• Get Rid of Credit Card Debt.   Even if your bill is bigger than your refund, it pays to get rid of as much debt as quickly as possible.  If your card charges 18% interest and you pay off all or some of that debt, it is the same as if you earned 18% on your money.  Remember to see which cards carry the highest rates.  Pay those off first and stop using all cards.  If you absolutely must charge, make sure you use a card carrying the lowest rates.

• Add to Your Emergency Fund.  It is recommended that you have six months’ worth of income stashed away in a liquid account (bank account, money market, etc.) in case of illness, or unemployment.  In the event of an emergency, how long could you go on paying your bills?  If your account seems thin, beef it up.

• Fund Your Investment Accounts.  As part of your monthly budget, it is recommended that 10% of your take home pay goes towards savings.  In addition to adding to your emergency fund and other general savings, this 10% can be satisfied in a number of ways: 

1. Fund retirement through an employer-sponsored plan.  This has enormous benefits, because the investment often times can be made with pre-tax dollars (lowering your income taxes) and the investment can grow without the effect of taxes, provided you withdraw the money in retirement.  Also, many employers help you save toward retirement by matching a percentage of your contributions.  That is called free money – and it’s hard to find.
2. Fund an IRA or a Roth IRA (contributions can be made for non-working spouses).  Again, tax-deferred growth is a key benefit here.  Check with your tax advisor if you qualify for a Roth IRA, as it has unique benefits such as tax-free withdrawals, and the ability to withdraw for reasons other than retirement, such a first-time home purchase, or to meet college costs.  Contribution limits are $5,000 ($6,000 if you are at least 50 years old). Contributions for 2011 can be made until April 15, 2012 (for both IRAs and Roth IRAs).
3. Add to your child’s college savings.  Whether you open a specific college savings account, such as a Coverdell account or a 529 Plan, or opt for a more general account, such a mutual fund or savings bond, you can take an important step in securing your child’s future.

 If it makes it easier to get started, think of it this way:  you wouldn’t give your kids dessert before they had dinner.  This list is dinner, and there’s no telling what kinds of dessert await you if you take care of this very necessary business first.

• Get Rid of Credit Card Debt. Even if your bill is bigger than your refund, it pays to get rid of as much debt as quickly as possible. If your card charges 18% interest and you pay off all or some of that debt, it is the same as if you earned 18% on your money. Remember to see which cards carry the highest rates. Pay those off first and stop using all cards. If you absolutely must charge, make sure you use a card carrying the lowest rates.

• Add to Your Emergency Fund. It is recommended that you have six months’ worth of income stashed away in a liquid account (bank account, money market, etc.) in case of illness, or unemployment. In the event of an emergency, how long could you go on paying your bills? If your account seems thin, beef it up.

• Fund Your Investment Accounts. As part of your monthly budget, it is recommended that 10% of your take home pay goes towards savings. In addition to adding to your emergency fund and other general savings, this 10% can be satisfied in a number of ways:

1. Fund retirement through an employer-sponsored plan. This has enormous benefits, because the investment often times can be made with pre-tax dollars (lowering your income taxes) and the investment can grow without the effect of taxes, provided you withdraw the money in retirement. Also, many employers help you save toward retirement by matching a percentage of your contributions. That is called free money – and it’s hard to find.
2. Fund an IRA or a Roth IRA (contributions can be made for non-working spouses). Again, tax-deferred growth is a key benefit here. Check with your tax advisor if you qualify for a Roth IRA, as it has unique benefits such as tax-free withdrawals, and the ability to withdraw for reasons other than retirement, such a first-time home purchase, or to meet college costs. Contribution limits are $5,000 ($6,000 if you are at least 50 years old). Contributions for 2011 can be made until April 15, 2012 (for both IRAs and Roth IRAs).
3. Add to your child’s college savings. Whether you open a specific college savings account, such as a Coverdell account or a 529 Plan, or opt for a more general account, such a mutual fund or savings bond, you can take an important step in securing your child’s future.

If it makes it easier to get started, think of it this way: you wouldn’t give your kids dessert before they had dinner. This list is dinner, and there’s no telling what kinds of dessert await you if you take care of this very necessary business first.

Increase Job Security.  One of the greatest fears in a weak job market is being laid-off.  In addition, there are jobs that are being exported overseas.  Worrying and complaining about this won’t change the situation.  Take this time to formulate a Plan B, and be wise to the writing on the wall.  If your job (or your spouse’s job) is always dangling by a thread, it’s time to look at the skills acquired and the contacts made.  Can this experience translate to another industry?  For example, an unemployed teacher might pursue a career as a corporate trainer, which requires the ability to communicate and instruct.

Consider freelance or consulting opportunities available (provided your employer doesn’t forbid this).  Would an investment in more education or training improve your job prospects?  Is there a side business that can be started with little or no capital (ideally, that would allow you to keep your full-time job)?  Maybe you have been itching for a change and want to explore a passion. Or, maybe you see a need that isn’t being filled in the market right now.  Again, use the experience and skills you already have to turn this into something profitable.  Brain storm, and write down everything you can think of, no matter how far-fetched it may seem.  You may end up with a clear idea of where you should be personally and professionally. 

Tap Resources.  Local colleges and universities and libraries have education and job placement counseling. There are small business development centers that offer free mentoring to start-ups, including assistance with fleshing out your idea, developing a business plan, marketing and management issues. Career Zone and Job Zone can help you match your talents with prospective careers.  There are resources for retired/mature workers looking to transition back into the workforce. Women and veterans have agencies dedicated to working with their needs.  The Small Business Administration, SCORE, and the US General Services Administration are some websites to explore. 

Work Hard.  This sounds obvious, I know.  But, how we invest our time has a lot to do with our success.  Two hours of television watching could be better spent planning a new business, or going to school to get additional training.  Of course we all need to unwind and recharge, but find the time to invest in getting “fit” for the challenges that may lie ahead.

Budget Wisely.  A budget is only as good as the information you put in it.  That is why you have to keep track of everything that you spend and everything that you make.  Only by tracking every little expense can you see where the “fat” is.  Saving/investing must be a line item in your budget.  Make room for it by cutting unnecessary expenses.  Every month, you should aim to put away at least 10% of your income (more, if you can).  If you are contributing to a retirement plan at work, this money would count toward the 10%. 

Refinance.  With fixed mortgage rates at unbelievable lows, you can immediately improve your cash flow by refinancing.  The key here is to pocket the difference, not spend it.  This money should be used to fully fund your retirement, or to build up the emergency fund.  If you are branching out into a business, some of these funds can be used in that manner.  This money should strengthen you, and not be used to buy more stuff.

Pay Down Credit Card Debt.  Get healthy and shed as much of this debt as you can.  You should aim to pay off more than just the minimum and look to consolidate the debt to one lower rate card.  Talk to your card company and try to negotiate a better rate.  If you still have high rate cards, be sure to pay them off first.  Of course, stop using credit cards for any new purchases. 

Delay.  Again, if you are nervous about job security, or debt is creeping up on you, put off purchasing anything you don’t really need.   Don’t eat out, don’t go on a vacation, don’t buy a new car, don’t indulge in anything that you would consider something you want (a manicure) versus a need (an annual check-up). 

Difficult times provide a chance to examine your life and to truly grow and benefit from the experience.  Preparing for survival mode will strengthen you and, more important, give you confidence when you do rise to the occasion.  Suddenly you will see possibilities that otherwise you might have never considered.  Growing pains aren’t easy to bear, but they are necessary for survival.

We hadn’t started our family yet, which was a goal of ours. But I wondered if winning Lotto was the only ticket to my other dream: to be able to stay home with our kids for as long (or short a time) as I wanted.  Back then, my earnings were almost five times his salary and I doubted we could sustain ourselves on his take home pay alone, especially with the added costs of a baby.  Sharing this thought with him might have made him feel badly; instead it motivated him.

 ”That’s it? That’s the goal?” Tony said, as if he had known it all along. “OK, give me some time, I’ll figure it out.”

I had it drummed into my head from friends and colleagues around me, who were enslaved to the double-income household: “There’s no way you can live on one salary – especially a teacher’s salary.”

Quietly I worried that I had given him a goal that was not within reach. I thought, maybe I could stay home for a year at most. I even started to accept that option, if it came to that. Thankfully, it never did. The more naysayers there were, the more determined he was to make a viable plan.

Stock piling became the first part of the strategy; generating investment income was the other component. We lived as if his salary was the only income we had, and aggressively saved and invested my salary and bonus. That is not to say that we didn’t enjoy ourselves. We made time for some travel; we ate out at restaurants within reason – but the savings/investing came first; what was left over was ours to play with. We put off starting a family until we felt we were on solid ground.

An interesting thing happened along the way. We had the opportunity to buy a small cabin in New England for a great price; it was very tempting and we came close to doing it. It was affordable based on our total income; but ultimately it would have taken us off our goal. When another opportunity presented itself — to move farther from New York City (where I worked) to an area we loved and where we wanted to raise our family– we struggled with the idea. I didn’t want all our savings/investing to dry up because this house was more expensive than the one we were living in. After careful consideration of all the numbers, Tony figured we could swing it, provided I was still willing to commute an extra 2 hours each day until we started our family. With trepidation, I agreed.

Then we faced a series of unexpected events. For starters I became pregnant and soon we found out we were expecting twins. Almost immediately, I ended up on bed rest.  Short-term disability gave way to long-term disability, which was less than my salary (although I wasn’t spending any money commuting).  When our sons arrived a full two months early, we were stunned.  After more than two weeks in the neonatal intensive care unit, they were released to come home – but with all sorts of equipment (like an apnea monitor to detect the cessation of heart beats or breathing and caffeine to keep the heart beat rate up).  To add to all this tension, I had used up all my leave and was due back almost as soon as the boys came home from the hospital.  I still can’t say how I would have been able to leave my babies under those circumstances – or who we would have asked to take on such a grave responsibility.  I am just so thankful that Tony thought to ask the question about my goals – and that I dared to utter it out loud.  Otherwise, our backs would have been against the wall.

Many times, there isn’t one right way to reaching a financial goal.  Sacrifices, compromises, and non-negotiable items differ by household.  The point is the goal kept us focused and shaped all the decisions we made – we passed up opportunities to spend our money in favor of getting us closer to what was our top goal.  Most important, had we not planned this out, I would have been headed back to my four-hour roundtrip commute; our preemie babies occupying my every thought.   Some call it luck – but I know Tony’s careful planning and our commitment to reaching our (seemingly unreachable) goal had a lot to do with the blessings that came our way. 

The financial wisdom I would like to impart is: Don’t be afraid to look at your dreams – even if they seem impossible to reach.  Instead of thinking about why you can’t get where you want to go, ask how you might get there.  Do this, and down the road, you may find yourself being referred to as the “lucky one”. 

• When we have dessert, it’s served after dinner – When a child sees that Mom or Dad doesn’t always immediately gratify their retail purchasing urge, it teaches that not everything you want is needed, or some things are worth the wait.  With toddlers, the currency can be giving up the bottle or diapers to “buy” something that they want.  Having older children partake in saving for a portion of a pricey purchase can help teach them about setting goals and working toward achieving them, as well.  In addition, they will start to understand the sacrifices you make to afford your lifestyle.

• Make sure your eyes aren’t bigger than your stomach – Showing children that bills are paid in full and on time sends them the signal that they need to keep a handle on how much they spend.  As you write the checks, let them know what you are doing and why you need to pay it on time.  If carrying credit card debt is something they don’t see in life, it makes them less likely to abuse the cards themselves.  This lesson is the single most important one to your future financial well-being.

• If …. Then … Lessons – Show your kids the power of choices and the consequences to get across budgeting basics (e.g., “If we buy this flat screen TV, we won’t have enough for food.”).   

• Do as I Do – There are no greater imitators than kids.  If they see you balancing the checkbook (even though they are not sure what that is), they will grow up knowing that is part of an adult routine.  As they get older, you can even enlist their help in calling out the check numbers.

• Make Saving a Game – When they are really young, nothing is more fun than the clink of change in a piggy bank, or a change sorter.  As they get older, encourage kids to put away a portion of any gift money they get, as well as dedicating a portion to gifting.  When they are old enough to get a bank book of their own, take them down to the bank.  It will be a day they remember.

• Story telling – Do you have a family member who overcame adversity (such as coming to this country with no money) only to live a successful life?  Let them know that Grandpa started up his business with nothing in his pocket.  Better yet, let him share the story.  Kids love to hear true stories, and they’ll be better off for having heard these words of wisdom.

Starting early in their lives will make all the difference, and it will be time well spent for all of you.  Remember:  They are watching.

Eat Healthier. 

Getting dinner on the table while juggling extra-curricular activities and homework can often lead to poor choices (as in unhealthy and expensive take-out).  TIP:  The simple act of meal planning before you shop for groceries can greatly decrease what you will buy and what you will spend.  Using the local flyer as your guide for sale items, make up a week’s worth of healthy dinners and lunches.  Shopping with Pea Pod and other delivery chains may also save time and money, as old shopping lists are saved and a running tally of the grocery bill is ever-present.  There will be time to gather your coupons, further reducing the bill.  Whether you order on-line or physically go to the store, the one simple step of meal planning with the flyer will ensure you buy the best-priced items and will have ample food for all your meals.  Furthermore, when you have a menu pre-set, you are less likely to pick up a pizza.

Organize Closets, the Garage and Pantries.

Wherever stuff lurks there is the potential to save a lot of money.  How many times have you had to run to the store to buy something you know you have but couldn’t find (such as scotch tape, a hammer, a flashlight, etc.)?    TIP:  Group like items as you would in a store.  You don’t need to spend a fortune on organizing supplies.  Old shoe boxes, clear storage bags, over the door hooks and bags can all help consolidate items based on their use.  Gift wrapping supplies, from scissors, tape, paper, bows, and generic cards can all be placed in one shopping bag; common household tools like measuring tape, flashlights, screw drivers and hammers can be placed in a box.   Designate a space in the coat closet for umbrellas, hats, scarfs, and gloves so you are not left scrambling the first morning there is inclement weather.  Don’t forget to extend this exercise to the food pantry, as well.   Then you will know what you need (or don’t need) next time you food shop.  When you are organized, less time and money will be spent by your household, guaranteed!

Purge Papers. 

From school handouts, to artwork, to junk mail and personal files – paper piles up and things get lost.  TIP:  Set-up a binder book or expandable file for each child that will house the class contact list, book orders, assignments, handouts, invitations, and artwork that you want to keep (consider framing or hanging a bulletin board to post larger items).   Toss junk mail as soon as it enters the house and get removed from mailing lists.  Keep an eye on your financial files, as well.  Here’s what to keep and what to shred:

• Keep only the current year’s payroll stubs, which can be shredded after you get your W2 and verify that your annual compensation amount is correctly reflected.
• Provided you do not need them to support income tax filings, bills and canceled checks that have already been reflected in your current bank statement can go after a year (exception: hold receipts indefinitely for warranty-items or large ticket purchases for insurance purposes).
• Bank statements.  Keep the monthly statements for the year.  After you file tax returns, hold on to any checks that relate to your tax preparations (housing/mortgage related expenses, payment of taxes, or business expenses) and your year-end statement.  Get rid of the rest.
• Investment statements.  For retirement accounts, keep records of all non-deductible IRA contributions to prove that you already paid taxes on these monies.  Keep quarterly statements of all investment accounts and make sure the year-end statement matches up before disposing of the quarterly statements.  Keep records of purchases and sales of securities for capital gain tax purposes. 
• Taxes:  Keep seven years’ worth of income tax records and supporting documents (receipts, checks, W2s, 1099s, etc.).
• Credit card receipts.  Keep receipts to reconcile against your monthly bill.  After verifying that the balance due is correct, shred all but those receipts you need for tax purposes.
• Housing Papers.  Keep all documentations relating to the purchase or sale of property for at least six years after you no longer own it.  Keep receipts pertaining to all household improvements for tax purposes.

Get in Balance. 

Many parents and children are so over scheduled that life has become a series of running from one place to the next (which often results in a “drive-thru” dinner).  Take an inventory of the activities and events your household participates in and decide which ones truly fit your family’s need for balance and recreation.  Eliminating some may be a sanity-saver and a budget booster.

 Making some small adjustments, such as these, can result in a less harried home life.  When you know what you are making for dinner, and you know where everything is, there are far fewer last minute errands to the store.  When the schedule isn’t jam-packed, you can actually enjoy dinner together and show your kids that down time is to be savored.  When the precious commodities, time and money, are preserved, you will feel more in charge of your life and less a part of the rat race.  Perhaps you’ll be inspired to stay healthy as a family, and use this found time to go for an after-dinner walk or bike ride.  Your kids will function better in a calmer environment, and you’ll be more present to guide them through life’s daily challenges without all the distractions. 

As they quietly learn from you, maybe, just maybe they will even be encouraged to make some resolutions of their own.

1.  What do you own?  It is surprising how many people have tens or hundreds of thousand dollars invested, and yet they are not sure what they own, or what their portfolio is designed to do.  Looking at your asset allocation (how your investments are spread out in the investment arena) is quite important.  In fact, Ibbotson Associates, a leading authority on asset allocation, found that 92% of investment returns are determined by the types of assets owned.  Market timing (buying high and selling low) accounted for just 6% of returns, and individual security selection accounted for a mere 2% of returns.  Meet with your financial professional and discuss how your portfolio is invested not just between the broad categories, like stocks, bonds, and cash, but more specifically in what types of securities.  For example, stocks (ownership in a company) can be grouped by capitalization (size), as in large, medium, and small.  Stocks can also be classified by style:  growth stocks are those that are expected to grow quickly; value stocks are thought to sell for less than they are worth (a “marked down” item, so to speak).  Stocks can also be domestic (US), foreign, global, or from emerging parts of the world economy.  Bonds (a loan) also fall into many categories, and can be issued by the US Government (or other governments), corporations or state and local municipalities.  Alternative type investments, such as real estate, oil, or gold also can play a limited role in a portfolio and act as a hedge.  Make sure the mutual funds owned in all portfolios contain different types of securities, or you run the risk of weighting your portfolio too heavily in one area; a market correction in that area would affect your investment results twice as hard.  If you are not working with a professional, now may be a good time to consider working with a fee-only advisor, such as our sister company, ATI Investment Consulting, Inc. because this analysis takes time and needs to be done thoroughly to consider and minimize investment risks.  Also, your situation may have changed since you constructed your portfolio.  Make sure your asset allocation strategy considers:

• Your time frame/goals;
• All investments in all accounts;
• Investment overlap in individual stocks owned and in mutual funds;
• Different asset classes (stocks, bonds, etc.), different market capitalizations (large, mid and small companies), different investment styles (growth, value) and different markets (US, foreign, emerging);
• Where the investments are owned (in a taxable brokerage account, or in a tax-deferred retirement account) because investing without being aware of potential taxes can result in “giving back” your returns in the way of taxes; and
• If the risks assumed are worth the potential reward.

2.  What is it costing you?  Having investments and not paying attention to the costs is a sure-fire way to handicap your potential returns.  If two portfolios own the same investments (such as the S&P 500 Index), but one’s fees cost 0.20% and you own the other, which costs 2.35%, immediately you have reduced your returns substantially.  In a volatile or down market, paying higher fees can make generating a reasonable return quite unlikely.  Most important, though, is what you forfeit over the long-term when you pay high fees.  As investments compound over time, the cost of high fees becomes more damaging.  Let’s assume these two investments each returned 10%.  After the deduction of fees, the returns are dramatically different: the high-cost investment returned 7.65% versus 9.80% for the low-cost fund.  After many years, these fees would really impact your bottom line.  If you invested $10,000 in each of these investments, after 30 years, the high-cost investment would be worth $91,289; and the low-cost mutual fund would be worth $165,222 – nearly $74,000 more than the high-cost investment.  Of course, this example is hypothetical and does not reflect past or future results for any investment. Click here to read more a more in-depth discussion about fees. 

3.  What is your plan?  Again, the power lies with you.  Maybe you have left your investments untended and the stock portion of your portfolio is larger than it should be.  Maybe you have not left enough of a cash reserve to cushion the blows from difficult markets.  Perhaps you would benefit from a gradual reallocation of your assets towards a more palatable allocation that won’t keep you up at night.  Maybe you have kept too much in cash and are not earning anything and could benefit from buying low as opportunities arise in this volatile market.  Again, sit with your professional and really go over your objectives, time frame and tolerance for risk (keeping in mind, of course, that an all cash portfolio guarantees you a negative return in this low interest-rate environment).  It has been our finding in working with clients, that accepting 60% of the market’s gains is well worth the protection of declining 60% less than the market in times of trouble. We lean toward a more balanced portfolio allocation for our clients for this reason. 

Remember, until you sell something, you haven’t lost anything.  But looking for ways to buy low and adjusting your portfolio to assume less risk and to pay less in fees will certainly benefit your long-term results in a meaningful way.  The control is yours to seize.  You can choose whether to allow yourself to feel stranded, waiting for the train to pull in, or you can use this time to make sure you are ready to climb aboard when the opportunity presents itself.

 We’re here to help should you need guidance: contact ATI Investment Consulting, Inc. at 631.675.1420.

Several moms I know have turned their young children’s’ interests in to businesses that they run together (one sells her own handcrafted tutu designs on-line, and the other makes and sells beaded jewelry).  Having hands-on experience running a business at a young age can really inspire your child to take their hobbies and passion to the next level.  Even if it becomes just a passing interest, the lessons they’ll learn at the lemonade stand (or wherever) will be invaluable.  Here’s what I learned all those years ago.

1.  Make sure you like and trust your partner. Fighting can kill desire (and profit).

2.  Find a partner with skills that compliment your own.  My friend was good at promotions.  The sign was pretty; she had a good personality and knew a lot of people.  I was better at the business side of things, making sure that the lemonade and the cups never ran out.

3.  Pay attention to outside forces working for and against you.  The weather had to be right — if it was too cold or too hot then no one was out to buy.  The rain killed business altogether.  Obviously, things sell when there is a demand for it.  Cold lemonade near a soccer field where there were games going on meant lots of sales.  

4.  Make sure your “lemonade” can hold its own with the competition.  If you price it too high (and there’s nothing special or different about it) prospects will go elsewhere.

5.  Know what you need to sell to break even.  Setting a competitive, realistic price means first knowing what you need to make to pay for the entire inventory.  If making a profit would mean pricing the item well above what people will pay for the good, then don’t bother selling it.

6.  You can do it!  The most valuable lesson of all was that I (at age eight) was capable of earning money on my own.  Nothing felt better than that!  It gave me such a rush of confidence that I was eager to go out and earn more money.

Make sure your kids get a taste of starting something up themselves and earning money from it, and they’ll reap rewards long after the “lemonade stand” has closed up shop.

Uncertainty is uncomfortable and scary; we like to know what’s coming around the bend before it hits us in the face, not after it has knocked us on our butts.  In spite of this angst and fear, there is cause to be hopeful.  I choose to look at what we’re going to do differently, how we will be smarter and more selective, and how our values will be what will guide us more and more.  Am I just being a cockeyed-optimist?  Perhaps, but here is what I see:

1.  Uncertainty can be a motivator.  Instead of wringing their hands, some people will do whatever they can to take some control.  Instead of putting off dealing with their finances, they are determined to do something.  That may mean drawing up a budget, paying off credit card debt, setting up an IRA, getting wills and life insurance in place, increasing the emergency fund, starting an investment plan for college costs, or reviewing spending habits.  A stronger citizen bolsters the economy.  In the world of politics, creative, problem-solvers who can work across party lines will shine.  That is good for the country.

2. Consumers are more discriminating.  Small business owners may reap the benefits of this shift in behavior. Consumers are tired of dealing with the big boys who somehow are sticking it to the consumer.  They want to feel a connection with those they are doing business with.  They want to associate with people they trust, who they see at the grocery store, at the local park, at religious services, or on the soccer field.  This will help the health of our local communities, not to mention improve the quality of goods and services.

3.  Planning is in vogue.  Looking back, many people feel like they hit the buffet line one too many times.  They are ready to look at their lifestyle choices and reassess where they should be investing their time and money in more productive ways that are beneficial to their families.  This will spill into other areas of their life.  Again, this will make people — and government — more creative and frugal.

4.   The blinders are off.  When times are good, it’s easy to not pay attention to your excesses, the government’s inefficiencies, and corporate corruption.  It’s tempting to only get involved in your life and not educate yourself about local and country-wide issues and take a stand.  We’re not in Kansas anymore, and clicking our heels won’t take us back to a kinder, gentler place.  We’re poised to make sure everyone is accountable (ourselves, included).  Accountability is a friend of goal setters as it motivates, creates urgency, and encourages measuring progress.   Things cannot change unless goals are set.

Getting through this may take time, but by being aware, taking control, and reassessing and realigning our values with our behavior are how we will survive and ultimately thrive.  The key to making the most of the down side will lie in our ability to focus on what changes we can make as consumers, professionals, taxpayers, voters, and as a nation rather than getting emotional about what “better times” we have left behind.  View these times as a challenge that will test and strengthen us — that is where the up side will be found.

I remember getting my older brother to let me clean his room for money, I took local babysitting jobs, and the moment I was old enough to put in for my working papers, I did.  Now my first job paid peanuts, because it was a “seasonal” job and didn’t have to pay minimum wage.  So for $2.75 an hour, I worked at the local pool;  but I was happy as a clam, because I was earning my own dough.

 When I left for college, my parents paid the lion’s share and I took out the standard $2,500 government loan and paid all my expenses:  books, entertainment, clothes, etc.  A funny thing happened.  Because I had earned money in the past, I wanted to earn again, and I did not want to have to ask anyone (even my parents) for money.  So, I started tutoring for $10 an hour (nice pay raise)!  And just as I was getting comfortable and into the groove the boom was lowered:  my Dad was retiring and we were moving to Florida.  He wanted me to transfer to a state school there.  Immediately I knew I had to do something to stop this. I didn’t want to leave, but what could I do?  That’s when I learned about becoming a Resident Advisor or “Den Mother.”  This job would single-handedly pay my Room and Board and pay me a stipend, and provide me with a phone.  Thankfully, I got the job — now I had to sell it to my folks.  My father’s reaction was not at all what I was expecting.  I thought he might be angry at the lengths I had gone to, to foil his plan.  Instead he said that I had thought it through well, had planned it well, and clearly it meant a lot to me to stay where I was.  I will never forget the look on his face:  it was one of satisfaction.  He had done his job well.

Tips for Raising Do-It Yourself Kids

1.  Let them have skin in the game.  If they want something big, let that be a motivator for them to earn and save their money.  You can help them out, but let them “own” a piece of it.  It builds confidence, pride, and encourages a work ethic.

2.  Don’t let them think that you will always step in.  If you practice the law of natural consequences, they will learn very quickly that their actions (or inactions) produce results (good and bad).  If they know that they will have to live with these consequences they will tend to be less impulsive and make better choices.

3.  Guide them out of the box.  Give them creative ideas on how they can achieve their goal, whether it be how to earn extra cash, or how to find something at a better price.  Show them how they can “make” their own solution.

4.  Clap hands.  When they rise up to the task, let them know how proud you are and how proud they should be.

5. Let their youth be an asset.  Enthusiasm and energy are great attributes of youngsters.  Harness it and direct it toward a goal and watch them accomplish wonderful things.  Don’t discourage them with words like, “You’re not old enough.” 

6.  Build confidence.  Let them know that if they want something badly enough they have the power to make it happen for themselves.