Teach your Children about Finances Part - II

Children and teens need more financial savvy as they get older.  They start earning more money and they have more expenses.   They are also ready for more depth in their financial education.  While it’s important to teach your children about finances, it’s also important to let them make a lot of their own decisions (within reason) about money.  Experience is a great teacher!  

1-  Help your child set some goals.  Discuss with your child some financial goals and write them down.  Post his goals in a place where he can refer to it often.  If your child has goals to work toward, he is less likely to squander his money away on consumables. 

2-  Help your child budget.  Get some sort of notebook or bill book to keep track of expenses.  My oldest son has a composition notebook that he uses to write things down.  Each month, he writes down all the expenses for the month.  He also writes down his earnings and he figures out where to allocate his money.  Any extra money goes into a savings account.   

You could also have your child save receipts to help track spending.  It can be a real eye opener to really see how much money went toward buying soda and potato chips!

 3-  Read and discuss good books on money.  There are lots of wonderful books about money.  Give a list of book options to your child and let him pick one to read.  Plan a date to discuss the book (you will need to read it too!)  I like to take my child out for an ice cream cone or for a walk in the park while we discuss the book.  Ask your child what he liked or didn’t like about the book.  What did he learn?  Did he agree with what the author had to say?  Try and pick a new book to read each month. 

Here are some of my family’s favorites:

•      Rich Dad, Poor Dad for Teens
•      The One Minute Millionaire   
•      Growing Money     
•      The Kids Business Book
•      If you want to be Rich and Happy, Don’t go to School 

4-    Play games together.  Games are a fun way to learn about money.  My kids especially like playing Monopoly.  Robert Kiyosaki’s Cashflow for Kids is another good one to play. 

5-  Let them pay for more of their expenses.  Kids learn best by doing.  Let your children pay for some of their expenses.  Once kids are in charge of paying for their own things, they learn how to be frugal in a hurry! 

6-  Teach your kids about investing.  Let your children do some research on different types of savings accounts.  Take them to a bank or credit union to discuss some different options with a financial advisor.  Teach your kids about the Stock Market and let them do some research on different companies. 

I recently found a simulation game online called The Stock Market Game designed to teach children to learn about investing.   Kids are grouped into teams and they “invest” play money on real stocks.  See if your child’s school would be interested in participating in the next simulation scheduled for October 2008.

 http://www.stockmarketgame.org/index.html   

As you teach your children about money, you will find that you have more financial savvy yourself. 

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Six Ways your Kids can Help out with the Budget!

Is the rising price of food and gas wrecking havoc with your monthly budget? Put your kids to work – after all, you use the gas to take them to soccer practice and they eat the food that you buy for the pantry. I’m not talking about having your five-year-old flipping burgers for eight hours a day (there are laws against such things, you know.) There are things that kids can do to make a difference in the monthly budget. Heck, even if your family is rolling in dough, it doesn’t hurt to have your kids do their part to help with expenses – it’s good practice for when they’re adults.

1- Let kids start paying for their “stuff”. If you’re at the grocery store and Junior begs you to buy him a lollipop, tell him that he is now in charge of buying his treats and toys. Make sure you also do plenty of teaching about the value of money and savings, but let Junior buy some of his own things.

As Junior gets older and starts earning more money, let him pay for more of his expenses. My oldest son has a cell phone and I don’t pay one penny of his bill. Let me tell you, he is real careful not to go over on minutes and his careful not to download too many extras - well, he doesn’t anymore. One month of paying $0.45 per minute because he exceeded his airtime minutes was enough to keep him careful about such things.

Kids can help pay for their own clothing. Parents don’t need to fork out $75 for designer jeans. You can give your child a set frugal amount of money for their clothing budget. If they want to spend money on expensive name-brand clothes, let them make up the difference.

2- Teach them to cook from scratch. In our busy lives, it’s all too easy to grab dinner at the fast food drive-thru. Convenience foods fill our shopping carts because, well, they’re convenient. Not only are fast foods and meals-in-a-box expensive, they are bad for our health.

It takes time to prepare healthy meals from scratch. This is where you can put your kids to work. Take some time to teach them how to make meals. My thirteen-year-old daughter is the bread maker of the family. This has saved us a lot of money. She makes five loaves at a time and we freeze any that we aren’t going to use right away.

Have your child wash and chop enough vegetables for the week. That way, you have vegetables ready for whenever you need them. Even the youngest child can help out. My two youngest children like to wash the lettuce in our salad spinner for our dinner salads. I have a friend that assigns each of her five children a day of the week to fix dinner. They plan what they will make in advance and then do all the cooking.

3- Assign your child to be on Utilities Patrol. Teach your child the importance of conservation. Let him look at the utility bills and ask him for suggestions for ways to lower the usage for the following month. Make it a game to see how much you can lower your utility bills. Play board games or read in the evening instead of watching television to help cut back on electricity. See who can get clean while taking the shortest shower to help save on the water bill.

4- Give your child a garden to take care of. Food is expensive these days, and a lot of the time, the quality isn’t very good. Let your children help plant and take care of a garden. If you have a big garden, maybe your children can each have their own rows or sections to take care of. I like to have raised garden beds. They’re easier for me to take care of and I don’t get as many weeds. It’s a great experience for a child to have his own garden box. Let them plan what vegetables to plant and show him how to take care of them. Growing vegetables is a great way for children to help with the family budget.

5- Let them come up with ways to save on gasoline. Brainstorm with your children about ways to save on gasoline. Could you consolidate trips? What about carpooling with friends? What about (gasp) walking? I saw some pictures recently of families traveling by large bikes in India. Some bikes had large baskets or carts attached to them for hauling the entire family. I got to thinking that having one of these family bikes wouldn’t be such a bad idea!

6- Have a family council. Sit down as a family and let your kids see how a budget works. Get the bills out so they can see how much money it takes to run a household. When it comes to miscellaneous expenses, get your children’s input. As parents, you have the final say, but kids usually come up with some great ideas. Tell them you have “X” dollars for the monthly entertainment budget and get their ideas on how to make the most of it.

There are many things that kids can do to help with the family budget and they will learn valuable life skills in the process. So, go ahead – put your kids to work!

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5 Ways to Teach Little Tykes About Finances

It’s important to teach children about money from the time they start earning their first pennies. Kids might learn about money from a textbook at school or they might learn with “play” money, but they also need to have experience with real money in the real world. Kids are curious about money. My six-year-old loves to collect pennies and put them in a jar to see how many he can accumulate. Children learn early that if they get a certain amount, they can start buying things.

Here are some ways to help your little tyke learn about money:

1- Teach children the value of money. Put a pile of coins on the dining room table. Start with pennies and teach your child that each penny equals one cent. Then move on to nickels. Put five pennies next to a nickel and tell your child that it takes five pennies to equal one nickel. Then do the same with other coins: five nickels equal a quarter, but so do two dimes and a nickel. I can also use twenty-five pennies.

2- Give them a place to put it. It’s nice for kids to be able to see where their money is going and to visually watch it grow. My youngest kids have a three-section savings box for their money. Each section has a specific purpose: one for savings, one for spending, and one for tithing. When my kids earn money, I help them put their coins and dollars in the right section. When they have a certain amount in their savings section, it goes into a savings account at the bank.

3- Teach kids that work equals money. Let kids find different ways to earn money. I remember being only about seven or eight-years-old and crushing up rose petals to make perfume. I think I may have even used my mom’s blender for that purpose (sorry, mom.) I went door-to-door selling my fragrant perfume to the neighbors. My business venture didn’t make me a millionaire, but I learned a little about creating a business, marketing, and how to budget all those quarters that I earned.

4- Let them pay for things. As parents, we provide the necessities: food, clothing, shelter, and educational necessities. There’s no parental contract that says that we need to bribe provide our children with the coolest toy of the week. If your kids really want something, let them buy it with their own hard-earned money. They’ll probably take better care of their toy too.

5- Allow them to make mistakes. It’s painful to watch children make mistakes - especially when it’s so easy for parents to step in and prevent pain and tears. Think of it this way: It’s much easier if a child learns from their mistakes while they’re young. If a seven-year-old decides to squander away his money on Dum Dum suckers and doesn’t have enough to go to the movie with his best friend – he’s learned that he should budget his money a little more carefully next time. If someone foolishly spends his money when he’s older and living on his own, he may have to skimp on the food budget, gas allowances, or even rent money.

Discuss money on a regular basis with your child. Help your kids make goals and learn how to save. I know of some parents who will match any dollar amount of money that their children put into savings. If we start teaching our little tykes early about money smarts, they will have a great head start on their future.

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The Credit Card Newbies Guide (Part 2)

Which features should I be looking out for?

Just like snowflakes, no two Credit Cards are exactly alike. While some cards try to tempt you with low interest rates, others have an enticing rewards program or cash back deal. Some platinum cards even come with a 24 hour concierge service that can organize anything from concert tickets to accommodation anywhere in the world – though the value of such a service to all but a select few seems questionable.

As a general rule, Credit Cards tend to be strong in some aspects and weak in others. Those Platinum cards that come with a ‘free’ concierge service typically attract annual fees of at least several hundred dollars. Likewise, other cards might be marketed for their low fees but sacrifice luxuries like reward programs, free travel insurance and the like. Whilst this might seem like a reasonable trade-off, depending on how much you’re spending every month you might be really missing out.

Ultimately, the idea is to find the card that is right for your own personal circumstances. I’m ashamed to say that I occasionally break the cardinal rule of paying off your balance in full every month, so in my case I prefer to go for a card with a low interest rate. Even though I’d like a rewards program, the reality is that the amount I’m saving in interest charges is far higher than anything I could get from a frequent fliers program.

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The ‘Credit Card for Newbies’ Guide (Part 1)

Prelude:

It seems kind of silly now, but I always thought that getting my first Credit Card was a rite of passage of sorts. It was my first entry into the fantastic and terrifying world of OPM – Other People’s Money, and to say I felt a little unprepared would be an understatement of criminal proportions. It’s been said time and time again, but it really is a shame they don’t teach personal finance in school because responsible use of Credit is a necessary survival skill in the modern world. As well as Credit Cards, Car financing and Student loans (right up to ‘The Big M’) are other common types of Credit that every single one of us will have to deal with at some stage during our lives.

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