Raising Kids to Be Smart About Money

Young minds are programmed to absorb and copy the behaviors around them, which means the sooner you instill proper money management skills, the more prone your kids are to become mature and responsible stewards of their own cash-flow in the future.
“Becoming financially literate early in life is fundamentally important to your financial well-being as an adult,” says Micah Fraim, award-winning CPA and best-selling author.

“I was pinching pennies at five years old, calculating the cost of grocery items per ounce, refusing to buy expensive clothes unless they were on-sale and foregoing scoops of ice cream from the ice cream shop, so I could buy multiple gallons at the grocery store,” Fraim says. “Now as an adult, I still have that same mindset and live well below my means.”

The following kid-approved strategies help you teach the core tenets of being financially savvy; in terms they’ll understand and appreciate. Consider how you can use them to teach your little ones to be smart about money.

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Find Opportunities for Lessons

At some point, your child will inevitably deplete their allowance on impulse purchases, rather than holding out for the more expensive item they’ve been asking for. Instead of giving them more money, or buying it for them, use this as an opportunity to demonstrate that money is a finite resource, which must be allocated over an extended period. Once you spend, it’s gone until you can make more.

Have a conversation about what else they could have done with that money, or how much longer they would have needed to save to get the big-ticket item they wanted. Perhaps give an example of when you spent foolishly, or better yet, saved enough money to buy something important, like your house or car.

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Demonstrate that Income Is Earned

Chores are an easy way to teach children that money must be earned. This tangible incentive for contributing to your household shows them that have to work for what they want, and even do things they may not want to do—i.e. vacuuming and doing the dishes.

The concept of having to earn your money is a positive outcome of rewarding children financially for completing chores. However, some parents find that this method doesn’t necessarily teach money management, making it a bad way to teach children how to be smart about money. The key to avoiding the latter is the set-up.

Susan Borowski, mother and author for Money Crashers, shares how she set this up with her teenage son:

“As a contributing member of the family, my 13-year-old son is expected to do certain chores around the house for free. He can earn money for tackling larger tasks, many of which he can choose, some of which he cannot; the amount he earns depends on the difficulty of the task or how long it takes. This forces us to discuss money each time he takes on a larger task.”

This shows them that they have control over how much they earn, rather than it being a given.

Secondly, keep chores focused on money management with an app like Chore Monster so children can track what they’ve done and earned. This is an easy way to establish a record-keeping system, for both chores and allowance, seeing increases or decreases in money earned over time.

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Establish a Record-Keeping System

When your child is consistently earning allowance or money for chores, it’s important that they’re able to account for what happens with that money. The more emphasis you put on this piece of the earning, the more they’ll see the value of managing their funds. They’ll start to notice wasteful spending habits and identify which pitfalls to avoid during their next allowance payout.

Designate a folder where they can stockpile receipts and a notebook where they can track all purchases. This simple method of financial reporting is an ideal precursor to balancing a checkbook, analyzing bank statements, or creating a monthly budget.

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Use Visual Aids to Your Advantage

Although the “piggy bank” is a time-honored childhood favorite, this approach to money management doesn’t allow your child to see the positive outcome of their coin stashing. For a more functional alternative, use a transparent mason jar or clear plastic Tupperware container, both of which gives them an unobstructed view of the progressive financial increase that comes from diligent and habitual saving. This tool makes the abstract concept of saving easy to see and understand.

You can also open a bank account for older children. This gives them a chance to become familiar with bank statements, which act as a visual aid. Each time a new statement comes in, they can sit down and look at how much money was put into the bank account and how that’s changed month-over-month. Many banks now offer online portals, as well, where your children can see progress represented in bar and pie graphs; these may be easier to understand and digest.

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Encourage Them to Set a Savings Goal

There’s a sense of accomplishment and empowerment in reaching a goal with no shortcuts taken or assistance received. Channel this mindset when encouraging your child to practice economical behaviors. Next time they express interest in the latest gadget, suggest they purchase it themselves and develop a step-by-step plan together, so they feel equipped for the undertaking. This process of setting aside money with a specific goal in mind reinforces the gratification gained from being smart about money and purchasing the item without any help.

It’s never too early to start teaching your kids about how to be financially savvy. Too many people don’t learn about personal finance until it’s too late — like when they’re buried in student loans — so teaching these skills early on is important for setting your children up for success later in life.

 

 

 

Written By: Jessica Thiefels
Source: PBS

6 Ways to Nail Your Resolution This Year

Cheers to the New Year! And the new you. It’s one thing to make a resolution, but it’s another thing to actually keep it, right? To keep you on track, here are some foolproof ways to help keep you from falling off the wagon this year. Let’s do this New Year’s thing right!

1. Make it to March 7th and Your Golden

Not like gold rush golden, but you’re in pretty good shape. It takes march-7two months for a habit to stick—66 days if you’re really counting. So write down March 7th on the back of your hand or your calendar or somewhere. Because you’re 80% more likely to keep with it after that day.

2. Dig Deep – Like Real Deep

Basically, try not to generalize. Yeah, that shovel
means “I want to save more money” isn’t cutting it this year. Figure out what you’re saving for, what the goal is, when you want it saved by, and set mini targets along the way.

3. Two’s Better Than One… Kinda Like Chopsticks

Yeah, it’s like teamwork–try eating rice with one chopstick. No, chopsticksactually, don’t. Just take our word for it. Same with resolutions. It’s way easier to keep one if you’ve got a buddy to keep you accountable–then you guys can guide each other.

4. Get Up When You Slip Up

Falling hurts. It hurts a lot. But you don’t let a slip-up banana-pkeep you down. Get back up and keep going–it builds character. And the more times you pick yourself up, the more likely you are to keep with it.

5. Get Your Tape Out – It’ll Help

No, not that kind of tape. Something that measures. Doesn’t matter if duct
you’re using centimeters, inches, marbles, or whatever–if you can measure it, you have a better chance of making it. So track your progress.

6. One Word… Megaphone

Ok, fine, so one word wasn’t quite enough. What we mean is, tell people.Megaphone Show off your resolution. Be proud of it. And one way you can do that is by taking The Relentless Resolutions Challenge. Take it and share your progress along the way.

 

 

 

 

 

 

 

Source: Ally Bank

This Industry is Still Hated by Most Americans

© Mike Segar/Reuters
© Mike Segar/Reuters

The stock market may be near all-time highs. The housing market may be in recovery. And Wall Street has forked over tens of billions to repay the bailouts and settle grievances stemming from the financial crisis.

But Americans still hate the banking industry. A Gallup poll and companion analysis “Why It’s Still Cool to Hate Banks” found that only 28% “have a great deal or quite a lot of confidence in the banks.” Even though that’s up from the 21% nadir in 2012’s poll, it’s well below the 40% average the banking industry held for the past 35 years, Gallup said. And it’s still well below the zenith year of 1979’s 60% rating.

“Few institutions have seen such a steep drop in confidence in recent years,” Gallup said.

Gallup’s Beth Youra notes that 67% of Americans have confidence in small business, but just 21% have confidence in “big business.”

“Banks are often portrayed as the epitome of big business and all its trappings — specifically highly paid executives who are out for profit at all costs,” Youra wrote.

Some of the problem for banks improving their image comes from banking’s lack of sexiness. “Nobody’s paying $12 for a ticket or subscribing to Netflix to watch a movie about someone who did the right thing the first time. But these are some of the real-life examples of ways in which customers have told us that their bank — even some of the ‘big banks’ — provided them with extraordinary, confidence-building experiences,” Youra says.

True. That is a big reason banks have had historically low confidence numbers compared to other industries. On the other hand, 4 million borrowers lost their homes to foreclosure in the financial crisis aftermath. Unemployment soared. People rightly believe that reckless banking was a big reason why.

And much of the public’s resentment is fueling the populist shift in Hillary Clinton’s campaign as well as the grass-roots effort to draft banking scourge Sen. Elizabeth Warren into higher office.

For banks to regain public confidence, Gallup suggests some common sense: treat customers better. A valuable lesson might be the S&L crisis of the late 1980s and early 1990s. Banks, perhaps not in response to the crisis, offered more credit to the public and financed a strong period of economic growth.

Don’t bet on much of a shift anytime soon. Banking is too consolidated. Just four banks; Bank of America Corp. , Citigroup Inc.  J.P. Morgan Chase & Co.  and Wells Fargo & Co.  control more than half of the nation’s assets and deposits. Why would they have any incentive to improve their conduct or services?

The real problem is a lack of competition, not the public’s confidence.

Written by David Weidner of MarketWatch

(Source: MarketWatch)