Cutter Family Finances: Five Financial Lessons I'm Teaching My (Yikes) Teenager

Jeffrey CutterRichard Maclone Photography - Jeffrey Cutter

Last week for my 47th birthday, Jill, the kids and I went up to the White Mountains for a three-day hike on the Appalachian Trail. It really was an amazing journey. We hiked about 24 miles up and down through some pretty competitive terrain. The kids did great. All three of them, hoofing it up step by step carrying backpacks and taking in the unbelievable views and sounds of nature.

Day two brought a very challenging hike—climbing about four miles up to Mt. Pierce. Our twins, Phoebe and Sophie, are 11 years old. They tended to want to take more “breaks” than my oldest, Maeve, who is 13 and stronger than her younger sisters. So I went up ahead with Maeve and Jill hung back with the twins.

Maeve and I hiked for about 35 minutes before taking our packs off, and sitting down for a water break. Whenever I get one of my kids alone, I always try to think of some “life lesson” I can share. Each of my three kids is very different so I have found I need to shape my lessons differently to each child to get the most out of them.

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Maeve and I talked for a bit about life in general. We talked about our trip, the expense associated with it, and how her mother and I saved some money so we could have this time together. The conversation evolved into one of Finance 101. (At her age, I get somewhat nervous about where conversations may take us since she still is so innocent and feels like she can tell me . . . everything. But finance, yup, right up my alley.) I broke our conversation down into five lessons for Maeve.

I told Maeve that she needs to understand the flow of money because it does not grow on trees. I’ve made that pretty clear to her over the past 13 years of her life. But it’s important for kids to understand where their money is coming from, and where it is going. How much money do they get in an allowance? How much do they earn from babysitting? Where is the money coming from? And once the money comes in, where is it going? Is it being spent on that $30 pair of jeans? Or being shelled out at the movie theater every weekend? Understanding income and expenses at a young age is the first step in understanding how to manage finances.

Next, I told Maeve it is important to save part of every “paycheck”—to have a savings plan. Typically, when Maeve gets $30 in her pocket, she immediately finds that $30 softball glove and thinks she can afford it because she has earned some money. Teach your kids the value of saving. With my kids, 20 percent of every buck that comes in goes straight to their savings account. I tell them to deposit their checks first and withdraw cash later (if they need it).

Third, I told Maeve that when she wants to buy something, to make sure to shop around for the right price. Despite how much I try to deny it, she is a teenage girl. She will shop. She will buy clothes. She will spend money. Don’t try to fight nature, folks; instead, teach your kids to spend responsibly and efficiently. Tell them not to buy the first iPod that they see on the shelf. Encourage them to think about the anticipated purchase. Suggest they ask themselves if they need it, or if there is something more important to spend their money on? Ask if they have found the best price. Ask if they are buying something for convenience, or if they would make the purchase no matter what options they had? Kids need to learn to research a purchase, to find the best price/option, and then ensure that they can afford it. If Maeve has done the research, I usually let nature takes its course.

Fourth, I stressed to Maeve that debt is not fun. Debt seems magical at 13 years old (heck, people of all ages seem to have that skewed concept of debt). Free money, right? No. As I have said many times before, nothing in life is free. Some debt is inevitable, like student loans, car loans and house loans. But debt is not something to be excited about or depend on forever. It is best to manage it as effectively as possible. Kids need to start respecting the power of debt, almost to the point of fear, before they can wield responsibility over their finances.

Lastly, I encouraged Maeve to set (realistic) goals. It might be to save $10,000 by the end of high school, or to afford her own car at 16, or to support her parents when they age (I know which one I’m rooting for) . . . but goals are important. Money can seem like a pretty arbitrary thing as a teen, especially when it’s just numbers in a bank account, but by setting goals, both long-term and short-term, they can see the progress they are making, they can understand the value of each decision, and they can, ideally, be motivated to make better ones.

We quietly sat there for a bit, cooling down, drinking some water, listening to the faint waterfall before Maeve said, “Dad?”

“Yes, Maeve?”

“Thanks, Dad.”

I grabbed her pack and said, “Come on, kiddo, let’s put your pack on, we have some more work to do.”

You know, I think I learned more about life in those three days than I did all summer.

Be vigilant and stay alert because you deserve more.

Jeffrey Cutter, CPA, PFS is the managing partner from Cutter Financial Group, LLC (www.cutterfinancialgroup.com) which provides private wealth and investment management through low risk, low volatility successful strategies. He can be reached at jeff@cutterfinancialgroup.com.

Investment advice is offered by Horter Investment Management, LLC, a registered investment adviser. Insurance and annuity products are sold separately through Cutter Financial Group, LLC. Securities transactions for Horter Investment Management clients are placed through Pershing Advisor Solutions, Trust Company of America, Jefferson National Monument Advisor, Fidelity, Security Benefit Life, FC Stone, and Wells Fargo Bank, N.A.

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Cutter Financial Group, LLC, a family owned and operated company, was founded by retirement and investment specialists. We engage high quality, independent wealth managers who specialize in significantly reducing risk during times of volatility, while capturing a large majority of the gains of the upside. This strategy allows our clients to secure a better, and worry-free, retirement.

Learn for about Cutter Financial Group on their website www.cutterfinancialgroup.com

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