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!)

From Helicopter Parents to Free-Range Parents

I grew up in the days of freedom. We rode our bikes to school and met with the neighborhood kids to play after school. We invented games or scavenger hunts and never seemed to be bored. We had to be home at dusk. Mom and Dad looked at our report cards when they arrived and if they got a call from the school …we were in trouble. We were supposed to do our homework, and we did. We were supposed to get good grades, and we did. Life was pretty simple.

Then, we grew up and had kids and the world seemed to get more dangerous (or were we just more aware of the dangers?) Kidnappings, pedophiles, predators praying on our kids. Mom and Dad both working so kids had to be entrusted to others. When parents were home, caring seemed to be shown by hovering. “Who are you playing with? What are you playing? What are you reading? Are you reading? What are you eating? Who are your teachers? Where is your homework? Let’s do it together. Let’s go to: soccer, football, cheerleading, yoga, ballet lessons, chess classes, tutoring, piano practice…(I’m getting nauseous).”

We went from free-range parents to helicopter parents. Ok, we try to balance work and home and kids and family and friends. If it isn’t scheduled, it can’t happen. We all want our kids to grow up to be healthy, self-sufficient, independent, creative kids who are in safe, supervised environments protected from the creeps that are lurking about. Are there areas in our child’s lives where we can give them some freedom so that they can learn to make choices on their own…and equally learn the consequences of those choices on their own? Yup! With money!

Kids today, if we allow them, can earn, save, spend and share money by being independent self-starters who can be empowered to make their own choices. You set down the rules. For instance, have your kids decide what they want to buy. For the younger ones, maybe a small toy, for older ones, it could be a video game or cell phone or iPad. (You must approve of their savings goal.) The challenge is that they have to earn the money to reach their goal. Either you can start them on an allowance doing regular chores – or pick odd jobs for them to do. [Hint: pay by the job, not by the hour.] They can dust, vacuum, weed, water plants, clean windows, sweep floors, brush dogs, stack recycling…let them come up with ideas. They can also earn money by using some of those skills they’ve learned, like teaching other younger kids to play the piano, or soccer, or chess, or do yoga.

Of course you will still supervise, but avoid hovering. If your kid earns the money - they get to buy the item - if they don’t earn the money – they don’t. It’s simple. You can use the same system for them to pick and donate to charity.

This earn and learn system will help balance the helicopter versus free-range parenting. The drawbacks of the helicopter parent is that you create a dependent child who doesn’t know how to be independent, because they were never allowed to be. The free-range parenting drawback is the safety issue that independence in a dangerous world can create.

Teens and Summer Jobs

Has your teen found a summer job yet, because it’s going to be hard to find one.  In fact, last year, only 1 in 4 teens had summer jobs, the lowest on record, and this summer may be just as tough.  

Half of all teens are in school over the summer doing remedial or prep work for college. The recession has also changed the landscape. Now, teens are competing with grandparents, who are also vying for the same summer jobs.

What should your teen do?  They should research companies that hire teens: camps, day care, retail stores, restaurants, tennis and swim clubs, libraries, parks, resorts—you get the picture.

Have your teen look into internships with corporations, who are interviewing now.  Also volunteer work is great.

Help your teen to create a simple resume and a cover letter.  Work with them to hone their interviewing skills. They should go prepared to each interview with a list of intelligent questions that demonstrate their knowledge of the job and why they are perfect the candidate.

They can search summer job opportunities online and also visit prospective employers in person.  They can also be creative and use their special talents by giving lessons to neighborhood kids.

The earlier they start, the more options they’ll have.

What Parents Need to Tell A Child About Their Own Finances: Where There’s a “Will”, There’s A Way!

In my mother’s day, and my grandmother’s time before that, a family discussion on the subject of sex or money was not considered “appropriate" dinner conversation. (Of course, that was also a time when family had dinner together!) Both were viewed by them to be intimate, private topics, and there is evidence to suggest that neither subject was discussed much even between husbands and wives!

Today, social morals have been relaxed (in some families) and sex is even a required topic of discussion within many families. The great life-threatening dangers that can come from imprudent or unprotected sex have forced most parents out of Victorian age restraints.

Oddly enough, the subject of money still has not been equally discussed, yet I contend that the imprudent or unprotected spending have their own serious consequences: over extension of credit, personal bankruptcy, and, at the extreme, homelessness, these are some of the unfortunate results that are on the rise.

Are you prepared to discuss your own finances with your child?  “Too personal”, or “none of their business?”  No parent cares to pass along information about him or herself that can be used to perhaps be embarrassing later on. (That’s why we discourage Mom from displaying those cute age-2 bathtub shots to our boyfriend!)

I don’t think Junior needs to know that you bounced seven checks in a day, or that you were denied a mortgage four times before getting approved. However, there is some financial information about yourself that an older child, and certainly a teen, does need to be aware of for their own benefit.

Start with your will.  You note I said your will.  If you have kids and you don’t have one – stop reading my blog and go to: www.nolo.com.  Make your will today with maximum ease and minimum cost using Nolo's Online Will.  Just log in, answer questions about yourself and your property, and print!  Or make your will with Quicken WillMaker Plus, software that comes with dozens of other useful documents such as Power of Attorney and Health Care Directive.  Not only does a will outline what happens to your financial assets and designate an executor (the person who sees that the instructions in a will are carried out), it also lays out (or should) what you want to happen with your children until they are old enough to be on their own.

It’s shocking to me to learn that despite the obvious importance of having a will, 55% of all Americans die without one.

I’m ok with you going onto sites to see what you want in your will – but I’m still a believer in getting a lawyer to actually draw one up. It’s not worth getting it wrong.

Some of the things to think about are:

1. Who do you trust to be the executor?
2. Who will get custody or guardianship of your kids?  By the way, make sure you have communicated your intentions to that person.  A surprise is not a good thing.
3. How will that child be provided for financially?  Have you made sure your guardian will also be provided for? Raising a child is expensive, you don’t want to burden that guardian.
4. How are your assets to be divided up?  Who gets what?  Remember, you need to review your will every 5 years or when something changes, like a new child, a death, divorce, etc.

The reason a discussion with your child about your will is so valuable is that it gives you the chance to assure your youngster that he or she will be taken care of if something happens to your spouse/partner. Don’t think that your 4 or 5 year old hasn’t thought of this. They are exposed to Bambi, Lion King, Cinderella – what happened to their parents? Hansel and Gretel still freaks me out!

Give your kids the assurances that are age appropriate, make sure they feel secure and don’t think they’ll end up in an orphanage begging for porridge.

Teaching Our Kids Important Money Skills Through the ATM

Without realizing it, many of us unconsciously leave our children with the impression that the ATM/debit or credit card in your wallet or purse is the way you get money.  When we run our errands, we often run our card through the machine or give the check-out person our card without explaining to our children what we are doing.  Think about it; even as babies, strapped in a car seat, they accompany parents as they use the bank drive-thru window.  It’s no wonder our kids think of these as magic pieces of plastic.

Part of a child's financial life needs to include the understanding and responsibility of using these cards. We also use language like “Oh, I don’t have money, I’ll just put this on my credit card.” We need to finish that thought and explain that the card is only a substitute for real money until the bill arrives and you have to pay that bill.  If your children are older, you can even show them the credit card bill and explain to them that now you are paying the bill.

First, children need to understand that our ATM card represents an account we have in a financial institution – a bank or credit union. If they haven’t been with you when you go inside the bank, take them along next time.  You can point out that the person behind the window is a teller and that the plastic card you carry is an ATM or Automated Teller Machine card.  While tellers are there only while the bank is open, the ATM works 24 hours a day, 7 days a week, without a break. Another advantage is that, since these machines are part of a network, the machine you use does not have to be at your own bank. The ATM allows you to access money in many different places, whether in a bank lobby, food or retail store, and other establishments around any town or city.

Help your kids to understand what happens when you put your card in the machine.  That thick black stripe on the back of the card contains information that tells the ATM who you are and identifies your account information.  One of the first things that happens is that you are asked to input your secret code using the key pad. This code, or PIN (Personal Identification Number), is one you have selected which you keep secret.  Anyone who tries to use the card without knowing that secret code will be unable to carry out any transaction at the ATM.  Your kids can think of this as the same kind of security we have with our passwords on our computers.

Another element of the ATM or credit card is the variety of transactions it enables. Our children usually see us obtain cash, but they should understand that you can also deposit money, move money from one account to another, or even just check to see your account balance. The machine gives you a receipt for each transaction.  Remind your kids that, if the machine you use does not belong to your bank, you may be charged a fee.

Now get out there and start teaching your kids important money skills!

Do We Instill Personal Values Through Consumerism?

So, you think that your personal values are only taught in church, mosque, or synagogue? Think again. There are few buying decisions that you make, which may supersede conventional wisdom and, believe it or not, this is allowed.

Usually these decisions are based on your personal convictions. They can be for political or religious reasons, or out of personal loyalty. For instance, do you refuse to drive anything but an American-made car? My stepfather did. Do you shy away from buying items made by anti-American countries? Or do you buy certain products because you or someone in your family works for that company?

Whatever the reason, if it strongly influences your buying decisions over all other considerations, you may want to explain your position to your youngster.

You know that one of my passions is to make U.S consumers aware of the impact of teaching values through the buying decision, particularly when purchasing things with the label, “Made in America.” This is a subject that is growing in importance; not only because of the recession, but also because many U.S. jobs are being permanently moved offshore.

If buying products made in the U.S. and producing jobs for our workers is important to you – discuss that with your children. Explain that the reason you want to buy goods made in the U.S., means that people here are working in jobs to make those products (continue the process for your youngsters). If people are employed here, they also pay their taxes. If they pay taxes, our government has to borrow less to pay for all of the services to keep the country going. Also, explain that, even for something as insignificant as a $20.00 t-shirt, buying an import could eliminate an American manufacturer who gives people jobs. So, fewer jobs now means more people need the government’s help and more tax burdens for the people who still are working.

Try not to scare the kids, but older teens can handle real-life economics and understand how these small decisions affect the larger community. Think about it:  If every American spent $64 on something made in America, we could create 200,000 jobs right now. The only way to figure out where something is made is to read the labels.  Teach your kids to do that. If they are buying online, see if they can inquire as to where the product was made, as well.

When I recently hosted “Moneytalk,” a national radio show, normally hosted by Bob Brinker, one of the callers told me an interesting thing. I have not been able to verify this, so let me know your thoughts. The caller said, that with most major product call centers, if you are transferred to a customer service representative in a foreign country, you can request to speak to a supervisor and ask to be transferred to a rep in the U.S.  Try it next time and let me know.

Never A Borrower Or Lender, Be ( especially if you are a child!)

An issue facing kids is borrowing and lending. Just as some societies distinguish themselves from the rest of the world by setting up elaborate barter systems, an important element of preteen and teenage custom is borrowing and lending money. You’re not going to change that. But you can discuss it and channel it before it becomes a problem.

One step toward helping your children understand borrowing and lending is to incorporate loans into the Allowance Jar System you’re using. Occasionally, your child will want to buy something that’s “on sale” right now or that it may be a “limited-time opportunity,” like spending when on vacation. The purchase price may not be out of range of their budget – they could easily afford it with four weeks of Medium-Term Savings – but they don’t have the ready cash right now.

But if you loan them the money to buy it, are you caving in and abandoning your system? Certainly not. You can work out a repayment schedule, with just a small rate of interest. After all, you’re not trying to make money off your kids. The interest payment can go into a family vacation fund, for instance. The point is that you want your kids to understand how borrowing and lending work. Charge them a flat interest of 10 cents per week on every dollar borrowed. They will start to feel the bite of interest, and that’s the point.

You can also use borrowing and lending situations to teach your children about establishing credit. If your child repays the loan on time they’ll be eligible for another, perhaps larger loan later. If not…they become a credit risk and won’t be eligible for another loan until they’ve proven their responsibility to your satisfaction.

When it comes to putting these lessons into practice outside the family, one rule changes right away. If your kids are loaning money to a friend, they shouldn’t charge interest. It’s a bad precedent to set between teenage friends. The most important thing to teach your child is that money lending is an exchange that has rules. If they’re going to lend money to a friend there should be a clearly defined repayment schedule. Your teen should discuss with the borrowing friend:  (1) How much money they want to borrow; (2) What the money is for; and (3) When the loan will be repaid.

More importantly, your young lender should know that this transaction is about “money” not “friendship.” The friend may not repay the loan on schedule, for instance. Explain that someone can be your good friend, yet still be irresponsible with money. With a contract (even a verbal contract), clearly understood by both parties, if a borrower fails to keep up their end of the deal, it doesn’t have to spell the end of a friendship. Your teenage lender should make it clear to their friend that there surely won’t be anymore loans available to them. However, another important lesson every lender should know in advance is that they should never lend more than they can afford to lose. Tough lessons, but real life!

Make Your Brain Happy: Earn Your Money

Have you bought that lottery ticket and dreamed of the bliss that big pay-off could yield?  If you have—you are not alone.

But, researchers at Emory University, with too much time on their hands, did a study awhile ago and determined that people who actually earned their money were happier.  So, all you lottery winners and trust-fund babies step aside to those who earn it.  We all thought you were happier, but it seems we working folks are… who knew?

Emory University researchers had measured brain activity in the striatum—that’s the part of the brain associated with reward processing and pleasure.  They had two groups of volunteers.  One group had to work to get their money while playing a computer game and the other group just got money without having to earn it.
The brains of those who had to work for their money were more stimulated.  It seemed the brain was happier.

As a side note—some of the big lottery winners may not be happy because they blow through their winnings at a shockingly fast pace.  Some years ago, Oprah had me do a show about big lottery winners—the people who won over $100,000,000.  We found that the people Oprah had me work with not only squandered their winnings, but went on to declare bankruptcy.  In fact, the stats showed that over 90% declared bankruptcy.  I even coached a man who won over $100,000,000 twice—and blew it! Unfortunately, my advice began with, “What were you thinking? Are you kidding?”  Most of their  issues centered around their fundamental lack of any money savvy and their friends and family expecting and getting a share of the pie. (But twice? Come on!)

Ok, back to the study.  The study did show that people who won the lottery were not happier a year after they won.  We also know from other psychological studies that people get a great deal of satisfaction out of the work they do.  We also know that we were designed to work to obtain the things we need and want.  Without that stimulus, we can suffer from depression.  Take a look at our unemployment rates and the devastating effects it’s had not only monetarily, but in terms of people’s self-esteem.

The moral of the story—America, we want and need to work, we are not looking for the hand-out.  Congress, stop acting like spoiled children (sorry kids, I didn’t mean to insult you) and you need to get back to work and come up with solutions to our job crisis.

Where Do Those Kids Get Those Ideas?

There’s an interesting phenomenon that happens right about the same time that our children turn from our sweet little kids into Freddie Krueger, or monsters from outer space… We start turning into some kind of different creatures, too, often creatures that we don’t approve of all that much.

You know the person I mean. The mom that we smirked and rolled our eyes at in the store when we were teenagers—the one who was only there to buy some light bulbs, but somehow kept adding giant squirt guns, giant boxes of popsicles, and other stuff to her shopping cart as her kids kept goading for more.

And you know the kids I mean—the ones who know exactly what they’re doing. When I wrote Money Still Doesn’t Grow on Trees, I referred to something called the, “nagging factor”. That’s the number of times kids say that they have to nag a parent before he/she will give in and buy them what they want. Guess how many times they have to nag us? The answer is “Nine”.

And face it… kids in a store have nothing better to do with their time… torturing us is almost a hobby, or a way of life. And, if you don’t put a stop to it, you’re supporting the behavior—especially if you’re going to give in.

I know… saying, “no” is a tough. But how about if they nagged, “Gee Mom, I’d really like you to buy me some drugs? Please, please buy them for me?” Obviously, ridiculous… 9 times, 200 times, it wouldn’t matter. Let’s look at this, of course you’d say, “No.” It might make them happy in the short run, but you know the destructiveness in the long run—no choice.

It can be the same thing with material items. Not as awful, but it’s the same thing. Giving something to a child because they nag or beg is pleasurable in the short run to the child—and to you, if you hear, “I love you, Mom. You’re the greatest”—but in the long run it teaches a lesson that you don’t want to teach.

Giving in is all about guilt. We give in to our kids, and later to our teens, because we feel guilty for one reason or another, and pretty soon we’ve become people we don’t much like being.

Where does this guilt come from—especially in the middle of a recession? Let’s look in the mirror and see what messages we are sending to our kids. (In terms of the guilt—I’m a Jewish mother, so I’m comfortable with my genetics—if you’re not, see a professional!)

Saying, “No” is tough—but often necessary. Try it the next time the kids nag. “No” worked for our parents, we wouldn’t have dreamed to keep nagging. If you stick to, “No” and don’t give in and reinforce the “nagging factor” behavior, it should also work for you.

Let me know.

You Don't Know How Lucky You Are!

Charity has to be taught, and shown to kids for them to “Get It”.  Yelling the words, “You don’t know how lucky you are!” can seem educational, but they’re really not.  None of us realize how lucky we are.   


“Giving” refers not just to money, but also to you.  On Christmas morning, I used to take my kids into a local hospital to serve meals to elderly people who had nowhere to go.  My kids “Got It”.  My big revelation came when my son, Rhett, was 8-years-old.  We were in a small bodega in New York City so that he could use some of his “Quick Cash” to buy some Tootsie Roll Pops (I was trying to empower him to make his own choices, and was a little liberal on the sugar choice!). 

He had his pops and his money and was standing in line to pay and in front of him was a homeless woman who had a cup of change and an orange.  She dumped out the coins and the owner of the store told her to put back the orange, because she didn’t have enough money.  As she collected the change, my son watched and interrupted and said, “I have my Quick Cash with me and I’d like to buy you the orange, I just need to put back the pops and start to count out my change again.”  


Every eye in the store turned to this little kid.  The woman thanked him and refused to take his money.  Rhett became insistent, saying “I work for my money and I get to choose how I spend it and I want to buy you this orange.  May I?”  Still she was reluctant, but he persevered.  “Don’t you know the rules?” he said.  “This is my money and I chose to buy you the orange, because someday when I don’t have the money, someone will be there to buy me some food.”  


The air was sucked out of the room and filled with sobbing mothers (me included).  The transaction took place, and Rhett joined me in the back of the store, where I was sobbing, “I’m so proud of you for doing this”.  And he said, “You are not supposed to be proud of me when I’m doing something I’m supposed to do.  You are supposed to be proud of me when I do something that I’m not supposed to do!”  Okay, he was right and, yes, the money lessons work!

The Holidays are Here

Our goal is not to repeat the annual gift giving “feeding frenzy” at the holidays. The scene you may remember could have been watching your kids wildly ripping open gifts, hardly looking at each then tearing the next one open. It couldn’t get worse… or could it?  This year, let’s not repeat going into debt the way many people did last year. This holiday season is by far the largest in terms of spending. The total Black Friday spending this year rose 6.6 percent over last year; including online and in-store sales. Online revenue boasted a growth of 24.3 percent over last year. Despite the economy, 2010 spending was an astonishing $135.16 billion, a 5.5 percent increase from 2009. With that trend in mind, 2011 holiday spending is expected to reach an astounding $142.6 billion or more, suggesting we are certainly in a repeat “feeding frenzy.”

It seems that those good ole’ days when gift giving brought a message that “I care about you” are gone.  Wouldn’t you love to instill—or re-instill-- those traditional values in your children?  If you do, you can start by using some of these helpful tips.

First, make sure everyone in the family has a gift-planning calendar. Since you already know the dates of Hanukkah, Christmas, Kwanza or any other holidays on which your family exchanges gifts, it will be simple to get started creating a calendar. Next, mark birthdays, anniversaries, graduations or any other special events that will require a gift. Your children will want to include their friends’ birthdays, too.

But that is just a start. Knowing when a birthday is coming up is important…but knowing when to begin to save for the gift is just as important.  A “start saving” date should be marked on everyone’s calendar…or in the desktop organizer on the family computer.

Make sure your kids understand the importance of appropriate giving.  An over generous gift can indicate too much need for approval or control, it can embarrass the recipient or it can signal the beginning of unhealthy materialistic competition.

You can explain to kids that parents and grandparents love all gifts equally, no matter how much has been spent on it. And suggest that the kids “pool” their resources to buy one gift for special relatives, each child contributing as much as they can afford based on a percentage of their allowance.

Once your children know how much they’re going to be spending on gifts, they can begin to make a saving schedule.  By dividing the cost of a gift by the number of weeks needed to save for the purchase will help them determine when they should begin to save.  Then they can mark the date on the calendar and set their saving plan in motion.

For those very important gifts–perhaps parents or grandparents–you may want to help your kids get that special gift.  The kids should continue to work towards their goal of saving the money needed to buy something special for Grammy and Grandpa but you can help them with a matching fund. In other words, if they’ve saved diligently according to the saving schedule they’ve set up, you’ll match the total.

Gift giving is mostly about “thoughtfulness.” A gift says, “I care.” It comes through most eloquently by how much thought has gone into the gift’s selection not its price.

And don’t forget you don’t have to spend money on every gift. In fact, you shouldn’t. Some gifts shouldn’t be “money-based.”  Help your children to give “gift vouchers” for something.  And that could be the best gift of all.

“Gift vouchers” can be geared to the recipient’s interests.  Like cleaning golf balls for your favorite golfer, cooking a vegetarian meal for the family vegan or cataloging a collection of baseball cards for your baseball lover.

“Gift vouchers” can be redeemed for running errands to the store, for yard work or for babysitting. One of the best ones was suggested by my own children.  It’s called a “No Fighting Zone” voucher, good for three fights. If my children started squabbling, I pulled out the voucher and the kids had to stop fighting. (P.S… This actually works!)
Let your kids come up with their own ideas for giving, just remember: “I care” and “I love you” never comes with a price tag.

Black Friday? It's Putting Most Americans in the "Red".

Maybe we should start calling it Red Friday instead of Black Friday?  From a shoppers budget perspective, it might be the more accurate color, especially when you consider the logic behind the day after Thanksgiving’s unofficial title.

While my adult readers probably have a good idea of the modern history of the Black Friday moniker, my younger readers may not.  So before we delve fully into this week’s blog topic: how holiday shoppers overspend and tips to prevent it, lets get our terms straight, first.

Black Friday – the day after Thanksgiving where many employers give their employees the day off – is typically the busiest or one of the busiest shopping days of the year.  It also marks the unofficial start to the time of year where businesses, especially retailers, rake in most of their yearly profits and are said to be “in the black”.  The “black” refers to the ink used to keep track of money coming in (revenue), money going out (expenses) and what’s left in the end when business is strong: profit.  Red ink, just like when a teacher corrects a homework mistake, is used to show when a business is losing money.  In that case, expenses are greater than revenue.

But for American families, who like any business, must also rely on a budget, their day after Thanksgiving is looking decidedly red. The reason: too many Americans overspend on Black Friday and the holidays in general, some by as much as 30 percent beyond what their budgets would dictate, not to mention the other shopaholic days of the extended weekend, including web-based “cyber” Monday and the growing smartphone-powered so-called “couch commerce” on Thanksgiving day itself. For all the recent lip service given to Americans increasing savings rate following the Great Recession, the truth is our collective self-restraint and fiscal discipline could use some help.

Here are some statistics to put our national spending gluttony in perspective:

• Nearly a third of Americans are expected to spend $700 or more on gifts during the entire holiday season.
• 86 percent of shoppers say they will spend the same or more as last year; only 13 percent plan to spend less.
• The average American household is already saddled with nearly $16,000 in credit card debt and the average college graduate earns their diploma $3,000 in the credit card red.
• Some 12 million Americans are still paying off last year’s holiday gifts this year, based on estimates from 2008 trends.

Next to weight loss, living within and sticking to a budget is often second on families New Year’s resolution lists.  This year, as we close out 2011 and begin 2012, why not make those resolutions stick?  Both weight loss and budgeting require discipline and organization.

First, plan in advance.  Make sure that everyone in the family has a gift-planning calendar.  Of course, you know the dates of Chanukah or Christmas or Kwanzaa or any other holiday on which your family exchanges gifts so these will be easy to mark.  Next, mark birthdays, anniversaries, graduations, or any other special events that will require a gift and overlap the holidays.  Your children will want to include their friends’ birthdays, too.  Even more important, though, now that you know when these dates fall, is to mark a “savings date,” where both parents and children begin to save for their expected purchases.

Just like how a grocery list helps supermarket shoppers stay on task and not be lured by impulse buys, so too can a list help with the holidays.  And remember, while Black Friday does offer some great deals, failure to follow these rules leaves shoppers spending far more than they intended.  If you know yourself to be an easily persuaded shopper, simply avoid Black Friday altogether.  Is there really a need to be clamoring into department stores and electronic stores, trampling over people for more “toys?”

I think not.

Together lets make Black Friday – and not Red Friday – the appropriate day after Thanksgiving title for us all!

How to Make a Money-Smart Kid Consumer

With the holidays right around the corner and shopping on everyone's mind, why not teach your kids a bit about making a "smart" buy decision.  Remember the “blind taste test” we used to do?  Why not do the same with your kids.

For instance, pick a generic cereal and a high-priced brand.  Let the kids blindfold family members and ask them to taste each and give opinions.  You can try this with lots of products (but don’t make the toilet paper test a blindfolded family activity).

You can also test organic or recycled products.  As a family, you may decide to spring for some organic/recycled products that you’ll be willing to pay more for because they may taste better and be better for you and the environment.  For more information go to www.childrensfinancialnetwork.com or eco-effect.net.

Grandparents, Grandkids, and Money

I made it—I’m a grandparent!  It's the best!  I see them once a week and am way more involved than my parents were with my kids.  I’m not alone.  70% of grandparents see their grandkids at least once a week.

We want to be the “cool” grandparents and sometimes we think cool is buying things for our grandkids.  Okay, I’m guilty!  My daughter caught me saying to my granddaughter (her daughter), “Can you say grandma is going to buy you a pony?”

Here are the rules: we do want our grandchildren to be financially responsible—so help your kids to start an allowance system and be supportive.  Supportive does not mean when you see the grandkids working and saving for, let’s say, that new gadget, to surprise them with it as a gift.  Remember when you were young and saved for that first bike or stereo?  That felt pretty good when you reached your goal.  Let your grandkids experience the same reward.  They will remember the time you spent with them way more than the stuff you bought.  I promise!

Electronic Banking for Kids Versus Your Neighborhood Bank

We are firmly planted in the digital age and there is no going back.  So, do you only teach kids about online banking and skip your local bank experience?  No—do both.

Start your 5-year-old out with a trip to your local bank to open up a savings account.  Explain that the bank keeps your money safe and uses it to lend (rent) money to other people to, for instance, buy homes.  They pay you a little money, called interest, because they are using your money.  You can get your money when you want it, but you want them to save that money and not use it until they are much older for something big like college or a house.  After they grasp the regular monthly visit to deposit money, you can show them how online banking works.

Will your 5-year-old understand the concept of long-term savings?  Absolutely, positively not!  Do the adults in American even understand the concept of long-term savings? Absolutely, positively not! Wouldn’t it be a great concept to teach our next generation who is inheriting our personal and governmental economic messes from us?

Bobby Henline - An Inspirational Hero!

I was just down in Orlando working with the Entrepreneurship Bootcamp for Veterans with Disabilities (EBV) with Wounded Warriors to help them redesign their lives to become entrepreneurs.  I met Bobby Henline, one of our amazing heroes, who served our country.  As Bobby said, he learned that “3” is his lucky number because during his 4^th tour to Iraq, his Humvee was blown up.  Bobby is a true hero in every way.  Through comedy and inspirational speaking, he helps other wounded vets and children regain their confidence after traumatic situations.  He’s turned his injuries into inspiration!

I encourage you to visit his website and learn more: http://bobbyhenline.com/.

How to Teach Your Kids About a Budget

Hopefully your kids are doing chores and earning money.  A budget does not have to be an instrument of torture.  It should be a habit.  The goal is to visually show your kids how a budget works.

Get 4 clear plastic jars or pouches.  Label them and divide the child’s money into: Charity Jar- 10%, Quick Cash- 30% (instant gratification), Medium-Term Savings- 30% (larger items to save for), and Long-Term Savings- 30% (college or a car).  Let your older kids research charities to whom they want to donate.  Steer the younger ones into a direction—maybe they want to give to sick children, for instance.  Quick cash is immediate gratification.  They worked hard so they get to spend some money, guilt-free.  You set the rules.  If it’s no candy, for example, those are the rules.  Let the kids learn from their choices.  Medium-term savings teach the rewards of pushing off instant gratification to save for something larger.  You can match dollar-for-dollar if the purchase is large.  Long-term savings is just that: college, a car, or other big purchases.  This is the money that is just saved and not touched.  Repeat: not touched.

The Allowance Debate

Should you or should you not have kids do chores to earn their money, or, should you just give them their money?

I’ll make it easy.  If you want to support the entitlement program of, “I’m on this Earth therefore I’m entitled to be supported”, then just dole out the dough.  But if you want kids to understand that the only way to get money is to earn it, then tie money to work.

There are two types of chores in a household: Citizen-of-the-World chores which you do for no pay, because we all share a planet.  And Work-for-Pay chores, where kids learn the life skills to make a home run—and they earn money.  For more tips and tools go to www.childrensfinancialnetwork.com/.  Let me know your thoughts.

How to Talk to Your Kids About Your Financial Woes

Come clean with your older kids.  Don’t pretend everything is okay if it isn’t.

If they all of a sudden see Mom or Dad (or both) moping around the house screaming or crying don’t just say, “Everything’s fine”.  They might think the worst; that you are sick.  Explain that things change in life and that times are tough and you got laid off.  It’s not your fault, things happen beyond your control.  Explain that you are looking for a job and that you’ll keep the kids posted.  You may not have all the answers today.  You may even have to move, but that is not the end of the world.

You will also have to cut back on expenses and you can even ask them to come up with ideas.  They will feel better if they are part of the solution.  You want your kids to understand that life and circumstances are constantly changing.  Allow them to be disappointed for awhile, but stress that you are not your “stuff”, and that you are a family with values.  It’s a great time to get back to basics and let the kids really see who you are.