Wednesday, January 25, 2017

Bill Kids Weekly For Their Share of The Best Deal

Teen enjoying music with siblings

Pay up front, save a bundle. Lots of services offer kids a reduced rate for committing to an extended time-frame in advance. Buy the 6 month World of Warcraft subscription instead of paying monthly, save $24.00 per year.

The problem: lots of kids can’t afford the up-front cost, so they take the cheaper, but ultimately costlier, pay-as-you-go option.

Pay as a group, save a bundle. Lots of services offer a reduced group or family rate. Pay $14.99/month for the Spotify family plan instead of two regular plans plus two student plans, save $179.64 per year!

The problem: lots of parents pick up the tab for the whole family, while the kids pay nothing. Suddenly kids develop the mistaken impression that shared services are free.

The solution to each of these problems?

Buy the best deal for your kid — up-front or family plan. Then bill your kid each week or month for the appropriate partial share. If your kid has an online account, automate the billing to eliminate the hassle of remembering.

Lots of parents are doing this with their kids on our family finance site. Parents are billing their kids for cell phone plans, Wizard 101, Xbox Live, Roblox, Minecraft Realms, Fantage, Club Penguin, Animal Jam, World of Warcraft, iCloud storage, Apple Music, Spotify, Marvel Comics Unlimited online access, Netflix, Hulu, Gamefly, WORLDteen, Six Flags season passes, gym memberships, sports team fees, musical instrument rentals, the Yousician music teaching app, access to the family car, pet insurance, you name it.

Try the approach in your family.

Your kid learns about pricing plans. Educational.

Your kid and your family get the best deal. Frugal.

Your kid pays their fair share. Accountable.

It’s a good deal all around.

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Wednesday, January 18, 2017

Try A Use-It-Or-Lose-It Allowance For Obsessive Young Savers

Use it or lose it money from Dad

“We are not to judge thrift solely by the test of saving or spending. A wise balance between the two is the desired end.” ~Owen D. Young

Not every kid has a spending problem. Some have a saving problem.

What does that mean? Some kids are so afraid to spend money, they never treat themselves or others to anything. Ever.

They’ve developed an irrational fear of spending.

You’re rightly telling your kids that money is a precious resource, and spending it on things they don’t value is unwise. But they may just be translating the message to: "spending is bad."

Spending money on things that give you and others joy is good. In moderation, of course.

So how can you get your obsessive young saver more comfortable with responsible spending?

Try a use-it-or-lose-it allowance — a small weekly stipend for guilt-free, joy-inducing spending.

Your child can use it to treat herself (or the two of you) to something modest each week. An ice cream. A cup of coffee. A donut. Admission to a museum. A movie. You might need to kick in a little extra sometimes too.

If the money doesn’t get used, poof! The leftover gets swept back into mom or dad’s account. Use it or lose it. No missed savings opportunity to agonize over.

Help your kids discover that moderate spending on things or experiences that bring joy is good. Saving every single little penny isn’t thrifty. It’s miserly. Help your kid find the right balance.

P.S. On a different but related note, I deployed a use-it-or-lose-it approach with my teens’ clothing allowances. My boys would just as soon go naked and abscond with the leftover funds. So I eliminated that opportunity with a use-it-or-lose-it provision. Do you have your own use-it-or-lose-it money example?

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Wednesday, January 11, 2017

Authorize DIY Projects To Hone Your Kid's Money (And Life) Skills

Son With Home Built Gaming Computer

Your kid has big DIY project ideas. Build an awesome gaming computer. Construct a skateboard ramp. Redecorate the bedroom.

As a busy parent, your first instinct is to hedge.

“Time suck!” you’re thinking. Let your kid take charge.

“Money suck!” you’re thinking. Demand a budget.

“Bound to fail!” you’re thinking. Lower your bar.

Years ago, I was skeptical when one of my sons (13 at the time) wanted to build his own gaming computer — one that would be more powerful and less expensive than a high-end off-the-shelf model. Sure kid.

I finally relented and authorized the project.

He researched and picked the parts, optimizing for the perfect balance of price and performance based on his specific needs.

We chased down obscure assembly instructions together online.

We battled through some software hiccups and compatibility issues together.

We — but mostly he — succeeded.

He learned to research, to compare, to budget, to be resourceful, to troubleshoot, to persevere.

I learned to let go of the reins a bit.

We bonded.

Recently, a mom on a popular NPR personal finance Facebook group reported a similar DIY experience:

“For Christmas, I gave my 11-year-old daughter a certain amount of $ for decorating her new room. This turns out to be a GREAT practical money management exercise for kids. She is online researching chairs, rugs & bedspreads. She is learning what things cost, about trade offs, taxes, and how to get everything she wants while sticking to her limit or less. I highly recommend it to parents!”

I won’t need to see any “after” pictures of her daughter’s room to declare that DIY project a winner. Look at those money (and life) lessons. Pure gold.

So, what DIY project can you authorize for your kid?

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Wednesday, January 4, 2017

Give Your Kid A Separate Giving Card

Girl holding giving prepaid debit card

“Hey, Suzy, we just donated $20 on your behalf to Heifer International.”
“Umm, OK. Thanks.”

— versus —

“Hey, Mom, Dad!!! You know that rescue shelter where we found Shadow? I found their site online. I’m going to give them the $20 I saved up on my charitable card.”
“Awesome, Suzy!”

Big difference.

Donating is like exercising. You don’t get the benefits if someone else does it for you.

When you donate on behalf of your kids, they lose out on the ownership, pride, and joy that comes from donating themselves. Even if it’s their hard earned dollars, there’s something about not being able to complete the final transaction that diminishes the charitable buzz.

As more donation opportunities move online, more kids are missing out on the full end-to-end charitable giving experience. Parents end up having to close the deal with their own credit or debit card online.

The solution? Give your kids their own debit cards so they can complete online charitable transactions themselves. (Of course, you’ll want to vet the site first for younger kids.)

For best results, let each kid accumulate the charitable funds into a separate sub-account or onto a separate prepaid card. It’s easier to track, avoids accidental spending, and encourages the best practice of money bucketing.

Don’t let today’s online world get in the way of your kid closing the charitable deal. Reaping that final benefit might just make giving a habit.

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