The Silver Lining On A Broken Mirror

By Alec Lindenauer, Chief Allowance Officer

Unexpected events happen all the time that impact us financially.

Case in point … One Sunday morning back in 2014, I walked into my kitchen and was rudely greeted by a swarm of termites. Inconvenient as it was, we had to move out and tent the house. More than a thousand dollars later, my house looked exactly the same as it did before, it's just that there were no more termites hiding. Other than a bug-free kitchen, I had nothing to show for my money.

And sometimes, when something unexpected happens to my children, I can take a financial hit as well. It's part of having kids. From doctor bills to growth spurts, kids are expensive.

My children's actions that have financial consequences should impact them as well, rather than just me. And, because we've been so diligent about our COR Allowance Days for so many years now, that's exactly what happens when those events come up.

Part of teaching kids personal finance is helping them plan for when the unexpected happens.

Fast forward eight years from "Termite Day," when my girls kids were 14 and 11, I was in my termite-free kitchen on a Saturday evening, when I heard fighting from the other side of the house. Whatever the kids were arguing about escalated quickly, and there were three piercing sounds in this order: scream, slam, crash, all followed by a terrifying scream. As I burst into the room, I found the mirror on the back of my 11-year-old's door had shattered into a million pieces. I found her shaking with fear, and my 14-year-old in shock, but thankfully both were in one piece. Nobody was hurt … obviously that was the most important thing.

This story could go in a lot of parenting directions, but since Cents of Responsibility is about parenting children into money savvy adults, I'm just going to touch on the financial aspects of what could have been a complete medical disaster.

After much consideration, my wife and I handed down several consequences as a result of their actions. From a financial perspective, we made it clear they were paying for the mirror to be replaced … an equal share for each of them.

For this particular consequence, there wasn't one bit of arguing from either of them. And, those of you who have female teens or tweens can appreciate how rare that is! They were completely accepting of their financial consequences. In fact, it made sense to them.

Almost immediately, they went to financial management mode … wondering how much it would be, when they'd have to pay it, what would happen if they didn't have enough money in their spend bucket. Basically, they were looking for all the answers we parents would be looking for when hit with an unexpected large expense.

As I often remind parents, it's not enough to teach our children financial concepts. It's just as important to have them practice good financial hygiene. A sliver lining of this whole fiasco was their opportunity to practice those good habits. 

If we weren't on the COR path, it would not have been a consequence. If they weren't managing their own money, it wouldn't have been an option for me to say, "use your own money." There would not have been an opportunity for them to practice managing this unexpected expense.

Had they not been traveling on the money savvy path, I would have most likely moved past it from a financial perspective. Without having financial mechanism for them to realize the financial consequences in the same way, I would have just shelled out the $150 myself.

I could have come up with something in an ad hoc way, like withholding birthday money, or not buying them new sneakers, but nothing would have been as impactful for them as having to strategize and practice something they'll have to deal with later in life on a somewhat regular basis.

Rules for their Spend, Save, Invest and Donate buckets are normally pretty stringent. For example, they can't take from Donate or Invest to buy something for themselves. And Save funds are for a defined goal. But, just like in my adult world, emergencies happen.

Termites, hurricanes, floods, and busted pipes are all part of life. Apparently broken mirrors are too. So in this case, I helped them strategize to use money from sources they wouldn't ordinarily use. On a regular basis, it's important to keep their rules nice and rigid. But when this stuff happens, their planning can be a teaching and practice moment, and a silver financial lining.

Teach centsibly,
Alec