Financial

Why Are Fewer Kids Working? (Pedcast)

Topic Introduction

Is it just my imagination or have you noticed what I have; fewer kids have a job before they graduate from high school. I think I am seeing fewer teens that are working compared to previous years. Actually, the stats back this up.  But why? Is it because parents are hyper focused on academics and sports and discourage their teens from working? Do parents now perceive work as time their teen isn’t improving their resume. Or could it be this way because teens just don’t need the extra money that a job affords them since their parents provide plenty for cash? Or, maybe the great recession of 2008 squeezed them out of many entry-level jobs that they typically could have gotten in the past. Now they are competing with grandma and grandpa for these hourly, low skill entry jobs. Whatever the reason, my impression seems to be correct… youth employment is at 20 year low.(1) Continue reading

Every Child Can Be a Powerball Winner (Pedcast)

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Healthcare Then and Now (Pedcast)

 

Sometimes I daydream about my career and how things have changed during my time in pediatrics… and boy, have things changed. When I started in pediatrics in 1982, I wore a lot of doctor hats: I functioned as office pediatrician, delivery room doctor, neonatologist, PICU doctor, a pediatric hospitalist, a pediatric ED physician, an after-hours phone triage nurse, and occasionally an assistant doctor in the operating room. A child came down with meningitis…they were mine to care for. An infant was born prematurely and needed NICU care…Doc Smo was on the case. Johnny had a near drowning event at the local pool and needed care in the pediatric ICU… you got it, they were mine as well. Well, you get the idea.

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College Savings Made Easy (Pedcast)

Welcome to another edition of the pediatric blog known as DocSmo.com… bringing you portable practical pediatrics that you can listen to on your, mommy or daddy time schedule.  I’m your host, Dr.Paul Smolen.  I have been a practicing pediatrician for now 32 years and a dad for 29 of those years. Today we are going to go personal and I am going to tell you about something my wife and I did when our children were young that I am very proud of and that really made a positive difference in our children’s lives.  Today we are going to talk money, specifically how to save a bundle. I assume since you are listening to a pediatric blog that you already have a child and probably already figured out that parenting is a very expensive affair. Kids cost a lot, especially when it comes to their education.   Parents need to be as smart as a wall street bond trader to have enough money to educate their children so sit back and listen to one of the things my wife and I did to help in our financial journey of parenting.  I think you will find that this strategy can really make a big difference when the day comes when you have to start writing those tuition checks for your little bundles of joy… and that day will come hopefully.

 

 

Simple things parents can do can make a big difference in your child’s life. To demonstrate that point, let me tell you the story of my first “grown up parent car”. Prior to buying this family car, we had driven a series of junk almost working used cars because that was all we could afford.  Then, our son was born and we decided to buy a Volvo Station Wagon because it’s reputation of durability and quality.  At the time, Volvos were one of the longest lasting cars made in the world. We paid $15,000 for our wagon, brand new off the car lot, which seemed like a bucket of money to us. The car had a few thrills but was mainly a solid workhorse. With meticulous care, we kept that car for 15 years and finally sold it for $3000.  Excluding all the costs of ownership like insurance, taxes, gas, tires, and repairs that we would have had with any car, the total cost of our ownership of our Volvo was $12,000 for 15 years we owned it. The $15,000 we paid minus the $3000 we got at the end of it’s Smolen life.

Now lets consider what most families do with their transportation dollars, that is to buy a new car every 4-5 years.  Had my family had done that, I estimate that we would have paid $15000 for our first car, probably about $20,000 for the second, and likely $25000 for the third for a total of $60000.  Lets say the residual value of all of the cars would be $8,000, that makes the total cost of ownership $52,000. Remember, the total cost of ownership of our one little Volvo wagon was $12,000 for our 15 years of driving.  $12,000 vs $52000.  You see where I am going with this?

 

So you can see under scenario 1, we spent $12,000 to use our car for 15 years whereas in scenario 2 where we bought 3 cars during the 15 year period, we paid $52,000 for our 15 years of driving.  The difference is a cool $40,000 that we were able to save by keeping our durable, no frills car until near the end of it’s life.

Consider that fact that the current cost of a four year public university degree averages $63,672 all inclusive.(1) The  $40,000 we saved by keeping our no frills car, with the conservative investment income added in would be more than enough to pay for that university degree your child may need.  Actually the total of our invested income would be about $72,812, more than enough to pay for that state college degree for one child. What if they chose not to go to college you say?  Well that $72,812 could be a nice down payment on a house or even seed money for a new business.

 

I recommend that you consider bucking the trend of many of your  friends who love buying cars and consider a different strategy, one that might just change a child’s future; your child’s future.

 

So here are the essential things to do to make this strategy work;

 

-I recommend you do some research and make sure the car you are buying has high reliability, utility,  and durability. Consumer Reports or Cars.com can easily give you that information.

-I also recommend that you buy the car new, and make sure you don’t skimp on maintenance.

Change that oil regularly, rotate those tires, and do all the scheduled repairs.

I feel fairly certain that your car will last and last. And for your child, well they will hopefully thank you with a big college diploma.

-Oh, and don’t forget to open up a 529 plan for them as soon as you can.  This is a type of tax favored investment plan specifically designed to save money for a child’s education.  This would be a great place to regularly save all that cash you are saving by driving your older car and any other spare change you can scrape together.

-And here’s another tip, when your family wants to buy junior a gift  for his birthday or Xmas or whatever, simply direct them to contribute to “the plan”.  That toy would have been long forgotten but not borrowing for a top notch education, could there be any better gift?

 

Remember this Doc Smo pearl; “What type of person your child becomes is, determined by the sum of all the little seemingly inconsequential decisions, their parents make.”  

Here is one easy way to get started shaping your child’s destiny.  Good luck.

 

Thanks for joining me today. Your comments are welcome on iTunes or my blog, www.docsmo.com.  We love to hear from you.  This is Dr. Paul Smolen, broadcasting from studio 1E, hoping your money fears, can be turned into graduation cheers.  Until next time.

Smo Notes:

1.  http://nces.ed.gov/fastfacts/display.asp?id=76