Tuesday, May 31, 2016

Encourage Kids To Be Name-Callers When Saving

Savings Name tags

Your kids know that calling people names is bad.

But calling money names? That’s all good when it comes to saving.

Names like Disneyland Summer 2017, My Next Smart Phone, My First Car, My Summer Trip Abroad.

Giving your kid’s savings jar, savings account, or savings card a customized name gives it a purpose. It makes the abstract concrete. The general specific. The boring exciting. The forgotten memorable.

Most importantly, it might just make the ignored achieved.

So let your kids know that name-calling is a good thing — when it comes to saving money that is.

Monday, May 30, 2016

Teach Kids The Relationship Between Luck and Work

Today’s fantastic family finance article is:

Luck As A Function Of Work Chart

Here’s a favorite quote often attributed to Thomas Jefferson:

I’m a great believer in luck.
I find the harder I work,
The more I have of it.

It turns out this quote probably came from a guy named Coleman Cox in the 1920s.

So why doesn’t Coleman get the credit? Bad luck I guess...

Two messages for the kids:

  • First, hard work means more opportunities, more luck.
  • Second, you don’t always get the credit you deserve, but your work can still be enjoyed by many.

Whether recognized or not, hard work is a winner.

Sunday, May 29, 2016

Challenge Kids To A Random Act Of Helpfulness

Today’s fantastic family finance article is:

Helping Hands Young and Old

The micro money message for today highlights the incredible two-way power of philanthropy. Check it out here.

Ralph Waldo Emerson, American writer and poet from the mid 1800s said:

“It is one of the beautiful compensations of this life that no one can sincerely try to help another without helping himself.”

Even the man famous for evangelizing self-reliance realizes the amazing two-way rewards of helping others. Kind of ironic.

So, challenge your kids to a random act of helpfulness today. No matter how small, it’ll make the helper and the helpee feel like a million bucks.

Saturday, May 28, 2016

Share This Instant Money Doubling Trick With Your Kids

Dollar Bill With Fold Line

In early March, I started sharing brief “micro money message” videos on Twitter with FamZoo’s followers. They’re 30 second personal finance messages to share with the kids over the weekend. Why 30 seconds? That’s the maximum duration allowed for a video embedded in a tweet — also known as the maximum duration of the modern attention span.

Since the videos have been warmly received on Twitter, I’ve decided to start capturing them on YouTube as well. Now parents have an easy place to locate and flip through previous episodes.

From now on, I’ll be sharing the latest micro money message each week on Family Finance Favs too. So, without further ado...

The micro money message this week: take your time with money decisions. Watch it here.

Kin Hubbard, the American humorist from the early 1900s, once quipped:

“The safest way to double your money Is to fold it over and put it in your pocket.”

There’s an important message in his tongue in cheek money doubling scheme: slow things down a bit to avoid misguided money decisions. Suppress the impulse. Just hang on to that money in your pocket a while longer. You’ll be more likely to skip a silly purchase or a risky investment.

Share Kin’s quip with your kids while out and about this long weekend. Maybe it’ll discourage an impulse buy or two.

And as you’re slowing things down with the kids, here’s another Kin classic to ponder:

“A loafer always has the correct time.”

What do you think Kin meant? That’s another good discussion topic for a lazy weekend afternoon.

Friday, May 27, 2016

Let Kids Know When They Can Get A Real Job

Today’s fantastic family finance article is:

Child Labor Opportunity

“You’re fired! Now go to your room.”

Yeah, parents make awkward bosses. And your kids make annoying employees.

It’s pretty hard to capture the true workplace experience at home. Working for a real boss — an adult who doesn’t love you unconditionally — builds valuable life skills, no matter how thankless the job.

So when can you tell your kid to go get a "real" job?

Federal law says 14 years of age for most paying jobs. But there are numerous exceptions based on the type of work, your location, and the employer.

Hand harvesting local short-season crops outside school hours? As young as 10.

Working at Starbucks? 16 is the typical age, or as young as 14 in Montana.

Whatever the job, it will require a work permit from the school or local government in many counties.

How do you figure out all the options and restrictions for your child?

Check out the guidance and fact sheets on the federal child labor page of the US Department of Labor site. For a handy summary of minimum age requirements organized by state and several popular companies, browse http://www.howoldtowork.net/.

You may find it’s time to quit playing boss to your kids. (You can just stick to being bossy instead.)

Thursday, May 26, 2016

Convince Your Grads To Say Yes To Free Boss Money

Free Boss Money

“Would you like some free money?”

“Nah, no thanks.”

Said no one ever. Well, except tons of freshly minted employees that is.

By the time your kids land that first job out of college, make sure they know how to say yes to free money from an employer. (It shouldn’t be too hard, they figured out how to say yes to free money from you, right?)

OK, so how do they know their employer is offering free money? Listen for the keyword “match” from the HR representative. Usually it comes during the benefits discussion about retirement plans like a 401(k) at a company — or a 403(b) at a nonprofit, or a 457(b) at a government agency. Whatever it is, any time your kid hears the word “match” from an employer, it’s time to listen up! Free money is lurking. (Don’t hear it? Ask!)

For example, the most common corporate match in a 401(k) plan is now “100% of the first 6%.” That means if an employee contributes up to 6% of pay to the retirement plan, the company will make a dollar for dollar matching contribution on the employee’s behalf.

Not sure what that means?

Walk through this simple example: say your college graduate makes $30,000 at a company offering the “100% of the first 6%” deal. Your grad wisely contributes 6% of pay or $1,800 to the 401(k) plan throughout the year. Then the company will also contribute $1,800. That’s $1,800 of free money people! $1,800 just magically turned into $3,600! Presto-change-o. Where else can you get an immediate 100% return on your money without breaking a sweat, or being ridiculously lucky, or landing in jail? Nowhere.

So make sure that future conversation goes like this:

Pointy-haired boss: “Would you like $1,800 of free money?”

Your informed child: “Heck yeah!”

Good work. You’re no pointy-haired parent.

Wednesday, May 25, 2016

Teach Your Teens Proper Tipping Etiquette

Gratuity Illiteracy

That first big date at the sit-down restaurant. Awkward.

The arrival of the bill followed by the clueless blank stare at the gratuity line. Double awkward!

Yes, your teens are growing up fast. They’re increasingly out and about on their own. Grabbing coffee drinks with friends. Getting a haircut. Going out to restaurants. Taking road trips for sporting events. Heading off to college. Taking a taxi or Lyft or Uber home from the rowdy college party. (We hope! That’s a separate, much more important conversation.)

The bottom line: you’re no longer by their side paying the tab.

Your teens have undoubtedly mastered paying for things. But do they have a clue about tipping etiquette?

Make sure your teens know the basic rules of thumb when it comes to gratuities — and that they know what gratuity means!

Here are just a few sample guidelines for the tipping scenarios teens are likely to encounter (leaving out some of the ones we hope they don’t!):

Service Person Tipping Guidelines
Barista $2 or less (your spare change).
Pizza/Food Delivery Person 15% to 20%. $2 minimum.
Barber, Hairdresser 15% to 20%.
Manicurist, Pedicurist 10% to 20%.
Waiter/Waitress 20% for good service. 10% typically sends a message. Look to see if gratuity already included for large bills first.
Parking Valet $2 to $5 when car is returned to you.
Skycap, Bellhop, Porter $1 per bag. $2 minimum.
Hotel Housekeeper $2 per night at budget hotel. $3 to $5 per night at nice hotel. Tip daily since housekeeper may change.
Taxi/Uber/Lyft Driver %10 to %15. $1 minimum. (Yes, it’s nice to tip your Uber driver.)

Find more tipping tips in this “ultimate guide”.

Remember, a complete serving of financial literacy includes gratuity. You’ll spare your teen some awkward money moments, and you’ll make some hard working service people happy.

Tuesday, May 24, 2016

Teach Your Teen These 5 Frugal Car Tips from A Motor City Expert

Today’s fantastic family finance article is:

Frugal Teen Car With Friends

Henry Payne knows a thing or two about cars. He’s the auto critic for the Motor City’s Detroit News, a syndicated car-toonist, and an amateur race car driver. He also knows a thing or two about teens. He raised two of them. So who better to trust for advice when it comes to cars, teens, and money?

Here are Henry’s top 5 frugal auto tips for teens:

  1. Buy used. Look for a pre-owned, compact hatchback sedan (Fiesta, Golf, Prius Hatchback) — great fuel economy with enough seats for your friends. New cars are a raw deal.
  2. Find a trusty neighborhood mechanic. Big, high volume dealerships make their money on expensive, $85-an-hour scheduled service. A good local shop will not only charge less per hour ($60) but also find you cheaper parts. And a kindly mechanic will look out for you, too.
  3. Get a bargain on high quality tires. No regular expense is greater than tires. Check out TireRack.com to find the most affordable, dependable options for your wheels.
  4. Stick to 87 Grade fuel. Ignore the advertising. Modern injection systems can run on anything. Don’t get duped.
  5. Save up. Put a little away every month and you’ll be able to pay cash for that first car of your dreams. That’s real independence. Your own car — with no debt payments.

Now your teen has the inside track.

Monday, May 23, 2016

Send Kids On A Theme Park Bargain Hunt

Disney At Night

What kid doesn’t want to go to an amusement park this summer?

What kid has any idea how much that actually costs?

Answers: pretty much no kid.

It’s the perfect opportunity to mix summer fun with a little personal finance education.

If your kid is angling for a trip to a theme park, say “yes!” But under one condition: your kid has to research and find the best deal.

In this episode of Stacking Benjamins, Robert Niles from Theme Park Insider shares a perfect example of where to look for some killer bargains: passes.

Compare buying one day tickets to buying annual or season passes. Even if you visit just a couple times, you might be better off buying the pass. Why? It often includes discounts or freebies on parking and in-park items like food or merchandise. It may even allow free access to other parks in the same chain.

Have your kids pencil out the math for the different scenarios. Have them look for other cost saving opportunities like off-peak times. Maybe even offer to let them apply some fraction of those savings to their souvenir and snack budgets. That should help stoke their bargain hunting fire.

Your kids will learn a quick lesson in savvy shopping. The added bonus? Your kids will appreciate the rides even more when they know how much they cost. Win, win.

Sunday, May 22, 2016

Remind Kids Allowance Starts With Allow

Today’s fantastic family finance article is:

Allowance Definition

“An allowance is where I ALLOW you to stay in my house.”
~ Chris Rock

Sometimes kids get the notion that an allowance is a right instead of a privilege.

“Suzy down the street gets X in allowance, why don’t I get the same?”

Short answer: “You aren’t Suzy, and this isn’t Suzy’s family.”

Long answer: “Let me explain our money philosophy...”

If your child is suffering from allowance entitlement, sit down and check out this classic sitcom clip together. Chris asks his father for an allowance. He gets an education instead.

Like Chris, your kids need to understand that many of the things they take for granted - the roof over their heads, the food on the table, all the creature comforts - come from money that is earned through hard work, not a handout.

That said, an allowance can still be an excellent way for kids to learn how to manage money for a specific purpose. Think of it as handing over a tiny slice of the family budget to your child. You’re putting your child in charge of some spending you would have done on their behalf anyway.

That’s not a right, it’s a responsibility. And an education.

Saturday, May 21, 2016

Pay Your Teen To Brown Bag It For Lunch

Brown Bag Lunch Deal

“Mom, the cool kids all go across the street to Chipotle for lunch.”

Ah, the teen years. That’s when many frugal habits come under serious assault. Peer pressure to eat out mounts, and the brown bag lunch habit falls by the wayside. Only many years later, when fiscal reality forces a sharpening of the budget pencil, will the frugal virtues of the brown bag be rediscovered.

So how can you maintain the brown bag habit with your teen in the face of peer pressure and the growing desire for independence?

Try paying for brown bag lunches.

Calculate the savings and offer a share of the spoils. Maybe 1 or 2 dollars for every brown bag packed and taken for lunch. Your teen might be pleasantly surprised at the potential upside. Making a sandwich at home can cost well under 2 dollars. The average Chipotle burrito? More like $7. Throw in extras, and the spread might be even greater. Come on. You can afford to kick in a nice little incentive payment.

Now the cool kids will be banking bucks for brown bags.

And the really cool kids will be saving those bucks for a Roth IRA contribution.

Who knows, you might just kick off a whole frugality fad at the local high school! Hey, a parent can dream...

Friday, May 20, 2016

Don't Let Teens Confuse Credit Cards With Emergency Funds

Credit Card, Not Emergency Fund

“I’m getting you this credit card for use in emergency situations only!”

That’s a very common refrain from parents with kids in high school and college. And, it makes a lot of sense too. No parent wants a kid stranded somewhere far away with an empty gas tank and no means of payment.

The problem comes when kids grow up thinking an emergency credit card is the same thing as an emergency fund. It’s not. It’s an emergency loan. Your teen needs to pay it back. Immediately.

And where does that repayment come from? Not you! From your teen’s emergency fund.

That’s right, your teen needs an emergency fund too.

Just open a separate savings sub-account or low cost prepaid card to serve as a modest emergency fund for your teen. Mandate that it be funded with a couple hundred dollars. Whenever your teen racks up an emergency payment with the credit card (or gets that first ticket or breaks that smartphone), cover it immediately using the emergency fund. Then, insist that replenishing the depleted fund becomes your teen’s top financial priority. Rinse and repeat with each emergency.

Teens who understand credit cards are not emergency funds will avert much bigger emergencies down the road — like crippling consumer debt.

Thursday, May 19, 2016

Show Kids This 2 Million Dollar Picture Of An Early Saving Start

Starting Age Versus Monthly Savings Chart

Parent: “When it comes to saving, you need to start early.”

Child: Shrug.“Yeah, whatever.”

It’s pretty easy to shrug off general financial advice — especially when it comes from a parent.

Try painting a specific picture instead:

Parent: “How would you like to have 2 million dollars in the bank when you’re ready to kick back as an oldster?”

Child: “Sounds chill.”

Parent: “If you start at 21, and stash $681 in the stock market every month, you’ll have a great shot at accumulating 2 million dollars by the time you’re 67.”

Child: “Sure sounds like a lot of money every month. I’ll pass until I’m older.”

Parent: “OK, then pick an age to start saving.”

As your child picks ages, look up the corresponding monthly amount required on the chart.

Child: “Wow. $1,126 at 30. $3,661 at 45. Ouch. I better start saving early.”

Parent: Shrug. “Indeed.”

Talk is cheap. Especially vague savings talk. It’ll be ignored. But a precise picture might just be worth 2 million dollars.

Wednesday, May 18, 2016

Start The Money Conversation With A Comic

Today’s fantastic family finance article is:

Personal Finance Comic

Can a comic book teach your kid good personal finance habits?

Probably not by itself.

But it can introduce the concepts.

The concepts can spark the conversations.

The conversations can spark the actions.

The actions can form the habits.

So, if your kid loves comic books, a personal finance themed comic book featuring popular Guardians of the Galaxy superheroes extolling the virtues of budgeting, saving, and emergency funds might be the perfect place to start.

Just remember, the real life superheroes are the moms, dads, and caregivers who turn the concepts into habits at home.

Tuesday, May 17, 2016

Create A Personal Finance Legacy

Today’s fantastic family finance article is:

Personal Finance Legacy

You know teaching your kids about money is important. You know starting early makes sense. But sometimes it’s just helpful to hear it from another parent. Someone else in the trenches. Someone else with young kids and a crazy schedule. It’s that little extra push you need.

Ask around. See what the other parents in your community are doing and why.

Ask someone like Catherine Alford with her two young twins. Why is she allocating her precious parenting time to personal finance lessons already?

Three simple reasons. She wants her kids to be prepared, independent, and — above all else — happy.

Get it straight from Cat in this short video.

As Cat says:

“If you don’t teach your kids about money, life is going to teach your kids about money.”

Life can be a pretty brutal teacher for the unprepared. Cat knows she can’t eliminate mistakes, but when a money dilemma crops up, she wants to be sure the kids at least “heard it from mom first.”

Smart mom.

Cat thinks of it as creating a personal finance legacy that her kids will in turn pass along to the next generation.

Love that.

Inspired to start your legacy?

Monday, May 16, 2016

Take A Fresh Look At Your Teen's Gaming Habit

Gaming Look

No instructions. Trial and error. Victory only after repeated failure. No trophies just for participating.

Sounds like a recipe for resilience or grit.

Something parents generally love to see.

But we’re talking about an activity parents often loathe: video games.

Maybe you need to take a closer look at the games your teens are playing online. Sit and observe a bit. Any surprises?

Your kid might just be building successful business skills. Check out the study mentioned in this Wall Street Journal article: Videogames So Tough They Teach You to Win in Real Life found.

Collaboration. Confidence. Concentration.

Beware that other C word though — compulsive.

Sunday, May 15, 2016

Read These College Application Essays About Money To Your Kids

Today’s fantastic family finance article is:

Being Quiet About Money

What if your kid chose to write a college application essay about money. What would it say?

Today’s article features 4 outstanding money essays culled from hundreds submitted to the New York Times.

Read one or two or all of these essays with your kids. Have a discussion. Likes? Dislikes? Reactions?

Do you think the parents had an inkling of their kids’ feelings?

Did Isabella’s mom know the deep influence of their “Dominican-bred frugality.”

Do Joseph’s parents know the odd mix of fear and pride that comes with being the first in the family to go to college?

Do Erica’s parents know the guilt and loathing she has for the money behaviors in her town — voted “the snobbiest city in Michigan”?

Sarah’s dad definitely didn’t know about her money feelings:

“Her father was surprised that his daughter had thought so hard about his feelings about his career and livelihood.”

That isn’t bad per se, but maybe a missed opportunity?

Your kids might be developing deep feelings about career, money, and values right now. Feelings based on you, the community, the country. This exercise might offer a comfortable opportunity tease out those feelings. Maybe you can add some perspective. Maybe you’ll gain some perspective.

Better to find out how your kid’s money essay is shaping up now than wait for senior year. Your conversation might change the story.

Saturday, May 14, 2016

Make a Money Advice Alphabet For Your Kids

Money Advice Alphabet

Why do so many of our important conversations about money devolve into a bunch of gobbledy gook? Fancy jargon. Busy charts. Numbing equations. Face it. Your kids aren’t listening.

If you want to get through to your kids about personal finance, you’re going to want to keep it simple, light, and memorable.

Like the ABCs of Finance that J. Money (the money dude with a mohawk over at BudgetsAreSexy.com) put together.

By the way, a xylograph is an engraving in wood. So J’s saying: make a picture of your goals. I think.

A little goofy. Nice and simple. Very meaningful.

What would your money advice alphabet look like? Here’s mine:

Automate your good money habits, like setting aside savings from your paycheck.

Bargains for things you don’t value are bad deals.

Create something of value every day. Anything.

Delay your gratification, but enjoy the moment.

Experiences are better than stuff, unless your stuff is creating an experience.

Find a spouse or partner who shares your values. It will be your best money decision ever.

Get the company match. It’s free money!

Happiness through gratitude, not gratification.

It’s never too late to change a bad money habit.

Just because someone else has it doesn’t mean you should have it too.

Keep learning and improving. The money will follow.

Long term, low cost, lots of irons in the fire. That’s how good investing rolls.

Markets cannot be timed. Make regular investments at regular intervals, and you’re bound to get it right at least once in awhile.

New is not always better than used. Think cars.

Open a Roth IRA with your first job as a teenager. Keep contributing as long as you can.

Pay off your credit card balance every month.

Quit quitting.

Remain calm. The market will come back eventually.

Stuff won’t make you feel better.

Talk to your family openly about money. As Ron Lieber says, every conversation about money is also about values.

Understand where you are putting your money. Don’t understand it? Don’t put it there until you do.

Volunteer. Time and money.

Work hard and smart.

Xenophobia limits life’s riches. Explore outside cultures and opportunities.

You are responsible.

Zero whining. Focus forward on a solution, not backward at a problem.

Try making your own money advice alphabet. It’s as easy as ABC.

Your kids might not listen to your money words, but maybe they’ll listen to your money letters.

Money Advice Alphabet

Friday, May 13, 2016

Quiz Your Kid On This Tricky Money Word

Today’s fantastic family finance article is:

Tom Rakewell The Spendthrift

Challenge your child to this tricky personal finance vocabulary quiz:

What does the word “spendthrift” mean?

You’ll probably hear something like: “Well, being thrifty is being smart with money. So, combining the words spend and thrift, I’d say a spendthrift is someone who spends wisely.”

Congratulations. Your child is quite logical.

Unfortunately, your child is also quite wrong.

Which is a good reminder that often money behavior and logic don’t go hand in hand.

As it turns out, the origin of the word spendthrift dates back to an archaic time when the word thrift referred to prosperity. So, a spendthrift was someone who frittered away prosperity through reckless spending. Quite the opposite of a thrifty spender indeed!

Speaking of old times, back in the 1700s, the English artist William Hogarth created a series of paintings that some consider the ancestor of the storyboard. The story? An eight panel cautionary tale of Tom Rakewell, the spendthrift son of a rich merchant.

See if your kid can figure out what’s going on in each of the panels. (If you can’t see them below, click here.) Don’t look too closely at panel three!

Stumped? Consult today’s article for the cheat sheet.

The bottom line: Missing the word “spendthrift” on the SAT won’t ruin your kid’s life, but behaving like one just might.

Your challenge? Don’t raise a Tom Rakewell.

The 8 Panel Cautionary Tale of Tom Rakewell the Spendthrift

Thursday, May 12, 2016

Make Sure Your Teen Appreciates New Car Depreciation

New Car Losing Market Value

Here’s a conversation you’ll want to have with your teen as those driving years approach.

You: “Imagine we just bought you a brand new car for $20,000.”

Your teen: “Sweet!”

You: “We immediately drive it home from the dealer. How much is your new car worth now?”

Your teen: “Umm… Is this a trick question? We just bought it. $20,000, right?”

You: “Nope. Less than $18,000.”

Your teen: “What?! Where did the $2,000 go?”

You: “Poof! Depreciation.”

Your teen needs to know that’s how new cars roll when it comes to maintaining resale value. Badly. And that’s why your teen isn’t buying one. Not as a teenager, and hopefully not as a young adult either.

The average new car depreciates 10% as soon as it’s driven off the lot. After just 5 years, it will be worth less than half it's original sticker price. Bad deal.

Guess what else is a raw deal with new cars? Insurance. Fees. Both will be more expensive.

Your teen’s new car money mantra: Buy used, or get used.

Good talk.

Want to turn these tips into action? Check out FamZoo.com.

Wednesday, May 11, 2016

Show Kids The Difference Between Frugal And Cheap

Cheap Car That Is No Bargain

Frugality is a virtue. It’s about spending your money thoughtfully. Not wasting it. Spending it carefully on the things and people you truly value.

Warren Buffett has a saying:

“Price is what you pay. Value is what you get.”

Frugal people get a lot of value for a very reasonable price.

Note the word reasonable.

What if you get a lot of value for an unreasonably low price? Perhaps by freeloading off a friend or taking advantage of a situation. That’s not frugal. That’s cheap.

What if you get very little value for a very low price? Perhaps by purchasing extremely low quality items or experiences. That’s not frugal. That’s cheap.

What if you get no value by refusing to pay any price? Perhaps by denying yourself any of life’s pleasures. That’s not frugal. That’s cheap.

Not sure where to draw the line between frugal and cheap? Take the fun test here.

Being frugal is a virtue. Being cheap is not. Teach your kids the difference.

Tuesday, May 10, 2016

Teach Youngsters To Be Advertising Cynics

Today’s fantastic family finance article is:

No Truth In Ads

There’s an old Russian proverb:

“When money speaks, the truth keeps silent.”

That’s what happens when over 15 billion dollars in advertising targets your kids annually. Marketers bombard your kids with false messages of consumption.

And the assault isn't just on the TV screen. Its on every screen. TV, computer, tablet, mobile phone. In videos. In social media. In games.

Are you paying attention to what your kids are seeing?

Teach your kids to fend off the advertising messages lurking on their screens. Watch together. On every screen. Find the falsehoods. Mock the manipulation. Deconstruct the deception.

Help your youngsters become informed, skeptical consumers.

When parents speak, even 15 billion dollars can’t silence the truth.

Monday, May 9, 2016

Warn Your Kids About The Tyranny Of Stuff

Today’s fantastic family finance article is:

Shelves Of Stuff

Our stuff. It’s piling up everywhere.

We consume so much stuff, we’re consumed by it.

In this classic comedy sketch, George Carlin theorizes that the meaning of modern life is nothing more than “trying to find a place for your stuff.”

As George points out, our stuff is so ridiculously out of control that an entire industry has been created around storing it. In fact, the projected revenue of the self-storage industry in 2016 is over $30 billion. Yikes. That’s one heck of a lot of stuff.

Remind your kids that owning a lot of stuff is just a burden. Let them know that, in many cases, less is more. More freedom.

As Henry Rollins said:

“The more you own, the more it owns you.”

Maybe it’s time to sit down with your kids and ditch (or donate or sell) some stuff.

Sunday, May 8, 2016

Share A Pearl Of Mom Wisdom With Your Kid Today

A wise and beautiful mom!

My mom taught me a deep respect for all forms of work — whether manual labor or mental labor. She taught me that work and dignity go hand in hand.

That’s why this quote from Thomas Edison is one of my favorites:

“Opportunity is missed by most people because it is dressed in overalls and looks like work.”

Anyone appearing in overalls near our house was certain to be greeted with a plate full of fresh cookies and a cool refreshment courtesy of my mom. It was her way of saying: “I appreciate your dedication to your craft. I appreciate and respect your labor.”

What did your mom teach you?

Share it with your kids today. Then they’ll realize how important it is to listen to mom too.

Happy Mother’s Day to all the moms out there. Keep teaching your kids good things!

P.S. That’s my beautiful and wise mom in the photo up top, circa 1958.

Saturday, May 7, 2016

Teach Your Kids What It Means To Be Rich

Today’s fantastic family finance article is:

Spending Compass Aligned With Values

What does it mean to be “rich”?

“Duh, Dad. To have tons of money.”

Not so fast.

Henry David Thoreau said:

“I make myself rich by making my wants few.”

And Charles Caleb Colton said:

“He that has little and wants less is richer than he that has much and wants more.”

And Doris Day said:

“Gratitude is riches. Complaint is poverty.”

Ponder these quotes with the kids.

Once basic needs are met, it seems that being rich has surprisingly little to do with the total amount of money you earn and more to do with how you spend whatever money you have.

Teach your kids to spend their money on the things that truly matter, the things they truly value, and they’ll be very rich indeed.

Friday, May 6, 2016

Help Your Kid Get More Grit

Today’s fantastic family finance article is:

Grit Equation

“I want my kid to have grit.”

Agree? Probably.

Success and grit seem to go hand in hand. And success often means financial security, among other good things.

But what is grit?

“Passion and perseverance for especially long-term goals,” says professor of psychology, Angela Duckworth who has written a book on grit.

If your kid lacks grit, can it be developed? Yes.

In researching the grit of people with deep success in a field or endeavor, Angela found it’s forged from four key elements:

  1. Interest — Sustained interest, often referred to as passion. But humans naturally get bored. They crave novelty. Gritty people “learn to substitute nuance for novelty” in their chosen area. They maintain interest by appreciating the endless subtleties.
  2. Practice — Not just rote practice. Deliberate practice. Tons of it. Like 10,000 hours as Malcolm Gladwell famously wrote in the book Outliers.
  3. Purpose — Connecting your endeavor to people or things or ideas that are beyond yourself.
  4. Hope — The unwavering belief that you can overcome the inevitable obstacles and setbacks.

Beware skipping element number one.

Forcing 10,000 hours of deliberate practice in the absence of interest is a recipe for disaster.

That said, it will take consistent prodding to get your kid to try out different interests and to appreciate nuance as novelty.

That’s called parenting grit.

Thursday, May 5, 2016

Give Your Kids This Basic Investing Chalk Talk

Today’s fantastic family finance article is:

Investing Big Picture

Investing, blah, blah, blah, cash, blah, blah, blah, stocks, blah, blah, blah, bonds, blah, blah, blah, diversification, blah, blah, blah, time horizon, blah, blah, blah, risk tolerance, blah, blah, blah, return, blah, blah, blah, asset allocation, blah, blah, blah, rebalancing. Got it?”
“Dad, you lost me at ‘investing.’”

Let’s try something different. A simple picture.

First, let’s draw a horizontal line representing when we anticipate needing some money. It starts with “right now” and works its way up to “decades from now” and beyond.

Now, let’s draw a vertical line showing how much risk we’re willing to take with our money. It starts with “no risk” and works it’s way up.

If we need the money right away, we don’t want to be taking any chances with it. That’s a dot in the lower left corner.

If we don’t need the money for decades, we’re more willing to take some chances. Why? It turns out that if we take more risk, we have a better chance of getting more reward. That’s a dot in the upper right corner.

Now, connect the dots. That shows us how "when we need the money" (our "time horizon") affects how much risk we’re willing to take.

Now let’s consider some of the most popular places to keep money.

  • As cash in a bank account. Not risky at all. In fact, if something happens to the bank, the government will step in and make sure you get your money back. (Up to $250,000 — as long as your account is FDIC insured. Make sure it is.) Write “cash” in the lower left corner of the chart.
  • Invested in stocks. Can be extremely risky — especially if you hold individual stocks or hold for short periods of time. (Hint: be sure to check out low cost index funds or ETFs as a way to hold broadly diversified collections of stocks with lower risk and strong returns over the long haul.) Write “stocks” in the upper right corner of the chart.
  • Invested in Bonds. Typically somewhere in between cash and stock when it comes to risk/reward. Write “bonds” in the middle of the chart.

So, where should you keep your money?

When do you need it?

Everyone needs some now for everyday spending, regular bills, and short term savings goals. Think cash. And remember, an emergency could happen any time, which means it could be today. That's why emergency funds should be in cash.

Everyone needs some for the future. The younger you are, the more decades in that future. So, the more you should be thinking stocks. As you get older, fewer decades, less stock which means more bonds and cash.

That’s the big picture when it comes to investing. Pretty simple.

Make sure your kid understands the big investing picture. You can wow her with the fancy jargon later.

Wednesday, May 4, 2016

Teach Teens That Even An Extreme Minimalist Needs An Emergency Fund

Today’s fantastic family finance article is:

Minimalist Emergency Fund

Imagine no possessions
I wonder if you can
No need for greed or hunger
A brotherhood of man
Imagine all the people
Sharing all the world...

~ John Lennon

Can your teen imagine living without money or possessions? Can you?

Heidemarie can. And has for 17 years. Well, OK, she has a few possessions. They all fit into a single rolling suitcase.

She barters her services for room, board, haircuts, transportation.

Miserable? No. Healthy and happy. A lifestyle built on “love and trust.”

Read today’s provocative article with your kids.

Imagine. Discuss. What would be the positives? What would be the negatives?

Sure, it’s wildly extreme to give up all your possessions, but do we really need to accumulate so many?

Final thought: even as an extreme minimalist, Heidemarie maintains an emergency fund. Smart. There are lots of “maximalists” out there with no emergency fund. Which is crazier?

Tuesday, May 3, 2016

The Key To Grooming A Kidpreneur: Creating Versus Just Consuming

Today’s fantastic family finance article is:

Zombie Gamer Kid

If you’re like most normal parents, you probably aren’t seriously fixated on trying to groom the next Zuckerberg, Jobs, or Wojcicki (Anne or Susan!).

That said, you probably do like the idea of your kid developing an entrepreneur’s knack for problem solving and creativity. And, one way or another, technology is invariably involved.

The good news: your smartphone-toting, screen-staring youngster is fully engaged with technology already. The bad news: that engagement is typically on the consuming end.

While moderation is certainly a good thing, the answer isn’t necessarily cutting the screen-time cord. Instead, try shifting more of those hours from consumption to creation.

Kid loves Minecraft? Explore making mods.

Kid loves Counter-Strike? Explore designing custom maps.

Kid loves YouTube? iTunes? Explore editing and production tools.

Whining for more screen-time? Create something, and your kid might just have a deal.

Monday, May 2, 2016

Share Warren's Wisdom With Your Kids: A Full Wallet Is Like A Full Bladder..

Today’s fantastic family finance article is:

A Bursting Wallet

The smartest investor of all time has a way of putting things in terms that even your youngest kids can understand.

At 85, he is after all just a big kid himself.

While sipping cherry coke and eating peanut brittle at the live streamed Berkshire Hathaway annual meeting last Saturday, Warren uttered this sage piece of personal finance wisdom:

“A full wallet is like a full bladder; you may have the urge to pee it away.”

Translation: when money hangs out in a convenient spending place (like your wallet), it tends to get spent. On whatever. Put your excess cash somewhere else. A savings jar. A savings account. An investment account.

If you’re finding Warren’s quote a bit too crass and juvenile to share with your kids, consider this alternative classic from the Oracle of Omaha:

“Do not save what is left after spending, but spend what is left after saving.”

Same wise message without the bodily fluids reference. Tuck some of that incoming cash away into savings. Right away.

That’s how you avoid the urge.

Sunday, May 1, 2016

How Teens Can Take Big Time CEOs To Task

Today’s fantastic family finance article is:

Activist Kid Shareholder

“Why the layoffs?”

“What are you doing to boost efficiency?”

“How much are you paying women compared to men?”

“What are you doing to raise the share price?”

“Why did CEO pay increase $3M when the share price decreased 6%?”

Some pretty tough questions for a CEO.

Who’s asking? A hard nosed financial reporter?

Industry analyst?

CNBC anchor?

Nope. A 9th grade shareholder. Natalie received shares in Bank of America as a gift when she was a baby. Now she’s holding the CEO’s feet to the fire.

How does Natalie get an audience with the CEO of a $150B public company?

Unlike most shareholders, she shows up at the annual shareholder meeting. She steps up to the microphone.

Remind kids that CEOs don't own the company, the shareholders do.

Even teen shareholders can stand up and ask CEOs the tough questions. In fact, as today’s article shows, they’re probably more likely to be heard.