Talking about Money

Happy New Year! It’s that time of year to make your annual resolutions.  Here’s one to add to your list:

 I will talk to my children about money.

It might sound like a simple resolution but it turns out that parents don’t talk enough with their children about money.  It doesn’t have to be stressful. The idea is to use every day events to open the discussion about money.

For example, if your 5 year old tells you to “just go to that machine and get some money,” it’s a great time to explain the basics of banking. “Mom and Dad work for money. We take our money to the bank for them to keep our money safe. We go to the bank when we need to get our money to pay our bills or buy things at the store.“

And, if your teen asks why “everyone else goes on a ski vacation over winter break except us,” it’s a great time to discuss the family budget. “Mom and Dad work for money and we have to plan how the family will spend our limited funds. First we have to pay for the house, food, car, clothing, education, as well as save for later, such as retirement, before we can plan our vacation budget.”

By talking about money using every day activities, you will be creating an open dialogue with your kids and teens so they are comfortable asking you questions about money (and maybe more!) This gives you the opportunity to “teach” them good money habits that they can use to grow into a financially independent adult. Now that’s a great New Year’s Resolution!

Rewards Galore

The other day, I was having coffee with a good friend at Panera and I used my Panera Club Card. I get points on my purchases and then, I receive rewards! Yippee! Who doesn’t love free stuff?!

“Do you have a rewards card?” I asked my friend as we sat down for a chat over coffee.

“Yes,” she said “but I keep forgetting to register it so I don’t use it.”

“Boy, are you missing out,” I tell her. “I got my pumpkin muffin for free with my points.”

I’ve discussed loyalty cards and their advantages with my teens. In some cases, we have a “family reward card” (Modells, CVS, Staples). For other stores, we each have our own loyalty cards so we don’t have to share the reward or take turns. For example, nobody wants to share their Red Mango rewards. My daughter registered her own Red Mango card and received a welcome reward of $5. As for me, I registered my Starbucks card and received a free birthday drink.

But, I’ve told my teens that while getting free stuff is great, there is a downside. The stores want to entice you to spend more and often. We’ve discussed only applying for loyalty cards if they are free and you shop at the store regularly anyway – rewards or not. I’ve told them to beware of buying more stuff than you need, just for the “points.”

Free loyalty cards are the best. However, some cards that you pay for may be worth it if you calculate the rewards outweigh the annual fee. For example, at Game Stop my son pays for the premium rewards card because it comes with a monthly gaming magazine that he enjoys. (Yes, he pays from his allowance!)

There is good and bad news with all the “junk” email you get when you register your loyalty card. You may get flooded with too many emails…but you also receive coupons and early sale info. My teens see me using my coupons (Staples Ink Rewards are great) and stocking up when there is a sale.

So during your holiday shopping, make sure you and your kids use your loyalty cards to build up points (remember to stay on budget), get sale info, and print out coupons. It’s a great lesson on smart shopping techniques. And, like I said…who doesn’t like free stuff!

What’s a Parent to do?

While having a successful Allowance Program is key to teaching your kids and teens about financial responsibility, they are watching your money habits closely…so beware.

While the old saying “Do as I say, not as I do” might work in some cases, when it comes to parenting it’s all about consistency. Your kids are watching you and emulating your every move in all aspects of your life. So it’s no surprise that they will copy your money habits too.

One of the most important lessons you can give your children is that of financial security. This is a good lesson for them to learn as adults, but could be instrumental in their current lives as a child.

Here are 3 sound financial steps you should have in place as a parent:

1.    Retirement Account:  you should make sure that you are saving for your own retirement. You don’t want to be a burden on your adult children if you run out of money in your later years. Keep adding to your retirement account. Remember you can get a loan for college but not for your retirement!

2.    Risk Management: you need to make sure that your risks are taken care of, meaning you should carefully consider life insurance, property and casualty insurance, disability coverage, long-term care policy, medical insurance and an umbrella insurance policy. If something happens to you or a family member, you need to be protected financially. You should review your insurance when you have any major life changes and at least every few years to make sure you are still covered appropriately.

3.    Estate Documents: you will need to have a will, a living will, and health directive.  You will need to name guardians for your children and give direction on your health wishes.

You will be protecting your children and your family. Your adult children should do the same when they have a family – this is a long-term financial lesson.

These steps can be “boring” and sometimes confusing. You may have to make scary decisions, but these will have an important, long-term financial impact on you and your children. Don’t put them off – Just do it!

$$ Happy Birthday $$

“I want a birthday party with ALL my friends!” announces my soon-to-be 17-year old.

“Aren’t you getting a little too old for those BIG birthday parties?” I ask.

Obviously, she’s not! This year she wants an old-fashion, kid-like party to celebrate. So, I start to go into my planning mode…and then stop short. I realize I need a budget for the birthday bash and this can be another financial lesson. (Insert teenage eye-rolling here.)

“OK, but you have to be in charge of the party planning and work within a budget.” I tell her.

She starts making her guest list, which spills over onto a second page. Then she brainstorms the party theme and activities before she starts researching where to have the party.

“Ouch!” she looks at the per person cost. “That’s $26.95 per person for the activities and it doesn’t include pizza or cake!”

“How many friends are on your list?”

“Only 35!” she says. “I can’t cut anyone off the list!”

“Well, you have a trade off to make. Invite less friends or find another party idea.”

This budget story doesn’t have an end (yet) since she is still in the mist of the planning.  However, you can see that having your teen, or even a younger child, involved in the planning helps them to understand the costs and the trade offs.  Birthdays are fun and should be celebrated but it’s easy to get carried away with the planning which can cause some money stress. Decide on a budget and stick to it. (You can insert some more teenage eye-rolling here!)

Here are some good websites for party ideas:

Evite

Real Simple

Celebrations 

Happy Birthday to my daughter, may all your dreams come true!

Everyday Lesson: A Penny Saved

Benjamin Franklin had it right – “a penny saved is a penny earned.” Have you ever thought about where all your pennies go?

An interesting lesson for your kids and teens would be to go through your daily activities and record your expenses. You may be surprised at exactly how much you spend on a daily basis.

First, consider the expenses that you incur daily but don’t physically pay each day:

• Housing (own or rent)
• Utilities (gas, electric, water, phone, internet)
• Food (groceries)
• Transportation (car, train pass)
• Insurance (auto, home, life)

You can show your kids and teens how to figure out how much a fixed expense costs on a daily basis. You may be uncomfortable sharing your mortgage or rent, so use a utility bill to show how much you were billed for the month and then divide by the number of days in the month to get a daily expense. Another idea is to take the weekly grocery bill and divide by the number of days or have them figure out how much dinner costs by adding up the cost of the ingredients. And for the teens, you can have they calculate the daily cost of their cell phone! 

What about the cash you spend from your wallet? Have the kids use a small note pad to record the things you buy with cash. I know for me, I don’t use a lot of cash since plastic is so easy to swipe! So you could have the kids record what you spend using your debit or credit card for everyday items such as: groceries, gas, dry cleaning, supplies, dining out, etc.

I know when I did this with my kids they were surprised at how quickly the everyday spending added up…and honestly, so was I.

This is a great way to teach your kids and teens to pay attention to the everyday expenses that can easily get out of control. You can explain to them that it is important to have a budget for each item. By having a budget, they will learn to count their pennies…and hopefully save a few too!

Everyday Lesson: Pet Therapy

“I want a puppy!”

Yes, every parent has been there. Your child wants a puppy. So you start with a low maintenance pet such as a gold fish or maybe a hamster. This is a good time to have the “responsibility” talk but it’s also a good time to discuss the financial responsibility of pet ownership.

Explain to your child that it’s not only the price of the pet. They have to consider all the costs of caring for your pet. The pet budget will need to include food, shelter, pet toys/treats, training lessons, collars/leashes, boarding and vet visits (both routine and emergency).  Don’t forget that these are recurring annual costs! The ASPCA has a great chart listing Pet Care Costs for Dogs, Cats, Rabbits, Small Mammals, Small Birds and Fish.

You can expand your discussion to talk about the cost of hobbies, sports, and extracurricular activities. The first step before taking on a new hobby or sport is to do your research. This involves putting together a budget. Check out to see if there are membership/club fees, special equipment (buy vs rent), and lessons.

Teaching your kids and teens that their “wants” (as well as their needs) must have a budget of it’s own is a great money lesson.

BTW, our “puppy” is now 2 years old and she is a big part of the family...and our budget, too!

Everyday Lesson: Reuse, Reduce, Recycle…Save Money!

Yesterday, my daughter and I ordered her schoolbooks for next year. I know, it’s still summer but we wanted to do some research on prices and shipping costs. We had the text book ISBN numbers, so it was easy to compare prices on the various websites. Also, her school holds a book swap at the end of the year so she was able to pick up a few of her books for a very reduced price.

It was enlightening for her to participate. In years past, I ordered the books on my own but this year I decided that since college is only two years away, she should get a taste of what her college textbooks will cost.

She was very surprised to see that her Physics book was $103 if she bought it NEW. We searched for USED copies and found them ranging from $69 to $77 depending on condition. I explained that we needed to think about shipping costs too. On Barnes and Noble’s website, we were able to get free shipping when we ordered up to a certain amount. However, we had to pay shipping on two books since they were coming from other book suppliers.

Her result was a savings of approximately $45. Teaching her to be environmentally aware by buying used books when possible and, also saving money was a great everyday lesson!

The Environmental Protection Agency has a good resource for Recycling.

For Kids: EPA Environmental Kids Club  

For Teens: EPA – Your Enviroment. Your Choice.

Everyday Lesson: It Takes a Thief

School is out and we always start our summer by cleaning out all the paperwork collected over the school year. As my kids were adding their paperwork to our already mountainous shred pile, they asked, “Why can’t we just throw this stuff in the garbage?”

It was the perfect time to talk about Identity Theft.  The Federal Trade Commission (FTC) estimates that 9 million+ Americans have their identities stolen each year. Check out their website that focuses on Deter, Detect and Defend.

Explain to your kids that identity theft happens when someone uses your personal information (your name, credit card number, social security, etc) without your permission to commit a crime or fraud.  The thieves can get your information in various ways: your trash, stealing your wallet (credit cards), skimming at a debit/credit card machine, spam or pop-up emails. Tell them that it is important for them not to share personal information or give friends their PIN numbers or passwords for ANY account (email, social networks, or bank accounts).

For teens and young adults, they should get in the habit of carefully monitoring their checking and saving accounts. Annually, they should check their credit report to look for errors and discrepancies.  With our teens living their lives “on-line,” they should be on guard when using the Internet and should take steps to secure their computers from attack.

It’s never too early to teach your kids to protect their money. After our discussion, my kids were psyched to use our shredder!

Happy Shredding!

Everyday Lesson: Career Planning

Have your kids ever said to you “Just go get some money from that machine where you put in your card in”?  It seems like kids really do think that money grows on trees…or at least they print it at the ATM.

This is a great time to talk about how you earn your money. You can talk about how you (and/or your spouse) go to work and you get paid money in exchange for the work. Then, you deposit the money in the bank for safekeeping until you need to use it to pay the bills. Also, talk about how you take part of your salary and set it aside for savings and longer-term goals. For older kids and teens, you can have a full discussion on payroll and income taxes. (Taxes – ugh!)

You can then continue your discussion to careers. Talk about how you picked your career and what type of training or education you needed. A great website for kids and teens to explore careers is the Bureau of Labor Statistics - Career Information. It starts by asking the question “What do you like?” and then shows careers connected to their interests.

It’s never too early to have your child start thinking about their interests, hobbies and special talents or skills. This is the first step for them towards career planning.  Their career choice will have an obvious impact on their salary expectations. You can help your child research the median salary for various occupations on the BLS website.

When it comes to learning about managing your money, there are two sides to the equation: income (money coming in) and expenses (money going out). Most times when we teach our kids about money, we focus on the spending and saving parts. So, don’t forget to talk about how you earn your money and your career. It’s a perfect way to start a dialogue about career planning with your kids and teens!

Everyday Lesson: Grocery Shopping

Over the next few weeks, I am going to highlight some everyday activities that you can use to teach your kids and teens about how to manage their money. 

First up…let’s go grocery shopping!

Before you leave the house to go grocery shopping, teach your kids and teens to PLAN first.

• Have your kids go through the cabinets and refrigerator/freezer to see what needs to be tossed and what you need to replace.
• With your kids, plan your menus for the coming week. What do you need for breakfasts, lunches (at home or to take) and dinners?
• Have your kids write the grocery list.
• Clip coupons from either on-line (kids and teens might enjoy the web surfing to find deals and discounts) or from your circulars that come with the junk mail.
• Remember to take them with you to the store along with your reusable bags which most stores now give you a rebate for using.
• Teach your kids not to shop on an empty stomach otherwise they will buy more!

Next is the shopping trip with your kids and teens leading the way.

• Have your kids use the list to walk the aisles to find your purchases and look for sales.
• Have your kids compare the differences and similarities between the store brands vs. national brands – price, quality, and packaging. Have them calculate the savings.
• Show them the price difference for pre-packaged, convenience foods like snack-packs and pre-cut veggies.
• What about those bulk packs – how much do you really save? Will you eat all of the bigger size or will it go to waste? Have your kids and teens calculate the unit price. Sometimes the store will have it on the shelf labels but beware of the number of units used.
• Talk about sticking to your grocery list and resisting the “impulse” buys that bust your budget. Explain the layout of the store and how they purposefully place items at eye level and at end of each aisle for easy purchase. If it’s hard to resist, then plan a budget that includes one “treat.”
• At the checkout, teach your kids to use the coupons and to double-check the items as they are rung up. Mistakes are often made and you need to teach them to speak up.

Some additional learning tips:

• Take your kids to a farmers market (most towns have them in the summer and into the fall) to check out the prices and quality compared to your local food store.
• Have your kids plan a whole meal from the menu to shopping to preparing and even the clean up. Give them a budget for the meal.

Learning to shop wisely for a necessity such as food is an important lifelong lesson. Enjoy the fruits (and vegetables) of your lesson!