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Investing in Your Child's Future. Or, You Know You're a Dad When Your Wallet Starts Emptying

You know you’re a dad when… your wallet starts emptying. I’m joking. Sort of.

As my 18-month-old son continues to grow, and my wife and I fall into our respective roles as parents, I feel like an anthropologist watching male-female gender role patterns play out before my very eyes. Which means my wife is doling out kisses and I am doling out money.

Of course, being a dad is more than just spending money. I cherish doing my share of day-to-day care for our little guy; I read books to him, play silly games, and I show him lots of affection. All in the hopes that someday he will have enough money to pay me back for all of this. Just kidding!

And of course my wife doesn’t just shower our child with love - she is as much a financial provider for the family as I am, and she spends money, too. Like when she bought that Kiss-o-matic 76™, which allows her to kiss our child more. Again, I kid – such a machine does not exist… yet.

But in all seriousness, we just opened a college savings account – a 529 plan – for our son. It was yet another in a long line of events that have made it very “real” that I am a dad. You mean, one day I am going to have a child in college? And it will cost how much? (For those of you wondering, the average cost of one year at a private college is estimated to be $76,406 in 2027; public college, here we come!)

The interesting thing about this process is that my wife really pushed me to take the lead in opening our account. Like it was “dad’s job” to do this. And I think, on the whole, dads are the ones who take care of this sort of thing for their families. That’s why most investment and insurance companies market to men and/or fathers. It speaks to our instinct to provide for and protect our families.

Interestingly, the guy who I worked this all out with is a new dad himself. You may know him as this guest blogger on this very blog. Sean and I observed together that now that we are dads, we have to take very seriously the need to plan ahead for our families.

And that is a central part of being a dad – sacrificing the “now” for the future. Gone are the days of using that extra money to buy cool (but useless) gadgets, fancier cars, and expensive nights out with your friends. That extra money is for our kids now.

Do you have any examples of how you had to sacrifice in the present to make for a better future for your kids? Please share!

Guest Post: The Other Side of the Coin

This is a guest post by Shane Barkley, President of Dad the Family Shepherd & Savvy Dads, and author of Dad Cents.

Are You Trying to Rob Your Kids?

This month’s focus at NFI is “Dad Cents,” and our plan is to give dads sound advice about ways that dads can improve their kids’ financial literacy.

Guest Post: Teaching Your Children the Power of a Dollar

This is a guest post from Luke Swygard, Financial Representative with Northwest Mutual Financial Network serving the Maryland/Virginia area. He is a married father with two children and lives in Richmond, VA. Visit his website at www.nmfn.com/lukeswygard for more information about his financial services.

The most precious moment of my day is walking in the door and hearing my boys racing to the door to see who can be the first to jump into my arms. Wow, what a feeling! Yes my boys are at the age where me coming home is still a cool thing, and I’m sure that will change over the years as it did for me and my father. Still today, I embrace excitedly some of the financial principles my father instilled in me and I smile each time I remember his wisdom.

The biggest principle he taught me is to never spend more than I earn. Simple. To the point. Not so easy. We live in a world today that demands we please ourselves, our spouses, our children, and our image. It’s a challenge to walk into Target or WalMart today and get through the store without your children looking at you with hopeful eyes that they might get something “special”…something that quickly finds its way to the bottom of the toy box. But how do we say no to that look, and better yet how do we teach them the value of an earned dollar and the power that it has to control us or help us?

Today I want to unwrap that power of a dollar and how we can teach that to our children. It’s invaluable to know the difference between a need and a want and talking with our children in simple economic principles. A need is food, shelter, and clothing. Moving forward from that…do we buy ramen noodles for dinner, or do we go to the finest restaurant in town? Do we rent a small apartment or do we live in a mansion on the water? Do we shop at Salvation Army or do we go to the fine clothiers in the fancy shopping center? Help your children define in needs and wants how to know what is prudent and what isn’t is extremely important. Thinking through that from my father’s advice, it’s all based on your income. You make a little and you live on less. You make a lot and you live on less. Either way there is distance between your expense and income, and that distance is in your favor.

Practical ways to help your children understand your thought process when you purchase things is a really fun exercise. Surprisingly you start making better financial decisions when you have to justify it to your children. Say you are at McDonalds and you are trying to decide between the happy meal and the value meal and you explain that by ordering three items off the value meal (value fries, cheeseburger, and small drink) for $3.00 versus spending $4 on the happy meal, you have the power of another dollar still in your pocket. The next logical question is what is the power of that dollar!

It still amazes me the time value of money. Albert Einstein referred to compound interest as the eighth wonder of the world and it truly is amazing. Realize for a second that a dollar invested today is worth thirty two dollars just thirty-five years from now. (Average rate of return in the market is about 7% over that time period). I know it is not an easy thing to tell your son or daughter that you aren’t getting a happy meal with a toy, but if you help them understand that by you saving that one dollar and setting it aside later for them that when they are 40 it will be $32 or when they are 75 it’s $4,096. Truly a wonder. Just imagine if you didn’t go to McDonald’s and you got the ramen noodles!

In summary there are really two thoughts. Spend less than you make and save the difference. If you do that you’ll find yourself getting ahead financially. Take your children to the grocery store and talk to them about why you pick one thing off the shelf and not another. Just last night I asked my five year old as we were looking at red onions which one was a better buy. He looked at the price per pound and promptly answered correctly. Have fun with your kids, do math in the grocery store, but never forget to tell them why it is important to know where your money goes. We worked hard for that dollar and we can make that dollar work hard for us, but if you’re not careful, the longing for what the world tells us will creep in and we’ll soon find we are strapped too tight or we don’t have enough money left over each month to save.

I leave you with one last challenge, what legacy will you leave for your children?

The Father Factor Blog: News, tips, and tools for dads and those helping dads.

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