My high school kid has a good part-time job. Should I charge him rent?

Dear Dave,

Our son is in high school, and he has a part-time job. He makes good grades, and we have always tried to teach him how to save and handle money according to your advice. He has even managed to set aside a few thousand dollars for college. My wife and I were talking the other night, and I brought up the idea of charging him a small amount for rent, maybe just $20 or $25 a month, to help him be even better prepared for the real world. What do you think about this?

Keith

Dear Keith,

I appreciate the fact that you’re looking for teachable moments. But making a high school kid pay rent? No, that’s a little over the top.
Listen, you and your wife are already way ahead of a lot of parents. Teaching him financial responsibility and the importance of education are great things. It sounds like your son is a bright, motivated young man, too.

I talk to adults all the time who are decades older, but still don’t grasp the concepts of maturity and responsibility like this kid does already. With the kind of start you’re giving him, I think he’s going to grow up to be a very successful adult. Keep up the good work, and let that young man know how proud you both are of him!

— Dave

Dear Dave,

I own a small business. How much should I have in a business emergency fund when my annual sales are around $100,000? Currently, I have two months of expenses set aside.

Theresa

Dear Theresa,

Generally, I like the idea of small businesses having about six months of expenses on hand. That kind of cushion usually eliminates the need for borrowing money. It also provides peace of mind. And if you’ve been an entrepreneur very long, you know that’s an invaluable thing.

Having a personal emergency fund set aside is a little different than having one in place for your business. When it comes to personal finance, I recommend having three to six months of expenses set aside. The basic idea is the same, though. A fully-funded emergency fund gives you an option—besides debt—when unexpected things happen!

— Dave