I'M SORRY ISN'T ALWAYS ENOUGH

Everyone knows that it's not good to break things. In most cases nobody means to do it, and most of the time the person who broke something is going to be sorry.  Breaking something that doesn't belong to you is a problem both inside the family and outside in the greater community.

Breaking something by accident isn't a terrible thing. Accidents happen. Sometimes they happen through carelessness, and that should be addressed; but sometimes they just happen. But in the case of breaking something an apology isn't quite enough. Restitution is needed, too.

You should try to restrain yourself from blowing up when something gets broken.  Yelling under those circumstances tends to send a message that things are more important than people.

The reward - or punishment - for behavioral matters should be behavioral; the reward or punishment - for material matters should be material. If you break something, you should pay for it, in time or money or both.  Not taking breakage seriously enough sends a damaging message, too: that it's not really important to respect the property of others.

I learned that lesson when I was about twelve. A girlfriend and I got a couple of brushes and a couple of cans of white paint and set out to write “Ringo for President”all over the streets in our neighborhood. We hadn't thought it through well enough to realize that Ringo was British and therefore ineligible to be president but that was actually the least of what we hadn't thought through. We believed we were using a water-based paint, but it turned out to be latex house paint.  We, of course, were convinced that we'd never get caught, but within an hour after we had run home and were listening to Beatles music and giggling, a policeman knocked at the door.  "Are you the two kids who painted up the street?" he asked.  We weren't cut out for a life of crime. We confessed immediately. "But how did you catch us?" I wanted to know, holding my hands out to be cuffed just like in the movies. The policeman smiled and pointed behind him. We looked. Across the front porch, down the steps, and out along the street was the evidence: our footprints in white paint, heading straight to the door.

We paid in both community service and money. I had to scrape every last “Ringo for President” off the streets with a wire brush, and I had to buy my own wire brush for the job.

You’ll want your children to understand that if they have friends over to visit, they’re responsible for their friends' behavior as well. If they take over the family laptop to play games, and one of the guests accidentally spills a beverage on it, and you're facing big bucks to have it fixed, your child is responsible for picking up the tab.

You're very likely to get a chorus of "No Fair!" on this rule. "Why am I responsible both ways? If I go over to someone else’s house and break something, I have to pay. If someone else comes over to my house and breaks something, I have to pay."

For an answer, refer your children back to the concept of "My House, My Rules."  This is the way we do things. If his friend has also been raised to be financially responsible, he'll assume the burden. But we have no control over the rules in other households, only our own.

What happens if a child breaks something that's far beyond his ability to pay? That can happen, and sometimes spectacularly. Here is an example.  A friend owned a 50 acre farm in the country.  She and her husband had a recently purchased tractor.  Her fourteen-year-old stepson and his and friend were visiting the farm. Somehow they had cajoled my friend into letting them try out the new tractor.  They promised to be careful, but the temptation to convert a piece of heavy farm machinery into a go-cart was too strong.

As fate would have it, they managed to steer the tractor directly into a pool in the middle of the farm.  They probably wouldn’t have been able to hit it if they tried. The damage to my friend: one ruined tractor; the cost of towing the tractor out of the pool and disposing of it; one polluted pool that had to be drained and restored by environmental professionals because the polluted water had to be taken away.

This story does not have a happy ending. The friend’s mother’s response was, "Gee, boys will be boys. Well, accidents happen." My friend never did find out what the other boy's parents felt, because they never bothered to contact her.

This was wrong. It was unfair to my friend, and it was letting the kids down, too, by sending them the wrong message. It was teaching them to be the kind of people we don't want our children to be.
This was a leviathan of a preventable accident caused by carelessness. It was destruction of property, and it was destruction of the environment. The monetary damage was well beyond any kids capacity to make financial restitution.  But the boys should have contributed something. They should have contributed enough money to feel the bite of it - a few hundred dollars, anyway - And they should have worked on the restoration of the pool.

YOU CAN NEVER BE TOO YOUNG

From the time our children are beginning to crawl we start teaching them about right and wrong, personal safety issues and morals.  Through the years we warn them about stranger-danger, alcohol and drugs.  We try to set good examples for healthy eating and personal accountability.  Why do so many parents neglect to teach their children one of the most important survival skills they're going to need – how to take care of themselves financially?

We certainly teach our kids about spending money, but this is setting them up for future failure.  Kids are constantly exposed to the emphasis on buying power but this comes at the expense of other important money skills that kids need to learn – earning, saving and sharing.

MONEY IN ACTION
Parents have to talk to their kids about money from a very early age as this is when good habits start to form.  It's important for kids to come into contact with money, learn where it comes from and understand how it is used.  Encourage your kids to play “store” at home.  Let them put coins in the parking meter.  Let them swipe the credit card when you get groceries.  Bring them to work with you.  Bring them to the bank to open a savings account.

I believe in allowances for kids who are ready to start doing age-appropriate things around the house, like watering the plants or setting the table.  It is important to use the allowance as a teaching tool.  It's never too soon to start teaching financial responsibility.  Even kids as young as 5 can benefit from the idea of budgeting – the child should set some allowance money aside to spend, some to save, some to share with the community.

This helps kids make better decisions and learn to delay gratification.  The time spend deciding what to buy with their own money, what to save for and what causes to contribute to also builds character.  Another benefit is valuable quality time with mom and dad.

Talk to your kids about money and keep talking to them about it as they grow.  The lessons learned will stay with them for life.

THE POWER WITHIN - An Open Letter to the United Negro College Fund

I was recently humbled to be honored by the United Negro College Fund (UNCF) “In recognition and appreciation of outstanding service toward financial literacy of young people in New Jersey and beyond.”

Proud to receive the award, and in a room filled with family, friends and colleagues, I was touched by the introduction by Michael Cox, the Director of Development for UNCF.  Michael is an inspirational human being.  He could have any job in corporate America – naming his own salary.  Instead, Michael, who also happens to be a clergyman, has chosen to make a real difference working for UNCF. In his introduction, Michael told of our first meeting and that after a few minutes we were finishing each others' sentences about empowering the next generation to give them the tools to build their future.  I was choked up listening to one of my heroes telling me that he was thankful to have me in his life.    Being acknowledged in this way is reaffirming.

When it was asked to speak, I wanted to talk about Hurricane Sandy.  The awards ceremony would be in New Jersey, and we had just experienced the most powerful natural disaster of most of our lifetimes – certainly mine.  I knew that Michael Cox, religious leader, would ask me “What have we learned?”

We learned that this disastrous natural weather event was indiscriminate -  saw no color or socio-economic status.  It was power and power can be positive or negative.

Just because most of us have our power back on – do we really?  We need to reflect upon our collective power and whether it is working for the greater good.  Out of the devastation came a positive power of people to care, to share and to give.  It reminded us that together we must rebuild our personal and collective infrastructures – our collective future.

This is what UNCF does for our youth of color.  It helps young people to prepare for the future by giving them the economic infrastructure that society has not afforded them.  The nation's largest and most effective minority education organization, for more than 67 years, UNCF has raised more than $3.3 billion to help more than 400,000 students attend college and graduate from college.  UNCF has distributed more funds to help minorities attend school than any  entity outside of the U.S. government.

Children of color were shut out from our higher educational network.  This wasn't a natural disaster, this was a man-made disaster.  We all know that poverty limits access to a future of choices.

UNCF cares, shares, gives and advocates by opening the shut door for our youth.  It gives kids the tools to build their future. They award 10,000 students each year through scholarships and internship programs so that underserved kids can afford college, but they need more help.

Hurricane Sandy taught me that I didn't lose my power – I lost my conveniences.  My power lies in my blessings: my kids, my grandkids, my friends and my colleagues.

I have been blessed via my work to have been able to follow my passion which is to give kids and their families the tools to build a healthy financial life. A life they will design, not a life that they are a victim to.  A life of choice.

I serve over 500,000 children through my programs: 200,000 youth of active military people, 100,000 kids in the National Urban League, 10,000 kids in Jersey City, NJ 5,000 kids in Newark, NJ, 135,000 in FCCLA and DECA, kids in the YWCA, Girl Scouts and ASPIRA.

I am also committed to working with UNCF – Michael Cox and I are designing what that will look like.  The vision is to empower those minds of younger children and their families so that the economic road to college is easier.  Michael and I share our approach to life, in fact when he came to my home, I showed him a small plaque hanging in my kitchen, which reads “There are two ways to life life: as though nothing is a miracle OR as though everything is a miracle.”

“A Mind is a Terrible Thing to Waste.”  Hurricane Sandy taught us that heart and soul are also terrible things to waste.

Thank you – United Negro College Fund – for the collective power that you foster.  Thank you for not wasting minds, hearts and souls - thank you for giving us all the true power for a better future.

STORM OF EMOTIONS

In the 1980's I created the topic of "kids and money" and in the following years I have
written 26 books and founded the Children's Financial Network to promote financial
literacy. Along with teaching families to become money savvy, I have also, always,
stressed the importance of sharing and giving of one's self in order to be "Citizens of the
Community."

In a time of crisis, such as the devastating after-effects of hurricane Sandy, we are
reminded of the inherent good of the American people. So many have been directly
effected by losing their homes or their livelihood or even a loved one. The rest of us
who have been fortunate enough to escape unharmed or perhaps inconvenienced,
have, once again, seen compassion in action. This is also a time of introspection.

All around us we see our first responders risking their lives to help strangers in crisis.
Neighbors are helping neighbors. Government agencies begin to assess damages and
to offer assistance to those that have been displaced. Charitable organizations step up
to the task of offering aid. Citizens rush to donate to those charities. Even politicians
put their differences aside in order to get work done.

I am one of the fortunate who has only been inconvenienced with the loss of utilities. As
the storm began to move into my neighborhood, I found myself alone in the dark -
listening to the rain pour down and the trees brush against my home. I was afraid for
my safety and my property, but my overwhelming concern was for my family - my kids
and my grandkids - and for everyone else being touched by this storm.

I was able to get to a friend's home for comfort and safety. Eventually, I was able to
contact my family and was assured that everyone was OK.

So many others were less fortunate. Just in my community, one family was left
homeless after a fire destroyed their home. In another tragedy, a couple was killed
when a tree fell on their car - leaving behind two young children who were also in the
car.

I am an advocate of teaching our kids about budgeting their allowance, and as part of
that education I teach that a portion of the weekly allowance be set aside for charity.
This week I proudly watched my friend's son, who upon learning of the neighborhood
tragedies, rushed to get his container filled with the charity money from his allowance.
Before I understood where he had disappeared to, I heard - "Mom, we have to take my
charity money and give it to that family whose house burned down." He followed up
with, "Where are they going to live? We have to help them."

I know that charitable giving will always be a part of this young man's life. The lessons
and habits we learn when we are young shape who we become as adults. Teach your
children to be givers - also teach by example. Remember that giving can be more than
donating money, you can also donate your time, clothing and even household items. Be
sure to get your family involved.

That generous young man is right - "We have to help." We should all do what we can to
help our neighbors. We can make a real difference.

PAY TODAY OR LAYAWAY

The Christmas buying season is here even earlier this year.  We're looking forward to Thanksgiving but the stores already have their sights on maximizing their Christmas bottom line.  Holiday sales are expected to rise 4.1 percent this year.

It seems that our kids just went back to school and the leaves are still on the trees, but the major department stores have already begun their layaway service.  In fact WalMart and Toy “r” Us began a full month earlier this year.

Layaway is a good tool to help you with your shopping and budget.  Using layaway has several advantages – helps you avoid impulse buying, forces you to budget and helps you to avoid getting into trouble with credit card debt.  You can do your own layaway at home with your kids.

In MONEY DOESN'T GROW ON TREES, I teach my Four-Jar Budget System which is saving and budgeting for kids.  Allowance money is divided among the four jars: Charity, Quick Cash, Medium-Term Savings and Long-Term Savings.

Medium-Term Savings is actually layaway at home.  It teaches deferred gratification.  Help your child make a goal to save for.  Go window-shopping at your favorite department store or on the internet.  The age of the child should determine how long the saving should take.  The older the child the more ambitious the goal. Yes, you're teaching delayed gratification, but you're also teaching gratification -   three weeks is a long time to a toddler.  It's a good idea to print out a picture of the item being saved for and attach it to the Medium-Term Savings Jar as an incentive.

When my kids were young we used this method.  You may be surprised to find out how different your kids are from one another.  My son decided he wanted a Walkman – the prehistoric ancestor to the iPod.  My daughter had her sights on a special pair of designer jeans – some of you might be old enough to remember all those commercials  with Brooke Shields – those jeans were all the rage.  

Both kids were certain they knew what they wanted and were patient enough to save up but a funny thing happened along the way.  My son never wavered.  He knew he wanted that Walkman and nothing was going to stop him.  After a few weeks of saving, those must-have jeans no longer seemed so must-have to her.  She decided – and it was her decision – that a pair of regular jeans would be just great.  The logo on the rear pocket wasn't as attractive as it had been.

They both learned valuable lessons.  My son treasured his Walkman for years.  In fact, he took amazing care of it.  My daughter discovered that it might not be so important to have the most expensive item just because it's the trendiest.

As with all good tools you need to do your homework in order to use in-store layaway safely and correctly.  Make sure you read the fine print before you begin.  Putting an item on layaway involves getting into a contract with the store.  Read the rules, payment schedule and fees.  Some stores have eliminated up-front fees.  Others even offer a bonus gift card when your order is paid for. Make sure you really want to buy an item before putting it on layaway.

If you decided not to purchase an item, fees can be costly.  For consumers who don't pay on time or decide to back out, money will be lost [wasted].  Not only will you not get your merchandise, you also don't get your service fees back.  In many cases there is also a cancellation fee.  You will get back any payments you made minus the fees – in the form of a store credit.

Layaway at home or layaway at your favorite stores, it's going to be a long shopping season.  I want you to stay financially healthy.  If the stores are already trying lure your dollars away from you, it is certainly time to make your holiday budget.  After you make your own budget be sure to help your kids with theirs.  Be honest with your budget and be sure to stick to it.  Don't go into debt in the “spirit” of giving.

ALLOWANCE FOR TEACHING

According to a survey by the American Institute of CPAs, parents give their kids an average of $15 a week which adds up to $780 a year with older children receiving more than younger ones.  According to CNNMoney, parents say that their kids are spending their allowance as soon as they get it. That's human nature, isn't it?

Let's take a time out.  Financial literacy is learned and parents need to begin teaching their kids about money early on.  These lessons can start as early as three years-old and continue into adulthood. The fundamentals stay with us for life.

In MONEY DOESN'T GROW ON TREES  I teach my Four-Jar Budget System at length.  This is a system I created when I first began working with kids and families – it really works.  Let's look at the most basic principles.

The first thing to remember is that an allowance is “work for pay” - “work” being a series of age-appropriate chores.  Turn “pay day” into a ritual which means you should distribute the allowance once a week at a specific time. I suggest paying your child $1 for every year of age – for example, a 5 year-old gets $5.

Now about the “jars”, they can be envelopes or even plastic bags but they should be see-through.  The first jar is for Charity.  The second jar is for Quick Cash.  The third jar is Medium-Term Savings.  The last is for Long-Term Savings. Each should be labeled.

Charity is 10 percent off the top of the allowance.  This is how you teach your child the value of giving.  It also opens up a dialogue to discuss your family values.

The balance of the allowance is divided equally among the remaining three jars.

Quick Cash is is there for whatever your child wants to spend it on within the parameters of your family rules.

Medium-Term Savings is for a plan you have made with your child for something that might take three weeks or more of saving.  This is how you teach deferred gratification.

Long-Term Savings is to instill a sense of investment in his own future. I suggest saving for college. As the child grows, this money gets put into a bank account and later into other investments.

Now you have the framework to help teach your child the basics of saving.

IS COLLEGE STILL WORTH IT? - ABSOLUTELY!

According to the U.S. Department of Education, the average prices for undergraduate tuition, room and board were estimated to be $13,600 at public institutions and $36,300 at private not-for-profit institutions.  Remember, those are averages – there are over 100 schools that cost over $50,000 a year.

College tuition is outpacing median incomes but not going to school is even more expensive.  The income gap between the college grad and the high school dropout is huge.  College graduates earn 80 percent more.

While a four-year traditional university is preferable, it may not be for everyone but other post-high school education is also beneficial.  Community colleges, vocational training and even online universities play a valuable role. They offer an alternative higher education and retraining that is affordable and convenient.

Let's put this in real terms. In 2010, of the Americans who earned over $150,000, 82 percent had a minimum of a bachelor degree.  Only 6 percent had just a high school diploma.  People can graduate from college with quite a bit of debt but the investment in college is still a good value.  A study from the Hamilton Project found that $100,000 for college would yield a higher lifetime return than if you had invested that same amount in corporate bonds or hot stocks.

YOUNGER AMERICANS WALK AWAY FROM CARS

According to CNNMoney, young Americans aren't buying cars like they used to.  In the last five years, the share of new cars bought by the 18 – 34 age group fell 30 percent. Is it a sign of the economy or are other social factors at play?

This age group has been hit particularly hard by the recession.  There is also a trend to re-urbanization which affords greater access to public transportation.  The expansion and popularity of car-on-demand rentals is off-setting some of the need to own and insure a vehicle that may not be used very often.

The ever-growing use of social media is reducing the traditional social importance of owning a car.  Now that this generation can meet and interact on the internet, the need to get in the car and go for a cruise downtown isn't as important.

According to a Deloitte study, forty-six percent of Generation Y kids “would choose Internet access over owning a car.” Recent increased driving restrictions such as raised age for licenses, restrictions on cell phone use and limits on car occupancy are taking away that appealing feeling of freedom.  The restrictions actually serve to “cut them off from their friends.”

Auto manufacturer analysts offer a rosier long-term-theory.  They tend to agree that, even though young people may hold off on buying new cars, at some point they will have families, move to the suburbs and need their own cars.

Whether or not you live in an urban location and even though trends maybe changing, you have to teach your kids the financial truth about car ownership.  The manufacturers are probably right in thinking that your kid will be buying a car someday.  Your child needs to know the real cost of having a car and the necessity to budget and save.

In Money Still Doesn't Grow on Trees, I have a chapter titled: TEENS AND CARS – HOW NOT TO DRIVE YOURSELF CRAZY.  I suggest a short quiz for your kids about the different costs associated with buying a car and different costs associated with operating a car. How much are these costs?

Go over your kid's answers with them.  Remember to include sales tax, registration and inspection fees, insurance premium and maintenance.  Don't forget the ever-climbing cost of gasoline. Have your kid do the research and put a realistic price next to each item.  The result is sure to be sticker shock.

I am not in favor of a generation of young people staying at home, tweeting and surfing the net as a substitute for face-to-face human interaction, but perhaps riding a bicycle and utilizing public transportation will continue to be an appealing, economic and Eco-friendly, alternative to owning a car.

TEACH YOUR CHILD THE “WHY” OF SAVING

We have a very low success rate of saving in the United States.  According to the Wall Street Journal, savings fell to 3.6 percent of personal income in the first quarter of this year.  We have to start teaching our children about saving when they are young.  The key is to make saving a habit and I start these lessons when a child is as young as 3 years-old.

Begin by explaining to your children that we save in order to get things we want in the future, but also to get things we will need in the future.  It's difficult to think about the future when you're young because most children think of the future as next week, after dinner or five minutes from now. A three year-old is not going to understand the concept of long-term saving, neither is a ten year-old.

In “Money Doesn't Grow on Trees” I explain that saving means putting something away in a safe place to be used, if necessary, at another time.  I suggest having your kids make a list of things you can save besides money.  Squirrels save nuts to eat during winter; most of us save empty bottles and cans for recycling.

In my Allowance System for Children it is a rule that they save some of their money for long-term.  With your help, they have to decide what they are saving for.  I like to suggest saving for college. A good savings plan begins with setting goals.  Talk to your children about what some of their longer term goals could be: a house, a car, other large-ticket items.  Explain that it takes planning and unless you think about these expensive items when you are younger, you probably won't have the money to obtain them later on.

Explain that a goal should be realistic and obtainable.  If you know that you and your children will never be able to save enough for a private college, don't set that as a goal.  The goal should be state school tuition but acknowledge the possibility that your child could get a scholarship to that private university.

Remember, at this point, they don't have to plan out their entire life but it is important to set aside money each month.  Financial planners recommend putting aside 10-15 percent  of one's net pay for savings.  The point is to create this habit of saving while the children are young and “pay yourself first”.  That means putting your own money aside each time your receive it for your savings goals.  Explain what college costs today and what they could be when they are actually ready to go.  Make sure they understand how prices rise.  They need to understand real budgets, real money issues and what it will take to save for real goals.

EVERYONE NEEDS GROCERIES

Aside from working, paying taxes and sleeping, everyone has to eat.  Dining out is a luxury.  Dining in is practical, healthy and financially sound.  This means grocery shopping is a part of life.  It also provides valuable life lessons for your children: budgeting, making smart choices and savvy shopping tips.

Do your homework.  Before you go shopping have your kids help you take an inventory of your groceries.  This will help you decide what needs replenishing and helps eliminate buying duplicate items.  Think of what meals you will be making during the week. Make a shopping list.

Take advantage of money-saving strategies.  Using coupons, enrolling in your grocery store's customer loyalty program and being aware of rebates will all save you a significant amount of money.  Make this a fun project: once a week hunt for coupons in your local newspaper with your kids.  Generally local newspapers have one day a week for coupon offers.  Keep in mind that just because you have a coupon for an item it's not a bargain if you don't need that item.  Check coupons against your shopping list. If you have a coupon for an item on your list put an asterisk next to that item to remind you.

Remember that store brands can save you quite a bit of money over regular-priced name brand items.  According to Consumer Reports, blind taste tests revealed that companies have made such great improvements in their private-label brands that it is often difficult to distinguish taste between the two. This can save an average of 30 percent off your grocery bill.

Common wisdom suggests eating a healthy snack before grocery shopping helps cut down on impulse buying.  Sticking to your list will also help with impulse buying.  Allow your child one healthy impulse buy such as a piece of fruit or some other nutritious snack and set a price limit.  This will help your child learn the value of using a choice wisely...it will also make your shopping trip just a little more pleasant!

Finally, pay attention to the check-out process.  Have your child watch as items are scanned to be sure you are being charged accurately.  If you feel an item has wrung up incorrectly, question the clerk.  If necessary ask for a manager to check the price on the shelf against the scanned price.  Some grocery stores will even give you the item for free, or some other reward for an incorrect scanner price.

Go green and put your kid in charge of bringing reusable shopping bags with you. This helps to reduce the energy and natural resources required to make paper or plastic grocery bags and keeps them out of landfills. Teach your kids a valuable ecology lesson by example.

TEENS AND JOBS

Now that kids are back in school, many teens will be thinking of getting a part-time job to help  supplement their allowance or to save for a car. Because of economic conditions, for some families,  there may be no choice but for the child to contribute to the household income if possible.  While I am a strong advocate of teens working a full-time summer job and even some weekend work during the school year, I don't believe that an after-school job is a good idea. Parents need to help your children balance work, school and time off.

Let's talk about the principles of of a budget but instead of money, apply them to time allocation.

Sleep is the foundation upon which our mental and physical health are built. Nobody gets enough sleep these days but teenagers especially need their sleep.  According to a National Sleep Foundation study on teens and sleep, teens need 8.5 to 9.25 hours a night.  This means that sleep time is budgeted as a “fixed” time allocation. School hours are also non-negotiable.  Your kids have to go to school.  They must not miss days or cut classes because of the demands of a job.

Homework, extracurricular activities and household responsibilities can be variable time allocations but they have to be counted realistically.  Make sure you budget enough time as these can't be shortchanged.

Time off means free time.  This is time just for the teen which doesn't have to be accounted for.  Everyone deserves a certain amount of “down time” whether it's time to take a bike ride or read a teen magazine.  How the time is used is up to the teen but it must be included in the budget.

If you add all this required time it doesn't leave much left for an after-school job.

Successfully managing their school time should be the main focus for our teens because the more education our children complete, the higher their lifetime average earnings will be.  This is true for both boys and girls but boys are more vulnerable.  According to the Manhattan Institute for Policy Research, 72 percent of girls compared to only 65 percent of boys graduate high school.

We know that work is good and healthy but it is not always good for our teens. If your teen is going work, be involved with your teen in the job choice. Be careful not to take on their responsibilities but it is up to you to discuss safety, training, location and schedule.  The National Institute for Occupational Safety and Health reported that an average of 231,000 teenagers under the age of 18 are injured at work each year.

If your child does work, it is up to you to monitor your child's work environment and to keep tabs on school work.  Confirm that grades don't suffer because your child is too tired from working and keep an eye on attendance.  School comes first.

COLLEGE KIDS AND CREDIT

College is a busy time for young adults. With part-time jobs, research projects, classes and dating most college students are more concerned with their GPAs than their credit scores.  It's pretty easy to make some really dumb mistakes that can harm their all-important credit score which can cost money later on when it's time to get a car loan or mortgage.

In 2010 the landmark federal legislation that overhauled the credit card industry went to college.  The laws began reaching into college campuses to protect students from “unfair or deceptive” practices by issuers.  The legislation proscribes unique protections for the young consumers who are such an attractive market for the card companies.  According to Sallie Mae, about 42 percent of college students have a credit card.

Credit card companies can still market cards on campus but they can no longer offer gimmicks or “come-ons” such as t-shirts, coffee mugs or even concert tickets just for filling out a credit application.  If a student is younger than 21, it is now tougher to get a credit card but it is not impossible.  “If they want to get a credit card, they're still finding ways to get credit cards,” said John Ulzheimer, President of consumer education at SmartCredit.com.

Even with the new laws students can still get into trouble with their credit.  According to Quicken Loans, there are two areas that cause these kids to have lower scores: high balances and credit inquiries.  Most students, and many adults, don't know that just applying for new cards can damage a credit score.

Long before your kid has gotten to college you should have been teaching them about finances and preparing them to be out in the world.  If not, it's never too late.  Students should not think of credit as cash.  They should know the difference between a debit and a credit card.

Parents may turn to the plastic for everything in order to rack up airline miles or other rewards but hopefully you have been careful to explain that you have to have the cash to pay that bill at the end of the month.  Paying the monthly balance in full avoids interest and builds solid credit for the future. Credit cards are not “magic” money.

Credit card abuse and high credit utilization are not the only ways to damage your credit score.  Even students who don't have a credit card can get in trouble.  Many college students who graduate are stunned to find that their credit scores have been hurt by unpaid utility bills.

They all move out of an apartment they rented off campus with friends and no one pays the bill.  The utility bill goes into collection and the student named on the bill take a credit report hit of 50 points or more. It's easy for a bill to go unattended to and go unpaid.  It could even be an honest mistake or misunderstanding but there is still a negative impact.

Send your kids off to college with the knowledge and tools they're going to need to get them through their adult financial life.

BIRTHDAY PARTY CRAZY

Remember when kid's birthday parties featured “Pin the Tail on the Donkey”, ice cream and birthday cake?  The guests were a few classmates and the birthday kid's grandparents.  At some point everyone would gather around the cake and sing “Happy Birthday”. Gifts would include a car model or some doll clothes.  Hula hoops were pretty cool.

Those days are gone.  We have entered the age of “Extreme” birthday parties.  “Pin the Tail on the Donkey” has been replaced with a live donkey.  The birthday cake has to be a creation worthy of a Food Network competition and follows a catered meal.

The pressure and expense of the “birthday circuit” have become impossible.  In addition to the soccer games and music lessons, the already over-busy kids have invitations to these enormous parties many weekends out of the school year.

According to family therapist Bill Doherty, one Minnesota family rented a bar for a princess-themed party.  Guests were picked up in limos.  The adults wore formal attire.  There was live music and even  champagne for the adults.

The birthday “princess” was turning 4!

Parents don't want their child to feel less important than their classmates and so the cycle continues.  The key here is to adhere to your own value system.  It is great to mark events such as birthdays but it is important to keep perspective.  As with most of our milestones, use this as a teachable moment.

When my daughter was at Dalton she gave a wonderful pair of mittens to one of her friends as a birthday gift only to have the kid come to my daughter's birthday and give her an expensive stereo system.  We called the mom, thanked her and returned the gift.  The next day I called the Class Mother and told her there was going to be a new gift rule: gifts had to be no more than $12.00.

Many children have three or four birthday parties each year: one for classmates, one for nuclear family, one for family friends and one at school.  It would be OK to cut this in half.  There can be one party for youngsters and one for adults.  Keep the list short.  Keep the party simple. The goal should be for the birthday child to enjoy spending time with friends and family.

KEEP THOSE GRADES UP!

In today's economic environment, higher property taxes and cost of living, frozen wages and withered home equity have put the crunch on middle-income parents.  Many no longer have the savings or even borrowing power to keep up with the ever-rising cost of education.

A family making $75,000 a year might have to contribute $10,000 a year toward the cost of of college before qualifying for need-based aid.  For a family with $150,000 in income the contribution jumps to $35,000 a year or more.  The need for student loans has skyrocketed.

Universities like Tulane are offering sizable amounts of aid based mostly on academic promise in order to bridge the loss of brighter students to less-expensive public colleges.  According to an Education Department study, the percentage of students receiving merit aid since 1995 has grown to significantly rival the number of students with need-based aid.

Merit aid is one of the most promising answers in college financing now.  Students can be attracted to schools for any number of emotional reasons including the look of the campus, having a friend also attending or even the climate.  Then the parents have to figure out how/if they can pay for it.  Remember your budget.

Put financial consideration high on your list when making the college “wish list”.  Be sure to include schools which offer substantial merit aid.  Look at schools that will want you and be willing to help out.  The University of Miami, for example, awards merit scholarships averaging more than $23,000 a year to nearly one quarter of it's freshmen.  Tulane offers similar statistics.

Good grades are not only necessary in order for your child to get accepted by the college of choice, but to help pay for it.  It is important to note that once accepted, the student has to continue to get good grades and meet set standards in order to renew the merit-based aid.

IT SHOULDN'T TAKE A TRUCK TO MOVE INTO THE DORM

Gearing up for college move-in is another chance for teaching budgeting and common sense.  Having a teen leave the nest for the real world is a milestone but we shouldn't try to assuage our anxiety with unnecessary shopping and spending.

First your child needs to find out what is provided by the school and also what is permitted in the dorm room.  Keep in mind that dorm room space is limited. Now it's time for a list.

You and your young adult need to make three lists: “must-haves”, “wants” and “bring from home”. Remember to research prices and list them with each item.  Set a realistic budget and stick to it.

Before you make any purchases or decide what to bring, your child should contact the roommate.  They can save money and clutter if they don't duplicate items that they can share.  For example, one can bring a microwave and the other a floor lamp or stereo.

Remember that this is your child's time to grow.  Let them make decisions.  Having matching bedding might be a priority for you but not your son or daughter.  You are not the one heading off to college.  Don't obsess about remembering every last sundry, snack or notebook.  Even the most remote campuses have commissaries and book stores.

Get ready to start baking your kid's favorite cookies to put in those “care packages”!

BACK-TO-SCHOOL BUDGETING REFRESHER

It's back-to-school time again and that always means it's also “back-to-spending” time.  This season people are projected to spend nearly $670.  This is a great time to teach your children.  Let's get back-to-basics.  Start by helping them make a spending budget for the two major back-to-school categories of supplies and clothing.

Begin with supplies.  First get a list of all the recommended supplies your children will need for the school year.  “Need” is the important word to focus on.  Give each child a small notebook and show them how to list each item and price.  Ask what supplies they think they will need or want for this year.  Again, they should write down the item and its price.  I recommend that you should pay for all the “needs” and have them pay for their “wants”.

Next, do the same thing with their clothing budget.  The list should be specific, detailing how many of each item they think they will need.  The total cost is likely to surprise you and your child alike.  After getting the totals, you decide the final amounts and prices.  If they say that the “need” three pairs of popular boots at $200 each, you get to say “I'll pay for $40 boots”.  We know this isn't going to be easy but this is a worthwhile lesson.

Your children can now start to understand the dynamics of planning, and most importantly, budgeting.

ARE THINGS LOOKING UP FOR STUDENT DEBT: NOPE

Generally, debt is down for the American consumer. Mortgage debt and credit card debt is being paid down – but student loan debt is not. It stands at roughly $1 trillion and rising.

Why? For starters, during the recession many people decided to return to or stay in school because job prospects were so lousy. People were hoping to wait out the recession and improve their chances of getting a job when it was over.

Student debt has also increased because of the rapid rise in the cost of college tuition, which is growing faster than inflation. Also, Mom and Dad may not be able to contribute as much as they had expected to, because they may be unemployed.

Some of the college debt burden is also falling on students’ parents and grandparents; almost 17% of outstanding past-due student loans are held by those over 50, and almost 5% by those over 60, according to an economist at Barclay’s Capital. This is the time parents and grandparents should be saving for their retirement, not worrying about college debt.

My advice? Remember, your offspring can borrow for college, you can’t borrow for retirement.

The Reinvented Wedding

Twenty-seven thousand dollars is a lot of money for a party even if it is the most important day of your lives.  According to theKnot.com and WeddingChannel.com, that's what the average wedding now costs.  Costs are even higher in the more expensive markets such as New York City and Chicago.  This is a good and sensible reason for the recent trend toward more homespun and creative wedding receptions.

In this sluggish economy more and more couples are turning to simpler, intimate and sometimes off-beat ways to celebrate.  According to Amy Kaneko, an events planner in San Francisco, “the backyard is the new ballroom.  “I think people are waking up to the insanity that is the wedding market” said Marin County, California caterer Stacy Scott.

Couples are opting for simple ceremonies followed by downsized receptions including picnics, barbecues or simply inviting only closest family and friends utilizing such venues as public parks, backyards or the living rooms of friends or family.

Another reason for the new trend is that marrying couples are now at record high ages. According to Brides Magazine, the average age of the bride is now 27 and the average age for the groom is now 29.  Couples are busy and have to do their planning in the midst of work and other pressing commitments.  These simpler festivities can take as little as two weeks planning and coordinating.  Often guests are asked to bring their own chairs and cushions.  Some couples have even gone the “covered dish” route asking friends to bring food and beverages.

Several years ago I worked with a couple to budget a wedding for a feature on Oprah.  We put together a complete Las Vegas  wedding for ten thousand dollars.  The key, as with most financial decisions is having a budget and sticking to it.

It is essential that the marrying couple and family [if they will be shouldering some of the cost] assess their finances, make a budget within their means and meticulously adhere to the plan. You must accurately assess all costs that will be involved and be honest and realistic about them.  Also include a category for unexpected costs.

Stay within your means and don't let your emotions get in the way of your financial health. If you can't afford an exorbitantly priced new designer gown, consider buying a gently used one or perhaps borrowing a gown from family or a friend.  You can always have the dress tailored to fit you which is far more cost effective than buying a new one.  If you are going to have your reception at a restaurant consult with the establishment to find a cheaper time of year or day of the week.  It's OK to break with tradition.

These are all great ideas even in better economic times.  Often the year of preparation and lavishness of the traditional wedding can overshadow the real meaning of the gathering.  These less formal, less frenetic celebrations make for a special day that everyone can enjoy and remember.

There's No Place Like Home

Traditionally, “fleeing the nest” has been a rite of passage for kids heading off to college.  Both children and parents look forward to the new life-stage.  Kids eagerly anticipate their freedom.  Parents dream of a clean, vacant extra room in the home.

According to a recent study from the largest student lender, Sallie Mae, this year more than half of the students surveyed lived at home while attending college.  This is up nearly 9 percent from just last year with most of the rise coming from families with over $100,000 in yearly income.

The study also noted that there has been a noticeable change in the way college is paid for overall.  Students are carrying a larger percentage of the cost, up 6 percent from four years ago. Parents are paying 7 percent less.

Along with choosing less expensive colleges, remaining in the family home has become another popular tool to help offset  the high cost of higher education.  Postponing the “fleeing of the nest” is not, however, without complications.

I discuss this topic in Money Still Doesn't Grow on Trees in a chapter on kids moving back home but it also applies to kids who don't leave.

Both parents and kids must have a set of rules.  These rules won't be the same ones that you used when your kids were minors and you were completely responsible for them but your kids are not your roommates.  Remember, it is still your house.

Two very important issues that you need to clarify up front are “who pays for what” and “my house, my rules”.  Be specific.  Negotiate a fair contract.  For example, you're probably not going to set up a curfew but you want to be notified if your kid isn't going to be home when expected.  On the other hand, you're not going to enter his or her room to gather dirty laundry from the floor. Coordinate on a reasonable budget to determine “who pays for what”.

Parents, forget those paint swatches and hold back on ordering that new treadmill.  That “extra” room might not be vacant for a few more years!

Teens and Cars: How Not to Drive Yourself Crazy

We all want things we can’t afford, and we basically know that there are various ways to handle the problem:

• We can do without it.
• We can save for it.
• We can find ways to increase our income.
• We can buy now and pay later on some sort of an installment plan that we can or can’t afford.

But what happens if we plan carefully in advance—save up, increase our income, or set up a plan to make payments we can afford—and suddenly we discover that we still can’t afford it?  This is a situation that your teen may easily find themselves in when it’s time to buy a car or pay their share of insurance on a family-owned vehicle. This comes from making plans based on too little information.

Give your teen this quiz before they start the auto-buying process:

1. What are all of the different costs associated with buying a car? How much are they? (Have your teen make a detailed list.)
2. What are all the different costs associated with operating a car? How much are they? (Encourage teens to go on-line to research the answers.)

It’s heart breaking when you’ve seen your teen work hard and save up what they think is enough for a car . . . when they drag you to their computer to show you the ad for that perfect vehicle . . . it's only $6,000.  “I’ve saved the money, so let’s go buy this…now!”

But we all know that your teen will need more than the $6,000. They will also need money for:

• Sales tax
• Registration
• Inspection
• Insurance
• Extras

The extra price tag on all these? That’s for your teen to research, with your coaching.  They may be shocked at the insurance quotes, which vary greatly from state-to-state and even within different regions or locations in each state—not to mention—gender.  For instance, in New Jersey, for a male driver, who is 18-years-old, the average insurance quote is $2,999 or $250 per month versus an 18-year-old female driver at $2,267 or $189 per month.  After your son stops grumbling about the fact that his insurance would be lower if he were a girl—turn this into a “teachable” moment and ask him to think about why a male’s insurance is higher!

Also, I include a trip to the insurance agent before turning over the keys. Since we are parents and most of what we say is heard by our ever-so-smart teens, as “Blah, blah, blah,” let your insurance agent explain liability, collision, personal injury coverage and the facts-of-life if your child is caught speeding or under the influence of drugs and alcohol.  The facts are “sobering” and are more impactful coming from a third party.

If your teen is going to drive the family car, let them research the cost of adding a teen to your insurance policy. I’m a firm believer that they need to pay the extra cost. Make sure this is also on the list of questions for your insurance agent visit. In many states, for instance, the insurance company can cancel your policy after one accident, or even one moving violation, by a teenage driver.

Also, let your teen find out what they can do to reduce the cost of the premiums. This varies from state to state and carrier to carrier, but here are some things that will generally make a considerable difference:

• Have your teen take and pass a driver-training course.
• If your teen is a good student, make sure their grade record is part of the insurance package you give to your carrier. Explain that insurance companies have found that good grades correlate with being more responsible and actuarial tables show that good students get into fewer accidents.
• Put limitations on how much your teen drives the family car—and which car they are allowed to drive. Premiums may be lower if they are driving the older or cheaper car. (Also, if your teen is only allowed to drive occasionally, premiums may be lower.

The next thing teens have to figure out is the ongoing cost of gas, maintenance, and emergencies and how they are going to pay for that. If they are using the car to do chores for you, it’s only fair if you help with the costs—if not, they may be shocked when they spend $50.00  to $100.00 for gas per week!


Stay tuned for my next blog post where I'll show you the “contract” I want you to create with your new driver.  Until then, Happy Motoring! (I know you have a lump in your throat—“Teens and driving” always causes that!)