How to Handle Mom and Dad's Bad Money Habits

Dear Dave,

Several months ago, my five-year-old son told me he wanted a Nintendo DS. He does little things around the house for me, and at his grandparents place, so I told him hed need to save his money and buy it. Well, he did! Hes got enough for the console, but not to pay the sales tax. Should I help him out?


Dear Nina,

Are you serious? Yes, you should pitch in and pay the sales tax! Its not like hes 15 or 20. This kid is just five years old, and hes a financial rock star. I think we can cut him a little slack on this one.

The older they get, the more hardcore you need to get as a parent when it comes to financial responsibility. But this child is already learning a great principle that will last him the rest of his life. If youre willing to sacrifice a little bit, you can accomplish anything.

Dont let this be a one-shot deal. He needs a new goal right now, so go out and find something hes as excited about as that Nintendo DS. Then, let him start working on that one.

Im telling you, if we could send some people to Washington who understand what your son already understands, this country would be in great shape!


Dear Dave,

Is it always a good idea to put the maximum amount of money you can afford into a down payment when buying your first home?


Dear David,

Absolutely! Even though most people cant pay cash up front for a home, you always want to make as big a down payment as possible on any home you buy. Making a down payment of at least 20 percent helps you avoid private mortgage insurance, plus the whole idea is to pay that sucker off and become debt-free as fast as possible. Also, avoid 30-year mortgage plans. Stick with a 15-year, fixed rate loan.

Now, when it comes to putting money toward your down payment, make sure you dont touch your emergency fund of three to six months of expenses or your retirement savings. Those things are off limits. But scrape together any other extra cash you can, pile it up, and apply it to your down payment. Youll be glad you did!


Dear Dave,

My mom and dad are terrible with money. Theyre getting older, so Id like to see them start saving something for retirement. How can I teach them your principles?


Dear Suzanne,

I hate to say it, but you probably cant. My grandmother used to say, Those convinced against their will are of the same opinion still. When you start trying to talk to your parents about money, you run into whats called powdered butt syndrome. Once someone has powdered your behind, they usually dont want your opinion on money or anything else.

Still, as parents get older, especially if you have a particular skill or expertise, they might ask your opinion from time to time. It may be hard for them to take you seriously, though, even if youre a world-renown expert. To them, youre always going to be their little girl.

Its great if they will listen to you, but youll probably have better luck getting them in front of someone knowledgeable in the field. Im talking about someone who isnt you, even if theyre not quite as smart as you!


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