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Golden Girl Finance
Say what you will about the so-called redneck lifestyle of the Shannon-Thompson family on TLC’s reality show, Here Comes Honey Boo Boo, you can’t help but kind of admire the way the family gets by. Mama June Shannon professes to feed her family of seven on $80 a week, thanks to a combination of coupon clipping, Bingo playing, child support cheques from her exes and er, roadkill.
Despite TLC’s apparent motive to shock and appall viewers with an inside look at this overweight, junk food eating, ‘low class’ family from rural Georgia, Mrs. Shannon repeatedly proves that her family is not as dysfunctional as you might initially believe. In fact, not only are the family members loving and supportive of one another, they all seem quite comfortable and happy with their current lifestyle and the parents are proving to be downright fiscally responsible when it comes to planning for their daughters’ futures.
The family is raking in anywhere from $15,000 to $50,000 per episode (reports vary). Yet their only major purchase so far has been a 2005 Ford Expedition. More importantly, Mrs. Shannon has made arrangements with TLC that the bulk of the earnings from the show are paid directly into five separate trust funds, one for each daughter. She doesn’t even see the money, apart from an email once a month confirming that the deposits have been made. The girls have no access to the funds until they turn 21. Meanwhile, Papa Thompson, aka Sugar Bear, continues his job as a contractor in order to pay the household bills.
According to TMZ, Mrs. Shannon said, “I want my kids to look back and say, ‘Mama played it smart. Not like those other reality TV people.’
Honey Boo Boo and her sisters are fortunate to have a mother with solid values and her eye on their futures. So how can you play it smart when it comes to saving for your kids?
Saving for School (RESP)
The first step, of course, is making sure your kids get a solid education. In Canada, you can contribute a lifetime maximum of $50,000 per child within a Registered Education Savings Plan (RESP). The money is tax-sheltered, so you can invest it in stocks, bonds or mutual funds, and any dividends or interest earned within the RESP account will not be taxable as long as it’s held inside the RESP.
If, however, your little darling becomes a star in Hollywood and never quite makes it to university, you can transfer the money you’ve contributed over to an RESP for one of your other kids, or into your own Registered Retirement Savings Plan (RRSP).
Free Money (CESG)
The Canada Education Savings Grant (CESG) will match your RESP contribution dollars by 20% to an annual maximum of $500 per year and a lifetime maximum of $7,200 per child. Some provinces also offer matching grants—so do not pass up the chance for free money! We can assure you, Honey Boo Boo’s mama would not miss this opportunity.
In order to get the matching money, you need to make annual contributions, rather than one lump sum. However the contributions can come from anyone, not just you. Grandparents, godparents or aunts and uncles might like to contribute too. So if you see too many toys stacking up, consider asking for RESP contribution money for Junior’s birthday instead of the latest Wii game.
The TFSA Habit
Once your child turns 18, you can help her open a Tax-Free Savings Account (TFSA) of her very own. This is an excellent vehicle for teaching young adults how to save, how to invest and how to build wealth for their future. Some parents offer to match their kids’ savings as an extra incentive.
Currently, the government allows each person to invest a maximum of $5,500 per year into a TFSA. Within the account, you may save or invest the funds however you wish and the money will grow, tax-free. It can also be withdrawn without penalty, making this the perfect way for your child to save up for a down payment, the purchase of a car, money to travel or any other short- to medium-term goals.
Teaching your child to save up for what they want and need in life, rather than paying for everything with credit, could be one of the most valuable lessons you give them.
Never Gonna Live Above My Means
In celebrity world, it is not unusual for parents and guardians of child stars to go a little cray-cray and end up in legal battles with their own kids over money—think Macaulay Culkin, Gary Coleman, Shirley Temple, Tiffany, LeAnn Rimes and Lindsay Lohan, just to name a few. The long list proves that June Shannon is an anomaly among Hollywood families.
As Mrs. Shannon told TMZ, ‘You’re never gonna see me drive a Range Rover or a Mercedes. I’ll drive one if someone else pays for it. Never gonna live above my means.’ We can all learn a lesson from that attitude. Respect Mrs. Shannon, respect!
When we look at our kids, we don’t typically think of them as mini business moguls. But maybe we should. After all, children are naturally smart about money; it doesn’t take them long to figure out that the world is full of things they want and that many of those things include a price tag. Where parents often struggle is in balancing providing for their children with teaching them how to provide for themselves. Rather than just giving them the money to buy whatever their little hearts’ desire, some parents might be surprised to learn that the answer may be teaching them how to earn it—and starting young.
At least that’s what Gail Haynes, author of The Lemonade Stand Millionaire: A Parent’s Guide to Encouraging the Entrepreneurial Spirit in Your Kids, believes. In fact, she suggests that teaching and encouraging entrepreneurship in kids right from the get-go is part of a sound financial education.
Don’t worry—we’re not talking about a hard-driving campaign to make your toddler the next Mark Zuckerberg. Instead, it’s about helping kids build the confidence to do anything, no matter where their interests lead them into adulthood; and, ensuring they have the money skills to keep them from landing where so many adults have fallen before: broke, in debt and out of options.
Why should you nurture little entrepreneurs? Here are a few key reasons why it’s fundamental to any child’s financial education:
1. Creativity
You’d be hard pressed to accuse any kid of a lack of creativity. Just try asking a group of kindergarteners for business ideas. Chances are you’ll get some silly ideas, some surprisingly good ones, and of course, some totally outlandish suggestions. But no matter what that group of kids comes up with, you can bet that they will be so totally into their ideas, they will barely be able to contain themselves. Now, think if you asked adults the same question. Not exactly the same kind of enthusiasm.
‘With entrepreneurship, it really is about nurturing creativity,’ Haynes said. ‘When your kids come to you with business ideas, even if they sound totally impossible, talking to them about what they love about that idea and encouraging them is important. Thankfully for all the things in our world today, at least somebody at one point believed they were possible.’
With all the things you have to painstakingly teach kids to do, creativity is one key life skill you can sit back and allow to unfold. According to Haynes, encourage those creative ideas and help kids develop the confidence to turn them into something more.
2. Ambition
Haynes’ financial philosophy sprung from her own experience when she suddenly became a single parent, leaving her and her kids in a very tough financial spot.
‘I realized that even though I had my own business and worked hard, I didn’t do smart things with my money. I didn’t want my kids to find themselves in the same financial position. We were literally heating our house with a wood stove and living by candlelight. It was not a fun time. So I started to teach them about what they could do,’ Haynes said.
What she found is that the more she taught her kids about how they could earn money and spend it wisely, the more they looked for ways to do it. In other words, understanding how money works may help kids develop the sense of ambition it takes to earn, save and invest it in the future.
‘They started thinking about what they could do to earn money. That turned to lemonade stands and then when they were ages 7 and 9, they started their own business selling rabbits.’ (A business that is still thriving—and debt free—more than seven years later.)
3. Money Management
So how exactly does Haynes encourage the business drive in her kids? To start, she treats them a lot like adults. They do chores, they negotiate jobs around the house, and if they complete all the work they’ve agreed to do, they get ‘a paycheque.’
‘I call it a paycheque, not an allowance,’ Haynes said.
That, in itself, according to Haynes, encourages kids to look for ways to earn money, rather than just asking for it. As an extension, Haynes believes that some kids will follow this with a natural desire to be entrepreneurial, such as through a lemonade stand or mowing the neighbour’s lawn.
For more reasons why you should nurture the entrepreneur in your kid, click here.
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