Save Your Money, Kids!

I'm putting up money posts this week and I'm starting with an issue close to home:

Can an 18-year-old African-American young man who struggles in school, and who will barely have the grades to pass his high school senior year, be able to become a millionaire by the time he's 40 or definitely 50?

I believe the answer is "yes." Because this boy is one of my six kids and he knows how to make money. Unfortunately, he also knows how to spend it.

Jack was a lifelong friend of our family and he moved in to our house at age 14 after having failed 6th grade and 7th grade. His father had to leave the state. Through hard work with local charter schools and the school district we got him caught up by his junior year even though he's never tried to get grades higher much higher than a "D" or "C."

But this past March, he started generating leads at a local Home Depot store for roofing, windows, gutters and attic insulation. He loved it. He started off at $10 an hour for part-time work! And if his leads turned into a sale, then he earned an additional bonus.

This summer, while working at Home Depot, he also started selling Cutco knives and in less than two weeks nearly grossed $5,000.

I cheerfully urged him to set aside $100 or $200 for a mutual fund each month and to give about $30 a month to a man from Nepal we know who offers schooling for homeless children. Jack responded with a "hmm, okay." Each week, we meet with him and a counselor and we would talk about the money he was earning and what he was doing with it. He got good at talking around the subject.

Our question to him on "what have you done with your money" almost became rhetorical. We can see the almost 20 pairs of shoes in his closet; he and his friends took a weekend trip to Tijuana and spent nearly $1,000 he later admitted; and his baseball hats at $20 each not to mention his eating out all the time have taken a toll on his bank account.

I became grieved and one time during counseling we added up his gross earnings: nearly $9,000 from March to the end of August which included some money from social security for the death of his mother several years earlier.

He admitted he had "almost $1,000" in his bank account. He has no expenses. We've never charged him rent or made his dad pay us. He doesn't pay for groceries, utilities, etc. But I estimated nearly $6,000 slipped right through his fingers in about a 6 month period.

To me, this is a sad commentary on how tough it is to teach values to kids who have little respect. Even more frustrating is the fact we have a mutual fund set aside for him and we had even put money into it.

But this is why I've also become passionate about people younger than 25 developing a long term financial view - or at least a mature financial view. I believe it's possible to become "rich" or "wealthy" if you start young and live within your income even if you never make a great deal of money year in and year out.

I need to try again and sit down with Jack to run some numbers for him and listen to his concerns and his hesitations about letting us help him invest. Hopefully, he will. If he doesn't, and I'll talk this through with my wife and our counselor, I'm thinking he'll need to pay us "rent" - about $250 a month. We'll put most of it into his mutual fund and give a small percentage to a charity and the rest will go to pay for a few groceries.

Hopefully, that will give him more of a dose of reality and prepare him for moving out next year.

So kids, whether you're in high school or entering college, it may seem impossible to set aside a small amount of money each month. But you owe it to your financial future and well-being to develop that habit now.

So skip a Frappucino now and then. You really don't need it. Try to pass on that extra hat or allow yourself to not have the latest pair of shoes. And take to heart this simple statement: the rich learned not to spend everything but the poor feel they need to spend everything they earn.