Try The 30 Day, 3 Second, 3 Word Spending Awareness Challenge With Your Kids

Most of the time, spending just happens. It’s automatic. Reflexive.

Thinking about spending often happens at the end of the week, or the end of the month. When the money runs out. Lots of negative thoughts. Lots of judgement.

Carl Richards wants you to try an experiment. For 30 days, every time you make a purchase, pause for 3 seconds, and ask yourself 3 words: “Isn’t that interesting?”

Seem weird? It’s all about simple awareness. In the moment. Read more about it in Carl’s article.

For fun, expand the exercise to include your kids. Whenever you’re out together buying something, consciously examine the receipt together and say: “Isn’t that interesting?”

See where the conversation leads from there.

It’ll be interesting. And educational.

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Show Kids How To Compartmentalize Money

Today’s fantastic family finance article is:

10 Ways to Trick Yourself Into Saving

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“Hmmm... Do I have enough to go out to the movies tonight? Lemme think... I know I’m setting aside some money for emergencies, and I’m saving toward my first car, and something else... Can’t remember off hand. Oh well, I probably have enough...”

When all your money is in one account, it can be very difficult to keep your financial priorities organized in your head. Spending meddles with saving.

Show your kids a better way. Show them how to keep money compartmentalized. Divide it into separate buckets, each labeled for a specific purpose.

Start the habit early. For youngsters, those buckets might just be labeled jars or titled accounts in a family bank spreadsheet. Older kids might use separate prepaid cards or bank subaccounts.

Clearly bucketed money has a way of staying put until its intended purpose comes calling. Mixed up money has a way of wandering at the first opportunity.

Keep your dollars in the right compartments.

P.S. Share the other smart saving tricks in today’s article with your kids too.

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Teach Kids To Think In Absolute Dollars, Not Relative

Today’s fantastic family finance article is:

How to Pinch Pennies in the Right Places

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When you’re thinking about money in absolute dollars, you might have a conversation like this:

Me: “Hey, can I have $20?”

You: “What? Are you crazy? That’s a lot of money!”

When you’re thinking about money in relative dollars, you might have a conversation like this:

Me: “For just 4% more, I’ll throw in this super fancy case for your phone!”

You: “Yeah, sure. Why not? That’s a small fraction of the $500 I’m already forking over!”

See what just happened there? The same $20 magically became less valuable in your head. Jedi mind trick. Salespeople play it all the time.

Teach your kids to resist the relative money mind trick. Teach them to ask: “Would I consider this a lot of money if someone simply walked up out of the blue and asked me for it?”

Teach your kids $20 is $20. Period.

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Sketch The Lifetime Value Of Your Kid's Next Purchase

“Dad, the Joneses have a trampoline. It’s awesome! Can we get one too? Plllleeaasse!!!”

Day 1. Indeed, awesome!

Day 10. Yeah, pretty fun.

Day 100. Meh...

The awesomeness of a fancy new “want” inevitably decays over time. In fact, the initial drop is often quite steep. Sometimes, it can crash from delightful to dull in just days.

The next time your kids ask for that shiny new thing, pull out the graph paper and plot a projection of its awesomeness over time.

Shade the area under the curve. That represents its lifetime value.

Things like trampolines often start high on the awesomeness scale, but descend rapidly. They’re just novelty items with a rapidly decaying fun factor.

On the other hand, things like ordinary bikes might start relatively low on the awesomeness scale. But if you ride your new bike every day, it delivers consistent long term value that ultimately exceeds that of the long abandoned trampoline.

So, focus your kids on buying things with lots of area beneath that value-over-time curve, especially when it comes to expensive items.

Does that mean your kids never get to enjoy a fancy want? Nope. As Mr. Money Mustache points out, they just need to figure out how to extract that initial high value without paying for the low value long tail.

The upshot: buy the bike, but visit your friend’s house for the trampoline.

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Coach Kids On the Differences Between Making Money And Managing It

Today’s fantastic family finance article is:

15 Broke NBA Stars and How They Blew Their Millions

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“Rich people don’t need to worry about money, right Dad?”

Wrong.

Teach your kids that making money and managing it are two very different skills. Just like offense and defense on the basketball court.

The stunning reversal-of-fortune stories profiled in today’s article serve as memorable cautionary tales from some of the highest paid NBA athletes of all time. The moral of each story: even the biggest salary can’t overcome bad money habits.

Here are just a few poster children on the NBA wall of financial shame:

Player	Earned	Blew It On	Result
Charles Barkley	$40M	A bad agent, compulsive gambling.	Broke after 4th year in NBA. Lost as much as $10M gambling. Has rebounded financially since.
Derek Coleman	$91M	Bad investments in Detroit.	Filed for bankruptcy in 2010.
Latrell Sprewell	$100M	Yacht, multiple million dollar homes.	Yacht seized, homes foreclosed.
Vin Baker	$100M	Bad investments, an entourage known to spend over $10K on a single meal, a pricey mansion.	Went broke. Sought job as manager at Starbucks.
Allen Iverson	$200M	Casinos, gratuitous bling, gated estate with gutters made of pure copper, credit cards, hand-outs.	Told divorce judge in 2012 that he didn’t have enough money to afford a cheeseburger.

Everybody needs to learn how to manage money wisely, regardless of income level. Without basic personal finance skills, even the largest fortune can evaporate.

Coach your kids to play both ends of the financial court, or they’ll wind up on the bench.

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Match Coupons To Encourage Your Kid To Shop Smart

Today’s fantastic family finance article is:

5 Simple Ways To Save Money When You’re Absolutely Broke

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Using coupons is a classic savvy shopper maneuver. And, these days, it couldn’t be easier to find them.

Often, a simple online search of the desired brand name or product followed by the keyword “coupon” will turn up a deal.

Next time your kid is zeroing in on an item, make sure a coupon search — along with some product research and comparison shopping — is on the pre-purchase checklist.

Consider adding a little extra incentive buy offering to match the value of any coupon found. Call it the savvy shopper cash back offer.

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Warn Kids That Loans Between Friends Can Be A Shakespearean Tragedy

Today’s fantastic family finance article is:

Neither a Borrower Nor a Lender Be

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Does your child know the risks of lending money between friends?

Try a little drama to get the point across. Specifically, Act 1, Scene 3, Lines 75-77 of Shakespeare’s classic tragedy Hamlet:

Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

Can your child decipher the 3 risks?

1. Default. A loan that “loses itself” is one the borrower never repays. The lender risks never seeing the money again.
2. Resentment. A loan that “loses a friend” is one that creates resentment in a personal relationship. Friendships and money are a risky mix.
3. Laziness. “Husbandry” refers to the careful, thrifty management of resources. Why work hard to earn and manage your own money when you can easily borrow it from a friend?

When it comes to friends, to loan or not to loan is indeed a tricky question.

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