aunt put money on her behalf in a Roth IRA when we were in high school, machine her ice cream shop earnings. At the time, I thought that was really lame and should get her a car or something a little more interesting. My opinion on this has gradually shifted over time, and I see myself doing the same thing.

  44. If I wanted to sell it all, it would still be $9.99.

    All my SPY that is. If I wanted to sell my BUD or Vanguard Bond Index Fund shares, that would cost an additional $9.99 for each transaction regardless of size.

  45. ” I talk to my kids all the time about finances.”

    Houston – at what age did you start going into more detail about your finances with your kids? If I told my kids now, they would really not understand why they don’t have an Xbox, Wii, etc. etc. etc. now.

  46. I’m beginning to see why the conventional wisdom sticks around…

    If you need $20k and have 40% stocks, to get that $20k you may need to sell more than 1 stock to reach that $20k, at $9.99 each transaction. People who need $20k now usually don’t like to spend $$ getting it when they could have just closed the savings account for free. Not saying that’s the best option, but why it’s stuck around as wisdom.

  47. Rhett, step 1 on that list is “open a savings account” and a comment about yield.

  48. (Lawyer side rant. Whoever thought that all caps letters would make a legal provision easier to read is an idiot. I hate reading all caps provisions and have to force myself to read each and every word.)

  49. you may need to sell more than 1 stock to reach that $20k, at $9.99 each transaction.

    There is almost no reason (IMHO) that you’d own more than one low cost stock index fund like SPY.

  50. I think that it is really important to teach kids about the power of compound interest. I know it is a little tougher in this rate environment, but the same concept across financial products. The balances they need for retirement, or college tuitions will be easier to achieve if they start saving as early as possible. It doesn’t matter if the amounts are small, but they should save something especially when here is an employer match.

    We have no school until after Labor Day, but I did make a list today of all of the school supplies that have to be purchased. Each teacher posts their list on our school web site, so I have to buy for 5 academic subjects and 3 specials. Big winner is tissues. Every single teacher is asking for tissues including the specials. If each teacher is required to teach 4 or 5 sections, and each kid brings a box….that would be at least 100 – 125 boxes in one classroom. I know that some parents don’t send in the tissues, or disinfecting wipes so they probably get less. I still wish they would just collect $5 from each family and mass order the paper goods. It is annoying when the regular supply list for middle school is already so long.

  51. School doesn’t start here until after Labor Day, so we’ve still got 1/3 of summer left. Personally, I can’t wait for it to cool down. September and October are probably my favorite months of the year.

    @tcmama – I identify with your post.

    You know, it’s like that personality test. Do I consider myself frugal? No, not really – our priorities are somewhat similar to the ones tcmama listed, plus wanting to save a bit more than usual to be able to have the chance to retire in our 50’s instead of our 60’s. But would Rhett consider me frugal? Probably. Would WCE? Doubtful. It’s the moving comparison point.

    I’m really interested in what the parents of older kids here have to say as DS isn’t that interested yet. We talk about money & budgeting and things like that, but he doesn’t care that much. His requests to buy things are few & far between, so they are mostly indulged.

    I don’t know what really works – some of it is just inate. My parents are quite frugal & conservative with their money and did everything “right” in teaching us how to be as adults, and one brother & I still managed to overspend, overdraft, and run up credit card debt when we were first on our own.

  52. “open a savings account”

    Which is what most people consider money under the mattress.

  53. ATM: Around 8th grade. Before that, they really didn’t have enough maturity or interest.

  54. The part I disagree with is “set up an automatic deposit from checking to savings”. If both accounts are at the same institution, you should be able to set up the savings to be overdraft protection for the checking. Making a few free transfers to checking during the month ekes out a little bit more interest. If a minimum average balance is required for interest, putting the $$ there first can make the difference.
    But yeah, getting much more complicated than that for a first $1000 savings would make it too hard to get to in emergency.

  55. If both accounts are at the same institution, you should be able to set up the savings to be overdraft protection for the checking.

    Too tempting. I’d say you should have to move the money manually. Also, your account could be drained in a fraud situation.

  56. Rhode – if you just do index funds, then you can get the $20k in one transaction.

    The other reason I like [tax-managed] index funds, which I stumbled upon relatively recently and long after I started buying them, is that you otherwise don’t have to sell for rebalancing, so you’re not triggering capital gains.

    http://beginnersinvest.about.com/od/capitalgainstax/a/Using-Deferred-Taxes-To-Increase-Your-Investment-Returns.htm

    Someone please tell me if I’m misunderstanding that. But for the four years that I’ve been investing in VTCLX, they’ve never triggered any capital gains except for qualified dividends. If I wanted to grab $20k for a new roof, and since I hold it directly through Vanguard, I don’t think there would be even a $9.99 fee. There would be a cap gains bill, though. I’m not entirely sure on what cost basis it’s calculated (the shares that I bought first, or those that I bought most recently? but I know that question is answered somewhere on the website).

    Another option, especially when the balance has grown a bit, would be to finance the $20k new roof and instead of having dividends reinvested, just direct them into your checking account until that balance is paid off.

  57. Who, of people Rhett was first talking about, people trying to save their first $1000 or set up a safety net for 2 or 3 months living, would be withdrawing $20K?

  58. Rhett, man, it’s been a while since I had a straight-up savings account!

  59. Who, of people Rhett was first talking about,

    I very clearly stated: the cost of keeping $50k in cash for 30 years. Clearly I was referring to totebaggers and not someone trying to scrape together $1000.

  60. It is funny that you posted those B of A rates because I was just on the Citi web site looking at the same stuff. The reason is that I received a letter from Citibank that if I want to maintain the same account status that I have now, I will have to quadruple my current balance. This can include debt such as a mortgage, but I don’t happen to have a mortgage with them.

    The rates are similar, and DH joked that the rates are so low on balances at Citi that it would be cheaper to keep our cash at Ally, and just pay Citi some fees. I hate paying fees, so I’ll see if there is some compromise at Citi, or I will just consolidate everything at Chase because I’m grandfathered into much cheaper banking accounts at Chase. I really like the service at Citi so I never wanted to leave, but I am not leaving a huge amount of can there to earn almost nothing.

  61. I think of an emergency fund for a kid right out of school is having $5K or so in cash. Having totebag parents is a form of an emergency fund too.

    I very well may help pay for a down payment to a house, but right now my gut reaction is that it isn’t a good thing to do, which may very well be an irrational response. My thought process, which probably isn’t rational is that I want my kids to make their living decisions on what they can afford and not on what they can afford + what we gift them. They need to be able to support themselves on their own earnings.

    I’m not saving anything for my kids’ houses, except maybe Legos.

  62. Rhett, you’re right, you did. The $1000 came from the page you linked to.

  63. This article on the Kennedy trust gets at the same concept of simply never paying capital gains taxes when you can just defer them:

    Like politics, tax savvy seems to run in the Kennedy family. The most recent example is the 1998 sale of the family’s most valuable asset: the iconic Merchandise Mart, a towering retail space on the Chicago River that was once thought to be the largest building in the world. Thanks to a carefully crafted deal with Vornado Realty, the Kennedy family deferred – or possibly avoided completely – capital gains tax on nearly half the value of the sale.

    The Kennedys did this using an obscure investment tool called an “operating partnership unit.” Similar to equity, partnership units offered the Kennedys an ownership stake in Vornado Realty, generating a robust stream of dividends. Of the $303 million the family pocketed from the sale, $116 million came in the form of this investment instrument, according to SEC filings.

    This alone isn’t a bad deal, being that the Kennedy’s have collected as much as $170 million in dividends since 1998, according to Forbes. The secret sauce, however, is that accepting partnership units in lieu of cash defers capital gains tax, as well as taxes on historical depreciation, for as long as the units are not cashed out, said Tony McEahern, head of wealth planning for Wells Fargo Private Bank. In fact, if the partnership units were placed into trusts, capital gains taxes could potentially be deferred forever.

    http://www.forbes.com/sites/carlodonnell/2014/07/08/how-the-1-billion-kennedy-family-fortune-defies-death-and-taxes-3/#39dc058b238d

  64. School starts next Thursday. I just went back to school shopping with DS yesterday. School starting in August is insane. It is projected to be over 100 degrees here next week.

  65. I think of an emergency fund for a kid right out of school is having $5K or so in cash.

    Why would you do that vs. putting it into a Roth IRA or ROTH 401k? Assuming of course that a kid fresh out school making $44k isn’t going to be putting $21k into their ROTH retirement account options.

  66. Rhode – There are options with no transaction fee too. e.g., if you open a brokerage account with Vanguard and use their mutual funds/ETF’s exclusively. ETrade has >2000 no-load, no-transaction fee mutual funds as well. It just depends what works for you. Putting small amounts into an account every month, I’m not interested in paying per trade.

  67. “I think of an emergency fund for a kid right out of school is having $5K or so in cash. ”

    Yes, this. It may take a while to build it.

    And while I agree that SPY may be the only investment one might need for the long term, that’s not where you want to put money you’ll need or could conceivably need to get your hands on in 0-3 (or even 5) years. Too much volatility.

    Milo – when you sell your shares (stock, etf, mutual fund) you can specify the oldest first, the newest first, specific lots — the 150 shares I bought on April 16, pretty much whatever you want. That way, assuming you are selling only a portion of your holdings, you can match selling gainers with losers and mitigate capital gains implications. However, if you do not specify, they’ll sell the shares however it’s specified in your brokerage agreement. and it is.

  68. @Lauren – We got a similar letter from Citibank about a year ago. They were completely inflexible, and we yanked our accounts. We are now with a regional bank instead. The only downside so far is that there are fewer convenient ATM’s.

    @tcmama – When we bought our house, we saved the down payment and went through the mortgage/house shopping process with minimal involvement from either of our parents. The IL’s surprised us with a nice check when we closed as a housewarming gift to spend on furniture/updates, etc. I really liked that idea, especially since we weren’t expecting it & it wasn’t in our plan. I may steal it for DS someday, we’ll see.

  69. Cordella, We have the opposite problem when school ends late. It can be very hot and humid in June, and school doesn’t finish until late June.

    I think it’s hard to focus in August and June because it is really summer in my mind. NY empties out in August so I can’t imagine how it would be if they ever moved up the start date.

    Rhett, we have those Cap One accounts. We were big ING users. It just lost something for me when Cap One took over. I know it’s different parts of the company, but I’m not a fan. They were crappy to work with on some work deals I had with them.

  70. Fred,

    What sort of emergencies are you expecting? My understanding is that you’d never use an emergency fund for something like a house down payment or first last and security as you’d need the emergency fund to pay your mortgage or rent in the case of unemployment. The only thing I can think of would be car repairs if you bought an older car and even then you might be better off charging it on a credit card and cash flowing it over a few months vs. not maxing out ( to the degree possible) your retirement accounts.

  71. Lauren,

    The two biggest surprises to me about the folks here are that almost everyone has a cleaning lady and so many people have “big bank” bank accounts. I would think you all would be credit union or online banking people and that you’d certainly clean your own houses.

  72. Rhett- it’s all relative. Compared to others with our income level, I may be a frugal miser. Compared to your average American, I am rich and wasteful. Louis Vuitton purses are very popular in my neighborhood. I could go out and buy several if I wanted to, but I don’t value that. I prefer cooking at home versus going out and like the library over purchasing books. I don’t really thrift shop anymore but I really don’t enjoy spending a ton of money on clothing. The older I get, the less possessions I desire. Not sure that’s tote baggy.

  73. The car repair example is best. My kid is (probably a bit overly) risk averse on the credit card front so he’d probably just rather pay for something like a new a/c condenser from savings.
    I would tell him to charge it and at least get the first ~30 days until the bill is due.
    If it were something like a set of tires, I might even advise him to get the (Firestone, Goodyear, Pep Boys, etc.) house credit card and use their ‘6 months is the same as cash’ promo. Plus usually at Goodyear at least you’ll get a bigger rebate/discount if you use their card. No, in theory he does not need another credit card beyond what he has, but if the benefits are good enough, and it results in a financial benefit, why not?

  74. Fred,

    Shouldn’t tires, maintenance, repairs, etc. be budgeted for and not something for which you’d need to dip into the emergency fund?

  75. “The older I get, the less possessions I desire. Not sure that’s tote baggy.”

    me too with the exception of books for my son and music albums for me (am I the only one here who still buys CDs? living in the country we didn’t have the greatest internet connection for streaming)

  76. Rhett – we bank with Bank of America. It’s very convenient for us and since I have a self managed rollover IRA with them (actually Merrill Lynch, which they own) all invested in index funds/etfs with a big enough balance I am in their highest rewards tier and the customer service I receive is excellent.

    (Not as good as First Republic, which I recommend to everyone, where my mom banks and I’m on her accounts so I benefit from that.)

  77. “The Kennedys did this using an obscure investment tool called an “operating partnership unit.” Similar to equity, partnership units offered the Kennedys an ownership stake in Vornado Realty, generating a robust stream of dividends. Of the $303 million the family pocketed from the sale, $116 million came in the form of this investment instrument”

    That all makes it seem so illicit. Operating partnership units in a REIT are a very normal real estate investment structure. Because of the tax code structure, people who derive their wealth and income from real estate almost always have no taxable income due to depreciation and ability to use 1031 exchanges and leverage.

  78. “I still wish they would just collect $5 from each family and mass order the paper goods.”

    Our local public elementary school started out with lists, and six years later had evolved into the system you describe. This was back before I became the Person Who Calls And Suggests Common Sense Solutions, but no doubt my predecessor in that position was responsible for the sensible evolution. You might consider making that call. Nothing to lose.

  79. As a young professional – I diligently saved money in my 401k. I don’t recall keeping very much in my checking or savings account. When we started saving for a house there was liquid cash as part of “house fund” but not thousands in emergency cash.
    Only later did we build up an emergency fund.

  80. Maintenance (oil changes, belts, brakes, tires) sure. But when stuff breaks (the repairs) and costs $1000, maybe not.

    Perhaps “emergency fund” overstates it a bit. Just an account, separate from the checking account, that’s a wee bit harder to get the money from, so the money is there for extraordinary things. And not just bad things. Money for a weekend trip with the guys, for instance. Figure out the routine monthly stuff and available cash beyond that goes into the other (savings) account so you have a pot of money for come what may.

  81. It’s very convenient for us… the customer service I receive is excellent.

    Why would you ever need to interact with them*? Ever since they started letting me deposit checks with my phone I’ve never need to go to or even call the bank.

    * I’m honestly curious as I think I may be missing something.

  82. “Shouldn’t tires, maintenance, repairs, etc. be budgeted for and not something for which you’d need to dip into the emergency fund?”

    I would think so. But we are bad savers like that. I suspect we aren’t alone. You just sorta assume all these things work well. And usually they don’t. I’m sure people choose credit card over savings and then keep making that choice without thought of how to get off that merry-go-round.

  83. Tires are about $500. While that’s maintenance, that’s also over 10 oil changes in cost. Sure people should save that $500 but they don’t. $30 every 3 months they can manage, $500 every 4-5 years is entirely different.

    Granted, if they just saved $10-20 per month in car maintenance, they’d be able to pay for all the oil changes and tires without issue. But people don’t think like that.

  84. Rhett – all your comments about emergency funds are completely rational. You are making me smile as you are the rational, model individual that I studied in economics class. And then there is everyone else. I think of the $5K as a back up to get out of a bad situation – bad job, bad relationship, a need to travel unexpectedly, etc. There are more economically efficient ways to saving the money, but I think it is ok to be less efficient with some emergency cash if it helps you sleep better at night.

  85. ” if the benefits are good enough, and it results in a financial benefit, why not?” Because forgetting can result in bigger fees than savings in time value of money, and could even ding one’s credit. Not doing it doesn’t raise the credit rating, but at least it doesn’t harm it.

    Mia, what’s routine to people who makes their money from real estate can be “obscure” for most people. All a matter of perspective.

    I wish school supplies lists were available online! We pick up supplies lists a few days before classes start (just went yesterday) and then everyone rushes to area stores. No chance of ordering in advance or being picky about what you’re getting. Some of the elementaries give people the option of paying for fall school supplies early in the summer. When teachers request classroom supplies like copy paper (a real thing in Florida) or tissues, I often wait a few months before sending them in. My kid and I often get big thank yous for doing that, even though they are just the supplies we were expected to buy. Our school district is bi-modal, with high and low end incomes. Regardless of the lists, some kids just bring paper and pencil. I’ve sent in extra notebooks, which teachers say really helps.

  86. DS and his DW bought their house with no help from us, though I did offer to make them a low-interest loan (at a higher rate than I am getting on some savings accounts but lower than they would pay elsewhere), but they didn’t need it. DH would have pushed more to give it to them, but I respect the desire of DS to manage on his own without help from his parents. They know we are always there in an emergency situation, and we started a 529 account for the baby, but so far they have been willing to live simply in order to stay within their means. It’s hard to watch them managing without things that it would be easy for us to provide for them, such as a car seat for both cars or a wading pool for the baby instead of the makeshift tub they are using, but IMO it’s important for young adults to make their own choices, and learn from their own experience the best balance between spending and saving.

    DIL’s parents are much frugal than we are, and they have an irrational fear of debt (as in, you need to save up to buy a car even in a 0% interest environment), so sometimes I do have to point out financial facts to DS so that he can make fully-informed decisions. Fortunately, when faced with how to roll over his 401(k) from one employer to another, he thought “Maybe I should check with mom first” before he took action.

    Someone asked about funding IRA’s for working teenagers. We did that, and it’s an amazing opportunity to help them get started. Even a small amount will grow over 50+ years. But apart from that, none of them was much interested in money matters, and I never sat them down and explained how much money comes in and how much goes out. By giving them relatively small amounts to spend at their discretion, it didn’t take them too long to distinguish between wants and needs, which is the foundation of all financial security.

  87. We started talking about finances as far as balancing spending versus income keeping track of where your money goes so you can make changes when needed etc. while they were in high school. With DD summer job, we put about $1000 of her earnings in an investment account, and have helped her to Reyna scenarios showing how much she can have 20 years down the road if she just leaves it as is, contributes x amount per month (the cost on one Coke Zero per day makes a huge difference over 20 years!) etc. We’ve included DS in those conversations so they can both begin to understand the power of compounding and the importance of starting saving early.

    DS starts school Aug 17, but had mandatory “college camp” today and tomorrow. Major victory that he can drive himself.

  88. Rhett –
    e.g. (1) I tried to withdraw cash from their atm. before the cash was dispensed, the atm shut down. It then spit out a receipt showing the $$ had been taken from my account. (2) my debit card broke, literally broke, along one side of the magnetic strip and I needed to order a new one (3) picking up foreign currency in the branch.

    for 1 & 2 I contacted them thru the app on my phone, and a real person answered on the first ring saying “how can I help you today, Mr. MacMurray.” No entering my account #, last 4 of social, etc. Done in 2 minutes each time with filing the claim and having the $$ restored to my account and getting the new card expedited at no charge. Normal people have to pay $5 if they need a new debit card off cycle.

  89. “The car repair example is best. My kid is (probably a bit overly) risk averse on the credit card front so he’d probably just rather pay for something like a new a/c condenser from savings.”

    This is going to sound really curmudgeonly, but I remember a summer when the A/C broke on our older station wagon and we simply didn’t get it fixed, thinking that the car maybe only had two or three years left. At the time (late 80s?), I think A/C was technically still an option on standard cars, anyway, so not having it wasn’t considered the same sort of unacceptable deprivation it is today. And we were not poor, but that’s the kind of story that I could use to suggest otherwise, if I were so inclined, e.g., if I were running for office. But the point is, especially for someone living in the Northeast, if the A/C condenser breaks in the car and the repair is not in the budget, it IS possible to simply not get it repaired. Like I said before, these are the types of points that MMM makes so well.

    Ironically, later that Fall, after the weather had turned cool and crisp, a mechanic was under the hood of that car for an unrelated issue and noticed a loose power connection, maybe for the compressor, that he quickly repaired for free and said “I think I fixed your AC, by the way.”

  90. Rhett, I can’t speak for anyone else, but Ive worked for some of these banks or their predecessors. I stayed because I never paid fees and I got lots of stuff for free. It is so convenient to have branches every where around here, plus free banking all over the world.

  91. “(at a higher rate than I am getting on some savings accounts but lower than they would pay elsewhere)”

    My family does this too for loans to family. My sister and I were just talking about it and frankly we don’t get it, but this is how it always has been. (We understand from a money and cents POV.)

    My Dad charged me interest on a loan when I first moved to NYC. My brother is charging my mom interest on a loan currently. Why? These are not large loans and its your daughter/mom, for goodness sake.

    Maybe if it was a larger loan or a real inconvenience, I’d get it. Seems a bit overly frugal, but that does describe my family.

  92. Scarlett: Good for your DS and his DW! Those are the choices that I would want my children to make, when they are at that life stage.

  93. Scarlett, people have asked about bulk paper good supplies. The PTA board and the district were in favor of doing it, but there wasn’t a high enough participation rate from the families.

    For example, the PTA already acts as a conduit for lice money. They collect it for each family, and the lice companies come in and check kids in the school at least six times per year. The set up works because the class parents sit in each classroom on open school night, and collect class dues for the teacher, AND lice money. Almost 98% of all families will pay for class dues and lice on open school night. The problem in the middle school is that it would have to be voluntary at a table at open school night. There are no homerooms so there are no class parents. They even tried to give parents an option in the middle school of paying for certain things online, or in person. The collection rate is always less than 35%.

    Also, some parents believe that our school taxes are high enough that tissues, clorox wipes and hand sanitizer should be purchased in bulk and provided to each teacher.

  94. One thing I haven’t paid any attention to is savings rates, as I was just assuming that it’s nothing, but after Rhett posted the BoA rates and later mentioned credit unions, I checked on our Navy Federal website and discovered that their [share] savings accounts are paying 5 times higher interest rates than BoA, and money market savings (MMSA) are 10 times higher than BoA:

    https://www.navyfederal.org/products-services/checking-savings/savings-rates.php

  95. “These are not large loans and its your daughter/mom, for goodness sake.”

    I still owe my brother $20k. That’s $50 a month at 3%.

    Of course, if you left behind a shampoo bottle at my grandmother’s house, she would determine that it wasn’t worth the postage to ship it, but would still mail you a check for the volumetrically pro-rated amount of the remaining shampoo, and use the rest herself.

  96. I plan to have monthly financial meetings with my kids during their sophomore or junior year of high school, to discuss the bills being paid and to take them through doing taxes and health insurance selection.

    In light of the Kennedy family example, I’ll note that that most truly wealthy Americans have a strong ability to avoid high taxes. (by moving overseas if nothing else) That is one of my concerns about the practicalities of implementing higher taxes on the rich.

    I spend heavily on childcare, where I am not at all frugal. And having four children isn’t frugal either.

    Some people buy million dollar California beach houses, some people have four kids. It’s about where you want your money to go.

    Rhett does well financially because he is flexible, smart and not afraid to take risks. We do well enough financially despite not being flexible for long-term family reasons (terminal cancer situations, widowed parents, our own children)

  97. “” if the benefits are good enough, and it results in a financial benefit, why not?” Because forgetting can result in bigger fees than savings in time value of money, and could even ding one’s credit. Not doing it doesn’t raise the credit rating, but at least it doesn’t harm it. ”

    Cheerful – I assume you mean forgetting to pay… But that would ding you unless you had the cash to fork over. And not many people have $500-1000 on hand for a car repair.

    Credit cards can be a good thing – like that Midas or Firestone card. Use it when you need it, shelve it when you don’t. That’s a valuable lesson for the lil man right there. And one that will only help his score so long that he makes the min payment on time. The only ding he’ll get then is if he doesn’t pay off the balance in the agreed upon time to receive zero interest.

    I was taught to be anti-credit card. It’s only been recently that my teachers (aka my parents) have come to see the virtue of zero or low interest over a period of time. I got on that bandwagon years before them.

  98. Milo – your grandmother must be related to my grandparents in some fashion. Maybe its generational – lived through the Depression and all that.

  99. “These are not large loans and its your daughter/mom, for goodness sake.”

    I agree, but there is no way DS would have taken the money unless I pitched it as a “win-win” for both of us. It remains to be seen whether his younger brothers would have the same reaction. I’m kind of doubting it, but maybe they just need to find a frugal DW.
    DS#2 already has a “registry” list of Stuff he Wants, much of which he has purchased since getting a good job. He jokes that his future DW, as yet unidentified, will be happy that someone else has already purchased the high-end chef’s knife and top-rated cookie sheets. She will get to pick out the color of the Kitchen-Aid standing mixer and may be allowed to weigh in on the dinnerware.

  100. I tend to agree about intra-family loans, except for large amounts (like my clients who loan their kids $1M as an estate planning device – they then forgive the loan in $28K increments every year). You have to paper it and you have to make sure it is at the AFR, etc. I think outright gifts are better. With family members, the likelihood of suing to collect the loan is so low, might as well save the up-front cost to set it up.

    Our kids are curious about money and we tell them how much things cost like a phone, a car, etc. Their grasp of large numbers isn’t great yet (except for #1 child, who is sometimes too smart for her own good!).

  101. @tcmama – Rhett as Homo Economicus! LOL. It goes with the cost per unit value too.

    @Scarlett – “I respect the desire of DS to manage on his own without help from his parents.” I can understand that. Besides the pride, there is always the worry that there are strings attached of some kind when accepting certain kinds of help. (not a car seat or a baby pool, obviously)

  102. L- Not to get into it too much, but the undocumented aspect of my brother’s loan to my mom is exactly what started the conversation. My sibs aren’t speaking (due to other matters) and my mom is not getting any younger. I’m expecting it to be ugly when she does pass away if that loan has not been repaid in full.

  103. “Some people buy million dollar California beach houses, some people have four kids. It’s about where you want your money to go.”

    LOL!! That wins for me today WCE!

  104. “I was taught to be anti-credit card. It’s only been recently that my teachers (aka my parents) have come to see the virtue of zero or low interest over a period of time. I got on that bandwagon years before them.”
    The occasional posts on here about credit cards can be real eye-openers.

    Ivy, I agree with you 1,000,000+ percent about the strings! Even a wading pool is a much nicer gift if it comes fully packaged with gift receipt.

  105. And we were not poor,

    I believe you mentioned in that past that they were, at times to a fairly significant degree, house poor.

  106. Rhett, my CFP guy at TIAA agrees with you totally. His jaw dropped at how much we keep in cash. “You do know your mutual funds are liquid, right?” “But maybe we’d lose money, or have to pay cap gains!” Eyeroll from him.

    Tcmama, yes, I put the max amount in DSS’s Roth IRA as soon as he started working as a teenager. I also dumped a fair amount of money into some stock funds for him when it turned out he wasn’t going to need a penny from us for college. He used that for his house down payment (and his wife used family gifts as well.)

  107. “Some people buy million dollar California beach houses, some people have four kids. It’s about where you want your money to go.”

    The value of social capital is even greater, honey. If you know someone with a million dollar California beach house, you can borrow it with your four kids. And if the beach house person needs to go on a Disney cruise, she can borrow your kids, right?

  108. “I believe you mentioned in that past that they were, at times to a fairly significant degree, house poor.”

    Yeah, but not at this point, and never to the point where a car breakdown would be a source of financial stress.

    Poor in the sense that we considered going to Pizza Hut “going out to eat” (then again, Bubba Gump, you know?), and we may or may not have had basic cable TV by that time.

    DW and I were talking recently when we stopped for lunch in Fayettville, NC (she had searched for Panera locations), and I was commenting about how before about 1992, I really don’t think there was much of anything in the way of popular casual dining restaurants. But around 1992, we got a Chili’s nearby, and it was such a novelty because it wasn’t quite Mexican, it wasn’t quite American, they paraded around with these loudly sizzling fajita platters, and they had the quirkiest crap on the walls. And we were in a reasonably affluent area, but before that time, there was no Chili’s, or Applebee’s, or Outback, or Red Robin, or Olive Garden, or Friday’s, or God knows how many you just expect to see. There was Pizza Hut, and Denny’s. And where my grandparents lived, more traditional places like Howard Johnson’s (and that’s like Don Draper era, or was that Holiday Inn that he visited?). And we simply did not do fine dining. That was just another world entirely, like my kids might think of private jet travel.

    We *DID* have Red Lobster, and that was for an occasion like Confirmation. That was a big deal.

  109. WCE, the whole concept of health insurance is so difficult to get across to teenagers, unless they have been unfortunate enough to have had many encounters with the health care system. DS1 needed to visit urgent care on a visit a few years ago, but his health insurance card was back in DC in a drawer. He had no idea that he was supposed to keep it in his wallet, because I failed to teach him that concept. Fortunately he was still covered under our plan so he took that card instead. When he was choosing health insurance at his new employer last year, I talked with him about catastrophic versus routine expenses and that he should try estimating the latter before deciding how much insurance he needed. Not sure that conversation would have made sense when he was 16.
    What does bug me is that he is way underinsured for life insurance. Clearly the frugal inlaws have convinced him that he can’t afford more than a minimal amount, something like $400K. He will soon have 2 kids and I am going to reopen that conversation. But perhaps the plan is that his SAHM DW will move in with her frugal parents and then inherit their house. Life insurance for a 20something healthy man is peanuts.

  110. Several people have commented on the relative nature of defining “frugal”. Here’s a great case in point. The guy is going to great lengths to save money on his daily Star*ucks trip, and apparently assumes he’s being frugal. I think a lot of us here would disagree that any daily coffee shop habit can be frugal. Despite his lack of facial hair, I think he’s a hipster doofus. http://news.dose.com/food/30033/3-Goes-A-Long-Way-When-You-Hack-The-Starbucks-Menu?utm_content=inf_10_71_2&utm_source=partners&utm_medium=WHFacebook&utm_campaign=fijifrost&tse_id=INF_675384405a5711e6b7dc69ca5c618d1d

  111. “We *DID* have Red Lobster, and that was for an occasion like Confirmation. That was a big deal.”

    We went to a Red Lobster one time growing up. This was “fancy” for us LOL
    Of course for a family of 5 , dining out is not cheap (it is bad enough to pay the bill for a family of 3!)

  112. As much as parents lecture and show by example, I’m convinced most kids are hard wired in how frugal they tend. Maturity and experience are probably most useful in learning to manage money wisely.

    Our school’s personal finance course, mandated by the state, seemed to offer minimal in the nuts and bolts and presented more big picture type of stuff, including just general economics. Things like taxes and interest rates didn’t seem to hit my kids as real until they actually experienced it.

    ” if you left behind a shampoo bottle at my grandmother’s house, she would determine that it wasn’t worth the postage to ship it, but would still mail you a check for the volumetrically pro-rated amount of the remaining shampoo, and use the rest herself.”

    That’s would seem so odd to me, but it goes to show how families are different about these things.

  113. never to the point where a car breakdown would be a source of financial stress.

    Even if the central air was on for the entire month of August?

  114. Scarlett, how is understanding health insurance different from understanding insurance for your car or home? Honest question, no shade intended.

  115. ” Things like taxes and interest rates didn’t seem to hit my kids as real until they actually experienced it.”
    I’m always amazed by the response tax-free days get each year. It’s an 8% discount from what you’d usually pay, but people act like it’s a bonanza.

  116. and I was commenting about how before about 1992, I really don’t think there was much of anything in the way of popular casual dining restaurants.

    Sizzler. That’s where my parents were still going right up til the bitter end. Golden Corral. Round Table Pizza (I think that’s a local California one). Many more independent restaurants like Fjord’s Smorgette, which was sort-of vaguely like a smorgasbord, only very Americanized. Cafeterias.

  117. Lauren, I just got that same letter from Citi. I have been banking with them since just getting out of grad school and really don’t want to switch – all my banking routines are set up with them. I just don’t have the mental cycles to make the switch. Grrrr. Plus their branch is much more conveniently located than the alternatives.

  118. “What does bug me is that he is way underinsured for life insurance. Clearly the frugal inlaws have convinced him that he can’t afford more than a minimal amount, something like $400K. ”

    Scarlett – that was me for a long while. My house/car insurance agent opened my eyes. We took out something like $250k on each of us – enough to get rid of our mortgage and pay debt. Now we carry $900k on each of us. Since we both work, there’s no sense in over-insuring the working spouse.

    “I’m always amazed by the response tax-free days get each year. It’s an 8% discount from what you’d usually pay, but people act like it’s a bonanza.”

    Cheerful – people in MA wait to make big ticket purchases during tax free week – like furniture, TVs, computers, cars, etc. A lot of businesses offer further discounts to get people in. Right now, a local furniture store is offering double the MA tax savings for RI stores (so a 16% discount). For clothes, Southern MA folks come to RI where clothes are still tax-free. Remember, these are also the people who think 8% is a lot, and for some people it is.

  119. “Even if the central air was on for the entire month of August?”

    Horrors! Why would anyone do that?? We *love* getting the fresh air!

    Yeah, that would have been fine. We could do any sport or camp that came up, they were always looking for enrichment programs. All those things cost something, but it was never a concern.

    I really never remember hearing a single concern about money as a child, and most kids I went to school with considered us rich or equivalently UMC at the very least because of our house.

    That’s why it’s so remarkable to me that, in certain categories, we just never spent money. And like I said, partly it was because those places simply did not exist.

  120. Ground Round, Ponderosa and Sambos (now Denny’s) – that was dining out during my childhood. Then came Friendly’s. Red Lobster – so fancy! I think we went there once.

  121. Cheerful, young people can understand that a thief might steal their laptop, or a tree might crush their car, but if they have been blessed with good health they don’t have a clue how much a health crisis might cost. And unlike other forms of insurance, buying health insurance involves decisions about premiums, deductibles, copays, networks, caps, and all of the other nuances that bedevil even experienced Totebaggers.

  122. ATM – yikes. NEVER DO AN UNDOCUMENTED LOAN. Never! I have a client whose parents “promised him the house” and he was ‘loaning’ them $$ to pay the house expenses, all of course in cash and not documented, and guess what? They never transferred the house to him. Sigh.

    We went to Sizzler! It was big in the late 80s/early 90s for special occasions in my town. :)

  123. “Cafeterias.”

    yeah, we had a cafeteria. even *my* parents kind of chuckled at it, but my grandparents discovered it on a trip to Florida and fell in love, and since we had the same one next to the mall, they “treated” us whenever they would visit. You walked down the line with a big plastic tray, and I could get a kid’s-size plate of fried shrimp, two sides, and a dessert like green JELL-O or chocolate pudding, both of which were topped with Cool Whip. Slightly earlier than the Challenger Explosion, I remember being in that line and hearing my parents and grandparents discussing the upcoming ’84 election. The whole dining area had green carpeting and salmon-colored vinyl plush chairs on those little gold wheels on which a kid could roll around endlessly.

  124. Regarding Grandmother and shampoo, that’s better than MIL. I left a pair of shoes at her house. She didn’t tell me that I forgot them and adopted them because she liked the style. A few months later I said “Hey, you’re wearing my shoes.” She said, “I know. I like them.” That’s it. I didn’t know what to say, so I let it drop. After that, I made sure to keep better track of my shoes.

  125. Rhett that is a good question but impossible to calculate easily on my phone. But he has only been working a few years and not near six figures so I’m guessing the SS benefits would be minimal.
    That reminds me to make sure he has insurance on his DW.

  126. In his awesome book on childhood in the 1950s, Bill Bryson talks about the advent of restaurant cafeterias and their arrival in Des Moines.

  127. Lyon’s. Golden West. They were all variations on Denny’s, though.

  128. I have memories of my granddad taking me to a cafeteria/vending machine style restaurant. Horn and Hardarts? You put your money in a slot and opened the little food-sized window and took your plate. My siblings and I loved that place!

    We went out to eat every Saturday after mass when I was growing up. Some weeks it was just Arby’s, other weeks a nicer sitdown restaurant. Special occasions were Steak and Ale. On one of our first anniversaries, my husband took me there because he knew I had such fond memories of the place from childhood.

  129. You know how people who think that the country is going to hell in a hand basket are quick to hypothesize that the next generation will be the first to do worse than their parents? I wonder if we’ll ever get to a time when it will be popular in America to be sitting with your grandchildren and telling them “you kids don’t know how bad you have it. When I was your age, we didn’t have to wait for a special occasion to go out to dinner. Simply being tired from work or wanting to get out of the house was plenty reason enough to go out for a family dinner. And I’ll tell you something else, you didn’t get just one or two presents on Christmas morning. You might get 10, 12 presents, the whole family room would be piled with boxes. It wasn’t like it is today.”

  130. We also rarely went out to eat when I was a kid. In the summers we spent in WA state, we would visit Seatle once, and go out to the Old Spaghetti Factory. We got to pick our birthday dinner, and I never even entertained the idea that it might involve going out so I always asked for homemade manicotti. But my brother started pushing the envelope a little when he hit around 10 or so and realized his friends went out to restaurants sometimes, so he started asking for Red Lobster.

    We did get fast food, but only when on car trips (which we had to do a lot when I was a kid) so we saw it as punishment rather than a treat.

  131. Milo,

    Although, if you look back to a generation before that, especially in your neck of the woods, it wasn’t unusually to have someone cook and clean for you on a full time basis of you had a totebag level income.

  132. Scarlett, I guess we have different definitions of “good health”. I think of my son as healthy, but he has needed stitches once or twice. He gets allergy shots regularly, and once had a bad reaction. When he was younger, he occasionally got respiratory infections–bronchitis and ear infections and sinus infections all at once, so a bunch of different meds. None of this would be impossible to pay for, but the allergy serum is $2.5 k, so insurance is certainly better there, and he’s always seen me use health insurance for the rest. He’s just starting high school so we haven’t gotten into out of pocket limits or copays yet, but he does know that choosing health insurance involves looking at what doctors it works with, so a basic understanding of network and premiums and deductibles are just like car insurance (which he understands because of a fender bender). I think you’ve just showed me a positive sign of all the respiratory crap. :)

  133. I can remember being invited to go out to a restaurant with a friend’s family when I was 16. We went to one of those steak chains – Steak and Ale, maybe? It was made clear that we would all be ordering the same thing, which was a steak slices on biscuits entree, the cheapest thing they sold. I still thought it was pretty cool.

    When I got to college, I met lots of UMC and just plain ol’ rich kids. My freshman year’s roommate’s family took me out for dinner during the fall parent’s weekend. We went to an actual real, non-chain restaurant. The dad wore a suit. I think they were puzzled as to why my parents hadn’t come for the weekend. It never occurred to them that my parents couldn’t afford to make that trip

  134. Oh, and I mention the bad shot reaction as a financial thing because of the meds and care needed to deal with it.

  135. I have sometimes taught our intro to healthcare informatics class, and one thing that amazed me at first was that my students knew NOTHING about health insurance. They did not even know what it was. I am guessing that quite a few of them came from families with no insurance.

  136. Rhett – that’s very true. In college, we were all issued and charged for this hopelessly archaic book called “service etiquette.” And there was never any reason to read it, but I did just out of fascination with the way the times have changed. This old society lady who wrote it would talk about the etiquette for visiting another officer’s house, and if they were a lieutenant or below (in their 20s, you might just leave your calling card (your calling card!!!) in the foyer, since they *may* not have a maid. In such cases, there should be a little silver dish on a table for just that purpose, so as to avoid any embarrassment. But anybody senior then that would certainly have a made, and you would give your calling card to her. And someone like a captain should have more help, including someone acting as a butler for the evening, in which case you would leave your calling card with him, not the maid.

    When I actually went to my CO’s house, instead of calling cards we brought things like taco dip to share.

  137. I went to a teen survivor’s workshop with DS2 a couple of weeks ago. One of the big points they made – we had a 2 hour session on this – was how important it is to gradually turn over healthcare responsibility to teens. This means they have to learn how health insurance works, how you make an appointment, who their providers have been, obviously what meds they are on, and so on. This is obviously critical for teen survivors but it made me realize that we need to do this for all our kids. I have commented before on the phenomenon of ADHD kids going off their meds in their first year of college. There are a number of reasons but one may simply be forgetting or not being sure how to make an appointment to get a prescription renewal.

  138. Milo, my dad used to tell me how bad I had it. I came out of college into a recession (1982) and he would talk about the 1950s, and how you had three or four job offers waiting for you, and they were well-paid, and the optimisim throughout the country that it was all going to just get better and better. Kind of like the Donald Fagen song, “IGY”:

    Standing tough under stars and stripes
    We can tell
    This dream’s in sight
    You’ve got to admit it
    At this point in time that it’s clear
    The future looks bright
    On that train all graphite and glitter
    Undersea by rail
    Ninety minutes from New York to Paris
    Well by seventy-six we’ll be A.O.K.

  139. Rhett, thanks for that info. They could probably almost live on SS at their current frugal consumption levels.

    We rarely ate our either. Recently had a conversation with a person about my age who remembered that, like us, they were not allowed to order juice on the rare breakfast after Mass outings. We only ate out when traveling and then only while on the road, because we always had a motel room with kitchenette or a modest beach house with a kitchen. We rented the same beach house in Nags Head four years in a row because it was so attractively priced. No a/c or tv and only one bathroom. But FOUR bedrooms so my sister and I got our own rooms for a week. Heaven. I did not think that we were roughing it because who needs a/c at the beach with all of the lovely breezes? And most of our friends never went to the beach so we felt rich.

    Years later when DH and I joined his entire family for a beach week every summer at one of those “sleeps 25” houses, I was amazed to find that the a/c was always on so cold that we would freeze coming inside in our wet suits. I always left windows open only to find them firmly shut when we came inside.
    And one year I hid the tv remote (the power button was broken) and enjoyed an hour of peace while everyone frantically searched and blamed the little kids for losing it.

  140. “my dad used to tell me how bad I had it”

    That’s kind of shocking, in a way.

    On Rhett’s maid comment, I guess it should have been obvious that the prosperous middle class have never had to get involved in meal preparation if they didn’t choose to. Through the ’40s, you could have an Irish or colored maid, then came Campbell’s and Swanson to fill the void left by an increasing minimum wage, then Chili’s, etc. were added to the mix, and now meal preparation at Costco, Wegman’s, and options like Noodles&Co/Panera.

  141. We’re back to school already here — this is the first week.

    The 8th graders have a class where they have to come up with a budget for starting out — choose the job you’re aiming for and the place you plan to live, find what the usual salary would be, find a place there to “rent,” pick out a bunch of household stuff on Amazon, set a budget. I don’t know to what extent they covered credit cards, time value of money, etc. I don’t think they’ve done anything like that at the high school level, although my oldest seems to have a policy of never doing the work for the advisory-and-life-skills type classes, so I might not know. I assume they’re not covering personal finance in his AP Econ class.

    When I was growing up we never ate out much and cleaned the house ourselves, but did some significant traveling as a family. And now with my own family, we don’t eat out much and clean the house ourselves (full disclosure: it’s not very clean), but are doing some significant traveling as a family. So I suppose there’s an argument for modeling.

  142. My/our challenge is that Mr WCE (and his divorced brothers) grew up with a Mom who did the housework. They don’t have the discipline to be as consistent as she was but want to live in a clean house. I don’t expect the “how clean is clean enough?” debate to be resolved till Mr WCE is retired and I am working, at which point the debate will switch to “How healthy does dinner need to be? How often are fish filets OK?”

  143. I came from a Totebaggy family and DH came from a frugal extreme Totebaggy family. We didn’t know the financial system when we got here but we were able to translate what we learned in other country and able to function here. I can teach my kids and give them a good start but what they do after is up to them.

  144. ” students knew NOTHING about health insurance.”
    Huh. So that’s why people were so mad at being forced to buy it.

    The calling card discussion reminds me of an interview with Cokie Roberts in which she talks about DC in her childhood. I can’t find it online, but here is part of it. https://books.google.com/books?id=TjKR4RaO-7AC&pg=PA176&lpg=PA176&dq=cokie+roberts+washington+dc+wives+protocol&source=bl&ots=tXpbqVKbMR&sig=iF709cfLQO8dyBwmvQmE6AQrUw4&hl=en&sa=X&ved=0ahUKEwjV7LP66KjOAhWF7iYKHQHSA6sQ6AEIJTAB#v=onepage&q=cokie%20roberts%20washington%20dc%20wives%20protocol&f=false
    There was a strict visiting protocol of wives calling on other wives higher up than themselves. It was fairly complicated with Supreme Court Justices’ wives having hours on certain days, wives of Senators on other days, etc. And they all exchanged calling cards. Hearing about it made me think about “behind every successful man there is a good woman”. It’s almost like jobs were for both spouses and when you married, you signed up to be a part of your husband’s career, whether doing this kind of socializing that tied into the socializing/lobbying/search for legislative partners that couples did in the evenings or managing the household meals, cleaning, schedule, etc. The presidency still requires an available spouse, of course, but I don’t know of other jobs that do. Perhaps CEOs of major firms?

    Growing up, the closest to regular meal rotations we had were weekends. Fridays were always meatless, usually fish–tuna stroganoff, salmon loaf, occasionally tuna casserole, sometimes mac & cheese. Vatican II removed the requirements to have meatless Fridays, but when they married, my mom signed up for that menu plan, so she kept with it. Sundays after Mass/church were fancy steak or similar in the dining room using the good china or, in the summer, grilling and eating on the back porch. A few times a year we went to a local restaurant. Sunday nights we usually ordered pizza from a local pizzeria. I had McD’s or Burger King only a couple of times growing up, and thought of it as a real treat, until HS when I got an egg Mcmuffin on the way home from morning swim practice regularly. The closest I come to that is trying to keep pizza ordering to one time per week.

  145. “One of the big points they made – we had a 2 hour session on this – was how important it is to gradually turn over healthcare responsibility to teens.”

    Perhaps it is easier now for kids with complicated medical histories — they can access their records electronically and share them with new health care providers. This must be an issue for college-age survivors who are seeking health care on campus or otherwise away from home.

    I gradually shifted responsibility for the routine dental and eye visits to the boys as they moved through college. I’m pretty sure that unmarried adult DS has not visited a dentist since he moved to the big city. If it weren’t for the contact lens prescription issue, he would not have bothered making an eye appointment either.

  146. “One of the big points they made – we had a 2 hour session on this – was how important it is to gradually turn over healthcare responsibility to teens.”

    “the whole concept of health insurance is so difficult to get across to teenagers”

    OT, this is something I need to add to what I’ll try to teach DS this year, and to DD when she’s older. DS has a semiannual dental checkup in a couple weeks; I’ll try to remember to get him to schedule the next checkup.

  147. Growing up my parents took me to a few very nice restaurants. Some of the chefs were trained in traditional French cooking, so the food was great. The Chinese restaurants they took me to served traditional Chinese fare at the time.
    I was also fortunate to be taken to fancy cake shops, ice cream palors by my aunts and friends of my parents. When one uncle and aunt were dating, they took me to a revolving restaurant.
    I am a non fussy eater and enjoyed myself.

  148. “(Roth 401k). He wants to go higher, but I told him it’s better to just build the regular, no strings attached, savings account till he has ~2-3 months net in there (with no home equity line of credit to use as an emergency short term cash source like his parents have, he needs an actual savings account for that purpose). Better not to tie up more than what gets the full company match until his life gets more settled.”

    I would suggest thace once he makes sure to get the company match, he next funds a Roth IRA as fully as possible. Because the Roth IRA is funded with after-tax dollars, and the principal can be withdrawn tax-free at any time, it can also serve as his emergency fund. Once the Roth IRA is fully funded, any additional savings could go back to the Roth 401k.

  149. Here, Red Lobster is hands down the best place for steamed whole lobster. The pricey seafood restaurants serve overpriced sorry lobster tails. So, for lobster and crab that’s where we go. I miss Boston and the seafood.

  150. “buy my evening RingDing”

    I had no idea what a RindDing is and had to google it. I guess it’s a regional delicacy; it looks very much like the Hostess DingDongs I ate as a kid.

  151. “The goal isn’t to spend less, the goal is to make more.”

    I partly agree. IMO, the goal is to have more money coming in than going out. This can be done Rhett’s way, making more, but it can also be done by spending less, or doing both.

    And what’s the point of making more money if you don’t have time to enjoy it? OTOH, the time to enjoy it could be in the future sometime, and if there’s one thing we totebaggers are good at, it’s delaying gratification.

    In hindsight, I positioned myself well financially by going to grad school part-time early in my career, leaving me little time to spend. By the time I finished my degree, I was well on my way to a down payment on my first house.

  152. home equity line of credit to use as an emergency short term cash

    Why not borrow from the 401k?

  153. Truth be told, I was a married father with another baby on the way before I ever learned a thing about private health insurance. When I accepted a job offer, I spent 20 minutes looking at the benefits paperwork. The basics are not rocket science. I think you may be underestimating your kids’ abilities to teach themselves a topic when the need arises.

  154. Fred, Risley, your approach to your DS’ college funding is a bit different that what I plan to do, which is what my parents did for me.

    Before the start of each semester, my Dad would deposit enough money into my checking account to cover tuition, fees, room, board (14 meal plan), and books (an estimate based on buying new books). At that point, it was up to me to manage those funds, as well as what I’d put into the account from my earnings to cover everything else.

    I did have my savings account (about 5% interest back then) linked to my checking account (0%), so I could keep most of my money in my savings account, and transfer it to checking as needed.

  155. “Why not borrow from the 401k?”

    Roth or traditional?

    There’s more of a risk with a traditional 401k loan; if something happens (e.g., job loss) and you can’t pay it back, it’s considered an early withdrawal, and there are taxes and penalties due.

  156. “So I suppose there’s an argument for modeling.”

    Or maybe for genetically influenced preferences. Or for both!

  157. “One of the things I plan to do is to fully fund their IRAs when they start working as teenagers. Does/did anyone do that?”

    We’re facilitating DS funding his own Roth IRA. We still give him an allowance, which has been more than enough spending money for him, so all of his earnings from his jobs, every penny so far, have gone into his Roth IRA. He hasn’t made enough to hit the contribution limit yet.

  158. “When I accepted a job offer, I spent 20 minutes looking at the benefits paperwork. The basics are not rocket science.”

    No, they aren’t, but much depends upon the employer and the choices available. And the whole “in-network” thing can be a very big deal in certain markets, where picking the “wrong” network can have serious consequences in the event of a medical crisis. DH’s university offers only a couple of choices, but one of the networks includes the University of Chicago, Mayo Clinic, and Cleveland Clinic in addition to one of the two local hospital systems. The other does not. And both cost the same, so you have to scroll through a bunch of pages to figure that out. Before my cancer experience, I didn’t pay a bit of attention to this stuff, but now I do.

  159. Ditto to Scarlett. When Ada talks about HMO’s, I think about if I had been in the HMO by employer offers, which only has in-network perinatologists in the city of Portland. FIL had to move from Montana to Washington for cancer treatment due to his Washington-based HMO.

  160. I, too, wouldn’t consider healthcare simple. We have to get a referral for specialists. Sometimes they don’t go through, so you have to call the doctor’s office to confirm before your appointment. Choosing the right plan, healthcare savings accounts, etc. Also, we have to realize that many people don’t get healthcare provided through work, so there’s the Obamacare exchanges that some have to deal with.

  161. Health insurance is important to look at closely but if you don’t use health care much, you don’t look at the details.
    Learning details about retirement savings, the benefits and risks of different types of loans are some of the other things that fall in the category that most people would rather not go into.

  162. “It remains to be seen whether his younger brothers would have the same reaction. I’m kind of doubting it, but maybe they just need to find a frugal DW.”

    I’m going to assume you meant they just need to find frugal DWs (plural).

    Sharing a frugal DW would be weird, and probably illegal.

    Just keeping it edgy here. :)

  163. Scarlett, buy your son a 20 or 25 year level term life policy and make your grandkids the beneficiaries – call it a baby gift for the new one.

    Our neighbor died suddenly without life insurance, and even though the SSI benefits are generous, the widow is struggling to hold on to their very modest house. The benefit is large enough to disqualify them for most of the need-based assistance like free school lunch and food stamps, but even with her working full time again it is not enough to live on here, and of course you don’t want to force your bereaved child to change schools by moving.

  164. “I came out of college into a recession (1982)”

    It wasn’t a recession for everybody. Most engineering grads I knew had multiple offers, and I don’t remember my non-engineering friends having problems getting jobs either.

  165. “we considered going to Pizza Hut “going out to eat””

    Well, eating at Pizza Hut is not eating in, so we consider it going out to eat. Same logic applies to eating at places like McD and JITB.

  166. Scarlett, those interoperable electronic medical records do not exist and probably never will. Also, patients do not have control of their records. You can get copies, but it will be by hospital and probably reams of paper. I saw my DS’s records from MSKCC after just 9 months of treatment, and it was hundreds of pages.

    There is supposedly some deadline for making medical records interoperable, but the deadline keeps being pushed to the future because the vendors don’t want to do it, and the hospitals have no stake.

    Most of the pediatric cancer survivors get a Summary of Treatment, which is just two pages and very terse. I find it to not be very informative.

  167. “In fact, if the partnership units were placed into trusts, capital gains taxes could potentially be deferred forever.”

    If handed down via inheritance, the step up of the cost basis would wipe out any capital gains tax at the time of inheritance. Handing the units down from generation to generation would continue to wipe out those taxes.

  168. One of the things I learned about health insurance is that you really can’t “choose the right plan” because by definition, it is for the unexpected and catastrophic. You have no idea whether you are going to get pancreatic cancer tomorrow, or get mowed down by a truck with massive head injuries, or develop some long term serious disease. Medical insurance is for the unforeseeable. The one thing I do check for is good out of network coverage in case you need a good specialist.

  169. It wasn’t a recession for everybody. Most engineering grads I knew had multiple offers, and I don’t remember my non-engineering friends having problems getting jobs either.

    http://www.pbs.org/wgbh/americanexperience/features/general-article/reagan-recession/

    But heavens, don’t let me get in the way of your gloating. At least it’s not a humble-brag.

    I spent 12 months in library school after college and then I got a job too. But that doesn’t mean there wasn’t a recession.

  170. And I had a job in 2008, but you know what? IT WAS STILL A RECESSION. Not for you, though, I get that.

  171. And my grandfathers both had good jobs during the Great Depression, so I guess there was no Great Depression.

  172. One of the things I learned about health insurance is that you really can’t “choose the right plan” because by definition, it is for the unexpected and catastrophic.

    I disagree, at least in regards to selecting from employer offerings. We assume we will hit the out of pocket max (we have for at least 10 years now), so we total up the out of pocket max and the premium cost for each plan and pick the one with the lowest total.

  173. My grandmother loved to take us to Old Country Buffet in the 80’s and 90’s. We went to local restaurants, went to Pizza Hut (usually for Book It!), and also ate fast food occasionally. We probably less than once a week, but it was a lot more than once a month. My parents were solidly middle-class – we lived in a small house with one bathroom for 5 people and drove one older car the majority of my childhood.

    I remember there were plenty of chain sit-down restaurants when I was in HS in the early 90’s. Applebee’s and Chili’s were big hangouts, and The Olive Garden was a place kids went on dates. And this was flyover country. The fast casual thing is practically a whole new category since the early 00’s though – Chipotle, Noodles & Co, Blaze Pizza, Roti, Nando’s, etc. There weren’t many of those before then that I remember – at least not chains. Places without full table service but with wine/beer, etc.

  174. I have never even come close to hitting the OOP Max for healthcare. More years than not, I only go to the doc once a year for my annual exam (now free as preventative care), and DS is down to one annual checkup as well. He doesn’t have nearly the number of sick visits that he did as a toddler. This year, I think he had one (strep). I had three (all for the same minor issue which finally resolved) which is more than I had in the prior 5 years combined. I have never been to the ER for myself or DS. DH goes for a physical once every few years and hasn’t had a sick visit in years. I guess we have just been lucky.

  175. Milo, I checked your link, and yes, Forbes really was inconsistent in using, or not using, an apostrophe to pluralize “Kennedy.”

    In the words of the comic HM posted, “make it stop.”

  176. I went to a casual breakfast-y chain with the kids meal coupons from the library reading program tonight. You get priority service if one adult shows up with four children, including a toddler. FYI

  177. “One of the things I learned about health insurance is that you really can’t “choose the right plan” because by definition, it is for the unexpected and catastrophic.”

    Not entirely. Family history, for example, will suggest the likelihood of certain maladies, as will lifestyle choices.

    Additionally, what is referred to as “health insurance” is often not just insurance, but part of a bigger health care plan, and thus includes medical care that is entirely expected and predictable.

    I think some optimization can be done based on reasonable guesses. E.g., someone in his/her 20s with no history of medical issues, and a family history of robust health, and not prone to taking a lot of physical risks might be well served to choose a high deductible/HSA option.

    That’s the sort of decision kids may need to make. I remember having to make such a decision as a sophomore in college as I was about to start a coop job.

  178. On picking health insurance, I’m kind of in-between Denver and Mooshi. I total up the med costs I know to expect for the year–physicals, allergy treatments, etc and see which plan covers that much for the lowest premium+OOP, but I then I also check the providers in that plan. I would not want to be stuck in an old-school HMO that severely limits who can treat you in case something big happens.

    Rocky, I agree. Friends oversees asked me about the incredibly high unemployment in the US in 1982. I was still in HS, so clueless–I didn’t know anyone who had lost a job (although looking back, some of my classmates’ parents must have).

    A great example of how the difference between income and spending is what matters, and wide range of priorities people can set: http://www.oneikathetraveller.com/how-i-afford-to-travel.html

  179. Sky thanks for the suggestion. I had thought of just paying for the insurance but keep putting it off. But time marches on.
    RMS, in our parallel lives I graduated in 1982 as well and remember the recession. It was particularly harsh in western PA. If I hadn’t gone directly to law school, I would have been seriously underemployed with a liberal arts degree. My roommates with vocational degrees got jobs but not many folks had multiple offers except for the petroleum engineers. After two years of law school, we all had multiple summer associate offers and the law firm arms race had bumped up salaries to $55K, which was more than my dad or FIL had made in their entire working careers.
    It was amazing.

  180. except for the petroleum engineers

    Who presumably all got laid off when oil prices collapsed a few years later.

    So, back to The Americans. We’re just starting season two and it just keeps geting better! As you know it’s based, very loosely, on a true story. When you lived in DC in the 80s, were there any odd or unusual stories in the paper or things you may have seen etc. that made you think more was going on?

  181. School starts back in two weeks. The school’s elementary kids have the option of buying supplies from a vendor which are shipped straight to the school. I love it. No hassle. The older students have no such program. I wish the teachers would standardize their requirements. Some want 1 inch binders, others want something different. I went to the store once school was in session for a day, the stores were cleaned out. The shelves were bare.

  182. “I, too, wouldn’t consider healthcare simple.”

    Agreed. Last month we had a post touching on this.

    “It wasn’t a recession for everybody.”

    This is always the case, right? I remember booming years in the oil industry when other types of jobs were suffering, and vice versa. My H’s business does well in certain recessionary environments. Today most totebaggers feel prosperous (or they should), but that’s not the case for everyone in the country.

  183. Rhett, a few of the spies nabbed in 2010 were living in the DC area, but others lived in Boston and the NYC suburbs, where The Americans is actually filmed. (We lived next to Falls Church, which looks nothing like the Jennings’ neighborhood. Aldrich Ames lived near us in Arlington, and Robert Hanssen was from the same orthodox Catholic circles we were, but alas we never had spies living next door.

    This is an article about the Henry and Paige equivalents from one of the families in that spy ring. https://www.theguardian.com/world/2016/may/07/discovered-our-parents-were-russian-spies-tim-alex-foley

  184. We’ve been watching the Americans this summer. It’s a great show with the bonus of the 80s clothes and stuff.

    I think choice of health insurance is important. Some is luck, but some is age. If I compare this milestone bday to the bday from a decade ago, the biggest change is health. I never had as many specialists as I do today. Same for DH. Also, I’ve already seen a few friends get very sick.

  185. I will check out The Americans again. I began watching but drifted off. I’ll pay attention to the period details.

  186. After watching a 27 year old become life threateningly ill with no warning, and out of work for 6 months, my new advice to young people is don’t ignore short term and long term disability insurance.

  187. Just to post something interesting (at least to me), I discovered this story last night. Unlike that other family I shared, these people are very Totebaggy, white-collar professionally successful and education-obsessed, with one child rather than four (naturally).

    And they chucked it all when the daughter was in middle school and became full-time cruisers and homeschoolers. This is an older article, and they’re still doing this, as you can see if you Google for more-recent interviews.

    http://www.passagemaker.com/articles/lifestyle/threesea-a-familys-voyage-of-discovery/

    Their obsession with their 13-yo’s science project, and the accompanying belief that it was worthy on its own of multiple presentations to groups of adults, makes me think that they must be pretty insufferable in real life, at least as parents.

  188. And yeah, this is ripe for a joke:

    “After ordering reprints of all past issues, he and Kathryn began pouring over them. “

  189. A little car detour that ties into the original topic. Decided that I *need* a car that seats 8 (and has cargo space) for occasional use. I do a lot with another family of 3, and it would work out far better if we could get everyone in one car. Also, the current largest car (Pacifica) seats 6 but can’t hold a cooler or a suitcase if all the seats are in use. The cars that qualify are a Yukon XL, Suburban, Excursion (and maybe more, but that’s what I’ve identified).

    I was explaining to the kids yesterday that we will buy an old car because we would rather spend our money on Disney cruises. I think they got the picture. I’m wading through craigslist and starting to believe maybe I just need a new car because it seems to be a lot of work to find a decent used car. Also, I live in an area where there are far more Nissan Leaf’s for sale (Leaves?) than Suburbans, so every car requires a trip to the exurbs. The other issue is that this will be 5,000 mile a year car – so it doesn’t make sense to buy something nice.

    I looked at a 2004 Suburban in beautiful shape, top of the line finishes, with 210k miles for 6k. Had a couple people (who seemed knowledgeable) say that it was just too many miles – that big things tend to fail after 200k and not to buy it, even if it ran perfectly. Looked at a 1999 for 2k yesterday, with 160k miles. Took it to the mechanic who said, “I can’t even charge you for looking at this. Don’t buy it. Even if it was free, it costs too much. I see 5k of work on this” So, back to the drawing board.

  190. Ada – have you tried looking for the 8 passenger Honda Odyssey? I know most minivans are 7 passenger, but the unicorns exist. And I think some trim levels of the Chevy Traverse are 8 passenger.

    Can you get away with 7 passenger? Do you need 8 seat belts?

    Toyota? Highlanders I think are 8 passenger. The Nissan Armada is 7 I believe, but huge.

    While you’re not looking for LATCH specifically, this might give you a good jumping off point for makes/models

    http://thecarseatlady.com/latch3rowvehicle/

  191. “posting has been deleted” – and I was so excited….

    Rhode – I need 8 seatbelts. (Well, I don’t “need” anything, but it doesn’t make sense to buy a new car to get 7). I’m surprised at the listed cargo capacity of the Odyssey – it is really possible it is so close to a Suburban?

  192. cargo capacity in weight or volume? Weight, no, but volume, probably similar.

    That’s weird that my listing just disappeared. I was steering you to consider domestic passenger vans. It was a 2006 Ford 15-passenger van for $10k that only had 1,000 miles. It also had “UMS Tae Kwon Do” in huge graphics across the side.

  193. I think I mentioned one of my friends with four kids got a passenger van — either 12-seat or 15-seat, I can’t remember. It’s really luxurious and has the DVD player and charging outlets next to all the seats and so on. And apparently they’re quite cheap compared to the alternatives of SUVs, minivans, etc.

  194. I’ve toyed with idea of a van, though 18k for a used one is a little crazy when a new one can be had for 27k. Either of those is too much for a car that is not an everyday vehicle. Also, safety in vans (especially 10 year old vans) is not great – high center of gravity, rollover potential, esp. compared to a suburban.

  195. Ada – the Odyssey may have one of those storage wells in the way back inflating the cargo volume. Whether or not the well is useful is another story.

    RMS – but those 12 and 15 passenger vans are very unsafe! I had to drive one in grad school and the lightest breeze made me feel like we were going to tip over.

  196. Don’t make the kids the beneficiaries of the life insurance policy. At least do the spouse, or if not spouse, then a trust. It is a huge PITA to title things in kids’ names or even in an UTMA account – usually the surviving parent has to be formally appointed as the kids’ guardian in order for it to work. :D

  197. Rhode, I’d say that the newer, Transit ones are likely much better, and I’m guessing that they’ve adopted electronic stability control. But they haven’t been around long enough for used ones to be cheap.

    Eight passengers in seatbelts and top-level safety, with additional cargo room, is no small request. That, and there’s just not a lot of market demand for it, which is why the primitive Econoline chugged along for three decades without much improvements. Good enough for your airport shuttle.

  198. Ada,

    Both Toyota Sequoia and Ford seat 8 passengers. The Sequoia will fit 7 adult sized teenagers for multihour drives. I looked for a used Sequoia for 3-4 year to replace my first one before I gave up and bought a new one. Do you need the 8 passenger vehicle forever, or is there an expected end date? If you foresee a time in the reasonable future when you no longer need the giant car, you might also factor in the resale value of the SUV/minivan.

  199. I hadn’t thought about a Sequoia. Thanks for the suggestion – there looks like there might be a few in the area that could work.

    Milo – I don’t need top level safety. I’ve been known to use an expired car seat. However, I am uncomfortable with vehicles that inspire websites like this: http://vanangels.com/faq/

  200. I lived in DC in the 80s. I just joked with a woman I met at a wedding about her job because of an experience with the FBI and CIA. She said she works for Dept of Agriculture, but she is spending a year overseas. DH knows her from college. I responded by saying that everyone I met in late 80s/early 90s was really CIA or FBI when they said Dept of Ag.

    I was the the CFO of a small company in DC. As a result, many of the employees listed me as a reference. I can’t tell you how many background checks I had to do for the supposed department of Ag.

    FBI wanted to hire accounting majors for white collar crime and fraud units. They would sometimes tell you that the background check was on behalf of the FBI. The CIA wanted all of the foreign service, government and foreign language students. They always pretended to be from another govt agency, and they asked endless amounts of questions about drugs, and alcohol.

    I found out many years later that two of my professors were actually CIA. They taught classes about the Soviet Union, and that allowed them to make frequent trips there at a time when there was little travel.

    During my senior year, I interned in a school next to the soviet embassy. It is still located off Wisconsin ave near the National Cathedral. They would leave propoganda pamphlets in local stores.

    The other dumb thing is it’s one of the highest points in the city.

    I happened to be back in DC visiting friends on the day that the Berlin Wall came down. It was an unbelievable moment for someone like me that grew up thinking KGB spies were all over DC.

  201. Ada, at the low price range, you might consider a Town and Country and include 7 passenger in your search, then buy a replacement seat to make it 8 passenger from a salvage yard. On the 2015 Honda Odyssey, the upgrade from 7 to 8 passenger is just a middle seat insert. Not sure about other years/minivan models.

    And the cargo capacity of an Odyssey and SUV-type vehicles is about the same. The main difference is traction/weather. I was annoyed when my Odyssey struggled on a tiny bit of ice coming up the hill from elementary school. I thought, “My Buick wouldn’t have even noticed.”

  202. Ada, I have no car advice, but having sold a used car before (to the end user, not a dealership), I would be very surprised if those people out in the hinterlands were unwilling to drive the vehicle in for you to it check out.

  203. Ada, the Sienna has also had an 8 passenger option for quite a while now, so there are likely to be used options of that.

    If the cargo area is an issue, perhaps you could consider external cargo carrying, e.g., a roof carrier, or rear carrier mounted on a trailer hitch.

  204. “safety in vans (especially 10 year old vans) is not great – high center of gravity, rollover potential, esp. compared to a suburban.”

    Is this based on data, or just a feeling?

    It’s been a while, but when we were looking for minivans, I did some research into safety. A lot of people were buying SUVs, and a commonly cited reason was safety, because the high seating position made them feel safe. However, the data did not confirm this. While SUV occupants tended to fare well in multi-vehicle collisions due to their high seating positions, that was offset by the higher probability of rollover due to the high centers of gravity.

    The net result, roughly, was that SUVs were not safer than sedans for their occupants, but created a higher risk for other on the road due to their height. In collisions with sedans, SUVs caused more death and injury to sedan occupants that other sedans due. Bumper heights on many SUVs were at about window level for sedans.

    I was not able to find as much data on minivans, but personal inspection told me that minivan bumper heights were about the same as sedans (many of them looked like someone took the sedan on which they were based and just stretched the body upward) and thus were likely to be less deadly to sedan occupants, while still having the high seating position to put passengers’ heads and upper torsos well above bumper height of most SUVs.

    This analysis was a big reason we ended up buying a minivan.

  205. BTW, the SUV info I cited above is probably largely obsolete. I believe most SUVs now are based on car designs, while when I did the research, many were still based on trucks, so the centers of gravity and bumper positions of most SUVs may be lower now.

    But the point is to not just assume a vehicle is safe, or not safe.

  206. Finn – Agree not to go on assumptions, and agree that crossovers are different than real SUVs. But also, electronic stability control has SIGNIFICANTLY reduced the threat of rollovers.

  207. Milo, you’re right about ESC, which reminds me to remind Ada that one thing to check on used vehicles is what safety systems they have.

    When I was shopping for my current car, one reason I decided to buy new rather than used was that ESC had just been added as a standard feature. Similarly, there are many other safety features that are standard, or common, now that are rare or nonexistent on used vehicles.

  208. GREAT topic, really like the focus of teaching our children to learn and understand the concepts of Budgeting,Credit Cards, Bank Accounts, Savings, and Credit Scores. As for ALL are important and I believe should be taught during a child’s beginning teenage years especially. I have a son and daughter. My daughter is just starting her freshmen year of college and my son is just now starting junior high. But through parental experience I have come to understand thoroughly this; is that kids are “EXPENSIVE” to raise and to groom them from childhood into being a responsible adult. I have taught my children to prioritize Education and Finances because your focus and lifestyle choices as an adult is predicated upon what learning experiences were instilled into you as a child. So the more my children gain some early experiences with financial concepts, with guidance this should lead to better career decisions and financial planning as adults. So when my daughter graduates from college she can focus on her chosen career, instead student loan or credit debt stressing her out. Or when my son grows up and attends college, I would expect him to understand or be developing an acumen for ALL 5 Financial Concepts. B/c I make it a FOCUS to LEARN so that she or he may grow old to be better and have more opportunity to create positive generational wealth and legacy for the families.

  209. Basic financial literacy should absolutely be taught and these principles are a great start. I think it should also be noted that speaking with a reputable financial advisor is worthwhile. These people literally spend their entire careers furthering their knowledge on the subject. They taught me how to stitch & sew at school, but I still pay a visit to the tailor when I need adjustments!

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