Family Finance Favs

Tuesday, June 7, 2016

Get A Clue About 529s

Do you know what a 529 is?

Don’t be embarrassed if you don’t. A recent Edward Jones survey says you’re in good company. It estimates 3 out of 4 Americans don’t know about the tax-advantaged college savings plans set up by Congress back in 1996.

If you’re a parent, it’s time to get a clue about 529s though. Why?

Tax free growth. The investments in a 529 account grow tax free.
Tax free withdrawal. No taxes are due on withdrawals if used for qualified college expenses for the beneficiary — like tuition, room and board, or even a computer.
State tax benefits. Some plans include special state tax benefits like being able to deduct contributions from taxable income.
Flexible assignment. Funds can be reassigned to qualifying relatives of the beneficiary — like a sibling.

Those are 4 good reasons to start doing some research if you have (or are related to) any kids who will be heading off to college someday.

Is a 529 plan the perfect savings vehicle for your kid’s college future? Probably. But you’ll never know if you don’t learn what one is.

Monday, June 6, 2016

Put Some Responsibility On Your Kid’s Shoulders

Today’s fantastic family finance article is:

The Importance of Chores for Our Children

Remarking on chores, columnist Tom Westfall observes:

“In today’s highly automated world, many kids grow up with so few responsibilities, in terms of their family, that they often feel like fifth wheels — unimportant and almost in the way.”

Giving kids chores is a chore, but it’s our responsibility to give our kids the responsibility.

Why? It gives them purpose and stability. As Pauline Phillips, aka Abigail Van Buren famous for her Dear Abby advice column, said:

“If you want children to keep their feet on the ground, put some responsibility on their shoulders.”

Chores are about belonging, participating, responsibility, purpose, character.

What are they not about? Perfection. Efficiency. Yes, you can probably do it better and faster — and, hopefully, with a lot less whining.

But that’s not the point.

So, it’s time to stop whining about the hassle of giving your kids chores. Put in the extra effort to make your kid feel like a big wheel around the house, not a fifth wheel.

Saturday, June 4, 2016

Paint The Right Money Picture For Your Kids

Today’s fantastic family finance article is:

Is Lizzie Grubman a Changed ‘Party Girl’?

A New York Times article profiles Jack’s mom.

The author paints a picture of pomp: the latest Prada, outsized platform shoes, and a “Givenchy Antigona black leather tote, whose oversize zipper teeth made it look like a document shredder for money.”

When asked to characterize his Mom, 7 year old Jack offers: “She buys us stuff. And she talks on the phone a lot.”

See the connection?

How would an author paint your picture?

How would your child describe you in two offhand sentences?

Do you think the external perceptions would align with your internal money values?

Make sure you’re painting the right money picture for your kids today, or you’ll cringe at the picture others paint tomorrow.

Start the College Affordability Talk By 9th Grade

Today’s fantastic family finance article is:

How to Talk to Kids About College Costs

“Mom, Dad, how much money do you make?”

Awkward? Get used to it. By 9th grade.

Why? Your teen needs to know what to be shooting for when it comes to college. In under 4 years, your child will be making one of the biggest financial decisions of her life. She needs all the financial facts on the table ahead of time to make an intelligent one.

What are you able and willing to kick in for college?
How much does your teen need to save, borrow, earn, or win to fill the gap?
What’s a reasonable target? Community college? Local state school? Private college? Community college followed by a transfer? (Excellent option!)
How long will it take for her to pay off any student loans after graduating?

Looking for a good resource to help you start framing the awkward money discussions with your kids? Check out Ron Lieber’s bestselling book, The Opposite of Spoiled.

Still worried about divulging your financial info to your teen? Get over it. You’ll be coughing it up for the FAFSA form in 12th grade anyway.

And senior year is too late to start putting together a sensible plan. Start today.

Friday, June 3, 2016

Teach Your Kids To Plug Their Money Leaks

Today’s fantastic family finance article is:

30 Second Micro Money Message: Know Your Money Leaks

Today’s micro money message: know your money leaks.

As Ben Franklin said:

“Beware of little expenses; a small leak will sink a great ship.”

In other words, you don’t have to hit a financial iceberg and go down like the Titanic. You can slowly nickel and dime your way to the bottom.

Make your kids inspect their little money rowboats for leaks. Fast food? In-game purchases? Online music and video subscriptions?

The key message here: Make sure your kids track where their money is going, so they can keep their financial boats afloat.

After all, you won’t be bailing them out.

Right?

Thursday, June 2, 2016

Charge Teens For A Share Of The Cell Phone Family Plan

“Huh? It costs money every month to use my smartphone?”

OK, not an unreasonable surprise for an 8 year old. But a 35 year old?! That would be crazy, right?

Maybe not when you consider that one poll found 40% of parents with adult children between the ages of 18 and 35 were still paying for their kids’ cell phone service.

Sure, the family plan is a great deal. But that doesn’t mean Junior can’t chip in. You won’t be doing your grown kids any favors if they don’t have a clue about what everyday shared services actually cost. Educate them before they leave the nest.

How? Make sure your kids share some skin in the family plan by allocating some of the costs to them each month.

How much per month? Your call, but the average amount parents are currently billing on FamZoo.com is $18.33 per month.

Getting a little static from Junior about your cost sharing scheme? Tell him to go research what it would cost to have his own plan.

Surprise!

Welcome back to the family plan, Junior.

Wednesday, June 1, 2016

Impose A Savings Tax On Your Kid’s Spending

Today’s fantastic family finance article is:

Turn Small Cash Windfalls into Wealth

How do you get your kids to think about saving when they are spending?

Try a savings tax.

Anytime your kids make a purchase, have them kick in a little savings to a savings jar, account, or card.

How much? Here are 3 options to consider:

Save the change: Round the purchase up to the nearest dollar. Save the difference. For example, $4.20 rounds up to $5.00. The difference — 80 cents — goes to savings.
Match the sales tax: Look for the sales tax line on the receipt. The tax amount goes to savings.
Save a percentage: Agree on a savings tax rate. Multiply the rate by the purchase amount. The result goes to savings. For example, a savings tax of 10% on $4.20 would be 42 cents.

You might even be able to find a banking app that does all that automatically, or at least makes the tiny transfers simple.

A savings tax on your kid’s purchases means more mindful spending and more consistent saving all bundled together. That’s a personal finance two-fer!