FIRSTFRUITS FINDINGS NEWSLETTER VOL. 10 NO. 3 MAY-JUNE 2005 A NOTE FROM THE DIRECTOR Isn’t life a series of experiences that prepares for the next experience? How well we prepare our kids will have a significant impact on their decisions especially in the area of how we prepare them to share, save and spend their money. As I was preparing to write this article, I was reading Phil. 4:11 in a devotional about contentment. As I mentioned in our last issue of FirstFruits Findings, contentment is the key to making good money decisions. What struck me this time is that contentment is a learned attitude. Paul said, “I have learned to be content . . .” Teaching our kids the value of contentment is something that can be developed from early childhood. Consequently, as they get older, teens begin to make more and more of their own spending decisions. They will be faced with an overwhelming number of conflicting choices according to needs vs. wants. Our job as parents is to help them, not only make good choices, but make good, sound financial decisions which will impact them in their role as managers of the Master’s money in the future. ~ Norm Vander Wel RAISING CHEERFUL GIVERS This is fourth in a series of articles on “Raising Cheerful Givers”. Helping This is fifth in a series of articles on “Raising Cheerful Givers”. Helping our children understand financial principles will not only help them manage their money, but also become joyful stewards. TEENS DANGERS OF CREDIT When you left home, how well prepared were you to make serious financial decisions? We spend 18 years preparing our children for adulthood, but only a few hours teaching them the use of credit and money. Yet, the failure of most marriages can be attributed to problems with credit and money. Even more importantly, the misuse of money destroys a Christian witness. As parents we have a great responsibility. In her book, Branded: The Buying and Selling of Teenagers, Alissa Quart writes that “those under twenty-five are now the fastest-growing group filing for bankruptcy.” As we discussed in earlier articles, it is critical to lay the groundwork early in our children’s lives by teaching them how to share, how to handle small amounts of money and to let them experience the positive value of delayed gratification. Once they reach teen years, they will be faced with bigger decisions that involve higher-risk, large-ticket items and will be less open to parental advice and suggestions. One of the best things to do while teens are still at home is to take them to a local bank to open their own checking account, perhaps with a debit card. Such accounts help to teach the discipline of tracking money. They provide an opportunity each month to review the statements together as you teach them how to manage an account. Once they have learned to manage a simple account, they can more easily graduate to transactions such as house and car payments. If your teen or young adult will be leaving soon for college or off on their own to work, they will be bombarded with offers for car loans and credit cards. Unfortunately, this is the time too many young people naively pile up debt that takes years from which to dig out. The device that digs the hole is often a personal credit card. Our consumer culture works overtime to convince young people they deserve a fantasy lifestyle. Teens need to understand that when they put money into investments others pay them rent for using their money. But when they borrow, they have to pay others to rent the money. And if they bounce a check or miss a payment, no matter how good the excuse, debt quickly turns into high interest loans, often as high as 25%, and additional credit becomes impossible to get. As Christian parents we need to give our children practice in using all the tools they need to manage bank accounts, credit cards, consumer loans and investments by the time they graduate from high school. This will give them a solid foundation for their family finances in the future, and provide them with the ability to continue the practice of joyful, generous giving to impact Christ’s kingdom. ? SOME THINGS TO THINK ABOUT If a student borrows $1,000 from his/her credit card company, then makes the minimum $25/month payment, it will take five years to pay back the debt. The original $1,000 borrowed will turn into $1,500 that has to be repaid. Credit card debt among college students has risen exponentially over the last decade. In fact, students double their average credit card debt and triple the number of credit cards in their wallets from the time they arrive on campus until graduation, according to student loan provider Nellie Mae. Nearly three in four adults younger than 25 carry balances on their credit cards. Chicago Tribune 4/27/05 The average household in the 18-24 age group spends 30 percent of income on credit payments. Nearly 1 in 5 households headed by people this age group reported being late or missing debt payments in the last year, a 27% jump from 1992. Chicago Tribune 4/27/05 To stay out of debt, act your wage. IT IS SO MUCH EASIER TO INSTILL HEALTHY FINANCIAL HABITS IN A YOUNG PERSON THAN IT IS TO UNRAVEL UNHEALTHY HABITS IN A YOUNG ADULT. TIPS TO TRY Clever cost-cutting ideas to use at home: Car buying. Before purchasing a car, go to www.edmunds.com and click on “True Cost to Own”. This handy tool helps you compare different vehicles and costs of buying, owning, operating a car over a five-year period by taking into consideration depreciation, insurance, maintenance, etc. Fill the rinse aid receptacle in your dishwasher with white vinegar instead of expensive rinse and drying agents. Shredded paper makes a wonderful substitute for kitty litter. You can either use the shreds from an office or shred your own newspaper. It is much better than the litter because it absorbs waste and odors better, doesn’t need to be replaced as often and is free! Don’t run water continuously while shaving or brushing teeth. That can waste ten gallons per person per day. RECOMMENDED RESOURCE “Prodigal Sons & Material Gifls” by Nathan Dungan (published by John Wiley & Sons, Inc) Dungan, who is an expert on family finances and the effects of mass marketing on young people, shows in his book “how not to be your child’s ATM.” He exposes the culture of spending that victimizes our children and offers practical advice to reorder our financial priorities….to share first, save next, and spend later...and then to pass these values on to our children. To sign up for Dungan’s monthly Share-Save-Spend tips, visit his website at www.sharesavespend.com