Skip to content

Trying to teach my daughter about money

September 1, 2012

I hope she’s a princess with dress up, but not with her money.

I had two proud father moments this past week. The first was Saturday night when my almost 5-year-old daughter Quincy wouldn’t let me into her room to help her clean so she could clean it all by herself. The second was Sunday morning when she was so proud to give her first dollar to the collection plate in church.

My wife Kerri and I began giving Q an allowance this past week. I had read a variety of plans by experts with a wide variety of ideas. Basically, when it comes to an allowance, people generally fall into two camps.

The first camp is the “you need to work to earn it” camp. With this group, all allowances are based on children completing family chores. Some even call it a commission as opposed to an allowance.

It is pretty easy to see the merit in this. By rewarding kids with money for completing their chores, they can see the value of hard work.

The second group believes an allowance isn’t for a lesson in work, but in handling money. This group will give children the same allowance very week, but then make sure there are some basic expenses children have to cover with their allowance.

The idea is the allowance is focused on using money, not on earning money. Also, the belief is that there are certain things everyone has to do around the house because they are part of the family, not because they will get paid for doing it. This group believes that you can actually destroy someone’s motivation to do something by giving them money for it, and there are some research studies shown in the book “Drive” by Daniel Pink, which backs up this notion.

Given these two logical arguments, we decided to adopt a hybrid allowance for Q. She will get $1 a week for being a part of the family. For every night she completes her cleaning chores, she will get $0.50 toward her allowance. So, every week she can earn as much as $4.

How did I pick $4? One piece of information I read consistently is people have had good luck making the allowance the same as the child’s age.

What does Q get to do with the money? Every week, she needs to save some, spend some, and give some. When she earns $4, she needs to save $1 for a long-term purchase, give $1, and she can spend $2 to spend on her own. Even though a forced giving and savings make take a little away from the idea behind it, I think it is important to build these habits early.

Can Q buy whatever she wants with her money? No. Her purchases do need to be approved to ensure they are appropriate for her. We still are her parents. That being said, we will let her spend money on what we may consider to be a bad purchase. I hope she makes a mistake in buying the wrong thing for a couple of dollars while she is still young instead of for thousands of dollars when she is a little older.

Why did we start now? Up until now, I don’t think Q thought about money a lot. With her birthday coming up in a couple of months, she already is starting to look at items she wants, but when we tell her she can’t have everything she wants as a gift, it kind of opened up the lessons I think will be valuable to her in terms of being responsible, earning money, giving money and saving money.

If you have any other questions, please post them on my blog at I do feel we have had some early successes. Q has done a better job of cleaning the rooms she is responsible for, and she had great pride Saturday night. When it came to giving her first dollar away to the church, she was actually excited to do it and to tell pastor she did it after church.

I know we’ll have some difficulties along the way, so I’ll continue to update you as they progress. If you have good tips for allowances, please post them on my blog.


Plan ahead so you have money to enjoy fair and other special events

August 15, 2012

Thanks for coming to Sterling, Dierks!

I imagine some of you came home from the Logan County Fair one of the nights and looked into your wallet and said, “What was I thinking?”

The county fair is a great time, but the expenses can quickly add up:

$50 for an unlimited ride wristband

$6-10 a meal or some type of meat on a stick

$50 or more for concert, rodeo, demolition derby tickets

$10 or more for carnival games

Thousands of dollars for therapy after not being able to figure out why you couldn’t drop three discs and cover the whole circle while the carny made it look so easy.

Spending can get out of control at the county fair, a night on the town, a vacation, or a special event. If you’re not careful, you can quickly break the bank.

When you are dealing with debt and a tight budget, if you splurge too much and end up with credit card debt, you can add 15% or more to the bill you paid. This can turn a fun week at the county fair turn into a nightmare.

It is easy to save money and have a great time at the fair. For example, you could make sure you eat all your meals at home before going, or you could pack a lunch. You could make up your own homemade games and rides to try and entertain the family as opposed to spending at least $3 a pop there. You can even stand outside the gate and listen to most of the Saturday night concert for free.

These all are options, but they also can take away some of the fun of the fair. To make the fair or other special event really special, make sure you save up the money to really enjoy it, and not regret your purchases later.

The fair probably will be back next year.  Christmas once again will be Dec. 25. You probably will have the urge to take a vacation next summer. These things generally are constants.

The problem is, it is tough to budget for events that only happen once or twice a year. Most of you probably have a pretty good idea on what your monthly fixed expenses are with rent, utilities, food, transportation, et cetera. The problem is, this is what many people fit their budget around, and what is left is throw-away money.

Rather than wasting your extra money every month, save it for these special events. Write down what you want to do in the coming year and estimate what each will cost. Then, add 10% to 20%. After this, you know about how much you’ll need to save.

For some events, if you can save $10 to $20 a month during the year, you’ll be in great shape. The problem is, if you don’t save up and are spending money you don’t have, it multiplies the amount you’ll have to pay back for the same entertainment.

It doesn’t seem like it is that hard, but it does require taking the time to think ahead and delay gratification. This is getting more difficult to do as we live in a society where we can get almost whatever we want when we want it, but it is the key to long-term success.

With a little planning ahead, you can order that $6 BBQ pork brisket from Jimmy L’s (which was delicious, by the way), buy the $28 Dierks Bentley tickets, and even stick around for one more round in the beer garden. Later, as you walk the empty fairgrounds, you’ll be happily thinking “every mile is a memory” as opposed to feeling broke and having a “long trip alone.”

Go for the gold with your personal finances

August 7, 2012

It wasn’t pretty when he ran, but it was good. Emil, here’s to you!

The Olympics is here once again and has captivated the world. From Sterling to Stockholm to Sydney, people sit at their televisions to watch the greatest athletes from around the world come together to compete.

We are enthralled by the drama. We love to see people push their bodies to the limit. We watch in awe as athletes perform amazing physical feats. Hopefully, we learn something from this excellence on display.

One of the greatest Olympic performances of all time was by Emil Zatopek. After Zatopek won the 5,000- and 10,000-meter races, he entered the the marathon for the first time in his life. His strategy was to stay with British world record holder Jim Peters.

At the quarter point, Zatopek asked Peters if the pace was fast enough. Peters knew the pace was fast, but he wanted to try and throw Zatopek, so Peters replied, “No” to get Zatopek to speed up and exhaust himself. But only half of Peters’ plan worked: Zatopek sped up, but Peters was the one who was exhausted and didn’t finish.

Zatopek became the only person to win gold medals in the 5,000- and 10,000-meters, and marathon races in the same Olympics during an eight-day span.

With a performance like this, it would be natural to think Zatopek was groomed from early on to be a star in long-distance running. But this wasn’t the case. He was born in Czechoslovakia in 1922 as the sixth child in a very modest family. At age 15, he started working in the Bata Shoe Company.

He didn’t realize he had a talent for running until 1940 when the shoe company sponsored a 1,500-meter race and Zatopek was ordered to run. Without a day of training in his life, Emil won second place out of 100 runners.

Zatopek didn’t rest on his talent, but used extensive training to turn him into a top worldwide athlete. His workouts were world famous. He would run 40 to 60, 400-meter runs every day.

For those who aren’t familiar, 400 meters is once around the track. When you add in some smaller distances in between, he ran 27 to 36 kilometers, or 16 to 22 miles, a day.

Zatopek even ran when it snowed, sometimes in Army boots. He probably wasn’t the most talented distance runner, but her took the talent he had and made the most of it. A lot of disciplined practice over time turned into world-class performance.

So, what does this have to do with personal finance? I think there are a couple of lessons we can learn from Zatopek:

  1. A little bit during a long time really can add up. Zatopek trained daily and demanded the most from his training. By starting to save and invest early and consistently doing it over the years, you eventually will have a nice retirement account. Start early, and stay disciplined.
  2. Make the most of your talent. By finishing second in a race he hadn’t run before, Zatopek knew he had some talent. He didn’t rest on his laurels; he worked every day to turn his local talent into a world-class talent. The most powerful wealth-building tool you have is your income. If you are good at something that makes you money, don’t be satisfied; work daily to take that talent and make the most out of it to increase your wages.
  3. Learn from the best. Even though Zatopek had never run the marathon, he followed the world record holder. When investing, learn from experience. See what the people who have consistently earned a good rate of return over decades have done, and emulate them.

Emil Zatopek had one of the best Olympic performances for all time. He used discipline, preparation and a recognition of a talent to get him there.

You may not be a future Olympian, but you can win the gold medal in personal finance by learning from him and putting yourself in a position where someday you can retire a winner.

Churchill is right – we make a life by what we give

August 1, 2012

Thank you Michael and Amy and northeastern Colorado for a magical night!

Sir Winston Churchill once said, “We make a living by what we get, we make a life by what we give.” I have been blown away by the charity shown by northeastern Colorado for my brother-in-law and his family.

In the past couple of months, Matt had surgery to remove testicular cancer, underwent chemotherapy treatments, and his wife Jaime gave birth to a 3-pound, 11-ounce baby, who was in the NICU for 10 days because he was so small. During all of this, he and his wife had to take a lot of unpaid time off leave, along with enormous medical bills.

My wife Kerri really wanted to do something for him to help with their financial situation. Luckily, she had connections to a duo of amazing dueling piano entertainers, Michael and Amy. Even though the connection wasn’t that close, Michael and Amy, a husband-and-wife act, were more than happy to help out when Kerri told them about the situation.

Once we had the entertainment lined up, we thought it would be great if 100 or so people showed up and we could raise $1,000 to $1,500. Kerri went to work setting a date and a venue.

Through constant promotion on Facebook, along with help from local media sponsors “South Platte Sentinel” and 105.7 KPMX, the word of the benefit event travelled throughout the northeastern part of the state. To defray the expense of the cost to bring Michael and Amy out, Kerri reached out to local businesses with a sponsorship package.

I don’t think either of knew quite what to expect, but neither of us thought it would be as an amazing success as it was. We had 26 businesses agree to help sponsor the event, even though many of them couldn’t even take advantage of using the tickets to attend. We also had some family sponsorships, including one family who wished to remain anonymous.

In addition, we have raised $1,200 as of July 30 with online donations at and lots of businesses and individuals gave more the night of the event.

Altogether, we sold around 350 tickets and lots of donations from folks who couldn’t attend. Michael and Amy gave an amazing performance at the Sterling Ramada  Inn courtyard and most everyone who attended were thrilled to see great entertainment in Sterling and have the money go to a young family in need.

Lots of people paid more than the $15 ticket price, and numerous individuals stepped up to help sell tickets, promote the show, set up and tear down the lighting, sound equipment and pianos before and after the event, and take tickets and seat people at the event.

The Santas of Sterling Miracle Letter Program gave a gift the night of the show that brought tears to my eyes, and Thrivant Financial for Lutherans also has pledged to give.

The one thing Kerri and I feel bad about is we’re afraid we cannot express our gratitude enough to everyone who contributed with their time, talents or treasures.

When I hear national news, it is easy to get depressed about the state of the world. We’re a couple of weeks out of a horrific theater shooting in Aurora, but we’re just a couple of days out from an incredible event that shows just how great humanity can be. We are so thankful to live where we do and to be blessed with amazing family, friends and citizens in this community.

The experience to see Kerri help her brother and to see the community help our family was priceless. And I have seen how much joy people can receive by giving. The love I felt from all those who were there in person and spirit was awesome.

It is not hard to look around and see the evil that results from the love of money, and to find stories about how greed has destroyed amazing people.

But, money itself isn’t a bad thing. A gift of money can be extremely helpful when people fall on hard times. It is hard for broke people to help others out. It is great there are so many in this area who have been successful and are willing to pay it forward.

Thank you, Sterling and northeastern Colorado! You have provided a lifeline to my Matt, Jaime and Rece Renquist, and you have given Kerri and I a high from the experience that it will take a while to come down from.

Because of your generosity, our dream of $1,000 and a few family and friends expanded to a major night of entertainment and about $10,000 raised. You have shown Kerri and I how you make a life, and I hope I can pay the favor back to many of you in the future.

One marshmallow now, or two later — you decide

July 29, 2012

It would be tough to resist this at 35, how could I do it at age 5?

Walter Mischel, Stanford University professor, conducted a famous experiment in 1972 with marshmallows. He took children ages 4 to 6 and made them a deal. They could have one marshmallow now, or wait 15 minutes and have a second marshmallow.

This study has become one of the best behavioral studies on delayed gratification. In followup studies, the individuals who were able to hold off for the 15 minutes were measured to be more competent and scored higher on the SAT.

Being able to delay gratification is one of the major characteristics that shows maturity, especially in relation to how people handle their money. Many individuals get older, but don’t develop more maturity in this regard.

We have become a society of instant gratification. With the technology we possess, we can buy almost anything online and have it the next day. With our smart phones, we can access anyone or any information in a matter of seconds. With credit, we can buy what we want now and pay for it later.

We have become a society of entitlement as well, especially the younger generation. It is easy to tell ourselves it is O.K. to buy that extra treat because we deserve it.

People see what everyone else on TV has and buy it because, ‘everyone else has it.’ Many believe needs aren’t just food and shelter, but also includes the latest smart phone or TIVO capabilities on our TVs.

How has this turned out for us? Not very well. Let’s look at the statistics:

  • One in every 10 Americans with a mortgage reports being late or missing a mortgage payment during the past year.
  • 7% of adults are either getting calls from collectors or seriously considering filing for bankruptcy.
  • Only 59% of the young adults in Generation Y (ages18-29) pay their bills on time every month.
  • More than a third of adults say they do not have any non-retirement savings. And though a majority are currently saving for their retirement, more than a quarter are not.
  • 31% of college students polled do not worry about debt, believing that they can pay it back once they are out of school and earning a regular paycheck.
  • More than 25% of college students think it is reasonable to run up a debt to splurge on a special celebration with friends at a restaurant or to use a credit card as a way to raise cash.
  • An average of 23% of college students choose to ignore overdraft penalties and the prospect of months or years of paying off a debt incurred for a moment of fun.

We are failing an entire generation by not teaching our children to delay gratification. What do I think is the best way to teach our kids? It is simple: lead by example.

When there is something you want, but don’t have the money for, don’t pull out your plastic; hold off on the purchase. While doing this, explain to your children that it is something you really want, but you are going to save and budget for it. We learn more from what we see than what we read or hear. If you set a good precedent, it will be easier to teach these good habits to your children.

Every day we face our own marshmallows. We make a choice to eat one now or wait to have two later. Whether it is something you are saving for or retirement, by waiting you will be able to enjoy more down the road.

We have done poorly in this aspect as a society, but for you, all it takes is one good decision followed by another. When you have that next temptation, think about delayed gratification and hold off to provide for a better future for you and your family for generations to come.

Don’t cash out that 401k

July 9, 2012

You may think you hit your payday, but hold on a second.

You’ll get your payday — but it will take awhile 

“Advance to Go. Collect $200.” This is usually one of the best cards to get in the game of Monopoly. Just by landing on the right space, you get to collect a couple of C-notes.
I think it was cards like this that have taught us it is fun to come into money, even when it may not be the best thing. For example, we generally all love getting a big tax return. This is great, but that basically means we’ve been loaning the government money for free all year long.
I’m not going to beat you up for paying a little too much in taxes during the year and getting a return the next year. Honestly, this forced savings that gave you 0% interest isn’t much worse than what you could get at a bank with a savings account.
Getting a little larger tax refund may not be a bad thing, but the habits it creates can be hurtful for other life incidents. The one major mistake many people make when switching jobs is to take a refund payment for their tax deferred retirement plan (think 401(k)).
If you have worked for an organization for awhile that has a retirement plan to which you were contributing, you might be pleasantly surprised with what you had saved when you leave that employer. When you get the information, it may feel like that nice tax return or your very own Advance To Go card.
Don’t fall for it. Even though you may have the best intentions to pay off credit card debt, save for a down payment on a home or give yourself some well-earned rest and relaxation, it isn’t worth it.
If you take money out of a tax deferred retirement plan after you switch jobs, you pay a 10% penalty on the withdrawal if you aren’t 59 1/2 years old yet. Also, you must count the withdrawal as income. Most people will pay at least an additional 15%, and if the withdrawal is large enough, it even can bump you up to the 25% income tax bracket.
You do not want to give up a fourth to a third of your retirement savings to purchase something right now. Even if you pay off credit card debt with an average interest rate of 15%, it still will look like you are borrowing money at 25-35% to pay off 15% interest.
Instead, you can roll over your money into a traditional IRA. By completing a rollover, you avoid the 10% penalty and the income tax right now. It also gives your retirement savings a chance to continue to grow.
There are some exceptions, such as if you lose your job, you may need that retirement money right now to provide your family with basic needs.
However, if this isn’t the case and you chose to switch employers and get a new job, roll over that retirement savings. Find a low-cost or no-load mutual fund or target date retirement fund and let that money sit and grow over the years. It may be difficult right now, but it definitely can pay off down the road.
Even though it may feel like you missed out on your chance to advance to go and collect your $200, by keeping your retirement savings invested in retirement accounts, you can avoid penalties, current taxes and the loss of future growth. You may not have the money now, but you still have the chance to get second place in a beauty contest and collect your $10 today.

Winning second prize in a beauty contest is almost as good as buying Boardwalk.

Largest tax increase ever?

July 2, 2012

I’m still not sure if it is good for the country, but the Affordable Care Act (Obamacare) is not the largest tax increase in American history.  According to Joseph Thorndike, director of the Tax History Project at Tax Analysts, the 1993 Clinton tax increase and the 1982 Reagan tax increase were both larger.  We still need to find a way to make health care more affordable for the entire nation.  Does either party have a suggestion on how to do this or are they too busy fighting each other over what’s already on the books.