How Does a 15-year old Save for a Car?

Ryan just bought a car. And she’s a beauty, too. 2002 baby blue Toyota Prius with only 57,000 miles. Owned by a 91-year old grannie who used it mostly to drive to church and back. No kidding. Problem is, Ryan can’t drive it; never mind he doesn’t have his license. He barely has his permit. And taking an online course to get his permit happened after he bought the car.

How does a 15-year old with no permit end up with a pretty snappy car sitting at the bottom of the driveway? It starts with a plan.

When Ryan was 11 years old he got his first job. He delivered papers once a week after school. Most of that money went directly into his savings account. Although he was responsible for all his discretionary spending, there wasn’t a whole lot he spent money on. John and I customized his interest rate (KidsSave was a great help in this area), so that the more he saved, the more he ended up with. This was a great incentive. But an even greater incentive was the offer his grandmother gave him. She would match him dollar for dollar on his first car.

Over the years he added soccer reffing, teaching math centers, and yard work for our neighbor to his list of jobs. He also did the occasional lemonade and root beer float stand. Then there were his buys and sells on ebay. Again, most of it went into his savings account. Although I have to mention here, just in case you may think he never enjoys spending money, he bought his own $350 mountain bike, an ipod touch, golf clubs and other pretty pricey items. He knows when to save and he knows when to spend.

But my main point is that, when you have a goal in mind, when you know what you want and have figured out the steps to get there, it’s easier to keep your eyes on the target. That’s the power of goal setting. It keeps us focused. Even when you’re eleven years old.

Four years later the perfect opportunity presented itself. We live near a community college which doubles as a used car lot on the weekends. Nathan and Ryan, just playing around on the computer one day, discovered that a used Prius would be on the lot. A Prius is exactly what Ryan wanted. He’s my little eco-friendly kid.

The stars seemed to be aligning for him. About six months ahead of when he had planned on buying a car, it was an opportunity not to be missed. An opportunity on a variety of levels. This was his first major negotiation and he wanted to do it himself. So John and I prepped him. He needed to know exactly what his maximum offer would be. Start low, move up.

The owner, through her grandson, was asking $10,000. Ryan went in at $8800. They came back at $9200 which was exactly what Ryan had hoped. He had just made his first deal.

After registration and taxes, the total came to $9796. Split with his grandmother, Ryan’s share was $4898. He paid in cash. That’s how a committed 15-year old buys his first car.

Teaching our kids to set personal financial goals when they are young is so important. It starts with the little things…a video game then a bike then an ipad. They learn it’s possible and begin saving for the bigger things. To see how it’s done, check out this video:

Kids Earning Money? Set Up a Roth IRA

I took Nathan and Ryan to our broker this morning to discuss Roth IRAs. Both boys have jobs and I thought it was time to have them begin thinking about their retirement. John and I decided to match any money they made this summer, dollar for dollar, and, well, my boys have never been known to turn down free money. They were all in.

I could have easily set up their custodial accounts online but I wanted the boys to have the experience of meeting with an expert. Besides, I’m not all that familiar with Roth IRAs, I had a few questions to ask, and I wanted them to learn right alongside me.

Our broker started by asking the boys what they already knew about Roth IRAs. Nathan volunteered that it was a retirement account that they wouldn’t be able to touch until they were 65 (turns out it’s 59 1/2). Ryan offered the fact that taxes were taken out before the money gets deposited into the account allowing for the money to be drawn tax-free later on. I was proud of both of them for being able to discuss the basics of these types of accounts.

I know it’s hard for many kids to even entertain the notion that one day they will be retired. It’s even harder to get them to begin to prepare for it. I’ve been lucky in this area with Nathan and Ryan. They’ve sat in enough of my money classes to know that they are in the best position now to set themselves up for financial freedom later in life. A little sacrifice now can pay greatly later.

When our broker started talking about the compounding effect of money, and having money work for them, Nathan and Ryan started to smile. They know all about it. In fact, once kids see the power of compound interest, they’re usually quite interested in making those sacrifices.

We then got into risk management. The question posed both boys was What would you do if your account value dropped by 10%? Sell, stay put, or buy more? It was an interesting question and I was curious what each would say…although I already knew.

Ryan said he’d buy more. Nathan said he’d stay put. Ryan has made a killing on his stock picks this year; he’s a little bit more of a risk-taker. Nathan is simply not willing to lose money if he has a choice. This fits in with the next question: When are you looking to retire? Under any other circumstances this would have been an odd question to pose a 15- and 17-year old. But we were in his office to discuss retirement, so it was totally appropriate.

Ryan wants to have the option of retiring when he’s 40. Nathan said he probably wouldn’t retire any time before 55. With this information, our broker created personal target funds for each of them. Then he printed them out. That alone was worth the 45 minutes in his office. The boys were fascinated with these pieces of personalized information and devoured them in the car ride home. Very cool.

And me, all I could think about in that car ride was how I was jyped of information when I was a teenager. Had I known then what I know now, I’d have left that office in my flip flops ready to head out to the beach and work on my tan.

Selling on Ebay, A Teenager’s Message

I asked my son, Ryan, to write about his experiences earning some additional money by selling things on ebay. Here is what he wrote, unedited by his mother!


Ebay can be a great tool to making money, anyone can do it, too. Kids, adults, it doesn’t matter! I’m Ryan, 15 years old, and I have used ebay since I was 12 to make money, mainly because I was too young to get a job.

Ebay is extremely easy to use and can be used to make yourself a small fortune. For example, I have bought and sold items that I’ve gotten from my friends and garage sales and sold them for much more than what I paid for. I recently bought an Ipod Touch for $100 from one of my friends, and sold it on ebay for $150. That’s a 50% gain! I have also sold items I’ve purchased from garage sales for almost 4 times what I paid for them. In all, I have probably MADE about $300 from ebay, and plan to make much more in the future.

It’s really quite simple to make an ebay account and get started on the road to success. Just click “register” on the ebay homepage and punch in all the info. That’s required. Then, you’re ready to sell! To sell your first item, on the homepage, go to “sell”, “sell an item”, and then find, and describe your item in a way to try to sell it, list features, accessories, etc. I strongly recommend setting a reserve price, the amount of money you’re least willing to sell the item for. To do this, you must be in the advanced settings of the description process. It’s considered an upgrade so you will have to pay a little to do this, but it’s not much.

Also, I highly recommend having a “buy it now” price, a price that you’re willing to sell it instantly, without the auction process. It is always good to have both.

After you’re done, you’re ready to list your item and make some money!

When you earn money from ebay, it is always great to save your money, you do not have to just spend it. I have already invested in mutual funds and the stock market, plus I have a savings account. Save away!

BTW, if you purchase something from someone on ebay, it is always good to leave feedback, good or bad. People rely on having positive feedback, so make sure you leave them feedback about what you thought about buying from them.

Spend to Make? But, of course!

I hung out in a second grade classroom last week to talk about saving money and then have the students make their own Money Jar.  It was a fun lesson and the Money Jars turned out unbelievable.  Kids and their creativity never ceases to amaze me.

While we were discussing money issues, I asked the students how they got money. Of course, the usual answers came up…allowance, chores, birthday money.  Then one little guy raised his hand and volunteered, “You have to spend money to get money.” 

Wow.  It took me a second to let his comment sink in.  If I was with a group of adults, I probably wouldn’t have skipped a beat.  Adults spend money on investments all the time in the hopes of making that money grow.  But I was in second-grade-mode, and the thought of a second grader coming up with this took me by surprise.

But he’s absolutely right…even on a second grade level.  Think about the good old fashioned lemonade stand.  Before you can make a profit, you first need to purchase all the supplies.  The same goes for making and selling crafts which a lot of kids like to do. 

I am always impressed with the kind of thinking that kids do if we allow them the opportunity to share their thoughts and reasons.  Who’d have thunk that a seven-year-old would get the concept that, yes, sometimes to make money you need to spend it.  Sheesh…with this kind of thinking, it’s hard to be smarter than a second grader.  🙂

Are Bribes Okay?

I took Ryan with me to hot yoga yesterday.  Nathan had gone a while back with my friend Rebecca and came back with stories about how he’d never sweat so much in all his life.  Then I started going and found out that he was right.  The heat, plus the difficulty of the poses made for a very intense 90 minutes.

Ryan likes a good challenge and asked if he could give it a go.  So yesterday we went.  In the lobby of the yoga studio was a girl who looked to be about 16 years old.  She was talking to the owner about the heat, not sure if she would be able to make it through, and wanted to know if she could get up and leave during the class.  I’ve learned that that is a no-no.  I’ve also learned the heat isn’t as much of an issue as I, too, thought it was going to be when I first started.  But the girl did not seemed convinced.

When we got into the yoga room, I was surprised to see that the 16-year old girl decided to stay.  She ended up right behind Ryan…and right next to the exit door.  I decided to go over and talk with her and allay some of her concerns about the heat.  I told her that because the poses are so difficult and require a lot of concentration, the heat actually becomes secondary.  And then I asked her what made her decide to come.

“My mom gave me twenty bucks to come,”  she said. 

Really?  So where was mom?  Apparently she had something better to do.

I had to smile to myself, though, about the twenty dollars.  To a teenager, that is a lot of money.  And the fact that she was so concerned about the heat, but stayed anyway, underscored the value of that money.  It made me think about whether bribes were okay.

I am not a believer in paying kids to do things they should do as a member of a family or community.  For example, paying kids to clean up after themselves is not okay.  Neither is paying them for their grades.  But every now and then, like in the yoga example, I do think it’s okay to offer a monetary reward.  The key is to never make it an on-going habit.  Because that’s when kids begin to expect a handout for everything they do.  And raising entitled kids is not teaching them good money habits…or life habits.

The 16-year old made it through the class just fine.  As Ryan and I were leaving, she was asking about memberships.  Ryan…he did awesome, as well.  But in the car ride home, he never asked me about going back.  He had proven he could do it…and was moving on to his next challenge -training for his first half-marathon.  I’ll stick to yoga.

A Win/Win

I can’t believe I have to add figure out Twitter to my list of things to do.  What the heck?  And I’m already behind the 8 ball, so the pressure is really on.

That’s when it hit me.  Ryan.  He likes spending time on the computer.  Why not have him do it?  I’ll even pay him.  And he can work when he wants for as long as he wants. 

So that’s what I did.  I showed Ryan my Twitter account.  And when we finally got the two Twitter accounts I owned figured out (I opened a Twitter account last fall??), he went to work.  I pay him 25 cents for each follower he gets me. 

But there are rules.  I’m very, very picky about who I interact with.  I don’t consider this a popularity contest.  This is not about amassing as many followers as he can get me.  He needs to read all the bios before clicking the ‘follow’ button.  I had already started the work for him so he could see the types of people I’m interested in following.  And if there’s ever a question, he can ask.

So far he’s made 75 cents.  That’s 3 followers.  Hmmm…this may be harder than I thought.  But then, who knows, maybe it’s just a slow start.  Hey, why don’t you help Ryan earn some money!  Become one of my followers on 

I feel great having that crossed off my list of things to do.  And Ryan feels great because he gets to “work” on the computer while earning extra money.  It’s a win/win.  Yea me for figuring this out.

The Rubber Trees

Nathan and Ryan had a “job” over the holidays watching the neighbor Tom’s two cats and taking care of the plants.  They’ve done this job before, apparently well enough to get asked back.  Actually, they take the job seriously.  I know, because the rubber tree plants gave them quite a scare.

About two weeks into the three week stint, Nathan and Ryan came back from Tom’s house looking a little worried.  It had been unusually cold in our little town of Rocklin.  So much so that it actually snowed.  Enough for Ryan to run out that white morning and make a decent snowman.

Two days before the snow, however, the boys ran over to Tom’s to cover the plants.  Part of the job description included checking the weather forecast for temperature drops.  They were instructed to cover a section of the garden with plastic if it dropped below freezing.  I was proud that I didn’t have to remind them to do this; teaching kids how to be responsible is often difficult and, as a parent, you may not know if they’re learning this life skill until you see them running over to the neighbor’s house to cover the plants.

This particular day, the boys returned from feeding the cats and checking on the plants with definite concern in their eyes.  The rubber trees in Tom’s back yard were looking pretty “brown and droopy”.  Tom had asked that they water the trees every four days unless it rained.  Well it had rained so the boys figured the trees were fine.  Until they saw them that morning.

“You did what he asked you to do,”  I told the boys.  “We’ll just have to wait and see.”

“Yes, but we don’t want Tom to think we’re not responsible because their trees died,”  Nathan said.

It’s nice to see that kids actually care about things like whether or not the neighbor’s trees die…on their watch.  That’s what I love about having kids do small “jobs” such as this.  Jobs that don’t involve mom or dad, where someone else is boss.  And it’s been my experience that kids really like the responsibility.  They like knowing that someone trusts them to do the job and do it well.  Money aside, the confidence-building alone is worth it.

And the rubber trees?  Turns out each winter they turn brown and droopy.  They perk up in the spring.  Who knew?

To Work or Not to Work

I was having coffee with some friends last week when we started talking about why having a job as a teenager may be a really good thing.  Of course, from a teens perspective, the extra cash is always nice.  But as a parent, there’s nothing like a “real” job to teach kids a few life lessons.

A week earlier, I had a phone interview with a freelance writer about teens and working.  She asked if I thought having teens work was a good idea.  As long as work doesn’t get in the way of school, I’m all for it.  I like how having a part-time job can help teach kids time management.  I also like the idea of teens having a “boss” that is not mom or dad.  There tends to be a little more accountability that way.

As I’m describing this to the writer, she throws in that she had recently talked with a child psychologist who said that teens who had jobs growing up don’t do any better or worse  in their “real job” as adults than teens who didn’t have the pleasure of working when they were younger.

Hmmm.  Without grilling her on the study the psychologist was referring to – what did he mean by didn’t do any better or worse – I had to disagree slightly.  It could very well be that time management and working hard comes readily to adults regardless of having a job as a teen.

But there is absolutely nothing like having to earn and then manage your own money as a teen.  Living within your means, setting priorities, learning how to save, budgeting, and my favorite…making money mistakes – all learned before leaving the comfort of home.  Priceless.

Of course, there’s a lot more to it than that.  Parents need to be involved in helping their teens take advantage of these lessons.  And part of that is not bailing out their teens when they make mistakes.  A difficult thing for a lot of parents.

But as I was chatting that morning with my girlfriends, it was apparent that there was one more really important lesson that I had forgotten about.  The lesson that minimum wage is not going to provide our kids with the lifestyle they expect to live as adults.  And that lesson is worth every newspaper they throw, every dish they wash, every burger they flip…as teenagers.

Keeping Track

Nathan and Ryan received their second, and final, soccer reffing checks in the mail yesterday.

“How much are you expecting?” I asked.

“A lot,” was the answer I received from both.  And a lot it was!  Nathan’s check came to $210 and Ryan’s came in at $164. 

But as nice as those numbers are, if you are not keeping track of what it is you are owed, you run the risk of not getting paid for the time you worked. 

The only way the soccer ref coordinator knows that you have, indeed, reffed a game, is through the game cards.  These game cards are signed by each referee then turned in sometime after each game.  But things happen.  Maybe the card gets lost under the seat of your car.  In which case, it doesn’t get turned in and you don’t receive reffing money for that game.  Besides, if other kids reffed the same game and you are responsible for turning in the card, they lose out, too.  

So when I saw the blank stares looking at me after I asked if they were sure they were getting paid for all their games, I knew I had failed in teaching them how to keep track.  I should have had them keep a list of each game they reffed and the amount they received for each one.   That way it would be a quick once-over when the checks arrived.

I suppose they could go back over the season and try and figure it out.  They probably won’t.

Note to self:  August, 2010, review with boys how to keep track of money owed.

Is Love Necessary?

I was talking to Nathan yesterday as he headed off to ref five soccer games.  Reffing soccer is good money.  Depending on how many other refs are involved in the game (there can be up to three), he could easily make $100.  That’s a lot of gas and burger money for a teenager.

“I was thinking about which was worse,” Nathan started.  “Running a 3K race or reffing a soccer game.”

I wasn’t surprised that either of those choices was on his list of things I really don’t like to do.  He’s not terribly fond of running.  But he runs anyway because he loves hanging out with the high school cross country team.  And he knows it’s a good way to stay in shape.  It’s the races that are excruciatingly painful.  But that’s because he figures if he’s going to be running anyway, he might as well give it his all.

Then there’s the reffing.  It’s the long hours of standing that he doesn’t like.  He knows it’s a pretty easy job, and for the amount of money he can make in one day compared to working at a burger joint, he’s got it made.

So his comment led to a discussion about jobs vs careers.  Do we have to love the jobs we do?  I told him I didn’t love cleaning toilets but it needs to get done.  I don’t do it as my career and that makes all the difference.

“I know, I know,” he said.  “Sometimes we have to do things we don’t really like.  I would never make a career out of reffing soccer.  But it’s really good money.  Besides, my career is going to do with public speaking and I’m really looking forward to that.”

As parents, I think it’s important to encourage our kids to find the things they really love to do and help them turn it into a career.  Nathan will love his “job” when he’s older, because it’s his passion.  But I also think it’s important for our teens to experience doing things that aren’t necessarily their passion.  There’s a lot of life skills, not to mention lessons, that they can learn from those.

I told Nathan to look at all the skills he’s learning through reffing and running.  Reffing has taught him to be responsible; he needs to show up on time and in the proper attire.  It’s taught him how to deal with angry parents and coaches.  And he’s learned to trust himself and the calls he makes.

Running has taught him what it’s like to be a team member.    It’s taught him the importance of going to practice.  And it’s taught him to set goals and work to achieve them.

You don’t need to love your job.  You do need to love your career.

BTW, his answer…running, because it’s over in 19 minutes.