Paying Bills: Even That Takes Practice

By Alec Lindenauer, Chief Allowance Officer

I’ll start with a confession. I’m one of those dads. The kind who is completely anti-smartphone for my daughters until the last possible minute. Basically until it meant my kids risk becoming social outcasts. My little one, now in seventh grade, still asks daily for her own phone. But, hey … as parents, we all have our “thing” that we cling on to. The iPhone is definitely mine.

So when my oldest came to her parents as an eighth grader with the looming threat of social isolation, I finally gave in. But, this was a wonderful time to add some Cents of Responsibility into the equation. After all, an iPhone is expensive, and comes with plenty of teaching opportunities. As always, we just need to keep our parent antennae up for when those opportunities present themselves. As far as a chance to teach, I centered on two key elements … the cost of the phone itself, and then the Apple Care warranty program. 

The first step was a visit to Apple.com to price the different options. The entry level iPhone was $18 per month for three years, and the costs rose from there. For the biggest phone with the most storage and best camera, it was closer to $48 each month. My wife and I explained we’d cover the $18 for a base model, but she’d have to budget for any extra cost each month from her allowance and interest earned. 

This immediately and effortlessly changed the conversation. It started with her saying, “I definitely want the bigger screen and upgraded camera.” But as soon as I laid out the parameters, and explained she’d be using her own money each month, she became pensive and analytical. There was no argument at all … just a new student on all things iPhone pricing. 

The next day, we went to the store so she could feel the form factor of each phone to match it with the different prices. After a few questions for the Apple Genius about storage and picture taking, she was set for the base model. “It’s fine,” she told me, “I’m okay to keep storing into the cloud. It’s not worth spending money each month for a few extra clicks. And the camera is great … I don’t think it’s worth spending an extra $10 each month just for a better picture.”

Boom. Done. Our whole negotiation came down to one parental decision delivered in one sentence, met with zero argument. We were covering the base $18, and she took it from there. Of course, it was the groundwork that did the work. Five-plus years of monthly strategic COR allowance days offered this perfect opportunity for her to practice disciplined budgeting and responsible spending. At my office, we call that practicing good financial hygiene.

Next came the monthly $10 Apple Care warranty program. Opportunity #2.

Again, I had already begun this part of the conversation the day before. First, I explained the ramifications of a lost or broken phone. Any replacement cost would be entirely her responsibility. We’re covering $18 per month, but if she had to come up with that a second time … she was on her own. Then I explained ins and outs of the Apple Care program as I understood it. But once at the store, she had a ton of questions … “What kind of events are covered? How many incidents are covered? How long does the coverage last?” And many more. 

I was thrilled. And impressed. My budding educated consumer was on full display. And so was my budding budgeter. After all, the impetus for her research was the $10 it would cost each and every month. With her monthly COR Allowance Day yielding around $80 at the time, this would make a considerable dent. She was measuring Need vs. Want in real time. 

In the end, she went for the Apple Care, and made a sound decision. She told me at the time, “I want to pay the $10 each month because even if I lose it once in the three-year period, I’ll have made the right money choice. And this way I won’t have to be quite as worried all the time. I don’t think I’ll lose the phone, but accidents can happen.”

Again, I was proud. She was practicing good financial hygiene, and took the time to really analyze her income and expense needs. But for me, as her CFP (Chief Financial Parent), this was the gift that would keep giving every month.

Now, every month since she has had her phone, she has been budgeting herself to a different degree. With this being her first fixed expense, she is now practicing the habit of paying her monthly bill on time. After all, when she heads out to the adult financial world, I don’t want that to be the first time she gets to practice that good habit. The more practiced she is, the more she’ll be ready for real bills.

As I said in my opening confession, my kids were pretty late to the smartphone game. But even if yours are already on their second or third phone, it’s not too late to change the game here. There’s always time to change course. Feel free to use my example above, or create your own. Either way, tell us about it!

Teach centsibly,

Alec