Wednesday, December 28, 2016

Make Kids Pay The Sales Tax

iPhone Receipt Showing Sales Tax

You want kids to appreciate the value of a dollar.

You want kids to be aware of how much things cost.

You want kids to share some financial skin in the game to encourage frugal behavior.

But kids can’t afford to pick up the full tab for everything.

The following transaction from our family finance site hints at a clever yet affordable solution to the dilemma:

10/22/2016 iPhone 7 sales tax -$72.97

Brilliant. Make your kids pick up just the sales tax instead.

In most states, the combined state and local sales tax is enough to make your kid take notice. If it isn’t enough in your state, you can always levy your own family sales tax and toss the proceeds into your family swear jar.

Making your kid pick up the sales tax for everything might be a bit over the top. Consider focusing on certain categories of spending instead. Sporting goods, clothing, toys, music equipment are some good examples.

Lots of kids don’t have a clue about how much things cost or that sales tax even exists. Sticking your kids with the tax bill on purchases is a clever and affordable way to make your kids mindful of both.

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Wednesday, December 21, 2016

Set Up A Smart Competition To Make Investing Lessons Fun For Kids

Chipotle Versus Index Fund Performance Comparison 2016

Buy a share of a favorite company’s stock for your child. That’s the time-honored technique for sparking an early interest in investing.

Why? It works. What kid wouldn’t want to own a piece of Disney? It’s the perfect way to turn the otherwise dry and abstract topic of investing into something personal and concrete.

There’s one big problem through. Betting on a single stock is a horrible investing strategy. It’s just gambling.

Case in point: my Chipotle chomping son was thrilled to receive a share of his burrito bingeing destination of choice last year for Christmas. This was shortly after the chain’s infamous E. coli debacle. We both knew the popular restaurant would rebound quickly as they tackled their problems. Furthermore, the wise counsel of Warren Buffett rang in our ears: “Be fearful when others are greedy and greedy when others are fearful.” Clearly a savvy investing maneuver on our part, right?


A year later, Chipotle is down over 27 percent. Doh!

The message for my son? The market is no place for his money. Way too risky. Way too hard to pick a winner.

Financial parenting fail. Right?

Not so fast.

We also bought him a piece of the overall stock market — a share of Vanguard’s VTI. As Jack Bogle says: “Don’t look for the needle in the haystack. Just buy the haystack!” In other words, there’s no need to struggle to pick individual winners. If you buy a piece of every stock in the market, you can’t help but scoop up all the winners too.

So how’d that work out?

VTI is up over 13 percent since then. Sweet.

Now, that isn’t to say your results will match. In fact, you might see the complete opposite.

Either way, setting up a little friendly competition between an exciting stock and a “boring” index will set the stage for ongoing concrete discussions with your youngster about critical investing principles like risk, volatility, and diversification.

The only sure bet? Your kid will wind up being a savvier investor as a result.

P.S. If you’d rather not hassle with setting up a custodial account for your youngster, consider a parent-paid investment account instead.

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Wednesday, December 14, 2016

Let Kids Gift Service Bucks Instead Of Stuff

Kid Service Dollar

I don’t want my kids to buy me any more stuff for birthdays or holidays.

But, I do want my kids to practice thoughtful gift giving and experience all of its benefits.

The answer? Kid service bucks.

Let your kids give you a voucher for a favorite service they can provide personally.

Like what? Culling through some anonymous transactions on our family finance site turns up an eclectic set of services that parents value. How do I know these services are valued? Because I can see parents are already paying top dollar for them!

Here are some favorites I found. They run the gamut from the practical to the quirky:

  • back scratches
  • hand drawn pictures
  • cleaning the fish tank
  • mowing the lawn
  • whacking the weeds
  • cleaning out and organizing drawers
  • washing the car
  • taking the car to the car wash (for driving teens)
  • babysitting younger siblings
  • planning and making their own school lunches
  • making mom’s or dad’s lunches for work
  • helping mom or dad cook dinners
  • making dinners
  • planning a week of meals
  • running errands
  • handling car pool pickups (for driving teens)
  • being awesome (that earned one kid $6 — clearly a high value service!)

See any you’d appreciate? Start dropping some hints to your kids. Maybe it’s time to “accidentally” leave a wishlist on the counter.

Kids can draw the vouchers by hand or make kid service dollars using the same technique I use for making Mom/Dad dollars.

Oh, and just in case my kids are reading: a handmade card and a few bike rides with Dad make the perfect gift for me!

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Wednesday, December 7, 2016

Browse Your Kid's Transactions For Great Gift Card Ideas

Mom holding phone with son's card transactions

Gift cards are the go-to gift for last minute shoppers — especially relatives chasing down that birthday or holiday gift for junior. Gift cards are easy to mail and more personal than cash.

That said, just going down to the local grocery store and plucking a card off the rack doesn’t feel all that personal or thoughtful. How do you know it’s a winner for your young recipient? How do you choose a card that’s unique and surprising, yet useful?

Do a little spending research on your subject.

For kids who use a checking account or prepaid card with parental online access, it’s easy and quick. Just browse through your child’s transaction history for clues.

Scanning through the recent purchases by my 14 year old son yields several instant winners:

  • A Newegg gift card — He built his own custom gaming PC a while back and is always upgrading parts. I see transactions for a memory upgrade and a new gaming mouse. I’m sure there’s more to come.
  • A Steam gift card — What’s a hot gaming rig without games? I’m seeing about a game transaction a month.
  • A Pizza My Heart gift card — Looks like that’s the local go-to spot for hanging with the buddies downtown.
  • A Tea For U gift card — There’s the time he got that $4 specialty tea downtown and later regretted it because of the ridiculous price! But he is quite the tea hound, and that might be a good surprise gift for guilt-free special occasions.

Boom. Instant winning gift ideas for Grandma S. and Grammy J. when they call at the last minute during the holidays. Like they do every year. :-)

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