Make a Money Saving Meal Plan with the Kids

Planning and saving money go hand in hand. That’s a critical financial concept for your kids to appreciate.

Here’s a simple recipe to drive the point home with the kids.

1. Sit down with your kids and calculate what it costs to go out to dinner as a family at your favorite go-to-in-a-pinch restaurant. Maybe you have a recent receipt handy that you can use for the figure.
2. Now, make a list with your kids of 1 to 3 simple home cooked meals. Given school obligations, it might make the most sense to target Friday, Saturday, and Sunday. Make sure each kid is in charge of at least one meal.
3. Find recipes and fill out the shopping list together.
4. Go to the grocery store together. Have the kids find the ingredients for their own meals. Bonus points: show them what unit prices are and how to use them for comparison shopping.
5. Compare the grocery bill to the total in step 1 multiplied by the number of meals. Cheaper? Should be! Bonus points: split the savings between the kids as a reward or use the savings for a family ice cream outing.
6. Cook, eat, and clean together each night. Bonus points: consider expressing gratitude together before each meal.

Give yourself a hand! You’ve taught your kids the financial power of planning ahead through firsthand experience. You’ve probably also taught them a bit about comparison shopping, how to cook a meal, the power of gratitude, and perhaps even a little appreciation for your nightly efforts.

That’s a pretty full menu of life skills packed into a few simple meals.

Get the Granny Match for Your Teen's Roth IRA

Bravo to grandparents who are in a secure financial spot!

But that can pose a bit of a problem if they’re lavishing gifts or cash on your teens — stuff your teens don’t need or stuff you’d rather not see them receive. On the flip side, many grandparents have no idea what to give your teens.

Here’s a great solution: the “Granny Match” for working teens. Open up a Roth IRA for your teen using the recipe here.

Get the grandparents to provide the matching portion in step 3. Note: even if your teen can’t contribute a cent, the grandparents can still provide up to the contribution limit as a gift.

Now read some of the other ideas in this article to decide how to invest those funds within the Roth. (Hint: VTI is the go-to option for my teen’s Roth IRAs.)

P.S. Consult your financial advisor first.

Show Your Kids What a Stock Is With This Simple Infographic

Today’s fantastic family finance article is:

What Is a Stock?

The stock market has proven to be one of the most effective ways to make your money grow over the long term. If kids have one thing on their side we don’t, it’s time. So, the sooner they understand the basics of stocks and investing, the better. Use this simple stock infographic to introduce your child to the definition of a stock, how stocks are traded, and basic investing definitions like:

• stock exchange
• initial public offering
• shareholders
• profit
• retained earnings
• dividends
• broker
• index

Learning about how an individual stock works is a good start. But, please, please, please, don’t stop there. Before your kid makes that first serious investment, be darn sure she knows about low cost index funds, dollar cost averaging, and holding for the long term.

Teach your kid diversified, consistent, patient investing for the win!

Teach Your Teens the Torment of the Payday Loan Treadmill

Today’s fantastic family finance article is:

How Payday Loans Work

Fast forward to your kid's future.

• Your young adult child needs money to pay the rent.
• Your young adult child is too embarrassed to ask you for help or advice.
• Your young adult child decides a payday loan is a good option. (Hey, the lenders are everywhere and it's easy!)
• Your young adult child just stepped on the treadmill of painful payday loan debt.

Why? Because you forgot to explain the brutal economics of payday loans. Fix that. Sit down with your teen and review this simple, clear payday loan infographic from Pew Research.

Park Your Teen's Tax Refund in a Roth IRA and Match If You Can

Dan Kadlec reports that Fidelity has finally joined others in providing custodial Roth IRA accounts for kids under 18. Bravo. Let’s hope that prods parents to make one of the smartest financial moves possible for their working teens: setting up a “Family 401k.”

If your teen made some W-2 income at a part-time or summer job last year, here’s the quick recipe:

1. Open up a Roth IRA (as a custodial account if your teen is under 18).
2. Convince your teen to contribute some of those summer earnings to the Roth. Already spent? How about that tax refund? (Hint: sit down together with an online compound interest calculator. The power of compounding over 50 years is an eye-opener for even the most jaded teen!)
3. Match your teen’s contribution if you can, ideally up to the limit.
4. Invest the money in a low cost, broadly diversified index fund.
5. Repeat starting at step 2 next year! (Bonus discussion: dollar cost averaging.)

Dan explains in more detail.

P.S. Consult your financial advisor first.

Keep Sexism Out of Your Chore Payment System

Wage discrimination based on gender starts very, very early according to Sheryl Sandberg. She informed the 2016 World Economic Forum audience: “we have a toddler wage gap” in allowance payments that sets the stage for the adult wage gap in the workplace.

Are you paying your son more than your daughter for doing the same household chores? If so, you might be planting some unfortunate seeds.

Or, perhaps not...

Carrie Lukas thinks Sheryl Sandberg has it wrong. “Parents may be responding to natural differences in what motivates girls and boys.“

Gender aside, certainly any parent of multiple kids quickly realizes that what motivates one child doesn’t necessarily motivate the other.

If you are compensating your kids with different amounts for the same tasks, just make sure you’re doing it for the right reason. And take the time to explain it to your kids.

Help Your Teen Control the Story with an Emergency Fund

Today’s fantastic family finance article is:

The Story of a FO Fund

This article uses some very indelicate language (you’ve been warned — share with older teens only at your discretion!) to tell a delicate story with two very different endings. Emergencies come in many forms, and sadly that includes abusive relationships at home or in the workplace. Ending A shows how the lack of an emergency fund can make it difficult to exit a bad situation. Ending B shows the opposite.

An emergency fund means the freedom to walk away. Teach your teens how to build up an emergency fund now. Keep the funds in a separate account — safely partitioned from everyday spending. Keep the funds in a very liquid, non-volatile asset (like cash or money market, not stocks). That way, if (heaven forbid) your daughter finds herself in a similar story, she can avoid ending A and safely land at ending B, happily ever after. The same goes for your son.