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  • Vincent Lam

My Daughter Wants a Dog!!

So I talked to her about money.

When my daughter keeps asking for a dog, the financial planner inside of me sees this as the perfect opportunity to get her some serious training about money management.

Family budgeting can be a very foreign concept to any 12-year-old kid. Why would they want to know when all they need and want are well taken care of without them having to worry? Try ask a kid how much they think your family spend on groceries each month. When I asked my daughter, her answer: “$200?” … LOL! That’s a big number to her as she is getting only $25 a month for her allowance. So when I told her how much we spend on groceries, her jaws just dropped!

That piqued her interest in knowing more about how much we pay for other areas and how much I earn. The income side is easy (unless you are retired and receiving income from various sources), but as we all know the expense side can be overwhelming. So instead of a list of itemized expense, I introduced to her the concept of “Live, Give, Owe, Grow”. It’s not just catchy, but also easy to visualize in her mind. When she asked, “to whom do we owe money?”, we talked about tax and debt; when she asked, “why and how do you grow your money?”, we talked about retirement and education funding. Suddenly, to her money is not just a number, but has meaning attached to it. Also, when we visualize it as pie with each category as a wedge in it, it becomes a powerful tool to help us focus on our goals. If we “owe” less or “live” on less, there will be more money for “give” and “grow”; when we have saved enough and reach our finish line, we can re-direct more money towards giving. It’s a simple concept that my daughter has no difficulties to understand.

As my daughter and I went through our family budget, she got to understand what are essential and what are nice to have. She had offered a few ideas where we might spend less in order to make her dog a reality. As she has a goal, budgeting has become a liberating exercise for her instead of something that she dreads.

I am still not sure if I should get a dog at the end. I just cannot imagine picking-up after the dog. But no matter what, I believe we already gained a lot from this process. And hopefully it will do her good for a lifetime.

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