Happy Birthday My Child - Now Sign The Contract!

"When my child was 15 years old, I was the dumbest adult on earth. When she reached age 18, I was a fountain of wisdom. It's amazing how much I learned in those three years." (Author Unknown)

Our dear friend's daughter, Hannah, was 16 years old this month. Residing in Tennessee (yes, here comes another good 'ole story of my Southern life and alter ego) the youth of America can get their drivers license at age 16.

Hannah's Mom and Step-Dad are the sweetest parents a kid could have, and bought her a car for her birthday. Since it was hard to hide it under the tree, Ken and I conceived a diabolical plan to hide her car in my garage until Christmas morning.

The night before, her Mom put a beautiful blue bow on the hood, and before Elizabeth and I headed next door for Christmas breakfast, I moved it to the driveway for her to find. It was beautiful- the tears flowed, it was snowing and a white Christmas, and Hannah was very, very happy. The neighbors were out on their porches, and the whole neighborhood celebrated with Hannah- It was a wondrous site. But, like most things in life, there were strings attached...

In the days that followed (she had 2 weeks to go before the sacred birthday), there was a contract drawn up between Hannah and her parents to agree on the terms of her new present.

Hannah was reluctant to sign it before she had Uncle Neal review it, but she buckled under the pressure (and the realization that no contract, no car) and signed it. Now I ask you- have you ever drawn a contract between you and your children?

A contract is an agreement between two or more parties for specific terms and agreements. We all know of contracts on our house, to buy a car, marriage and a host of reasons, but have you ever thought to draw a contract between you and you children?

Draconian you say? I beg to differ. The purpose of a contract is to merely memorize a conversation in writing to signify that both parties (the child and the wardens) agree to certain terms and agreements in a noted issue. Have you ever had the discussion with your child who forgot what time to be home, or to do certain chores? Have you ever heard the phrase "you never told me to do it." "You said 12:00, not 11:00." "You never said I had to clean my room today." Go ahead…you know you can come up with at least another three!

Oral agreements are great until someone has a slip of the mind, or the terms of the oral agreement become fuzzy over time. By putting it in writing, there is no question as to the conditions, stipulations and provisions. Additionally, it teaches our children accountability, with no chance of a difference of opinion- if it's verbal, it's open to interpretation. If it's in writing, it is what it is, and can't be changed unless either party agrees to change it. It's no different than the contract they will sign with the bank for a mortgage years in the future: it teaches them to agree to terms, and to be responsible citizens who follow their word, being acutely aware of the penalties that may ensue due to their failure to keep up their side of the deal.

Contracts are vital to society because they facilitate cooperation and trust. Without contracts, verbal agreements can lead to ill will and broken promises- we wouldn't want that to happen, would we? A pouting child, an extended lower lip? Heaven forbid! Penalties should be inserted in the agreement, as this too teaches a lesson. As parents, it's our job to teach our children about life and prepare them for adulthood- can't we have a little fun along the way?

Contracts should be entered into voluntarily without duress or pressure. Well, no pressure to the parent at least! So, before you call me or write me to tell me how antiquated my thinking is, just think about the last time you had a difference opinion with your little darling about a verbal agreement that could have been avoided with a contract- I see the little smile breaking out on your face!

If hearing from me once a month isn't enough, come visit me in our new blog site at www.chestnutblog.com.  If you think I've got pearls of wisdom here... you ain't read nothin' yet! See you there!

Neal A. Deutsch is a Certified Financial Planner^™  & Registered Securities Principal, offering securities through First Allied Securities, Inc., member FINRA/SIPC.  Neal is President of Chestnut Investment Group in Suffern, NY, helping people with financial planning since 1984. Please feel free to call Neal at (845)369-0016 or email him with your questions at neald@chestnutinvestment.com.

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