Thursday, September 21, 2017

Spur More Money Talk With Tech, Not Less

Mobile phone with money speech bubble.

“I worry these automated apps and debit cards will cause me to have fewer thoughtful money conversations with my kids.”

I hear that a lot. And it drives me nuts.

(It almost makes me as crazy as: “Don’t give your kid a debit card, use cash instead.” Nonsense. See my counterarguments here and here.)

The automation fear is frustrating because the effect of a well-designed family finance app is precisely the opposite. Thoughtful automation spurs more parent-child conversations about money, not fewer.

And, as Ron Lieber says: “Every conversation about money is also about values.” So, that’s a good thing.

Just because the manual mechanics are eliminated for things like:

  • remembering to deliver regular allowance,
  • accounting for chores or odd jobs,
  • calculating parent-paid interest,
  • and tracking transactions,

doesn’t mean the conversation disappears too.

In fact, it’s when the mechanics are not automated that the parents eventually fail to follow through, and the system collapses. No follow-through means no system means no conversations. Automation fixes that.

The app’s automated audit trail and real time alerts proactively prompt an ongoing stream of money discussions with your child:

“I see you made 6 cents in interest for the week. Let’s talk about how the incredible power of compound interest is putting your savings to work.”
“I see you spent $3.99 at a specialty tea shop. Let’s talk about whether it’s worth paying that much. Maybe, maybe not.”
“I see a $23.50 ATM transaction. Let’s talk about how that $3.50 fee is a 17.5% tax on your $20 withdrawal, and how to avoid it next time.”
“I see 20% of your allowance is still going to paying off that loan I made you for the latest iPhone. Let’s talk about whether you’d make the same choice next time. Maybe there’s some extra work you can do to pay it off faster.”
“I see your Spotify payment was declined again. Let’s talk about how that would cost you a $35 overdraft fee on a bank debit card and the importance of keeping a cushion in your account.”
“I see your donation to the disaster relief agency went through. I’m so proud of you. Let’s talk about how you picked the place to donate.”
“I see your payment to me for your share of the family cell phone plan came through today. Painful isn’t it? Let’s talk about finding a cheaper option.”
“I got your annual clothing budget proposal notification. Let’s talk about a compromise on the line item for jeans. Oh, and you forgot to include underwear.”
“I got your money request notification just now. Let’s discuss why you’re running short of funds before I approve or deny the request.”

Those are all good, thoughtful conversations to have. Regularly. Small steps and repetition are key ingredients to building good habits.

Without automation, your only consistent money conversation with your kid might just be:

“Dad, why do you keep forgetting my allowance?”

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Thursday, September 14, 2017

5 Reasons To Turn Card Activity Alerts On For Your Kids

Taco Fraud Alert

My buddy Keith sent me a message this week about an odd $46 Taco Bell transaction on his daughter’s prepaid card:

Definitely stolen. [The card was lifted from her backpack.]

I’ll have her fill out the form.

On the plus side, had we not had text alerts on the purchases, it would have been A LOT worse.

Seeing the alert, they wisely locked the card. We can only hope all those tacos gave the thief a nasty case of Montezuma’s revenge.

Meanwhile, Keith is teaching his daughter a valuable personal finance habit: turn on activity alerts for your financial accounts.

I was disappointed to find Keith is in the minority of parents on our family finance site. Only 12.7% of the cards with purchase activity in the last 30 days have alerts turned on.

Why should they? Five good reasons:

  1. Nip fraud at the bud. As we learned with the taco fraudster story above, you’ll catch sketchy activity right away. Then you can lock your card to prevent further damage and order a replacement.
  2. Stay on budget. A good prepaid or bank debit card activity alert will report not only the amount and merchant in real-time, but also the remaining balance. Knowing your dwindling balance after each and every purchase makes spending more mindful and easier to resist. It’s a simple yet effective budgeting tool.
  3. Peace of mind. Once your kids head away for school, they may not communicate with you as much any more. Mine didn’t. Hey, they were busy! Card activity alerts are a simple way to know your kids are safe and sound without bugging them.
  4. Cancel forgotten or unused services. Still being billed for that online game you stopped using (or enjoying) a while back? You’ll be automatically reminded every month until you cancel.
  5. Deliver Just-In-Time advice. “You just paid how much for what?” Your kid is going to make some rookie purchase mistakes. Alerts shared with parents provide an opportunity to deliver some sage personal finance wisdom in the moment while the incident is still fresh. An ATM withdrawal alert for $22.00 instead of $20.00? That’s a $2.00 fee right there. Let your kid know there’s a free ATM down the block. Save a couple bucks next time. Just keep it positive. Mistakes are an essential part of the learning process.

Of the 12.7% of cards with activity alerts enabled, almost half (46%) are sharing the alerts with parents. That’s a good thing if it leads to thoughtful conversation and coaching. Not so much if becomes another form of nagging. Stay mindful of the difference for best results.

Sure, card activity alerts can notify you about fraudulent taco purchases. But, more importantly, they’re part of the whole enchilada when it comes to teaching your kids about personal finance.

Want to turn these tips into action? Check out

Friday, September 8, 2017

Teach Kids To Memorize Their Social Security Numbers

Teen Social Security Card

3,000 miles away from home. Zero friends. Intimidated. Vulnerable.

That sums up my first day at college.

Picture your kid in a similar situation.

Then throw this little wrinkle on top:

"I'm sorry, your card has been declined."

Great. Add broke to your kid’s list.

The card’s app says: “The incorrect PIN has been entered 3 times. A security block has been applied. Please contact the card processor via the 800 number on the back of your card.”

Exasperated, your kid calls the number:

“Before we can help you with your card, we’ll need to confirm your identity. Please provide the last four digits of your social security number.”

Ummm... No clue.

“I’m sorry, we can’t help you.”

Far away from home. No friends. No confidence. And, now, no money. Total. Melt. Down.


Not the best start to school.

Fortunately, back in my day we used mostly cash.

But one of the young cardholders on our family finance site wasn’t so lucky last week. Mom told us it was the straw that broke the emotional camel’s back on a traumatic first day of school.

Which leads us to today’s tip: help your kids memorize their social security numbers.

A Social Security Number (SSN) is something every American needs to know. It’s a standard part of the identity verification protocol for a financial account. If you can’t remember your PIN, you’ll probably be asked for your your SSN or its last four digits. If you don’t know your SSN, well... A financial institution can’t help you if they can’t confirm your identity.

PINs and SSNs are among the last numbers modern kids need to memorize now that smartphones remember everything else.

In the past, I’ve covered a trick for picking a memorable PIN based on a favorite phrase and a smartphone keypad.

But how about memorizing an SSN? You don’t get to pick that number yourself.

Try the inverse:

Map the 9 SSN numbers to the letters on a mobile phone keypad.

See if your kid can devise a memorable phrase with words that start with the candidate letters.

For example, if the SSN was 778-95-4648 (no, that isn’t my SSN — sheesh!), the mapping could yield the following mnemonic phrase:

7 7 8 9 5 4 6 4 8
Parents Please Teach Your Kids Good Money Habits Today!

That’s a lot easier for me to remember than a string of numbers.

With that little trick in their hip pockets, your kids may still be intimidated on their first day of college, but at least they won’t be broke.

Want to turn these tips into action? Check out

Friday, September 1, 2017

Help Kids Practice Philanthropy When Disaster Strikes

Shoe in water.

Houston, we have a problem.

No doubt your kids have seen the devastating images of families displaced by the brutal floods of Hurricane Harvey. Kids just like themselves have been driven from their homes.

It’s sad and scary.

Meanwhile, our kids are also witnessing the amazing grace and kindness of citizens pulling together to help those in need.

It’s inspiring and reassuring.

Even from afar, your kids can be a part of that helping spirit. Now is the perfect time to revisit that philanthropy discussion. Use one of these 20 great giving quotes to kick off the conversation.

Remember, no balance built up in a child’s charitable giving account is too small to make a difference. Encourage your child to consider a donation through a reputable organization. Looking at anonymous transaction data for kids on our family finance site, we’ve seen donations to The Salvation Army, The Red Cross, United Way of Greater Houston, Houston Food Bank, and local churches to name just a few. It warms the heart.

Part of the philanthropic discussion should include the importance of doing your homework on the charitable agency itself. That can be a surprisingly tricky and controversial task — even for the largest, most recognizable names. Here’s a prime example you might want to discuss with older teens.

Ultimately, you have to make your own judgement based on the information available. But kids should know that research is an important element of charitable giving. It’s more than just the swipe of a card.

The bonus is that altruism improves your own child’s well being. And, if your child can perform the transaction directly, it’s particularly powerful.

Houston, working together, we have a solution.

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Thursday, August 24, 2017

Teach Kids How To Read The Free Trial Fine Print

Free trial fine print.

“We’re calling about a charge on Johnny’s card. He says he never bought this service.”

We hear that a lot at our family finance site.

More often than not, Johnny did buy that service. Eventually.

Of course, it started out free. And “free” is the only keyword Johnny saw or remembered.

Time to teach Johnny to look for another keyword: “cancel”.

In fact, here’s a good rule for your card-toting kid:

No subscribing without learning how to cancel first.

If your kid can’t locate the cancellation instructions, then either your kid is not ready or the service provider is too sketchy.

Be sure to review the cancellation terms in full. Some providers levy hefty extra fees for early cancellations. Check out this MoviePass example.

Sadly, lots of online services prey on unsuspecting or un-savvy kids. A classic example from a FamZoo customer service interaction:

“My daughter signed up for a “free” on-line subscription, thinking that it was free, but then keyed in her card and is now getting monthly fees — of $34.95 and $39.95.”

We’ve seen specific complaints about MovieLush and ReelHD to name a couple.

Be sure to turn on card activity alerts so you can be on the lookout.

If you notice a sketchy or unfamiliar charge, show your kid how to google the description along with the keyword “cancel”. You’ll either find instructions from the provider or stories from other bilked consumers that might include a hidden cancellation recipe. If a charge is not legitimate and the merchant refuses to refund it, show your child how to file a claim for the unauthorized charges.

Rule number two for your card-toting kid:

No free trial without a cancellation reminder.

Have your kid enter the reminder on an online calendar or a checklist that will trigger an alert a few days before the end of the free trial period. Include the cancellation instructions found from Rule 1.

That way, your kid will have ample opportunity to not buy the service if it turns out to be less than expected.

With a little education, we can keep those mystery charges off little Johnny’s card.

Want to turn these tips into action? Check out

Wednesday, August 16, 2017

20 Back To School Family Finance Tips for Kids K-12

Kid headed to school.

It’s back-to-school season.

Let’s kick it off on the right financial foot.

Whether you’ve got kids headed to kindergarten, elementary school, middle school, or high school, you’ll find an idea or two to try here:

  1. Start money conversations by kindergarten with these classic books — The traits, habits, and behaviors that lead to financial well-being start to gel as early as preschool. Here are nine books to get your youngster headed in the right direction.
  2. Roll out the Premium Price Rule while back-to-school shopping — Impulsivity and peer-pressure can blow a hole in the back-to-school budget. Focus your kid on value and get some shared skin in the game with the Premium Price Rule.
  3. Go refurbished on the back-to-school computer — The sooner your kids learn they don’t need the latest, greatest shiny object, the shinier their financial futures will be. If your kid needs a computer for school, it’s a perfect opportunity to make that point. Here are some key things to consider when going the refurbished route.
  4. Fix your kid’s allowance — Are you doing allowance right? Here’s a six point checklist to find out. The beginning of the school year is a good time for a tune-up.
  5. Boost college savings with an allowance — It seems counter-intuitive that giving kids an allowance could help parents save for college. Here’s the behavioral finance trick to making it work.
  6. Pay for studying, not the grade (if at all) — Do you have an opinion on paying kids for good grades? Either way, you’ll want to check out this study. It might change your mind.
  7. Plan your lost coat strategy — It’s inevitable. Your kid is going to lose a coat at school this year. At least once. It can get expensive. Here are some ideas for planning your parental response.
  8. Get your kid a card by middle school — The data from our family finance site shows that middle school is the perfect time to start putting plastic in your kid’s hands. As long as it’s the right plastic, with the right controls, no risk of debt, and plenty of educational features. Check out the age distribution data for FamZoo cards.
  9. Show your kid the average price of a homemade sandwich — Your kid could save you almost $500 during the school year by eating a homemade sandwich instead of a quarter pounder with cheese. Here’s the data.
  10. Pay your teen to brown bag it for lunch — As kids get into the teen years, frugal habits like the brown bag lunch come under pressure. Here’s one way to make the brown bag lunch cool, or at least profitable, for your teen. You can afford the bribe. You’re already saving over $500 with the homemade sandwiches (see above).
  11. Use real stats to set fast food boundaries — Brown-bagging it or not, junkets to the local fast food joint are a classic teen rite of social passage. Use these purchase statistics to set reasonable boundaries.
  12. Get ready for that Starbucks peer-pressure — The data from our family finance site pinpoints when kids start to feel the pressure (or desire) to head off for Starbucks. How you can prepare.
  13. Help kids rehearse for awkward money scenes with friends — “Come on, let’s go get pizza. It’s only 10 bucks. You can afford it!” When it comes to your kid’s money dialog with friends, ditch the improv. Here’s how to script a solid response ahead of time.
  14. Help your kid embrace a frugal persona — The “strategy of identity” can help people form desirable habits. Here’s how to apply the strategy to your kid’s money habits in the face of peer pressure.
  15. Encourage your kid to learn to code — If you have any opportunity to expose your kid to writing software. Do it. Here are 223,054 reasons why.
  16. Put your kid in charge of a narrow budget — It’s shocking how many kids enter college with zero experience managing a budget. Don’t let that happen. Try this simple strategy this school year.
  17. Reward your student with a spot bonus — Spot bonuses. They always make you feel appreciated as an employee. They’ll make your kid feel appreciated too. Catch your kid doing something good this school year. 56 examples from real parents.
  18. Don’t necessarily discourage a part-time job — It’s a shame that fewer and fewer students are holding down part-time jobs while in school. Here’s evidence we should reverse that trend.
  19. Show teens there’s a scholarship for that — Your kid may think that scholarship opportunities only exist for math and science whizzes. Not true. There's a scholarship out there for darn near anything. Even drawing ducks. Show kids how to find them.
  20. Review 529 statements with your teen every quarter — Here are 6 valuable lessons your teen can learn from 529 statements if you’re willing to make a 15 minute investment every 3 months.

Kids aren’t learning much about personal finance in school. So, if you only do one or two of the above, you’ll still get a gold star in my grade book.

Want to turn these tips into action? Check out

Wednesday, August 9, 2017

Post Wants On The Fridge To Chill Your Child's Spending

Purchase sticky on fridge.

I love the delayed gratification system Joanna Hampton’s parents instituted for purchase requests over a certain dollar amount:

  • Write the desired purchase on a piece of paper. Sign it. Date it.
  • Post the paper on the family fridge.
  • Wait the agreed upon number of days.
  • Make the purchase. Or not.

Often, the bloom falls off the rose long before the waiting period is up.

The duration was 30 days in Joanna’s case, which seems a bit long. Pick what makes sense for your kids. In fact, you might scale the waiting period with the price: over $20? 2 days. Over $50? A week. Over $100? A month.

The digital variation on the fridge setup would be to have your child register the desired purchase in a text message, or in a shared google sheet, or on a shared google calendar, or via a money request in FamZoo.

Fridge or no fridge, it's a simple, effective system for putting the chill on instant gratification.

Looking for some other tips for delaying gratification? Try:

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