Emergency? For kids? Nah.
Most people don’t learn about emergency funds until they’re off on their own. And usually it’s after they’ve already dug themselves into a big financial hole. That’s why an emergency fund is the very first step in Dave Ramsey’s famous 7 baby steps to help people dig out of financial distress.
But what if we taught people about emergency funds much, much earlier? Why not take that first financial baby step as a kid?
Kids and teens certainly have plenty of little emergencies to cut their teeth on. Like:
- That third lost sweatshirt.
- The new shoes left on the soccer field, never to be seen again.
- The hockey puck through the garage door window. Six times.
- The gaping holes in the fence from constant lacrosse ball shelling. See evidence in picture above.
- The glass pane in the side door cracked by a hurled cell phone. The culmination of a hormonal teen tantrum, the dramatic origins of which have been long forgotten...
- The massive data plan overage charge.
- The gold license plate replacement for the snooty Jaguar owner on the receiving end of a fender bump in the Starbucks parking lot.
Some or all of these may or may not have been actual emergency moments from my five kids’ earlier years. I’m not naming names...
Unless my family is completely abnormal, you’ll also have plenty of opportunities to deploy some emergency funds long before your child’s passage to adulthood.
So here’s a simple 4 step plan for making your kids emergency fund savvy:
- Set up a separate emergency fund for your kid. Add an extra jar, account, or prepaid card to your standard set of buckets.
- Divert a slice of allowance, chore, or odd job income to fill the fund. Temporarily amend your kid’s spend-save-give allocations to factor in the new emergency bucket. Revert to the original allocation once the emergency fund hits the target — maybe $25 for a youngster, $100 for a pre-teen, and $500 for a teen.
- Share some skin on the next emergency. Some emergencies may extend well beyond your kid’s means. Sharing the costs on a case-by-case basis is fine. As long as there’s some shared skin in the game, the lesson will be learned.
- Replenish the fund. Return to step 2. Rinse and repeat as childhood’s little emergencies arise.
Don’t wait to make your kids take those first emergency fund baby steps. Baby steps now might mean no crawling out of debt later.
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