Difficulty getting children to save

I was talking with a co-worker the other day about teaching kids about money. She mentioned that she had problems getting her child to save money. In her experience, getting her child to save worked only when she and her child would fight. Her child wouldn’t save on its own, money given was almost instantly money spent, and her child had even lied to her about how much money her child would earn or be given. She was frustrated that she, a teacher, wasn’t able to teach her children the importance of smart money management. So she threw the question at me:
 

How do I make my kids save money?
 

Before we get to the answer, let’s look at what we are dealing with. First, let me say that I’m not talking about EVERY person in EVERY situation, but many people in this particular situation. If this isn’t you, congratulations! You are ahead of many of your friends. If this is you, don’t feel too bad about it, most of your friends who deny that this is them are lying to themselves anyway.

Any parent will tell you that you can’t make your child do anything. They’ll tell you stories going back in their children’s history about toilet training (or housebreaking, as I like to think of it- not a breeder), or getting their children to eat the right foods, or even about sleep patterns. These parents, after fighting for almost half a decade just to get their children to the point where they can function at school, often give up trying to teach about money and hope their children will pick up money skills somewhere else.

Then we send our children off to school where many teachers do their absolute best to get their charges to learn the absolute basics needed to move on to the next level. This is where I currently come into the picture. Let me give you a little picture of what kids are dealing with today.

Kids are given a worksheet for “Cornell Notes” that is pre-printed with much of the information they need to know already filled in.
The rest of the notes are displayed on an overhead projector with the teacher telling kids “Write down where your notes say subtopic that calls for random bullet point>.”

In English and History classes, kids are no longer required to READ FROM THE BOOK!! That was so big it deserved two exclamation points. When many parents were in school, you had to read from the book. Now, textbook publishers include .mp3 files or cd’s with all the reading so a teacher can just play the file and the kids just sit and read.

In many districts and schools, teachers are required to teach a specified list of topics by the state, leaving little to no room for financial topics.
Many teachers would love to teach many different topics. For several reasons, whether it’s about money, time, experience of the teacher in different skill-sets, or whatever else, we too often run out of time with your children before we run out of mandated education topics.

At the end of the 12 years of mandated education, we are lucky if we did our job and created an adult that is ready to function in society at large, hold down a job, and maybe even move on to higher education (if we’re lucky)!
 

Still not hearing solutions, Stanton!

This is where it gets a little more difficult. The key to making financial education for kids easy is catching them when they are young. My friend had a kid that was a little older, so she has to come up with other solutions. Here are a few. Some are going to be more difficult than others, and some are going to seem too far outside of your parenting philosophy. Hey! I’ve never claimed to have the only answers. If you have something that works better, or even something different that also works, feel free to chime-in in the comments.

Don’t give them a choice!  Remember that you are the parent, and should be able to set the rules for how money is handled in your house. If teaching your children to save for long-term goals is important to you, then your children are going to save for the long-term, because they won’t know that there is another option. If tithing is important, then your child will tithe because that is all they will know. If they start fighting you, trying to avoid your priorities, or making your life difficult, take whatever money they might have and put it in a savings account for when they are mature enough to follow the rules.

Start as early as possible!  The earlier you start your children down the path of learning financial responsibility, the harder it will be to break the habits you instill in them.

Reinforcement, reinforcement, reinforcement!  Both positive and negative reinforcement has their places here. Let’s say you do the three piggy-bank thing that is the current flavor of the month when it comes to teaching young people about money. When your child puts money in each bank accordingly, without being prompted, make a big deal out of it! Tell them how proud you are that they are becoming more mature and responsible. Kids have a need to please adults. On the flip side, when they do something inappropriate with their money, there has to be a consequence. If your child raids their “bicycle” savings account to buy a Selena Gomez poster, you need to temporarily take away their ability to access that money and maybe even the poster until they have replaced the money.

Communicate openly and honestly!  Talk with your children about the importance of learning to manage their finances. Make sure you keep the conversation at a level that their individual development can handle, but make sure you communicate. Be honest with them about difficulties you might have had or setbacks you might have had in the past and your desire to make sure they don’t repeat your mistakes. Also communicate the feelings you have had when you have experienced success with money issues. Finally, talk to your children about the way they might meet financial challenges, and work your way through the hypothetical. You want to make your children comfortable about talking with you about financial issues so they will still feel comfortable when they are older and might need your advice.

Feed their curiosity, even if it isn’t as deep as you want it to be!  Expose your children to as many possible views on money management as you feel comfortable exposing them to. Find blogs like this one, or others that you might read, and read them with your children. Make it a thing. For example, I post on Fridays. I do this so people have a whole weekend to peruse my posts and not interfere with their weekday schedule. Maybe you and your children can read and discuss my latest post on Saturday, over breakfast. You spend some great quality time with your kid, they get to learn something, and you both have something in common to discuss. Warning! Sometimes the language here gets a little saucy. I try to keep it PG-13, but every once in a while it gets worse. I try to let you know when that is going to happen ahead of time, sometimes what I consider PG-13 and what you might consider could be different.

While we’re at it, find a book by someone who can teach your kids about finance and have a “book club” within your family.  Find times to read and discuss the book.  If I might make a suggestion as to which book…,

  

Whatever you do, don’t give in to the frustration that comes with trying to teach some kids anything!  I get it.  It’s frustrating, but once they get it, everything is magical!  Teach them well (sounds like an intro to a song!)  Enjoy!

WTF about Bank Transfer Day?

November 5^th 2011 has been designated by the great and popular ones as Bank Transfer Day. Facebook has a whole group dedicated to the idea that people should close their bank accounts at major banks and open accounts at smaller, regional banks and credit unions. Because of the way the calendar works out, many financial institutions will be promoting this heavily for Friday November 4^th, which is one week from today. Many are planning hootenannies with balloon animals and popcorn carts or whatever cheesy marketing stunts their marketing whizzes can come up with. Because of my unique perspective as one who knows a little something about these things, I’ve been in many conversations about the Events of Bank Transfer Day with peers, family members, and even friends.

 

First, before I share my opinion, let’s look at what BTD is. Angered by large financial institutions that are planning on adding fees to services that have been traditionally free to customers and members, many of the same people who are occupying places in protest have decided to prove a point by closing their accounts at the large institutions in favor of smaller ones.

I’m all for free speech, and I especially am supportive of the idea of reviewing your banking situation to see if you are dealing with an institution that is best serving your needs. Further, I think Bank of America specifically sucks a very large bag of…, well, let’s just say that I’m no FAN! That being said, I’m not sure of the wisdom of jumping on a bandwagon to prove a point. I think many people make rash or quick decisions and later on regret these decisions. When changing financial institutions, the potential for real regret is very low, but not absent.

So I guess what I’m saying is go for it! I’ve talked about some things to keep in mind when considering a new financial institution HERE, and also HERE. For those of you who have read FINANCE FOR YOUTH: THE BOOK, you may remember that I dedicated a whole chapter to selecting the best financial institution. In part, what I said was this:

Do a little research first, and when you visit branch offices, go in ready

to ask questions until you are satisfied with the answers. Decide what’s

important to you when it comes to a financial institution.

And,

Treat your initial visits to a bank or credit union like a job interview for

them. Weed through any that don’t have everything you want and you will be

left with a more manageable list of candidates. If you don’t like the answers

they are giving, you can leave quickly without wasting a lot of time.

And even,

Above all, don’t feel pressured to open an account just because of a

strong sales person. There is a phrase that you might have heard before

about putting all of one’s eggs in one basket; and this is true. Look at the

benefits for you opening an account, and go with the one that offers the

most for the least money (fees!).

If you haven’t yet read Finance For Youth: The Book, what are you waiting for?!?! Get to clickin’ on the link above to get your copy and one for a friend in time for the holidays! Aside from the above, I spend a whole chapter talking about things you need to know to make a good decision about the future of your financial institution.

So, take this week to interview a new financial institution, or ten. If you are getting feed for something that should be free, find an institution that can accommodate your needs, or reevaluate your hierarchy of financial needs. Kick the tires, ask questions, be a pest. If after all that, you decide that Financial Institution X is better than Financial institution 4, switch. But don’t switch because of a protest movement. Don’t switch because some hipster on TV said you should, or because you saw a video with some character wearing a Guy Fawkes’ mask from V for Vendetta ranting about the evils of banks. Do it because it makes sense and because you will ultimately benefit from doing so.

So after spending most of this post telling you not to get all amped up by the protest movements and the protesters, I could think of no better way to illustrate the silliness of making rash decisions than by having Flava Flav and Public Enemy performing “Fight the Power”.  Enjoy!

Having “The Talk”

In every parent‘s life there comes a time when they need to sit their child down and have a serious talk about life. Some parents make a big deal and production about it, buying visual aids and showing their kids the tools that they use. Other parents pretend that this isn’t happening, or at least that it isn’t happening yet, all the time realizing that they are risking their children having to learn the facts from people who don’t have their best interests in mind, or even worse, from the streets.

Of course the above holds true for many sensitive and difficult subjects, but only one can truly rise to the level of being called “THE TALK”. We’re talking about finances here.

Earlier, at the beginning of summer, we discussed some choices about how to handle the idea of allowances for kids. You can read about them HERE, HERE, or even HERE. Some parents thought that this was the end of the story, and not something way closer to the beginning. The truth is, your kids are going to need to learn how best to handle serious issues like the smart use of credit, planning for the future, making and sticking to budgets, and even how to deal with life when your plans blow up on you. This is when it can get a little messy for parents and their children alike. Hopefully I can give you a few tips to make this less difficult on everyone.

You really can be too young: Many of the bloggers out there and some of the “gurus” will tell you that your kids are never too young to learn about these issues. Well, that’s not exactly true. I’m all for teaching kids about money issues in ways that are age and developmentally appropriate. I could try to talk to my 6-year-old nephew about the finer points of an interest-only mortgage, but I’m sure he’s more interested in seeing what his nostrils look like when you shine a flashlight through them (That may not be strictly true, but I always get a kick from the flashlight thing). You should stick to basics that you can deliver in small enough chunks that they can understand, but with just enough detail that you don’t lose them. If you just can’t help yourself and you absolutely need to talk about topics that are probably over their head, the best way is by teasing the more advanced topics in the course of the more basic (and appropriate) lessons.

A little mystery is better than total disclosure: Remember the first time you heard, saw, heard about, learned, or discovered that your parents had sex (that is if your parents have had sex, unlike my parents, who never have and never will, thankyouverymuch)? Yeah, you don’t want to put your kids through that when it comes to money issues. Some parents might struggle to keep their finances healthy. Having kids, in and of itself, is an expensive proposition, but by no means the only reason parents might not want to divulge too much. Maybe they made some bad choices, maybe life got a little hairy, but the kidlets don’t need all the details. If you want to purge your soul, see your clergy, a psychologist, a bartender, or whoever, but don’t burden your kids with too much detail into your own finances.

Try to let your kids guide the direction of the conversation: Just like the other “talk”, one area where parents frequently screw up is by misunderstanding the questions that their children may have. A kid might ask where babies come from, and a parent will start the conversation with, “Well, sometimes Daddies make special drinks for Mommies that help Mommies get sleepy…,” when all the kid wants to hear is “from the hospital”. No kid wants to hear the first story. No adult wants to hear that (with the exception of some members of the local police, but that is another story altogether.) Kids have an amazing ability to communicate to adults what they are ready to grasp. Sadly, adults generally suck at interpreting what the kids are saying. My best advice here is to ask a lot of questions about what kids are curious about or need help understanding. Give them a broad, basic answer, followed by some more questioning to see if that helps to answer their questions, and then a more detailed response. Lather, rinse, repeat as necessary.

Showing is better than telling: Kids get lectured at enough at school. I personally make sure of that. They learn very early on how to tune out when they feel another lecture coming on. Try to avoid adding to the lectures they will have to sit through by developing activities that will help them see what happens. There are games on the internet that can be used in a pinch, but these are generic, and might not be the best fit for your child. Of course, this will mean that you have to be engaged with your child, but most parents who are planning on teaching them about personal finance are probably already pretty well engaged already.

And finally,

Be prepared: Before you get to the point where you need to have “the talk”, be prepared with the accurate information and some ideas about how you would answer questions. This means you might need to invest a little time and a little money on reading materials. You’re reading Finance For Youth: The Blog
already, so that is a good start! Another place where you will get good information that is definitely not over someone’s head is by reading my book, Finance For Youth: The Book, available through www.finance4youth.com. Am I saying that my stuff is the only stuff you should read? Absolutely! However, I know that would be incredibly unlikely, so I suggest that you supplement F4Y products with products from your second favorite personal finance person.

Having “the talk” is going to be strange. There is no way around it, but it doesn’t have to be so uncomfortable that you postpone it until it is too late. Remember, postponing leads to your kids needing your money long after they should be on the way to creating their own lives, and nobody wants that.  Also remember that if you get stuck having to give the talk, and it gets awkward, you can always just tell your spouse that your kid ate the pie!

 

 

Guest Post: Financial Literacy: Teaching Personal Finance to Teens

Note From Wil: This is a guest post from Kelly Austin, a writer with http://www.highersalery.com.  Much of what Miss Austin writes today should sound familiar to many readers. Much of her advice today can also be found in various articles right here on F4Y:TB. I include her take for those newer readers who might not have read some of those older posts.

I like to include the writings and opinions of as many people as I can.  If you want to contribute to Finance For Youth: The Blog, send me an email:
wil@finance4youth.com.

Personal finance is one subject that does not get enough attention in the education system, so it is up to parents to raise financially literate children. Here are five actions that you can do to help teach your teenager about personal finance.

Get a job: Encourage your teen to find a part-time job so that he learns the value of work and develops a good work habit. Giving allowances is okay, but adults have to work for their money; no one just gives money to them. Help your teen look for a paper route, babysitting job or a job at the local fast food joint. Working ten to fifteen hours a week while in high school will help them learn to prioritize their time and earn money for their spending and savings needs.
(Note from Wil:  I talk about this very topic HERE!)

Open a Checking Account: Your teen probably has a savings account but it’s good to get him a checking account so he can deposit and use his hard-earned cash. You can get your name put on the account so that you can oversee his transactions. Let him get a debit card and teach him to balance his account regularly. Even if he messes up and gets an overdraft charge, it’s better to do it now than to rack up thousands in credit card charges and fees as an adult.
(Note from Wil:  I talk about this very topic HERE!)

Make A Budget: Once your teen has a job, show him how to make a balanced budget. The expenses must equal (or at least less than) the income otherwise he’ll go into debt. Allocate extra money to savings goals. If your teen doesn’t have a job, you might consider giving him a lump sum of money equal to what you usually give him annually (or quarterly) for his clothing and entertainment expenses. Then it’s up to him to spend it appropriately. Do not bail him out if he wastes it. The best thing you can do is to give him some household chores so he can earn some money.
(Note from Wil:  I talk about this very topic HERE!)

Read A Good Personal Finance Book: There are a few great books that teach personal finance and are enjoyable for teens. Consider giving your teen a copy of Dave Ramsey‘s Total Money Makeover or Your Money or Your Life by Vicki Robin and Joe Dominguez. I Will Teach You To Be Rich by Ramit Sethi is also great for teens as it was written when he was just out of college and has a writing style that appeals to a younger audience.
(Note from Wil:  I personally don’t agree that all of these books or authors are great, but that’s my opinion.  For a F4Y friendly book, You can always go with THIS ONE!)

Set Short and Long Term Financial Goals: Your teen will likely have a long list of needs and wants. Help him to prioritize them and set short and long-term savings goals. Short term goals might be saving for a concert, buying a car or new computer. Long term goals will likely be college, an apartment or car upgrade.
(Note from Wil:  This is the name of the game!  I talk about this everywhere online and in Finance For Youth: The Book!)

This guest article was contributed by Kelly Austin from www.highersalary.com. Visit her site for information about salary and benefit information for many popular careers.

Broken Resolutions? Great, now let’s get to work!

Okay, maybe you’ve already broke your New Year’s Resolution to get in better shape. You probably have broken many of your resolutions. Just this Monday, I had a student tell me that they broke their new year’s resolution to be on time to school. Monday was the students’ first day back after winter break.

The reason I refused to name specific resolutions for New Year’s is because so many resolutions fail. Rather than look sad like my friend here, now you have the opportunity to get off your butt and do something. Just don’t call it a resolution!

Getting in shape is the most popular resolution. Getting out of debt and being better with money was up there. Guess which one I care more about?

• Understand that learning about finance, much like getting in better physical shape, is a process, not a simple declaration. Take small steps. Right now, you are young enough to make a real effort, and even to make a few missteps once in a while. Don’t give up already.
  
• Don’t get hung up on titles or artificial definitions. You want to learn to be better with money than your friends and some members of your family. You don’t need to say that you are going to be “debt-free” in 2011, unless you really think this is a goal that is attainable and worthy of attaining. I’m not saying there is anything wrong with wanting to avoid debt, but don’t lose sight of the bigger picture of being happy and living a fulfilling life.
  
• While this is an individual journey, you don’t have to always be alone. If you don’t have friends or family that will go on a similar journey, find people that have already been there or who are on the fence about starting their own. There are tons of Finance blogs out there where this is their whole approach. Check out my blogroll for several of what I consider to be the best examples. Check out my Twitter followers for others.
  
• Do not ignore the benefit of doing your homework. Just like in math, science, or any other class in school, you don’t have all the answers. You have access to them, but you have to do the work. Reading these articles will help, reading and re-reading finance for youth: the book will also get you there. Frankly, there are several other writers out there who might resonate more with you that will help. I don’t care where you get the information (as long as it is accurate), just that you get it and read it.
  
• Practice what you learn. There is a huge difference between reading books about Bruce Lee and taking martial arts lessons. I’ve done both. The books were great, but they never helped me to defend myself when I needed to. You need to practice the skills I teach you here or else you won’t be able to use them when you need to. Nowhere in the world of f4y do I tell you how to handle every situation. I have no intentions of changing that. I give you guidelines and basic skills. It is up to you to adapt what I teach you into something that serves you in other situations.
  

There are no guarantees in life, which means you could do everything right and some stupid thing or another could screw it up anyway. It also means that you may succeed even if you do nothing. I’m suggesting ways to increase the probability that you can succeed, and instead of being like my friend above, you can be more like his idol here. Notice how through following my advice, from a very young age, he is now in fantastic shape to succeed. I hope the same for you!

So instead of wallowing in whatever failure you think you are guilty of because you couldn’t stick to something as weighty as a New Year’s resolution, start tonight to build in a determined, planned, reasoned out, regiment to succeed. I’ve got a feeling that you might succeed after all!