‘Being a child at home alone in the summer is a high-risk occupation. If you call your mother at work 13 times an hour, she can hurt you.’ – Erma Bombeck
I was sitting around at home one day last week, and suddenly I got a message from our 14-year-old daughter with a list of potential flights to Seattle for next summer.
Confused, I asked her what this was all about, and she announced: “We are going to Seattle next summer!”
Stunned, I said: “Umm, how was your day?”
She then told me how she and a friend have planned a trip to the US next summer for a concert. She said we can stay with family for free, and it will cut down the cost of the trip. If that doesn’t work, her friend has a grandparent in New Jersey who they will stay with.
Hopefully, I then was able to calmly explain that living in this country, we have no idea what tomorrow will bring, and we aren’t yet making plans for next August. Oh, and I also calmly mentioned that she’s not flying with a friend to the US at her age for a concert.
After my calm responses, I asked what really brought this all up, and she started talking about how all her friends are doing cool things this summer, and she also wanted to join in the fun. I mentioned that we have a family trip planned in a few weeks, but apparently that didn’t suffice.
I happen to be an aficionado of 1980s music. After she made the comment about also wanting to have some fun, I was reminded of the lyrics in the Bananarama classic “Cruel Summer”:
“The city is crowded my friends are away and I’m on my own
It’s too hot to handle so I got to get up and go
It’s a cruel, (cruel), cruel summer
Leaving me here on my own…”
Funds for summer plans
Also, earlier in the week, my dear wife kindly requested I transfer money for a summer camp, swimming lessons, and the aforementioned family vacation.
I checked my weather app, and lo and behold, the whole forecast was sunny and hot. That means it’s summer in Israel, and we won’t see any rain for the next three to four months. These drought-like weather conditions are eerily similar to the family's financial forecast over the next few months.
What’s a summer financial drought? It’s getting sucked dry of your money. It tends to happen in the summer, when the expense of vacations, summer camps, books, and clothes for the upcoming school year, spending money for kids to go to movies and meet up with friends, all hit your wallet at once, depleting your bank account.
A couple of years ago, I wrote: “A few weeks ago, as I was driving some of my kids to school, I was listening to a morning talk show. The segment was about increasing government subsidies for summer day camps. As if the topic of government subsidies doesn’t raise my blood pressure enough, they had a guest who was complaining about how expensive summer is for her. Aside from sending three kids to camp during July, she was saying she has to pay for additional camps and a family vacation to Europe in August.
That’s when I lost it. I started talking out loud about her complaining about how much it costs to go to Europe for a family vacation. My five-year-old asked, “Abba, who are you talking to?”
Golden rule of personal finance
Yes, summer is expensive, and I understand that parents get stuck and need to have a plan for their kids, and that costs money. What I don’t get is the need for parents to lose all sense of financial responsibility to finance summer vacation. In fact, if the kids see that the parents aren’t disciplined financially, there is a great chance that they will grow up lacking that same discipline.
Whatever happened to the golden rule of personal finance: If you can’t afford it, don’t buy it? If you can’t afford a trip to Europe, don’t go. As Amazon founder Jeff Bezos said, “The one thing that offends me the most is when I walk by a bank and see ads trying to convince people to take out second mortgages on their home so they can go on vacation. That’s approaching evil.”
And that’s from someone who only recently spent $50 million on his wedding. With all his wealth, I’m sure he didn’t have to take a second mortgage to pay for it. It’s less than 1% of his net worth.
Saving well in advance for the summer
Parents need to be smart. Start planning and saving well in advance of the summer so that the sudden expenses don’t send you scrambling to try and find the money to pay for them. In addition, there are plenty of ways to keep children occupied that won’t break the bank.
Use the summer to be a good example for your children and spend only what you both budgeted for and can truly afford.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is the author of Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing.