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Steve and Annette Economides are hailed as "America's Cheapest Family." With their amazing tools for saving money and personal story of living debt free, they are showing families everywhere how to live the American dream without debt. They have five children.

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the MoneySmart family system

Thomas Nelson

Contents

CHAPTER 1 The 5/50/500 Rule.....................................................................1CHAPTER 2 How We Raised Five MoneySmart Kids....................................................12CHAPTER 3 Morning: First Things First...........................................................27CHAPTER 4 School: More Than Book Smart..........................................................33CHAPTER 5 Chores: The Gateway to Productive Work................................................45CHAPTER 6 Round-Up: A Neat Way to End the Day...................................................59CHAPTER 7 Giving and Sharing: The Blessings of Generosity.......................................69CHAPTER 8 Saving: Banking on Their Future.......................................................79CHAPTER 9 Clothes Become a Money Tool...........................................................90CHAPTER 10 Spending: Living with Limits.........................................................100CHAPTER 11 Activities for Character, Strength, and Scholarships.................................113CHAPTER 12 Playing and Paying: Toys, Recreation, and Technology.................................128CHAPTER 13 Gifts and Gratefulness...............................................................152CHAPTER 14 Miscellaneous Expenses: Essentials, Electives, and Extravagances.....................159CHAPTER 15 To Work or Not to Work?..............................................................171CHAPTER 16 Transportation: Getting Around.......................................................186CHAPTER 17 Friends, Love, and Marriage..........................................................199CHAPTER 18 College and Trade Schools............................................................211CHAPTER 19 Bailouts: The $50,000 Boomerang......................................................231CHAPTER 20 MoneySmart Grandparents..............................................................244CHAPTER 21 The Complete MoneySmart Family.......................................................249Acknowledgments..................................................................................254Index............................................................................................255

Chapter One

No matter what age your children are, you will always have a financial connection with them. It starts before they are born and will continue after you die. That connection will be defined by how you view and handle money, and how you train your kids to view and handle money. The flow of cash from you to your children may be a trickle or it may be a torrent. The control of the spigot and the power of the flow should be determined by you, but in many cases, unfortunately, the child controls the tap.

This is a book for parents who have money—any amount of money, from a small amount to a small fortune.

This book is about how we, as parents, deal with our money and how we deal with our kids at every age and stage of life.

You will always be your child's parent. Sure, over time the relationship will change. The first change starts when the umbilical cord is cut. But one cord that will never be cut is the cord of money and possessions.

We really love our kids, and we know that most of you feel the same about your own children. The strategies and philosophies we espouse aren't anti-kid—they are pro-parent and pro-child. We want to equip parents (grandparents, aunts, uncles, and anyone who might regularly interact with children financially) with tools that will help them empower their children rather than enable them.

We are going to base what we write on a few assumptions:

1. All children and parents can learn.

2. All children and parents can learn to work.

3. All children and parents can learn to save.

4. All children and parents can learn to manage money.

5. All children and parents can learn to spend money responsibly.

What we have written is pro-parent, if you define successful parents as those who desire to raise their children to be independent, self-sufficient, and mature adults who can stand on their own two feet financially.

And what we have written is pro-child, if you define successful children as those who want to be independent and self-sufficient adults, able to stand on their own two feet and look back at their parents with a smile of gratitude for helping them to be autonomous.

Unfortunately, this rosy scene is becoming a rare occurrence as many parents are finding it more and more difficult to cut the cord of cash flow to their aging children. We're going to show you how we've carefully and progressively minimized the transfer of funds and how you can too!

Raising Kids Costs and Costs, and Costs Some More

If you've got kids, the experts say you're going to be spending money—and a lot of it. The "experts" at the USDA in their 2010 report "Expenditures on Children and Families" say that we should expect to spend about $261,000 to raise each child from birth through age seventeen ($14,500 per year). Do you think this is accurate? We don't! In 2009, according to the U.S. Census Bureau, the median annual household income fell to $49,777. Meaning that it could take more than five years and three months of your entire gross household income to get Junior through the formative years and ready for college. And if you have more than one child, the situation is even bleaker. Unless you have some sort of trust fund or rich uncle who has left an inheritance, the money you'll be spending on your kids today is probably the money you should be saving for tomorrow—for your retirement.

The Experts?

Throughout this book we'll refer to experts and their statistics. While we like to use these numbers as points of reference, we are very cautious about basing serious life decisions solely on their conclusions—particularly any survey telling us what it will cost us to raise a child for the first seventeen years of life. Here's why we're skeptical.

When we actually dissect their numbers, we have found that they are based on providing a prescribed number of square feet of living space per person, a certain number of cubic feet in a car, a certain amount of money spent at restaurants each month, and an average cost for clothing, food, and health care expenses. In short, the numbers might be accurate if you lived in a major city, paid retail for everything, never shopped sales or thrift stores, bought all designer clothes, and drove a late-model car.

Just calculate with us for a minute. If you're an average family with 1.8 children (according to USDA figures, this alone should cost you $26,100 per year), living in an average city, spending an average amount on food ($200 per month per person × 12 months = $9,120 per year) with an average yearly household income ($50,000 per year—about $40,000 after taxes), you'd be left with $4,700 a year ($392 per month) to spend on cars, clothes, housing, debt, recreation, gifts, utilities, health care, cell phones, cable TV, medical bills, dental bills, and chewing gum. Something simply doesn't add up!

Do you think that the experts are right on the money when it comes to the cost of raising your children?

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