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.

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.

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!

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.

Dare to Go "Green" in 2012

Use this year’s resolutions to raise consciousness and also to really change your behavior.  We are coming out of one of the worst economic downturns in our lives.  Let’s use 2012 as a “do-over”–a look at our past should help to guide us to make different choices for the future.

There is no better time, then now…2012 will be a little different–we are going to add energy efficiency to our new list this year.  This is the best time to think about the environment and how we can do our part.  Let’s start with what I call, the ECO-Effect™.  This concept combines ECOlogy and ECOnomics together, so we can save money and resources at the same time.  In fact, my new book, ECO-Effect™: The Greening of Money, explains these concepts for parents and kids and gives you activities to help you also “ECHO” these ideas, so that parents talk to kids, to schools, to communities to the world to make it a better place for all living things.  How can you and your kids have your own “ECO-Effect™” for the New Year?  Start by showing your children your utility bills and let them come up with energy saving ideas.  For instance, it may be a good idea to turn lights off when you leave the room, or unplug all of those cell phone chargers and who knew that you don’t actually have to have a lengthy conversation with the refrigerator door opened?  Let the kids start this New Year by tracking the savings each month to really see your ECO-Effect™!

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!

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.

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?

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.

Should a Teen Word During The School Year?

In some families, there is not an economic choice.  Many teens work after school or during the summer because they must.  I am an advocate of teens working; however, you need to help your children balance work, school, and time off.  Beyond that, I don’t believe it’s a good idea for a teen to have an after-school job during the school year.

A full-time summer job; however, is a good thing, as is work on weekends during the school year.  A good job for teens is one where they will learn something of value.  At these jobs, teens take responsibility or gain knowledge.  Often, some of the best jobs are ones that pay nothing.  I’m referring of course to volunteer jobs.  They frequently involve a lot more responsibility and provide a chance to really make a difference.  Some can even help teens deal better with problems at home.  Kids who want to make this kind of positive impact on society deserve our support.  Perhaps consider an allowance that’s half of what they could make at the sort of job they would get if they hadn’t made this commitment.  Be involved with your teen in choosing a job but be careful not to take on responsibility that should be theirs.  Discuss safety, training, location, schedules, and even the social status factor.  Have your teen do research to ensure that they’ve picked the right job for themselves and the time they have available to work.  But remember, school comes first.

Economic Crisis - A Learning Moment for Your Kids

Go Congress!  You have created a wonderful situation to spice up a dinner conversation.  (That is, if you remember what dinner is—you know, the family eats together and looks up from their phones long enough to engage in something called conversation?)

Explain to your kids that if the Government’s economic situation was being experienced by your family—you would have to declare bankruptcy.  That means that you would not have enough to pay your bills.  Have kids figure out what some of your monthly bills are (hint: mortgage/rent, utilities, cell phone, car, gas, etc.).  The bank would take back your home, or the landlord would kick you out of the house, the utility companies would shut off the electricity and heat/air conditioning, your cell phone would not work, etc.

But, governments are different than families.  Governments can tax people.  Explain taxes without causing lasting psychological damage for your kids—or huge psychiatric bills for you.  Don’t ask the kids to set up a toll at the end of the street—it won’t work, and your neighbors will want in on it!

Governments can also print money to pay bills.  Imagine the printing press you could have!  So, all the drama in Washington—kind of like bickering children?  So sorry, I’d never insult your kids! Explain to your kids that government can get away with irresponsibility, but that families can’t!