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Dear Dave,

I’m a single dad with two teenagers at home. My 15-year-old son wants to open a checking account of his own, but he doesn’t want me or anyone else to have access to it. Should I just let him do this and suffer the consequences I know are coming?

Tim


Dear Tim,

When it comes to 15-year-olds, as a parent you have every right to say, “My food and my roof. You do what I say.” With kids this age you never know what you’re getting. Half the time you’re talking to a 35-year-old, and the other half they’re 5 again.

At that age, I think you let them do, or not do, these things based on their ability to perform well in life. To the extent they behave and show some sense, you lengthen the rope and give them more freedom and privileges. If they act like doofuses, you shorten the rope. Remember, no is a complete sentence. Can you tell I’ve raised teenagers?

If it were my son, I’d sit him down and gently explain that he doesn’t have the capacity or knowledge to manage this idea by himself just yet. You wouldn’t turn your child lose behind the wheel of a car the moment they wanted to drive, right? So make yourself a part of the experience by teaching him to handle money wisely. Then, as he matures in financial understanding, you can give him more leeway.

If he wants to go dramatic on you, let him. And remind him that for every minute he’s in drama mode, that’s less leeway he’s getting in this matter and every other one in his life. In other words, the more mature you act, son, the better your existence is going to be.

No, at 15 he’s not opening a checking account on his own.

Dave


The point of life insurance

Dear Dave,

I have a 20-year level term life insurance policy. I noticed the other day that the cost would increase to $4,000 per year at the end of the term. Is that because it’s the end of the policy coverage or something else?

Tate


Dear Tate,

Technically, the policy will expire at the end of the term. But most companies that sell term life insurance will let you renew it, if you can’t get any other insurance, at a ridiculously high rate. But let’s face it – 20 years down the road your probability of death has also increased. The older you are, statistically speaking, the more likely you are to die.

If it were me, and I’m near the end of that policy, I’d go buy another 20-year level term policy, and let the old one run out. The only time you might run into trouble with a policy like that is if you were in the last year of coverage, and were diagnosed with a terminal illness. Then you’re really going to be paying through the nose to keep your coverage intact.

But the real point of a 20-year level term policy is to ensure that your family is taken care of while the kids are at home and your mortgage is covered if you die prematurely. If you follow my plan, you’ll have $500,000 to $1 million in your retirement account when the policy runs out and the kids are gone. Plus, you’ll have taken a 15-year mortgage, and your house will be paid off, too. If something happens then, your spouse will be OK financially.

The further along in life you get, assuming you do the stuff I teach, the less need you’ll have for life insurance!

Dave

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