Summer is usually a time for teenagers to get off the couch, get a summer job, and start to learn how to make  a living.   But it might be more difficult to do that this year because of the financial crisis and large number of people out of work.

But don’t give up – there are ways to find a summer job.  CNN’s Fredricka Whitfield talks to Sharon Lechter, author of the book “Three Feet from Gold,” and head of the financial education group “Pay Your Family First.”

June 24, 2010, 7:00 AM ET

Your Parents’ Money Habits and You

by Sharon Lechter

Decisions you make today about how you spend and how you invest your money will affect you for years to come. Looking at how your parents dealt with money is an important starting point. Did they save money? Did they think of ways to make more money? Or did they agonize over never having enough money? Did your parents say, “We can’t afford it!” more than they said, “How can we afford it?” One statement is scarcity mentality, while the other is abundance mentality.

A few triggers that may help you define your financial upbringing:
•    Did your parents save up for your family vacation, or was it something you did and then stressed about how to pay for when the bills came in?
•    Did one parent shoulder the bulk of the financial responsibility, and complain about it?
•    Did your parents fight about money in front of you?
•    Did your parents make sacrifices to provide for you?
•    You may have been protected from family financial traumas. Ask your parents what they would have done differently with their money at your age. Did they have a budget, a savings account for a rainy day or invest early in the stock market, or did they live paycheck to paycheck? Let them know you value their insight and give them time to prepare for the conversation. Given the current economic crisis, they may be willing to share more freely with you.

Now that you have analyzed how your parents dealt with money, how will you?
•    You have a golden opportunity. Recognize the positive lessons you learned from your parents and keep them, but also commit yourself to not repeating the negative ones.
•    Adopt the “pay as you go” plan and stay out of debt.
•    Set a goal (taking a vacation) and then when you achieve it, celebrate achieving the goal. Enjoy the well-deserved vacation! It beats the alternative—going into debt for a vacation and then fretting over how you are going to pay for it for months after the good memories have faded.
•    Start “paying yourself first” by automatically saving a percentage of your income each and every month.

Will your mindset be one of scarcity (never having enough) or abundance (planning and achieving)? It is your choice. For now, you still drive your own financial future.

Sharon Lechter is a CPA, author of “Three Feet from Gold” and co-author of “Rich Dad Poor Dad.”

However, as my children have grown, I have learned so much more from them than I could ever have taught them.  Thankfully, they have the thirst for learning and a great deal of patience for their mom.

So let’s explore how you can add to your current wisdom. Answer these questions:

1. Can you attend a seminar?  There are many free seminars in your community as well as many wonderful courses that can open your mind to new opportunities. I find unexpected rewards as I have shown up at events. I’m personally grateful for people that make me think!  As you experience the speaker’s education and the energy of the participants, notice how your mind is opened to new ideas. You may gain clarity or come up with a new idea simply because your brain is relaxed or because you’re removed from your normal stressful environment.
2. Can you make the time today to change your future?  Another option I share with people who just can’t find that one hour a day, is to look at your week.  Can you have a babysitter lined up to take your children somewhere fun while you attend a seminar? You may not only learn something that will change your life, you may also meet the people waiting to be your mentors or future business partners!
3. Do you know what tools you need?  I heard a speaker share the story of a lumberman who cut down 5 trees on his first day on the job. The lumberman was jazzed! On the second day, he got to the forest two hours earlier, determined to do even better. However he was only able to cut down 4 trees.  His answer on the third day was to get up even earlier, and to work even harder.  What was his result on the third day?  He only cut down 3 trees. He had determination and took action. His only problem was that he didn’t take time to prepare properly and sharpen his ax. How does this relate to you? Your ax is your mind!  Sharpen it by learning not only new subject matter but by meeting people who will not only challenge you, but support you along your way.

Remember, you plant seeds of your future today. As you make better choices today, you change the course of your future. Continue to learn how to improve your finances, reduce debt and get more value from your precious time. As you look in the mirror with honesty and take action toward a positive future, don’t miss seeing that you are someone who can change the world!

We’d love to hear from you what action you’ve taken and what result that created. Please share with us so we can support you in reaching your goals.

Pay Your Family First is a company dedicated to providing financial education for families. Our goal is to ignite the entrepreneurial spirit and a love for learning. Join us! www.payyourfamilyfirst.com.

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Sharon Lechter

CEO – Pay Your Family First
Co-author of Three Feet From Gold and Rich Dad Poor Dad
Member of the President’s Advisory Council on Financial Literacy
Member of the National CPA’s Commission on Financial Literacy of the AICPA

I have heard this same line from speakers all over the world.  This particular speaker was fabulous. And it is true that you should not lose focus on your goal. You absolutely need to prioritize your activities. You will not get yourself out of debt watching TV. But, as I sat there listening to him rebuking the audience one more time, my guilt turned into anger and frustration.  Why was I angry when I thought the speaker was so great? I realized there is another perspective and it should be shared. 

My husband, Michael, and I enjoy those cable programs.  We use this time at night to reward ourselves. We have earned that quiet time; we got the job done! If I have created opportunity for myself during the day, I reward myself by cuddling on the sofa with my husband for a couple of hours.  The shows are irrelevant, but the time cuddling with my husband is priceless.  (However, I do give thanks for TIVO because I have lost patience for commercials!)

There are many nights where Michael will say, “Are you coming to watch television?  Should I wait for you, or not?”  He asks me this because I am in our home office furiously answering e-mails or sending new ones.  Why?  So I can say, “I’ll be there in just a minute, as soon as I finish here.”  When I turn off the lights in my office, I know I have earned the time cuddling with my husband!  And more, I have worked on my future! 

Now to the real point.  The issue isn’t the debt you are in today; the issue is what you are doing for your future!

What are you doing for your future?  There are 24 hours in the day.  You may be committed to 8 hours for your job, but that still leaves you 16 hours.  You may give 8 hours to sleep (wouldn’t that be a gift?).  That still leaves 8 hours.  Let’s assume you need 2 hours to commute back and forth to work (ugh!), 1 hour to get ready for your day, 1 hour for dinner (hopefully with your family), you still have 4 hours in your day.  Can you commit to spending 1 hour of that remaining 4 hours a day to your future? 

In other words, can you commit to spending 7 hours a week to your future?

However, if you can and will commit to spending 4 hours a week on your future, magic can and will happen in your life. It all starts with a desire and commitment to make the necessary changes to build our future.

What will you do with this new found time to work on your future? Share your vision of your future and what you are working on so we can support you with guidance and wisdom.

Pay Your Family First is a company dedicated to providing financial education for families. Our goal is to ignite the entrepreneurial spirit and a love for learning. Join us! www.payyourfamilyfirst.com.

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Sharon Lechter

CEO – Pay Your Family First
Co-author of Three Feet From Gold and Rich Dad Poor Dad
Member of the President’s Advisory Council on Financial Literacy
Member of the National CPA’s Commission on Financial Literacy of the AICPA

Start by looking in the mirror. As you evaluate your situation, ask yourself how you spend your time. Do you spend your time productively? Do you get the job done?

It’s been said that time is our most precious resource. We can always make more money or replace what we have lost, but there’s absolutely no way to replace the past minute of time we just spent. If you grasp how precious time really is, then you won’t waste it.

Just as monitoring your money flow – the making and spending of money – is important, even more important is to take a real hard look at where and how you spend your time. Most people have no idea of how much time they lose every day, every week or every month. This lost time when put to productive activities could add a much needed part time income or be just enough to start a new business.

Take action and record where you spend your time each day for the next month. Evaluate and consider where you could be more productive. Watch out for time wasters and limit your focus on those activities. Just by monitoring and being aware you’ll gain productivity as you choose to be more efficient.

Share your thoughts with us so we can guide you to your success.

Pay Your Family First is a company dedicated to providing financial education for families. Our goal is to ignite the entrepreneurial spirit and a love for learning. Join us! www.payyourfamilyfirst.com.

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Sharon Lechter

CEO – Pay Your Family First
Co-author of Three Feet From Gold and Rich Dad Poor Dad
Member of the President’s Advisory Council on Financial Literacy
Member of the National CPA’s Commission on Financial Literacy of the AICPA

I thought I’d share a few simple guidelines to expand your awareness and get you back on track.

1. Establish a budget. You may have heard, “What gets measured gets managed.” Sit down and record your monthly expenses. Prioritize them so you can see what might be addressed to tighten the budget as necessary. Many people don’t realize where their money goes each month because they don’t take time to detail all the areas their money is applied.
2. Stick to your decision. If you really want to change your current financial picture, you need to establish guidelines. Your budget is a guideline established to help you meet your goals. Measure everything that comes in and goes out. Ask yourself if you really need the things you purchase on a regular basis. Can you cut the spending to have more than enough coming in each month? If you can delay or postpone all together a purchase that’s not necessary, this one act will put you closer to your goal.
3. Pay attention and be open to learning new habits. Notice the types of things you are spending your money on. Can you shift buying patterns to give you more value? Perhaps you can plan to make coffee at home instead of purchasing an individual cup of coffee everyday. Cook meals on the weekend and reheat leftovers during the week to reduce food costs. Watch for instant gratification purchases. Ask yourself how you might shift to create a situation that fits with your budget.

A better financial picture starts with you choosing that you want to get control over your current financial situation. Taking action and working each month will strengthen your ability each month. The planning you’ve done on making your budget will give you a great foundation to build upon.

We’re here to help you. What questions do you have?

Pay Your Family First is a company dedicated to providing financial education for families. Our goal is to ignite the entrepreneurial spirit and a love for learning. Join us! www.payyourfamilyfirst.com.

- – - – - -
Sharon Lechter

CEO – Pay Your Family First
Co-author of Three Feet From Gold and Rich Dad Poor Dad
Member of the President’s Advisory Council on Financial Literacy
Member of the National CPA’s Commission on Financial Literacy of the AICPA

Our world persuades us to want what we don’t really need. We are encouraged to want instant financial gratification. The only way to gain control is to become educated and aware of how to quit reacting and decide our powerful response. If we don’t prepare ahead of time, we fall prey to our emotions.

You maintain control when you don’t let your emotions run your life. To gain control, you must notice the emotion and not let it rule your actions. As you notice emotions powering you to want instant financial gratification reaching for the credit card, stop and allow the logical side of your brain to think. As you delay the emotional response and suspend reaction, you can train yourself to become a powerful responder and stay focused on your goals.

Stressful pressures leave us with a well worn out response to ourselves and our children: “No, we don’t have the money for that!” The world answers for us if we are not careful with, “Just charge it!  Put it on one of your credit cards!” Many adults seem to have forgotten how credit cards work and fallen into a financial trap that is hard to overcome. Falling prey to “just charge it” impulses, we become victims and behaviorally teach our children the wrong message. 94% of young people surveyed say they learn their financial habits from their parents (that’s us). So let’s stop for a minute and have a little reality check. After all, it’s more powerful to show your children so they can follow rather than try to convince them to do as you say not as you do.

What do YOU believe about money?

Where does YOUR money come from and where does it go?

Where does YOUR money grow?

Take Action Now:

You can contemplate each of the questions above to begin raising your awareness of your current financial situation. Your belief will set your limits. Knowing where your money comes from  will help guide your focus. Detailing and being honest about where your money goes will identify holes in your financial bucket that may need to be patched. And lastly, but most importantly, tending to the financial garden and knowing where your money grows will allow you to get money working for you instead of you always working for money.

When your next credit card bill comes in, review it completely. Think about what it felt like when you bought something on the bill. Are you still enjoying it? Do you still have it? Did you really need it immediately or could you have planned to save the money and purchased the item fully instead of charging it? Examine the bill to be certain of what you purchased. You may be surprised to find that there are automatic charges for products you don’t have a clue as to what they are. You may have thought they were cancelled and they weren’t. Identify holes in your financial bucket and repair them quickly! How much might you be losing in a month? How does it feel to pay for something AFTER the fact?  Is it as much fun paying for it as it was buying it? Could you plan for upcoming purchases and then carry no debt? Could you see making fewer purchases for a month, six months, or even a year?

Study the buying and paying sides of your own life and share this experience to educate your children about both sides of the money equation—buying and paying. Knowledge is power. And as you act on the knowledge you create freedom for yourself to respond powerfully.

Pay Your Family First is a company dedicated to providing financial education for families. Our goal is to ignite the entrepreneurial spirit and a love for learning. Join us! www.payyourfamilyfirst.com.

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Sharon Lechter

CEO – Pay Your Family First
Co-author of Three Feet From Gold and Rich Dad Poor Dad
Member of the President’s Advisory Council on Financial Literacy
Member of the National CPA’s Commission on Financial Literacy of the AICPA

Everything I learned about money, I learned from my Dad.  His rule was simple. Half of every thing I earned from my part-time jobs went into a savings account.  Every other week, my parents drove me to the bank to deposit that 50% into a passbook savings account. I would never have even thought about withdrawing money from that account. When I started driving, the habit continued, and, yes, my parents would check up on me. 

Did I like putting the 50% in the bank at the time?  Of course not, but after tithing 10% to my church, I could spend the other 40% any way I liked.  My parents didn’t “control” how I spent it.  I realize now that my saving, giving, investing and spending habits today became habits when I was still at home under consistent guidance from my parents.  (I cannot stress the word consistent strongly enough.)

Consistency is imperative in forming a habit, good or bad.  Repetition creates the pattern of behavior.  For instance,

•  Alcoholics drink consistently
• Smokers smoke consistently
• People in debt spend consistently
• Philanthropists give consistently
• Savers save money consistently
• Investors invest money consistently

Definition: “Habit – an acquired pattern of behavior that has become almost involuntary as a result of frequent repetition.”

In order to change your life, you need to start by changing your habits.  In order to teach our children to be productive and successful adults, we need to help them form habits that produce positive results for them consistently at a young age.  It is easy to look at the list above and know that you would prefer your children to be savers, investors, and philanthropists instead of alcoholics, smokers, or debtors.  It is much more difficult as a parent to find the time to take the action NOW to help instill the habits that will propel your children toward a financial future of successful investing instead of a financial future plagued with drowning in debt.

The cost to our children and our society is getting too high not to take action NOW.  It is time for parents, grandparents, and other interested adults to start educating our children today…so they can live a happy and healthy tomorrow.

Pay Your Family First is a company dedicated to providing financial education for families. Our goal is to ignite the entrepreneurial spirit and a love for learning. Join us! www.payyourfamilyfirst.com.

- – - – - – -
Sharon Lechter

CEO – Pay Your Family First
Co-author of Three Feet From Gold and Rich Dad Poor Dad
Member of the President’s Advisory Council on Financial Literacy
Member of the National CPA’s Commission on Financial Literacy of the AICPA

USA Today Article in Money Section
April 23, 2010

By Christine Dugas, USA TODAY

They’re called “Generation Y” — teens and twentysomethings known stereotypically for their coddled upbringing, confidence, opinionated dialogue, free-spending habits and openness to change.

Ultimately, however, the more than 50 million members may be best remembered for whether they can overcome the dire financial straits that plague many of them.

Even before the recession, those in Generation Y — the latest products of a get-it-now, pay-for-it-later mind-set that has permeated the nation’s economy — faced a range of financial pitfalls as they embraced expensive high-tech gadgets and added credit card debt onto student loans.

Now, stagnant wages, job insecurity, the decline in employer-sponsored health insurance and retirement benefits, the rapid increase in basic expenses, soaring debt and minimal savings have jeopardized the economic security of the entire generation, according to a recent report by Demos, a public policy research and advocacy think tank.

Their generation is the first in a century that is unlikely to end up better off financially than their parents, the Demos report said.

“The recession has hit them hard,” says Jose Garcia, associate director of policy and research at Demos, based in New York. “It affects their income potential, their saving potential and their career-ladder potential.”

Kristen Ammerman, 21, a senior at Michigan State University, faces such challenges and sees her Gen Y classmates struggling with financial issues — while seemingly oblivious to the potential consequences.

“I work at a part-time job, have incredible debt and get food stamps,” she says. “I’m still short on rent every month. … My friends all want the newest and best things. They spend money on them any chance they get.”

No standard definition for Generation Y exists, but analysts generally classify anyone born from the 1980s to 2000 as members. Demographers also call them the Millennial Generation.

Their plight seems as much created by members’ pre-recession personal finance habits as by the misfortune of coming of age as the recession took hold in December 2007:

• About 37% of 18- to 29-year-olds have been underemployed or out of work during the recession, the highest share among the age group in more than three decades, according to a Pew Research Center study released in February.

• This generation is the least likely of any to be covered by health insurance. Just 61% say they were covered by some form of a health plan, the Pew study said.

• Only 58% pay monthly bills on time, a National Foundation for Credit Counseling (NFCC) 2010 survey said.

• 60% of workers 20 to 29 years old cashed out their 401(k) retirement plans — typically a big financial no-no because such a move squanders retirement assets and forces the recipient to pay a tax penalty — when they changed or lost jobs, an October study by Hewitt Associates said.

• Nearly 70% of Gen Y members are not building up a cash cushion, and 43% are amassing too much credit card debt, says a November MetLife poll.

On average, Gen Yers each have more than three credit cards, and 20% carry a balance of more than $10,000, according to Fidelity Investments.

• Millennials are graduating from college with an average of $23,200 in student debt, according to the most recent data from the Project on Student Debt. That is a 24% increase from 2004.

“They have high, unrealistic expectations,” says Lee Jenkins, author of Lee Jenkins on Money and a managing partner of Atlanta Capital Group in Atlanta.

“And many of them don’t manage money very well.”

‘A pretty optimistic outlook’
Even so, not all Gen Y members have learned from the harsh realities they face.

This year, 25% of Gen Y members say they are spending more than last year, compared with 18% of all adults, according to the NFCC survey.

“They are throwing caution to the wind and have a pretty optimistic outlook,” says Gail Cunningham, vice president of NFCC.

Unemployment among Gen Y members is “badly setting back their careers,” says Paul Taylor, executive vice president of the Pew Research Center. “Yet, despite the problems they face, they tend to be upbeat — which is typical of young adults.”

That doesn’t necessarily mean that Millennials are confident in their ability to manage their finances in a way that allows them to emerge from their predicament.

“Many of them are willing to buy now and pay later,” says Ashley Adami, a financial planner for ClearPoint Credit Counseling Solutions in Seattle. She not only has Gen Y clients, she is a Gen Y member.

A common trait within members of the generation is a belief that they have the skills and ability to make money and afford large purchases, even when it doesn’t appear that they do.

Frank Lennon, 27, an analyst in the hospitality industry in Nashville, acknowledges that during his college years and after graduation, he spent more money than he made.

“I was greedy,” he says. “I made a lot of poor financial decisions without thinking of the big picture. I should have known better.”
Lennon’s wife, Erin, 26, is still in college and has $28,000 in student loans. It was only when they were married in October that they became aware of their total credit card and college loan debts.

“The real shock was on our wedding day, when we realized that we were $104,000 in debt,” Frank says.

“Because we had gotten some cash gifts, we used it to make a credit card payment on our wedding night.”

Turning around the turmoil
The keys to turning around financial turmoil traditionally have been employment and earnings.

But Millennials have become known for switching jobs constantly, says Brad Kimler, executive vice president of Fidelity’s Consulting Services business.

And unfortunately, when they have left jobs, they often have cashed out their retirement plans, saying they needed the money, he says.

Ammerman, who works part time at Home Depot, has job-hopped since she started working in high school.

“I switch around because I get bored or need to make more money,” she says. She says she does not participate in Home Depot’s 401(k) plan because she has too many bills to pay.

The recession and its fewer job opportunities have grounded some Millennials.

Stefanie Potts, 24, an assistant director at the University of Southern California’s Office of Admission, says many in her generation initially thought it was desirable to move around, take job risks and get experience.

“The advice has completely changed,” she says. “Most of us are happy to have a job.”

But many who are just graduating from college are having trouble starting out with an entry-level job in their field.

Some can find only unpaid internships. And because entry-level jobs generally offer low pay, graduates who are overwhelmed with debt may have to seek better-paying, non-professional jobs.
“I was helped by my parents,” says Mark McShane, 27, who works for a financial services company in Boston.
“Even when I graduated, they gave me a small stipend to help me with those first 15 months out of school. But without that, I’m not sure I would have been able to accept my initial job, which leads to the next step in my career.”
Even before the recession, nearly half of college students dropped out before earning a degree, the Demos report said.
Now, people from low- and moderate-income families are much less likely to enroll at all.
‘A dose of reality’

The unemployment rate for Gen Y remains much higher than the national rate.
In March, the national rate was 9.7%, compared with 18.8% for workers younger than 25, according to the Bureau of Labor Statistics.
“The economy has given them a dose of reality,” Jenkins says. More than half of Generation Y, 60%, say they are concerned about paying their bills, according to a recent poll by Harvard’s Institute of Politics.
“When you get a little bit of money, what do you do with it?” asks Mikala Shremshock, 27, who works for Veeco Instruments near Philadelphia.
“Do you pay off your credit cards, put it toward student loans, make an extra payment on your house or car, or put it in your IRA? I don’t have enough to really make a big dent in anything. If you get a bonus, why not just spend it?”
Faced with financial setbacks, Millennials are starting to be more realistic.
More than half of them, 55%, say they are watching their spending very closely now, up from 43% in 2006, according to the Pew Research Center.
It’s unclear whether the more-conservative approach to personal finance is only temporary, Fidelity’s Kimler says.
Frank and Erin Lennon say they are living frugally now. They rarely eat out. Frank temporarily has stopped making contributions to his 401(k) plan so they can focus on paying down debt.
“I think the reason why we’re being so frugal now is because we’ve seen the rainy days, and we’ve had friends that have gone through some really hard times,” he says.
The couple have a dry-erase “Bill Board” on their refrigerator, where they keep track of their debt.
“This allows us to remain on the same page and resist unnecessary spending,” Frank says.
Unlike their parents, who had the G.I. Bill and pension plans, those in Generation Y have few safety nets.
Ammerman is not worried about her future, even though she will graduate with a journalism degree at a time when newspapers are closing and jobs are hard to get.
Rather than trying the newspaper route, she is thinking of trying to use her skills to write about video games, a field she says is male-dominated.
“I know what I’m capable of, and I know where I can go, so I can do the best,” she says.

 Do you ever feel like you have “ATM” tattooed across your forehead? 

 Do your kids (or Grandkids) think money grows on trees, and that you are the tree? 

 Do you even know how much money you actually give to your children?  Even if you give your children an allowance, there’s that extra $20 here and $10 there. And let’s not forget the money for the popcorn at the movie, when your child conveniently “forgets” to give you the change.

 Our children are with us when we spend our money, but they are not with us when we make it. So they don’t understand the simple fact that before it goes out, it must come in.  (insert following article)

 JUST CHARGE IT!

 Your children are quick studies when it comes to spending money.  They see you spending money all the time…just in the course of daily living.  They go to the mall with their friends and learn all about the latest trends because they want to appear “cool” to their friends.

 The problem, however, is that your children are not typically with you when you make your money.  They don’t see all the effort that goes into earning a living.  They may see you leave the house in the morning and come home at night, but they probably don’t understand what you are doing all day.  What they see is the stress that you bring home to the family.  They start saying, “I don’t want to work as hard as you do, Mom and Dad. I want a life!”  These are actual statements that my children have made to me and my husband.  They were sobering, to say the least!

 But what they didn’t fail to experience was the “spending” part of our lives.  The fruits of our labor, you might say.  They enjoyed the spoils (OR: “goodies”), but did not appreciate the efforts that produced those spoils (OR: “goodies”).

 This fact was brought home to me one day when my children were younger.  I had had a very stressful day at work (can you relate?) and was still somewhat preoccupied. My children and I were out shopping for school supplies and my youngest son saw a new video camera he wanted me to buy for the family (for once it was not just for him).  In my not so wonderful way, I said “No, we don’t have the money for that!”

His response was, “Just charge it!  Put it on one of your credit cards!”

 At that moment, I realized that my son understood the spending part of credit cards, but not the paying part of credit cards.  My kids were with me when I was buying things on my credit cards, but not with me when I paid the bills each month.

 I happen to love my credit cards. They make buying things easier. However, I pay them off each month so that I am not charged interest.  But I realized my children didn’t know this! They didn’t know this, because I hadn’t told them.

 In this generation, credit cards have become the payment of choice.  Intentionally or not, our children have learned instant gratification through our actions.  By falling prey to “just charge it” impulses, we are teaching our children the wrong message.  94% of young people surveyed say they learn their financial habits from their parents (that’s us).

  ACTION STEP:

 When your next credit card bill comes in, review it with your children.  Discuss what it felt like when you bought something.  Are you still enjoying it?  Do you still have it?  How does it feel to pay for it AFTER the fact?  Is it as much fun paying for it as it was buying it?

 Sharing the “paying” side of life will educate your children about both sides of the money equation—buying and paying. Knowledge is power. 

 WHY NOT?

 Why don’t we teach our children about money?  Could it be because we don’t know much about it?  Chances are you weren’t taught about money in school, either.

 Everything I learned about money, I learned from my Dad.  His rule was simple. Half of every thing I earned from my part-time jobs went into a savings account.  Every other week, my parents drove me to the bank to deposit that 50% into a passbook savings account. I would never have even thought about withdrawing money from that account. When I started driving, the habit continued, and, yes, my parents would check up on me.  Did I like putting the 50% in the bank at the time?  Of course not, but after tithing 10% to my church, I could spend the other 40% any way I liked.  My parents didn’t “control” how I spent it.  I realize now that my saving, giving, investing and spending habits today became habits when I was still at home under consistent guidance from my parents.  I cannot stress the word consistent strongly enough.

 Unfortunately, my children didn’t benefit from the same instilled habits.  I used the same lessons my dad had taught me, but with much different results.

 I didn’t factor in the existence of credit cards. They didn’t exist when I was in high school.  I felt that teaching good habits to my children would make them understand the perils of credit card debt.  It didn’t.  I hear parents say all the time, “I am not going to give my kids credit cards.” and for a long time I felt that way too.  But the harsh reality is, your kids will sign up for credit cards when they go to college—and you probably won’t even know it.  Wouldn’t it be better to let them make the mistakes while they are still at home, while you may still have SOME influence over their decision-making?

 Phil’s Story:

During my later high school years, I worked for my spending money.  I worked for a few different retail stores, and my parents had a rule for me.  That was that 50% of what I earned had to go into a savings account that I could not touch.  I never understood the rule, only that my parents would check up on me to be sure that I made the appropriate deposits.  As I entered my first semester of college, I was given some great opportunities to obtain credit.  I recall the first week that I moved into my dorm at Arizona State University there was a table out front of the dorm room.  All I had to do was write down my name, address, and social security number, and then sign something. Suddenly, I had $500 dollars.  That was awesome!

I recall that I had about $2500 in my savings from working.  It took me months to save that kind of money, but mere minutes to have access to $500. I started to use my credit card and it was not long before I had a few more, as I could save 10% at my favorite clothing store.   That 10% savings on a $200 purchase turned into a 22% interest and a delinquency on my credit for $9. {It wasn’t until 6 years later that I looked at my credit and realized that I had a delinquency of $9.  I was able to handle that with the creditor, as well as clean up another issue and my credit score surged by close to 50 points over the next couple months.} 

 By the end of my first year in college, I was close to $2000 in debt, and I had no job.  I had a conversation with my parents—actually I asked them to bail me out and they responded with a resounding ”No!”  They did the best thing for me; they told me I had to get a job and handle it.  What I had not told them at the time was that I had also burned through my savings of $2500, too.  I swung by $5000.  From the summer after my first year of college, I worked.  Still it was tough, though, as I was only working 20 hours a week (weekends and evenings) and after taxes that was just above the minimum payment of my credit cards.  This was when I got the biggest lesson about credit cards—the challenge of paying a minimum payment.  I would pay my minimum payment and then I would get my next statement and even though I had not charged anything new my balance was going up.  ‘Going up?’ I thought. But I made my payment, that was when I went and asked my mom why that was.

 What an awakening!  Now I understood why she always said that she paid off her credit cards every month…  That my interest per month was more than my minimum payment.  After years of working more hours over the summer and making payments as I could, I finally achieved a zero balance on my credit card.  I remember this day, as I had used the zero balance statement for a “show and tell” during the Dale Carnegie course I took prior to joining the Rich Dad Company.  I was so proud that I was able to pay off my credit card.

 I also, was not as consistent with my children, as my parents were with me.  A habit is formed as a consistent method of response or activity.  The definition of habit in Webster’s College Dictionary is:

            “Habit – an acquired pattern of behavior that has become almost involuntary as a result of frequent repetition.”

 Consistency is imperative in forming a habit, good or bad.  Repetition creates the pattern of behavior.  For instance,

•  Alcoholics drink consistently
• Smokers smoke consistently
• People in debt spend consistently
• Philanthropists give consistently
• Savers save money consistently
• Investors invest money consistently

 In order to change your life, you need to start by changing your habits.  In order to teach our children to be productive and successful adults, we need to help them form habits that produce positive results for them consistently at a young age.  It is easy to look at the list above and know that you would prefer your children to be savers, investors, and philanthropists instead of alcoholics, smokers, or debtors.  It is much more difficult as a parent to find the time to take the action NOW to help instill the habits that will propel your children toward a financial future of successful investing instead of a financial future plagued with drowning in debt.

 Turn Your Concern into Positive Action!

 The cost to our children and our society is getting too high not to take action NOW.  The incidence of drug abuse, alcoholism, teenage suicide, and pregnancy is rising and it will most likely hit closer to home than you want to imagine.  It is time for parents, grandparents, and other interested adults to start educating our children today…so they can live a happy and healthy tomorrow.

 I share my own story because I don’t want parents to “do what I did.”  I want you to learn from my mistakes.  And yes, I am saying “do what I say, not what I did.”  I truly felt I was teaching my children about money, but it wasn’t good enough!  It wasn’t consistent enough. As a result, my children have learned the hard way—by getting into debt and having to work hard to not only get out of it, but also to start to repair their credit history.

 So these are the two extremes.

 First, mine, where I learned good habits and have never “experienced” being deeply in debt. There were many times in our lives where money was very tight for my husband and me and we were totally stressed out about money.  Money problems create one of the greatest stresses in a marriage, but working through those stressful times can also create magic in a marriage and family.  Mike and I agreed never to carry balances due on our credit cards. We paid, and continue to pay, them off each and every month.  It wasn’t easy, but it was our way to know we were in control over our financial life.

 And then there were our children, who have gotten deeply into debt and had to “work” their way out.  My message to you is there is a better way.  Give your children the tools to become independent, the tools to make mistakes—and most importantly, to learn from them.  Give them those tools while you are still around to be their mentor and support system.

 When I graduated from college, I had $22,000 in the bank because of the habits I learned from my father.  Today many young people graduate from college that much in debt, if not more. They start their adult lives already in the hole financially.

 Please join my effort in “Calling All Parents, and Grandparents, too”.  You can truly make a difference in your child’s or grandchild’s life.

 WHAT CAN YOU DO?

 There is no lack of good financial education content available—and much of it is even free and available on-line.  The problem is execution. Unless we take the time or make the time to teach our children about money, chances are they will never learn it.

 We are still not teaching money skills in school.  While there are many wonderful organizations dedicated to improving financial literacy, and they are reaching more children every year, can you afford to wait?  Can your children afford for you to wait?

 I have also talked to many parents who have the fear of needing to have the right answers and taking the time to teach their children.  At least we can encourage them to learn more and support them.  In today’s day and age, often we are learning together with our children.  Instead of having to be the one with all the answers I have trained myself to become a leader more than an instructor.  It is critical that we as parents draw out of our children and not just try to put in.  Our children have access today to the same information that we do, so let’s learn together.  Let’s achieve together.

 The other frustration I have is the lack of actual “Action Steps” in all the information available.  There are a lot of lessons, and a lot of  “you should’s”, but not enough “here’s how’s.”  There is little or no practical advice, so I understand when other parents, say “I just don’t know how to get started.”  This program has been developed as a result of that frustration.  Some of the action steps we will provide will make sense and feel good to you while others may not work for you or feel like “too much effort.”  Listen to your own inner voice as to what you want to do, and will do.  If you’re ready to turn your concern into action, you will find definitive action steps that you can take to teach your children the basic financial principles they will need to not only survive—but to thrive—in the world they face.

 Pay Your Family First is a company dedicated to creating and providing financial education products that teach financial education in a fun and experiential way.  Our goal is to ignite the entrepreneurial spirit as well as the love for learning in young people today.  For more information please visit www.payyourfamilyfirst.com.

 The credit card regulations which went into effect on February 22, 2010 will prevent credit card companies from soliciting within 1000 feet of college campuses.  While this is a huge step in the right direction it is still critically important for parents and grandparents to teach their children about money.  Let them stub their toes while they are still at home instead of breaking their legs when they leave home!

 Thank you

Sharon Lechter

CEO – Pay Your Family First
Co-author of Three Feet From Gold and Rich Dad Poor Dad
Member of the President’s Advisory Council on Financial Literacy
Member of the National CPA’s Commission on Financial Literacy of the AICPA