Navigating the holidays post-divorce is a difficult enough task for adults, but it also brings out stress and anxiety in children, whether small or big (adult). We tackled holiday survival post-divorce topics like “finding your new normal” and “creating emotional balance” here and here, now we will discuss guiding your children through the holidays. This is especially important if it is your first round of holidays since your separation or divorce. One of the most important aspects to remember is to be transparent about how the holidays will go. Set up a detailed schedule in your parenting plan early on with your ex. Having a plan in place and communicating those plans with your child(ren) will help ease some of their stress, even if it’s as simple as knowing that yes, both mom and dad will be at their holiday concert at school, or that mom will take the kids to see Santa. Whether your child is 2 or 20 it is important to maintain a holiday schedule and stick to it. Unfortunately it does require both parents to be willing to negotiate, and ultimately give up time, but developing a fair plan with your child’s best interest in mind will be better in the long run. Talk to your children about your traditions. Discuss with them what will remain the same, what traditions they will continue to celebrate and at who’s home, etc. Don’t be afraid to create new traditions. Many families will try to keep things as normal as possible, but that doesn’t mean that this isn’t a good time to start something new. Again, this holds true of children at any age, and talking about it early in the season will help them to know what to expect throughout the holiday season. Communication is key, even if it’s something that as an adult you wouldn’t think twice about, often times children do not have any idea what to expect for their first holidays post-divorce. For example, a young child has no concept of Santa knowing that they moved, or if Santa still comes if they are at dad’s house on Christmas and not at mom’s. Talk them through these scenarios. Establish realistic holiday expectations with your ex early on. How will you navigate gift giving with finances split? Especially on those big ticket items. Do gifts and toys get to travel from one house to the other? Etc. How will you avoid what becomes a “bidding war” of presents to “buy/show” your love? – This unfortunately happens often, and ultimately the child is negatively affected when years of this behavior occurs. The holidays are overwhelming for all of us – young and old, so don’t be afraid to ditch the lines at the mall, or the umpteenth extended family gathering, and trade for a quiet night at home with just you and the kids.
Sometimes your teenage children think they know everything. Do they know that if they saved the $6 they spend each day on a super antioxidant smoothie (or caramel macchiato), in 8 years they could buy a 4-door sedan in soul red or titanium flash (1)? Below are 3 lessons you should teach them about the long-term financial impact of decisions that they will soon be making for themselves. Lesson #1: Over time, compound interest can make a little bit of savings grow to a very big amount One of the regrets many of us has, is that we did not start saving soon enough. The idea of compound interest is something that your kids will understand by the time they are in middle school. There are numerous online calculators you can use to show them how deciding to save their money and forego that daily splurge can turn into better investments (like a new car). Lesson #2: College is a very expensive but financially important decision As your high schooler starts to contemplate where they want to go to college, don’t leave them out of the financing discussion. Even parents who expect to cover the entire cost of college need to make their child understand that it is a significant investment in their future, and not a nonstop party. Let them know that by completing college, they will likely earn $1 – $3 million more over their lifetime than their classmates who didn’t (2). Lesson #3: Credit cards are a tool and not a new source of money Credit card debt is rampant among people of all ages, but studies have shown that outstanding balances ramp up quickly after college. Before, during and after college, make sure your child understands that credit cards are not free money. Talk to them about using credit cards only to the extent that the balance can be paid off each month. Revisit Lesson #1 and show them how fast the balance on a 20% credit card can grow out of control. The best way to drive these lessons home is to set a good example. Demonstrate good use of credit by paying off your credit cards monthly. Develop a budget and then communicate how sticking to it serves larger financial goals. It’s very likely that you have made some big financial mistakes in your life. Wouldn’t it make sense to share what you have learned so they don’t make them too? (1) Assuming $6/day, saved for 8 years, earning 6% after fees, the total is $22,403. This exceeds the base MSRP of a 185 horsepower 2016 Mazda 6 4-door sedan with 6-speed manual transmission in Titanium Flash Mica ($21,330). The same model in Soul Red Metallic is $21,630. (2) The Economic Value of College Majors 2015, Georgetown University Center on Education and the Workforce.
What are you teaching your children that will best prepare them for a successful adulthood? To be polite and say thank you? To believe in themselves? How about that if they save 15% of every check they ever earn, they will retire a millionaire (1). Preparing your child to handle the financial matters that they will face as adults doesn’t require a finance degree from Harvard. Below are some money lessons they can start at an early age. Lesson #1: Life isn’t one big shopping spree I think we have all experienced the grocery store tantrum when that 3-year-old just has to have the cereal with the cartoon character on the box. You can work with your preschoolers to understand that you go to the store for very specific items. Every trip to the store is not an opportunity for them to get a present. It is a lesson all ages could work on. Lesson #2: If you really want something, it is worth waiting for Teach your child about setting purchasing goals and saving for those goals. Have you given them a piggy bank yet? Every time they earn money or receive it as a gift, have them save at least 10% towards their goal. Lesson #3: It is important to spend wisely No one has an infinite amount of money so spending involves making choices. By the time your child is in elementary school, have them start to think about spending money on things they will still value in a couple of days. Here are a couple ways that you can help your child to develop money skills. #1 Give your child an allowance. You could use their age to determine their allowance amount. For example, my 7-year-old receives $7 a week. Make them understand that you take care of their needs and they use the allowance for their wants. An example of this would be when we went school shopping. I paid for my son’s school supplies that were on the teacher’s list. He really wanted a cool pencil box not on the list so he had to use his own money for this. It made him think about how badly he really wanted it. #2 Give them a birthday budget. Determine what you can afford for your child’s birthday present and party, then let your child determine how they want to spend it. Would they like to have the entire amount spent on a gift for themselves and forgo a party or would they like some combination of the two? Having a little skin in the game, really gets them thinking about spending wisely. During these early years, the overriding idea to teach your kids is that there is a difference between the things we want and the things we need. Giving them a little bit of responsibility at an early age will help them to understand this and set them up for a lifetime of healthy money habits. (1) Assuming that they work full-time for 40 years earning an after-tax salary of least $42,000 per year, and that their savings earn an average annual return of 6% after fees.