When Children Earn a Paycheck – Q&A with Mama Meredith Part III

By Jessica Searcy Kmetty

In Part I of this blog series, we introduced you to Meredith, a self-described community creator, home curator, minimalist, hipster mama who is raising 3 “wonderful wilds” in NYC. We talked about how she manages finances for her family, how she and her husband discuss their money scripts, and her philosophy on debt and spending. In Part II, we talked about her family’s “no-spend” months and how you could incorporate them into your life. In Part III, we’re going to hear more about her children, all of whom are employed.

So, your children all have jobs? How old are they?

Yes, I have three children and one on the way! Alice is 8, Ethan is 6 and Dahlia is 3. They each work in print and on camera modeling.

Do auditions impact the children’s education?

Auditions are usually after school, but sometimes I have to pick them up early to travel into Manhattan. The school knows their situation and the children have work permits, so the school allows for flexibility in their schedule.

How do you manage the children’s income?

Handling the money each child earns can get complicated. They each have a trust account, and by law, 15% of their earnings must be deposited into their trust. They also have junior accounts, sometimes called kid accounts, with debit cards that are attached to their trusts as well. It’s basically a checking account off their trust that can be used for work purposes.

Parents can spend A LOT of money when they have children working in the industry, so we did this to better track what the children earn minus what we as parents spend to make it happen.

For example, when my husband recently took my son into the city for an audition, the debit card came along. They used it to buy train tickets, and for a business “snack.”

We also have to track mileage, their SAG union dues, and just about every other expenditure for tax purposes. They have reached a level where their earnings are supporting them continuing in their craft. They earn money based on the jobs they do, and because they’re in a union, they do union job commercials.

Again, 15% of their pay gets deposited directly into their trust, their agent gets her commission, and then whatever is left over comes into their mailbox as a paycheck. The paycheck gets deposited into their trusts as well.

Tell me about your experience with Roth IRAs for Kids.

We were happy to find out about Roth IRAs for kids and opened one for each child. There is a maximum contribution of $5,500 per year per kid and the only rule is that the child must be earning income (the entire contribution must be earned and no more than what was earned can be contributed). We contributed the $5,500 for each child by moving that money out of their trust accounts. We liked this option because it was an additional way to shelter their income and let it grow.

What lessons are you teaching your children about their money?

The kids don’t ask to spend very often, because we’ve operated on a budget for so long and they are aware of that. We also talk to them about our spending values and our philosophy on not creating waste, so asking for new things all the time isn’t something they do.

But, that doesn’t mean they don’t occasionally ask for something fun from the store or other item, service, or experience. To help them understand that they’re working and earning money, we sometimes let them buy a small item for themselves. However, it’s not an expectation they have. They also understand that when we purchase the train tickets or other needs for their jobs or auditions, that the money spent comes from money they have earned.

They also work together to get things they want. They’ll save up some money for when the ice cream man comes and they’ll get a giant cone and share it outside on the door stoop. I love that they’re learning to share, and actually enjoy it!


Tell me about your Need vs. Want discussions.

Along with their earnings, I budget $30 of our household finances per child each month, and they do get to help dictate how some of that is spent. We talk a lot about Need vs. Want in our home, and our hope is to teach our children how to satisfy their needs first. We talk about our budget, how money comes to us and gets budgeted and spent and when the money is gone, that’s the end of spending. We talk about how you have obligations each month and money must be used to satisfy those obligations first, and then if money is left over, you get to choose how to spend it.

While we’re out and about, my children see me use my phone to check our bank accounts while we’re shopping to see how much is available to spend. They also know that toward the end of the month, we do more free things as a family, because we may have already used our allotted budget. This also helps show that Wants don’t always have to come with a price. You can find ways to satisfy your Wants without spending.

Do your extended families help support you in raising financially educated children?

I’m very vocal about the process of using our money and how our spending matches our values, and our families are very respectful of that. My mom is actually working on some of the same financial goals that we are and is trying to reduce her spending as well. For Christmas, my children received memberships to the Zoo rather than “things.”

My husband’s family really enjoys giving gifts and little items to the kids. This brings them joy and I would not want to take that away from them. But, they’ve slowly changed from giving them gifts to giving things such as dollar coins. The kids are happy to get anything, and this way it’s something they can save!

For 7 simple steps you can take to get your children started on their journey to financial success, click here for our free whitepaper, How to Teach Your Children About Money.

Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this content, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for you or your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Searcy Financial Services, Inc.

The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.  

Published for the blog on January 30, 2019 by Searcy Financial Services, your Overland Park, Kansas Fee-Only Financial Planner and Investment Manager.