Teach Kids Profit, Loss, Margins, And Other Stuff

Today’s fantastic family finance article is:

Some Kids Sell Lemonade. He Starts a Chain.

---

Jack started a business.

Jack had a 45% profit margin his first year of operation in 2014.

Jack secured a business loan.

Jack hired a sales team.

Jack expanded operations to the web.

Jack built partnerships with compatible businesses.

Jack grew 2015 revenue to $25,000 — 12.5 times that of the prior year.

Jack is 10 years old.

Wow.

Read the story with your kids here.

Yes, it's an extreme example, and Jack had lots of help from his nuclear engineer dad and Young Americans Bank.

But, your kid doesn't need to do anything nearly as elaborate to learn about margins, profit, loss "and all of that financial literacy stuff." A little lemonade or cookie stand on the corner is still a fine place to start.

---

Get tomorrow’s tip here.

Give Your Kids Some Dangerous Chores

---

One foolproof way to increase your kid’s interest in doing chores around the house is to make them a bit “dangerous.”

Slice some fruit. Pound some nails. Chop some wood.

Gasp! You’re thinking “emergency room” right now aren’t you?

Why take the risk?

Confidence. Resilience. Pride.

Of course, you’re going to have to use some of that archaic stuff known as “judgement” to know whether and when your child is ready for the risk/reward of a “dangerous” chore.

Then, the recipe is simple: Show. Guide. Back-off.

Still nervous about taking off your kid’s bubble wrap? Read this excellent essay to boost your confidence.

---

Get tomorrow’s tip here.

Teach Your Kids The 48-Hour Rule

Does your child have an impulsive streak when it comes to spending? Gotta have that shiny object right now, only to have it lose its luster days later?

That’s a habit you’ll want to nip at the bud while the stakes are low.

Time to roll out the 48-hour rule: “Wait 48 hours before making an impulse purchase.” (Or at least a day.)

Train your child to put some distance between the desire and the purchase. Put the item on hold at the store, or save it in the online shopping cart. Sleep on it. A little time for reflection is the ultimate buzz-kill when it comes to impulsive behavior. That’s valuable awareness to pick up early.

The “48-hour Rule” and “Grandpa’s Rule” are the two financial rules of thumb that will resonate most with youngsters from these 10 Essential Financial Rules of Thumb. Parents will definitely benefit from the other 9.

Read them all.

Right now! :-)

---

Get tomorrow’s tip here.

Discuss Dee-1's Car Obsession With Your Kids

Today’s fantastic family finance video is:

Dee-1 Explains Why He Drives a ___ As An Everyday Car and Its Reactions

---

Dee-1 is a very popular New Orleans rapper. Dee-1 is obsessed with his car. Dee-1 drives a…

Wait for it…

’98 Honda Accord with 262,000 miles and a flaky radiator.

Surprised? Indeed.

Dee-1’s message: “Dawg, I’m not defined by my car.”

Bravo. Now there’s a rap message every parent can get behind.

Sit down with your kids and watch Dee-1 share his “teachable moment” about his frugal ride in this 5 minute interview.

Who knew frugality could be so dope¹.

P.S.: The parental advisory for explicit content at the beginning is guaranteed to make your kids pay close attention. But no worries folks. All clean.

P.P.S. Just to pile on, Dee-1 also paid off his student loans and rapped about it here. Gold.

¹That means “so good” in modern parlance.

---

Get tomorrow’s tip here.

Get The How-Not-To Manual On Spoiling Your Kids For Less

Today’s fantastic family finance book is:

The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money — Paperback

---

It just got cheaper to figure out how to raise kids who are responsible and thoughtful with money.

That’s because Ron Lieber’s New York Times and Wall Street Journal bestseller, The Opposite of Spoiled, just came out in paperback this week. This is easily one of the best books out there on teaching your kids good money habits. It’s packed with best-practice anecdotes. No dry, abstract tome here.

To get a provocative taste of the delicate matters Ron covers in his book, check out this preview in the Times: Why You Should Tell Your Children How Much You Make. 754 reader comments! Clearly Ron has people talking. Grab the book, and you’ll be talking too — to your kids about money.

---

Get tomorrow’s tip here.

Rethink Your Reward Economy

Rewards have become a mainstay in the modern parenting toolbox when it comes to coaxing chores and good behavior out of kids. The upside:

• More compliance.
• Fewer power struggles.
• Less nagging.
• More peaceful family life.

Ahhh. What’s not to like? Well, you may soon find yourself dealing with the dark side:

• Reward creep.
• Reward escalation.
• Lost leverage. (“No thanks. I don’t want the money.”)
• Disappearing intrinsic motivation.
• Diminished desire to help others.

This article explains why substituting “market norms” for situations that should be governed by “social norms” leads to an erosion of goodwill.

Fancy behaviorial economics talk aside, here’s the bottom line: while it’s perfectly fine to offer some work-for-pay gigs to the kids, make it darn clear that basic chores and good behavior are simply expected.

The kids’ reward? They get to be a member of the family and — bonus for the rest of us — grow up to become decent, thoughtful human beings.

---

Get tomorrow’s tip here.

Let Your Girl Scout Sell the Cookies

Today’s fantastic family finance article is:

The Modern Girl Scout Mom Needs To Mind Her Own Business

---

Mmmm. Thin mints. It’s that time of year again. Sweet.

Even sweeter, when Girl Scouts sell cookies, they learn important business basics:

• Identifying prospects.
• Delivering a sales pitch.
• Dealing with rejection.
• Closing a deal.
• Managing inventory and finances.

But when parents sell the cookies, Girl Scouts learn:

• Nothing.

So stop hawking cookies for your Girl Scout at the office, on Facebook, or anywhere else.

Let your kid do the selling. And the learning.

Still having trouble letting go? Read the 4 tips for getting the most out of this year’s cookie sale season in today’s article.

---

Get tomorrow’s tip here.

Ditch the Dismissive Money Comments Around the Kids

Do you make dismissive comments around the kids about handling money?

• Maybe you make dismissive comments about budgeting or tracking expenses because you have an ample financial cushion. You want your kids to know you’re successful.
• Maybe you make dismissive comments about being in debt because you’re in a challenged financial position. You don’t want to alarm the kids or have them think lesser of you.
• Maybe you make dismissive comments whenever the subject of money comes up. Talking about money is taboo in your family.

Time to mute the dismissive money comments and turn on the open conversations.

• Your kids need to understand that money is a finite resource to be managed wisely, regardless of any abundance you might currently enjoy.
• Your kids need to understand the different kinds of debt — credit card, auto loan, mortgage, student — and how to carefully consider (or avoid) each.
• Your kids need to understand how money works and the importance of discussing it transparently with spouses or partners.

If you dismiss the little money conversations with your kids now, you’re in for some big ugly ones later.

---

Get the next tip here.

Draw Your Kids Into Good Money Habits

Today’s fantastic family finance article is:

The Power of a Picture

---

Want to drive your kids away from a discussion about personal finance? Talk numbers.

Want to draw your kids in? Draw a picture.

Numbers can overwhelm. Numbers can hide the goal. Numbers can discourage.

Pictures can focus. Pictures can show the way. Pictures can inspire.

Mac shows 4 excellent examples in today’s article:

1. A picture of profits for his sons’ fledgling “Broritto” business.
2. A picture of progress toward a mountain bike purchase.
3. A picture of patient saving.
4. A picture of the power of compound interest.

See the pictures here, and draw your own conclusions.

---

Get tomorrow’s tip here.

Let Your Moral Money Compass Be Your Kid's Guide

Today’s fantastic family finance article is:

When Parenting Goes Right

---

Honesty is always the best policy, and money matters are no exception.

If you want your kids to embrace that notion, you’ll need to show the way.

The next time you stumble into a financial windfall due to an error on a receipt or a bill, discuss it with your kids. What would they do? Then, include them in the process of doing the right thing. Yep, that means correcting the error and returning the funds to the rightful owner. Sure, the extra dollars would be a nice little bonus, but the good vibe from doing the right thing is priceless. Your kids need to see that.

If they do, their moral compasses are likely to line up with yours in the future.

That’s what Laura Anderson discovered with her son. She pointed her compass true north, and her son followed. Read the story here.

---

Get tomorrow’s tip here.

Kidnap Ninja Turtles for Chore Ransom?

Today’s fantastic family finance article is:

How Two Brothers Earn Their Allowance

---

Is holding your kid’s toys for ransom clever or criminal? Clever, if done as a lighthearted introduction to a thoughtful chore routine.

Sometimes youngsters just don’t know — or don’t want to know — what they’re capable of when it comes to helping out around the house.

Two South Carolina brothers didn’t know until mom kidnapped their Ninja Turtle toys. To free the figurines, they had to earn points through chores and good behavior. They complied and got their beloved turtles back one by one over 4 weeks.

Remember, this was just an initial gambit to make the boys understand they were perfectly capable of handling typical household tasks. With capabilities and expectations set, mom moved on to a more traditional chore system.

The takeaway: a creative jolt might be just what your youngsters need to jump-start their chore habit.

Read more about this mom’s misdemeanor in today’s article. It’s a mini-crime that just might pay.

---

Get tomorrow’s tip here.

Give Kids a Saturday Job Interview Instead of an Allowance

Maggie of Northern Expenditure has a clever money system with her younger kids. It balances between unpaid family responsibilities and money making opportunities.

If the kids meet their unpaid chore expectations during the week, they’re eligible to be hired for paid jobs on the weekend. In other words, the performance during the week is like an extended job interview for the weekend.

Saving up for that cool new phone? Better buckle down and land the job.

The message: everyday help around the house is expected, a paying job is a privilege.

---

Get tomorrow’s tip here.

Reinvest Your Teen's Roth IRA Dividends

Today’s fantastic family finance article is:

11 Investing Tips You Wish You Could Tell Your Younger Self

---

When you sit down with your teens to choose a low cost index fund investment for their Roth IRAs (hint, hint), be sure to opt for reinvesting dividends.

Why?

You’ll get the benefits of compounding and dollar cost averaging in one sweet package. A two-fer!

Make sure you have the right boxes checked when you make your investment. Not sure? You can review and update the settings after the fact. For example, in CapOne Investing (formerly ShareBuilder), you can access your settings under Portfolio > Dividend Reinvestment.

Read more about why reinvesting matters and pick up some other solid tips in today’s article.

---

Get tomorrow’s tip here.

Teach Teens to Favor Stocks Over Bonds

Today’s fantastic family finance article is:

How Much of Your Nest Egg to Put Into Stocks? All of It

---

You are convincing your working teen to open a Roth IRA, right? Good. Excellent financial parenting! That’s the perfect parking place for that tax refund from last summer’s job. (If you can, match her contribution by some percentage as an extra incentive.)

Now, you just need to help your teen decide how to invest that new Roth contribution.

Given the recent stock market gyrations, you might be thinking something safe like bonds or Treasury bills.

Don't.

Here’s why.

You’re teen isn’t going to touch that Roth account for over 30 years, right? Right.

Well, in that time-frame, stocks outperformed long-term bonds 99% of the time, and they outperformed short term bonds and Treasury bills 100% of the time. That’s a pretty thorough beating.

Check out the how and the why and the numbers in today’s article.

Based on such compelling evidence, you can feel more comfortable ignoring the scary market headlines, bypassing bonds, and selecting a low cost US total stock index fund for your teen’s long term investing.

P.S. As always, consult your financial advisor first.

---

Get tomorrow’s tip here.

Encourage Your Teenpreneur Without Distorting Reality

Today’s fantastic family finance article is:

#AskGaryVee Episode 179: Encouraging Children

---

On this episode of the Ask Gary Vee Show, the famously energetic Internet entrepreneur, Gary Vaynerchuk, fields this listener question: “My sons love digital media and Snapchat. They wanna be producers. Any advice for y-gen?”

Gary’s advice boils down to a simple three step recipe for parents of aspiring kidpreneurs:

1. “Make them feel like they can actually do it.”
2. “Let the results be the results. Don't fake the results.”
3. Disappointing outcome? Help them own it. Discuss how to do better.
   Return to Step 1.

Gary laments that many parents do the complete opposite: damping expectations at the outset, and doling out unwarranted praise afterwards.

Gary closes out the segment with this pearl:

“Encouragement matters, but reality matters just as much. Create friction among those two to create the perfect storm for the young and moldable minds.”

The bottom line: Create positive permission for your kidpreneurs to compete and regroup, but don’t hand out any “8th place trophies.”

Watch Gary’s 3 minute segment starting at 16:17 here.

---

Get tomorrow’s tip here.

Help Your Kids Build a Sweetheart Credit Score

Do you want your kids to enjoy stable long term relationships as adults? Of course you do. Then start teaching them good money habits now so they’ll have higher credit scores as young adults.

What’s the connection between credit scores and lasting love?

A study of Equifax data for 50,000 couples shows that people who have higher credit scores are more likely to commit to a relationship and have that relationship last longer.

Here are some of the most important credit score building habits you can start emphasizing with your kids now:

• Make your payments on time and in full. Missing or coming up short on your payments — credit cards, car loans, student loans, mortgage, etc. — has the biggest negative impact on your credit score.
• Don’t max out your credit. Using all of your available credit reduces your score. Share this water pitcher analogy to teach your teens about smart credit card utilization.
• Use a smaller number of accounts responsibly over the long term. Opening up a bunch of credit accounts signals financial trouble.

See here for more info about the most important factors impacting a FICO credit score.

Oh, and if your kids still think love is yucky, let them know there are lots of other non-yucky reasons to have a good credit score.

---

Get tomorrow’s tip here.

It's Easier to Build Financially Capable Kids Than Repair Broke Adults

Today’s fantastic family finance article is:

Build Strong Children

---

Excuses abound for failing to teach our kids basic personal finance skills.

• It’s not my job. Schools should teach that.
• I just don’t have time.
• I’m not qualified — I struggle with money myself.
• It’s uncomfortable to talk about money. That topic is taboo in our family.

Frederick Douglass, the famous African American abolitionist, would have had little sympathy. Mac Thomson explains why in today’s article featuring a classic Douglass quote.

If you think it’s hard or inconvenient to teach your kids good money habits now, just you wait.

Strike that. Just do it. Now.

---

Get tomorrow’s tip here.

Know What Qualifies As A Legit 529 College Expense

Today’s fantastic family finance article is:

Do’s, Don’ts for Using College Savings Withdrawals

---

Kudos to you for wisely putting funds in a 529 for your kid’s college education! Smart move.

Just make sure you’re equally smart when it comes to pulling the funds out. That means knowing the rules about which institutions and expenses qualify for withdrawals. Use 529 funds incorrectly, and you’ll face penalties and tax liabilities.

Today’s article does a nice job of summarizing the rules in plain English. Some highlights: computers, Internet access, and software (except games!) are now qualified expenses. Travel expenses to and from college are not. Off campus room and board? That gets a bit trickier.

Brush up on the latest rules here.

---

Get tomorrow’s tip here.

Teach Your Kids Fuzzy Fun Money Math

Today’s fantastic family finance article is:

Putting a Price on Fun

---

Warren Buffett describes the difference between price and value this way: “Price is what you pay, value is what you get.”

The price part is simple. But what determines value? That’s far more subtle.

Sometimes it’s “the market.” In other words, if you turned around and sold the item to someone else, how much would you get?

Other times, it’s just you. How much do you value the thing relative to a substitute? How much joy does it bring you personally? A lot? Then it’s valuable — no matter what others think. Sometimes things that are pricey simply aren’t that fun for you. Conversely, sometimes things that are dirt cheap (or even free) are tons of fun. Those are called fun bargains! Tip: fill your life with them.

Now here comes the math. Next time you’re with the kids, try doing some “fuzzy fun money math” to decide what your family truly values. Find two “wants.” Estimate the rough amount of fun that each represents — aka “fun units.” You get to make up the scale. Is it a 10? An 8? Divide the estimated fun units of each item by their respective prices to come up with a measure of fun per dollar spent. Compare. Discuss. Carl Richards walks through some examples in today’s article. (Note: Carl’s formula is the inverse — the price per unit of fun — but it serves the same purpose.)

The math might seem a bit fuzzy, but the value of the conversation will be clear — perhaps even priceless.

---

Get tomorrow’s tip here.

Show Kids How to Give Passwords the Finger

Passwords are nothing to thumb your nose at — especially when it comes to accessing financial accounts.

Teach your kids to give passwords the finger instead. Well, a fingerprint at least. If your kids happen to have smartphones equipped with fingerprint readers, be sure to show them how to secure their devices with their fingers. A fingerprint is far more secure than a passcode. And it can’t be forgotten. Read the latest on fingerprint password technology here.

Alas, not all of us are fortunate enough to have the latest in phone technology. Even if we do, it will be a long time before passwords are eliminated entirely — if ever. So, when your kids can’t give passwords the finger, at least teach them how to create strong ones.

Here’s a tip: take a memorable personal sentence, and turn it into a password using the first letter of each word. Like:

“My dog Colby looks like a spotted cow and howls like a coyote 3 times a day”

which becomes

“MdCllascahlac3tad”.

Then test its strength at http://www.passwordmeter.com.

Our example gets a 95% — very strong!

---

Get new tips here.

Stick to the Mayberry Money Rules

It’s inevitable. Someday your kid is going to lament that “other parents” pay their kids way more money for way less work. The bottom line: you’re offering the worst allowance deal in the neighborhood, and you need to step up!

Actually, that’s when it’s time to sit down. Sit down and explain the “Mayberry Money Rules.”

Not ringing a bell? Watch this classic 2 minute Mayberry R.F.D. clip. Opie tries to explain the “75 Cent Rule” to his dad, Andy. Opie wants 75 cents a week in allowance for doing nothing because that’s what “they” get. Andy isn’t buying:

Andy: You want it straight don’t you?

Opie: Uh huh.

Andy: There are no rules for pas and sons. Each mother or father raises his boy or girl the way that he thinks is best. And I think it’s best for you to get a quarter and work for it. When you give something — in this case cleaning the garage — then you get something — in this case a quarter. That’s the greatest feeling in the world. You do feel good after working don’t you?

Opie: Uh huh. Good and tired.

Andy: As you get bigger, you'll be doing more and more work for more and more return, and that good feeling will get bigger. You understand what I mean?

Opie: I think so. I'm not going to get the 75 cents.

Andy: Right.

Opie: And I have to work for the 25.

Andy: Right. All clear to you?

Opie: Yeah. The bigger you get the tired-er you get.

Love that.

Remember, you’re the sheriff when it comes to money rules in your family. Whatever they are, take the time to thoughtfully explain them to your kid. And, by all means, stick to your guns.

---

Get tomorrow’s tip here.

Alert Your Kids to Account Activity

Your daughter just got her first prepaid card, debit card, or — gulp — credit card. Yikes. Some urgent questions:

• Did she really just buy a big screen TV 900 miles away in Podunk?
• Did she get double billed for that Zappos order?
• Is she still shelling out payments for World of Warcraft even though she stopped playing months ago? Still watching Netflix? Hulu? Still listening to Spotify?
• Did that deposit go through yet?
• How much was that last purchase? How much is left in her account?

These are all good questions for your card toting teen to know in real time.

Why?

1. Nip fraud at the bud.
2. Catch faulty billings.
3. Curb spending on unused subscriptions.
4. Stay on budget.
5. Just be more mindful of spending in general.

All good reasons for your kids to get automatic notifications whenever money comes or goes.

So, help your kids set up activity alerts on their financial accounts today. It may take a little poking around to find the right setting. Stumped by your credit card? Jim has a great trick for coaxing the right alerts here.

---

Get tomorrow’s tip here.

Send the Right Money Message at Birthday Party Time

What kind of personal finance message are you sending your kid when you blow $2,000 on a 9 year old’s birthday party?

You’re obsessed with keeping up appearances?

You value material things over authentic experiences?

You don’t know how to make and manage a rational budget?

All bad.

Marvel at the absurd parental party planning antics in this article. More importantly, you’ll also find practical tips for keeping birthday costs in check and sending the right money messages.

Still feeling a little parental peer pressure to throw a big bash? Remember these witty words from Erma Bombeck:

“Before you try to keep up with the Joneses, be sure they’re not trying to keep up with you.”

---

Get tomorrow’s tip here.

Teach Kids to Manage Their Mobile Data Budget

Today’s fantastic family finance article is:

Stretch Your Wireless Data Plan Instead of Paying More

You: “You need to get your phone usage under control. You’re crushing our family plan.”

Your Kid: “Gee, I had no idea I was using THAT much data! Are you sure?! I'm only using Instagram a little bit. And maybe watching a few videos on YouTube. A show or two on Netflix. Oh, and I do Snapchat occasionally.”

Umm, yeah. that’ll do it.

Tired of playing data cop and paying extra for data overages?

Time to deputize your child as Data Cop Jr. Teach your kids how to monitor and control their own data usage.

On Android, show your kid how to navigate to settings and tap on Data Usage. You’ll see a graph of data usage over time followed by a “wall of data shame” listing the most voracious apps up top. Enlightening! Your child can set a limit for total data usage as well as an alert when a threshold is crossed along the way.

iPhones have similar functionality under Cellular settings.

You’ll find more cool data (and money) saving tips in the article.

P.S. Let your kids know you’ll be billing them from now on for data overages. After all, you just destroyed the “but-I’m-clueless” defense.

Inspire Your Kidpreneur With This Teen Tie Triumph

Today’s fantastic family finance article is:

Meet the 14-Year Old Who Built a Bow Tie Empire (When He Was Nine)

Here’s young Mo’s entrepreneurship journey in a nutshell:

• Learns to sew bow ties at age 9 from octogenarian grandma, a retired seamstress.
• Launches “Mo’s Bows” selling $5 hand-sewn bow ties to summer camp-mates.
• Grows business on Etsy.
• Appears on Shark Tank at age 12. Doesn’t get deal, but gets free mentorship from Shark Daymond John.
• Expands into Neiman Marcus.
• Meets President, and receives Dreamer’s Award from National Retail Federation.
• Grows business to 6 employees and estimated $350,000 in annual revenue at age 14.

Next stop? Skinny neckties!

Check out the full story with your kid here. Mo’s glowing grin might just spur your budding kidpreneur to launch a venture too.

Whether your kid’s first foray into business thrives like Mo’s or withers like 99.99% of the rest, remember what SharkTank’s Daymond John says: “If I’ve learned one thing in this life it’s this: even if you lose, don’t lose the lesson.”

Regardless of outcome, your job as a parent is to make sure the experience is a net gain.

STEM Student? No Need to Overstress or Overpay on Elite Colleges

Today’s fantastic family finance article is:

Do Elite Colleges Lead to Higher Salaries? Only for Some Professions

Yet another great thing about kids going into STEM (Science, Technology, Engineering, Math) fields: the prestige and expense of the college doesn’t matter much to future pay. That’s the conclusion of a study tracking 7,300 young adults 10 years after graduation.

So, STEM parents, no need to freak out about the kids getting into that top tier school. And certainly no need to pile on student debt seeking an unnecessary pedigree.

Have a kid eyeing a liberal arts major? Sorry. No relief on the college stress reduction front. Looks like a pedigree still packs a pay punch.

Jesse Never Whines About Chores. Inspire Your Kids!

Today’s fantastic family finance video is:

The Jesse Chore Highlight Reel

Jesse happily vacuums, dusts, cleans up spills, and picks up garbage. He’s also irrepressibly cheerful and helpful around the house.

The model child?

Nope. More like the model dog! Jesse is a Jack Russell Terrier.

Next time your kids whine about chores, pull up this video. If a dog can do chores, they certainly can too!

On the other hand, if the kids can train your dog to do chores like Jesse, they probably deserve a free pass.

Wag more, whine less!

Use Sick Money Lingo With Your Teens

Father: “A Roth IRA funded with after-tax dollars using a dollar cost averaging strategy will allow your investment in highly diversified, low cost index funds to grow tax efficiently at roughly a 7% average annualized return if held for a significant period of time.”

Son: “Zzzzzz.”

OK Pops, you’re gonna have to step up your game if you want to connect with your teen about important money concepts.

Take two:

Father: “Junior, how’d you like me to show you how to turn $500 into $500,000 without going to the slammer?”

Son: “Sounds baller! TMAI* Daddy-O!”

Now you’re getting somewhere.

So, that’s your homework assignment inspired by J. Money over at BudgetsAreSexy.com: spend 15 minutes teaching your teen something about money using “sick” lingo that won’t put your kid in an instant coma.

Read J$’s “baller” article for more tips.

---

* Tell Me About It

Teach Your Kids They Can't Time the Market (And They Don't Have To)

Today’s fantastic family finance article is:

6 Sobering Facts About the Stock Market

If the kids overhear investment “experts” blathering on TV in the background during breakfast, they might be picking up the subliminal message that people actually know what’s going to happen in the stock market.

Time to let your kids in on the big secret: nobody really knows where the market is headed and when. Here’s a good example from the article: dudes in fancy suits from Merrill Lynch projected that energy stocks would perform well in 2015. Ummm...down 25% instead. Doh!

Explain to your kids that when people try to time the market, studies show they invariably perform worse than just leaving their investments alone. Why? Natural human emotion. They feel jealous when the market climbs, so the buy. They feel fearful when the market drops, so they sell. Buy high, sell low. Ooops, that’s the opposite of what you’re supposed to do!

Now let your kids in on the good news: you don’t have to time the market. Just buy at regular intervals over long periods, and you’re bound to get lucky at least some of the time. That’s called dollar cost averaging. You’ll do fine over the long term.

“Why buy stocks at all?’ your kids ask. Because over the long term (there’s that phrase again!), the stock market generally outperforms all the other places you can stash your money.

Discuss the other sobering stock market facts in the article with your kids. And tell them to ignore the talking stock heads on TV.