By DAVE RAMSEY
Q: We have two kids, ages 8 and 11. When they get some money we have them take out 10 percent for tithes or giving and 10 percent for saving. It’s difficult with the younger one sometimes because all he wants to do is spend money. And really, what’s the point if he gets $10 of putting away just a dollar? How do you convince a child this age that it’s good to save?
A: First, I think you’ve got a nice plan in place working with them on saving and giving. With a kid who’s 8, you start out by explaining it the best you can on his level. Then, if he still doesn’t want to do it, you make him do it anyway. Sometimes as a parent you have to pull rank when it comes to doing what’s best for the kid.
Now, here’s the point of saving, even if it’s only a dollar: You want to make sure you teach them a pattern of habits that will help them win in life. When your kids have homework you make them sit down and do it. Then you help them when they need help, right? The point is you want them to learn good study habits, so that when they get into high school and beyond they can succeed. That one dollar won’t make him rich right now, but getting into the habit of saving – because his mean, old dad made him do it when he was a kid – will make him wealthy one day.
You might try setting goals for him, too. Lots of younger kids have trouble with the concept of saving. But if you set some goals and let him save up a little bit of money and pay for something himself, it will be a real lesson for him. It will show him that delaying pleasure really pays off.
Make sure you start out small with a few easily attainable goals. Then you’ll be paving the way for bigger things, like saving for a car and maybe even college.
Q: I’m a new landlord, and I have a question. In the event of a lawsuit, what is the best way to protect my personal assets?
A: I’d go with a liability umbrella policy of about $2 million. This picks up where your liability leaves off on your car, homeowner’s and rental property fire and extended coverage policies. It’s not very expensive, either.
If you start to build a substantial portfolio of investment real estate, such as houses, you might want to begin putting every four or five properties you buy into a separate corporate entity. I’d advise an LLC, which is a kind of cross between a sole-proprietorship and a corporation. Plus, it has some of the best characteristics of both business types.
Each LLC is a separate company with its own checking account. If you do all the paperwork properly, and an LLC entity owns a property where someone falls and sues you, then they can only sue for the assets of that company.