Food for thought
Guess which topic most parents say is easier to explain to their kids than the birds and the bees, death or politics?
You guessed it: Money. A whopping 77 percent of parents can talk more easily about finances with their kids than they can other challenging topics.
That’s good news on the financial front. It means money isn’t a taboo topic in most U.S. families, according to a new survey by Wakefield Research for Junior Achievement and the Jackson Charitable Foundation. The Children’s Financial Literacy Survey included 500 children, aged seven to 10, and their parents.
Other key survey findings:
- 77 percent of parents believe the best place for kids to learn personal finance basics is at home. Good thing, since only five U.S. states (Alabama, Missouri, Tennessee, Utah and Virginia) require high school students to take one personal finance course in order to graduate, says Champlain College’s Center for Financial Literacy. Eleven states plus the District of Columbia have zero personal finance requirements in their high school curricula.
- Parents think kids should learn about money as young as age five, and by age eight, on average. Many kids begin to start understanding the connection between numbers and money in kindergarten (“Five pennies is the same as a five-cent nickel.”). By age eight, kids may understand that money is exchanged for goods and services (i.e. to buy stuff).
- 92 percent of parents save money—for emergencies, college tuition, and retirement. Good on you, parents! You’ve got the most important savings goals covered. Of course, we don’t know how much the surveyed parents are saving. But hey, any savings amount is a good thing.
- 82 percent of kids earn allowances from parents for doing chores, getting good grades, doing homework and doing good deeds. Learn more about the pros and cons of connecting allowance to these accomplishments.
Of course, all is not rosy when it comes to kids and money. Many of the young survey respondents showed they have a lot left to learn about finances. But hey, the oldest kids surveyed were only 10. They’ve got time:
- 33 percent of the kids surveyed haven’t yet been taught how to get or earn money. Uh oh. Is that a sign that it’s time to talk about extra summer chores for pay, parents?
- 41 percent of kids don’t know how to spend money. Even kids as young as 10 can begin making some simple spending decisions. How about having your kid help pick a birthday gift (with a maximum dollar amount) for a friend? Or choose how to spend their souvenir money during your summer vacation?
- 47 percent of kids haven’t learned how to give money to help people. An easy fix: Many parents use the “three-jar system,” (or some version of it.). They require their kids to split their allowances three ways: Spending, saving and donating. This way, giving money to others becomes an automatic habit. Be sure to let your kids help decide where their donations will go.
- When asked why they think people put money in a bank, only slightly more than half (53 percent) of kids said “saving it so they won’t spend it.” First, banks and credit unions are almost invisible to kids, since parents don’t physically visit branches anymore. You could make a point to drop into your bank or credit union occasionally, or look online for kid-friendly videos like “Roles of a Bank” from CashVille Kidz.Just as important, though, is explaining to your kids how banks, budget categories and savings accounts make it easier for them to separate their spending money from savings.
- Only 25 percent of kids surveyed know you can earn interest on savings. Interest can seem like a tricky topic to explain to kids, for sure. How about sharing this “Schoolhouse Rock” classic to help make the concept clear?
For more about the survey, along with other kids, work and money topics, visit Junior Achievement’s website.
(photo courtesy © Paul Hamilton cc2.0)
This Thursday is the return of the annual “Take Your Daughters and Sons to Work Day.” Although participating in this day seems like it should be a no-brainer, it’s not. Many parents actually are ambivalent about the event.
When this day was created as “Take Your Daughters to Work Day” back in 1992 by Gloria Steinem and her For Women Foundation, the intent was innovative and well-meaning: Encourage more girls to consider professional careers. The day (which is now celebrated on the fourth Thursday in April) was later broadened to include boys/sons.
Some parents now wonder if the day is still necessary or helpful. Why? For one thing, a lot of today’s parents have computer-based jobs that aren’t easy (or as interesting) to show kids. How do you compare computer work to, say, the work of a firefighter or veterinarian?
On the other hand, if you don’t take your kids to your workplace, they may end up doing busy work at school and/or feeling left out of the “fun” while most their classmates are away.
So how do you decide whether to opt in to this career day? Consider a few different criteria:
Are You Prepared?
Blogger Katherine Lewis offers some good basics on how to make this day work well if you’re new to it. Key takeaway: Plan your workload carefully. You won’t get as much done as you hope. And it does pay to think ahead about activities and talk with your boss and colleagues about how to make the day interesting for the kids.
Is Your Child Old Enough to Appreciate the Day?
Washington Post parenting editor Amy Joyce decided a couple of years ago that her kids (then about 5 and 7) weren’t going to participate. As one of Joyce’s colleagues pointed out, many of these days end up with parents and their coworkers desperately trying to come up with ideas to make work seem fun for kids who would otherwise be bored. Are these junior workers getting a realistic idea of what it’s like to work at your company? Probably not.
Does Your Workplace Have an Organized Program?
This is a big one. It’s much easier to make this day work when you have help. Are different departments willing to do “show and tell” presentations to groups of employees’ kids? Will someone offer to arrange a couple of age-appropriate, hands-on activities?
For instance, my husband’s former employer, a catalog/online retailer, arranged for kids to write fun catalog descriptions of a few products and learn a bit about a computer design program. That worked great.
What’s Your Goal?
If you want your younger child just to be able to visualize where you are all day when you’re at work, awesome. However, a quick tour of your office any day—and it doesn’t have to be in April—might be enough in that case.
If you truly want to expose your kids to career options they might not otherwise consider or fully understand, should they go to work with you…or someone else? For instance, I’m pretty sure my younger daughter doesn’t want to be a freelance writer like me. My hope, instead, is to find a friend in software design who’ll let my daughter shadow for a day. And I’m open to it being a day other than the fourth Thursday in April.
Is One Day Enough?
I like this Working Mother writer’s idea that it’s great to extend the career lessons well beyond this single day. Make a point to talk regularly with your kids about job choices that aren’t as obvious as firefighter, veterinarian or whatever you do.
Better yet, look carefully at their natural interests (Minecraft enthusiast = future software game designer?). See if you can connect them with people who can offer some ideas.
After all, sometimes your child’s best first career counselor is you.
(photo courtesy © Brandon Atkinson cc2.0)
When your kid turned six or seven, your household probably started getting visits from that teeny-tiny ambassador known as the Tooth Fairy, or the TF for short. In many cultures, the TF leaves kids money while they sleep in exchange for their baby teeth. Today’s average U.S. rate: $4.61 per tooth. That’s a pretty good return for something so tiny that can’t even be used again!
Fun fact: Apparently, the TF’s going price for teeth correlates with stock market ups and downs. When the stock market does well, the TF pays well. When the market takes a dip, so do the TF’s under-pillow offerings, according to Delta Dental.
The Tooth Fairy Can Leave More Than Just Money
Interestingly, the TF begins leaving money for kids before many of them fully appreciate what those coins and dollars can do. Some kids still intermingle money with their toys—a sure-fire sign that they don’t yet understand money’s value.
Are your kids at this early stage—or would your family just prefer that your kids earn their money rather than have it magically appear under their pillow? If so, the TF is quite open to non-monetary ideas. New York Times columnist Ron Lieber agrees with her that losing teeth shouldn’t always be about the money. Here are some alternatives:
- Tooth certificates: The TF is more than happy to leave your child a special recognition certificate to commemorate a tooth upgrade. If money is still expected, the TF is open to the option of loading reward money on your child’s prepaid debit card.
- Tiny letters: The TF is pretty small, we understand. So it’s pretty cool when she leaves a personalized little letter for your child, honoring his tooth loss. Of course, the TF’s letters are proportionately tiny. Your child may need a magnifying glass to read them. That adds to the fun.
- TF books: What’s the story behind the mysterious dental enthusiast anyway? What does she do with all those teeth? Does the TF do things differently in other countries? She loves leaving kids some great reads to help them with their research.
- Foreign currency: Speaking of other countries, the TF is a global phenom. That means she has access to coins from all around the world. Sometimes she leaves those foreign coins for her gap-toothed friends. She encourages them to start a coin collection, get enthused about future travel and more. She has access to the same kinds of coins you might find at a bank with a foreign currency department, or churches that collect interesting types of coins in their weekly collections—hint, hint.
- Dental supplies: The TF is all about tooth health. So it makes perfect sense that she’d love an excuse to leave your child some fun supplies. Think flavored dental floss, electric toothbrushes bearing images of favorite characters—or even cute little boxes or pouches for future lost teeth.
Whatever gifts the TF leaves, expect to see a bit of fairy dust. The TF is a big fan of leaving bits of glitter behind. That girl knows how to make a grand exit.
(photo courtesy © Michael Bentley cc2.0)
Letting your kid “graduate” from handling cash to carrying a debit card can be a big milestone in a family’s life. After all, handing over that shiny piece of plastic is a signal that your child or teen is moving to a new stage in their financial life.
If you’re still the primary owner on your child’s debit card—which you really should be, as a parent—your child’s financial life is still on training wheels. However, you’re allowing your child or teen to begin making some more independent decisions with their money.
So how do you know if your kid is ready for debit card? First, you know your own child. You’re the best judge of their maturity level and spending habits. However, if you’re a bit on the fence about a child or teen prepaid debit card, here are some good readiness indicators:
1. They’ve successfully handled cash for a year or two.
It’s actually not a great idea to give kids debit cards until they’ve had some hands-on time with cash. Financial expert Dave Ramsey suggests a cash practice period, too. Why? You want proof that your kids fully understand the value of money and the concept that “when it’s gone, it’s gone.”
Kids and teens also need some experience separating actual cash and coins into at least the three basic categories of Spending, Saving and Giving. Using separate jars or envelopes for this task gives kids a visual picture of the budgeting process.
On the other hand, if you let kids start their money lives with debit cards, money may not seem as real to them. Plus, their funds are all lumped together into a single account they think of as “mine to spend.” So be sure give kids and teens a solid cash training period before upgrading them to debit cards.
2. They can keep track of their belongings.
Carrying a debit card is a privilege and a responsibility. Kids who constantly lose things, from their coats to their phones, may not be ready for one. Today’s EMV chips do make it much harder for thieves to use lost/stolen debit cards, since they also need to enter a PIN code to complete transactions. However, who wants the hassle of dealing with a lost debit card?
Wait until you see signs that your kids can keep their valuables safe. However, if your kid does lose a debit card, be sure you know how to quickly “freeze” it so thieves can’t use it. Greenlight makes it easy: Simply log into your mobile app and turn off the card. Then let us know that you need a replacement card.
3. Your kids responsibly handle “school bucks.”
Many schools let you load funds onto kids’ ID cards to pay for school lunches and snacks. Unfortunately, you may already have dealt with that shocking first semester when your middle-schooler drains all their prepaid lunch money by buying extra junk food or feeding their ravenous friends.
This experience isn’t unusual and it doesn’t mean your kid is a financial deadbeat. However, it is a sign that they don’t fully understand the responsibility of having funds attached to a card. So first, talk to your kids about your expectations for how they spend lunch money. And wait on the debit card until your kids prove they can spend their school bucks carefully.
4. Your kids need to be able to make purchases on their own.
For many kids, this is about the same time they get a cell phone. You’re no longer with them 24/7. They’re getting more independent, so you give them a cell phone to get in touch while you’re apart. Entrusting them with a debit card so they can buy a movie ticket or get lunch with friends can also be a nice convenience.
5. Your kids need to buy things that cost more than a latte.
If your teen is doing his own back-to-school shopping, he’s going to need to carry more in his wallet than, say, $5. When your kid starts carrying enough cash that it makes you a bit nervous, that’s the time to consider a special child or teen prepaid debit card. The safety factor alone may be worth it.
6. Your kids start asking questions about debit cards.
Now, no one is implying that kids who show interest in cards automatically are ready for them. However, kids’ questions often are good indicators of changes in their development. A kid who asks about debit cards may be starting to notice how you use your debit card, or may see friends getting debit cards, and be curious.
This is a great time to open the discussion about when and why you will allow them to start using a debit card. Even if your child isn’t quite ready for a card, use this time to show them how you responsibly use your card, how you check your account balances, and to talk about the big difference between debit an credit cards. By the time your kid is ready for a card, they’ll be well versed in how to use it with care.
If you’re ready to teach your kids to be financially independent, check out the Greenlight Debit Card for Kids here to learn more!
(photo courtesy © NASA Goddard cc2.0)
Do you want your kids to be financially stable when they’re adults? Want to avoid having to take-in your wayward son after he’s run out of money, forcing you to shelter him in your basement until he gets back on his feet? Want to make sure your daughter doesn’t waste her entire paycheck on a frivolous, impulse purchase?
If your answer to any of the above questions is “yes,” consider this technique: Have your child look after an imaginary dog for a month.
Why an Imaginary Dog?
When I was in high school, I had a friend named Scott who desperately wanted a dog. His parents were hesitant, worrying about things like, “What if we end up taking care of the dog all the time?” and “Can we afford all the expenses that come with a dog?” But, in a moment of parenting brilliance, Scott’s mom and dad came up with the Imaginary Dog Plan. This plan required Scott to wake up every morning at 6am, walk a leash around his neighborhood, put down an empty food bowl, and then open and close an empty dog crate. Immediately after school, Scott came home and walked that empty leash again, put down the empty food bowl, and spent 30 minutes either vacuuming, dusting, or completing some other household chore as a stand-in for the time he’d have to spend cleaning up after a dog. Additionally, his parents struck a deal requiring him to pay for half of all the expenses that come with having a dog. To prove that he could do this, Scott did extra chores around the house and got a part-time job. By the end of the month, Scott had walked his empty leash 60+ times and had saved $300. By the end of the month, Scott had a real dog.
How an Imaginary Dog Can Help Your Family:
So, how does my friend’s dog apply to you and your family? Simple: the principles Scott’s parents taught him through this exercise are the same principles any kid needs as a foundation for a successful financial life. If your son or daughter wants something, whether it’s seemingly insignificant, like a crazy new pair of socks, or something bigger like a pet or laptop, consider using this technique to help them get what they want while also teaching them the importance of being responsible with their money. Some of the lessons they’ll learn from an exercise like this are:
- If you want something, you need to work for it
- You need to consider all the responsibilities attached to making a purchase
- You need to be fully prepared, financially and physically (with your time, etc.) before making a purchase
- You should give yourself time before making a big purchase to make sure you really want that particular thing
- Often, making purchases (especially big ones) requires some sort of sacrifice, so you need to ask yourself, “Is it worth it?”
Obviously, if you decide to try this with your kids, the situations will be different, and you’ll need to adapt strategies. It wouldn’t make any sense for your daughter to walk a leash every day to prove that she’s responsible enough to buy a laptop. Instead, you may start by asking her to save a certain amount of money each week. Then, have her to carry around a fragile place-holder (picture frames, perhaps), proving that she’ll be careful with something as breakable as a laptop. You could even have her do research on how to fix common laptop problems, making sure she’ll know what to do if it won’t turn on one day, or if it gets a virus.
Whatever way you apply this to you and your child’s life, just be sure to remember the main point: If you prepare your kids now to be responsible, both financially and personally, they are much more likely to continue these practices as adults. Try it today, and hopefully you’ll still have your basement to yourself once your kids grow up!
The way I see it, there are three main options for giving your kids an allowance.
Option One: Give them an automatic allowance. With automatic allowances, parents will usually set a standard amount of money for their kids to receive, weekly, bi-monthly, or monthly, and their child will receive that money no matter what (for the most part, of course).
Option Two: Don’t give your kids any allowance at all: self-explanatory.
Option Three: Have your kids earn an allowance. Many parents use this option and assign certain tasks or chores to their child, which upon completion, will result in a rewarded allowance. Of course, you’ll find pros and cons of any decision you make as a parent, including the decision about allowances. However, out of these three main options, I think there is a clear, front-runner that is beneficial for both parents and children.
Through the course of my life, and my more recent research and inquiries into this topic, I have been exposed to numerous variations of the allowance situation. Two stories stuck with me, though, as extreme, yet surprisingly realistic examples of the negative consequences of giving your kids an automated allowance or not giving them an allowance at all.
Extreme Scenario #1: The Jean-Ralphio and Mona-Lisa Saperstein Story
Parks and Recreation is a sit-com that recently went off the air in 2015. It follows the quirky and endearing Parks and Rec. department of Pawnee, Indiana through the trials, tribulations, and triumphs of life. While most of the characters are lovable and good-hearted people at their core, there are two characters, Mona-Lisa and Jean-Ralphio Saperstein, who should serve as a warning to any parent considering the automatic allowance option. Mona-Lisa and Jean-Ralphio come from a rich family, headed by a father who clearly does not regulate the money they receive. It is quite evident that, in their fictional lives, they’ve probably never heard the word “no” before as a response to any request, thus resulting in their annoying and outrageous request of “Money please!” This demand is made often, without remorse, and almost rarely without an affirmative answer from their father. They are so used to receiving money whenever they want, automatically and without any effort, that they perfectly illustrate an extreme consequence of giving your kids an automatic, no-strings-attached allowance.
While this is obviously an extreme example, taken from a fictional TV show, there is some real truth that lies at the core of Mona-Lisa and Jean-Ralphio’s roles. If you don’t require any effort from your children in order for them to receive their allowance, then what’s to stop them from taking it for granted? What lesson will they learn about how to get money? Will they turn out like Mon- Lisa and Jean-Ralphio, assuming that all they need to do in order to get money is sit around and wait for it, and then if it’s not enough, just whine until they get more? Do you, as a parent, really want to hear “Money please!” all the time, even after you’ve already given your child money? I don’t think so.
Extreme Scenario #2: No Allowance: The Story of Put-Back Pancakes
My aunt and uncle adhere to a much different philosophy than that of fictional father, Dr. Saperstein, from Parks and Rec. They didn’t believe in giving their kids an allowance at all. So, my cousin, let’s call him Jim, had to figure out another way to get money. As many teenagers do, Jim turned to the job force and got a part-time job as a carhop at Sonic. He worked at Sonic all 4 years of high school, and in this time, he learned to budget and save his money since he knew his parents weren’t going to be his main source of income. So far, so good, right?
In almost every way, my cousin is a perfect example of how not giving your kids an allowance is a good option. He learned the value of hard work. He didn’t bother his parents for money all the time. He had a good head on his shoulders and was able to understand the basic principle of saving money, which is advanced for a teenager. However, there are two things wrong with this story. Number one, my cousin is an anomaly. He represents a small population of teenagers who are stable and level-headed enough to make these responsible decisions, like finding and maintaining a job and saving the money he made at this job. Other teens may not be as dedicated as he was to earning and saving money during those carefree, teenage years.
The second thing wrong with my cousin’s story is the end. Jim managed to save more money during his high school years than I think most high schoolers could even comprehend. But, this resulted in him being extremely stingy with his money, to a fault. Perfect example: his honeymoon. After my cousin got married, he and his wife vacationed in Mexico for their honeymoon. One morning, at breakfast, Jim piled his plate high with food from the buffet, taking full advantage of an “all you can eat” meal. However, before he went to sit down to his feast, he was stopped by the cashier at the end of the line who told him that breakfast was not actually included in his room rate and that he’d need to shell out a rather hefty sum for his overloaded plate. My cousin, the too-money conscious man that he’d become, looked at the cashier, turned around, and dumped his food back in each, individual serving pan from which he’d taken it just minutes before.
The moral of Jim’s story is this: not giving your kids an allowance might be a good idea. They might find a job, work hard for their money, and learn valuable lessons about managing their own finances. Or, they might end up like my cousin, dumping pancakes and scrambled eggs back into hot plates in Mexico, effectively embarrassing himself and his new wife on what should’ve been a lovely honeymoon.
So, what do you do as a parent then? Ultimately, the decision is up to you and what you think is best for your family. However, considering the pros and cons of each side, setting up a system for your kids to earn their allowance seems like the best, least painful, and most beneficial way to go. By having to earn their allowance, kids will hopefully learn the lesson of working for what they get. Ideally, they’d value their money more because they had to work for it, thereby making them more conscious about spending and saving. And finally, the system of working for their money at home will mirror their future, independent lives when they have to work for their paychecks and balance their adult finances. Exposing your kids now to the realities of money management and working to earn their money is an invaluable experience, and you can easily start by implementing an earned allowance policy in your house today!
(photo courtesy © Carissa Rogers cc2.0)