Friday, November 17, 2006

Lessons for Preschoolers

Numerous parents have asked me if there are any resources on the web to help them teach their preschool kids about money. One of the best set of resources I've come across is distributed free by the Credit Union National Association, Thrive by Five. The lessons are super simple (very important for this age group) and pretty fun. Try them out and let me know what works for you.

All the lessons are in both English and Spanish. Pretty cool.


Friday, November 03, 2006

"This Doesn't Fit Into Our Budget"

My 3-year-old always asks to buy stuff when we go into a store. To anyone who has kids, this certainly isn't a shocker. So how do we deal with it? In her book, Money Still Doesn't Grow on Trees, Neale S. Godfrey says that if you should remember only one piece of information from her book, it's the phrase, "This doesn't fit into our budget." My wife and I use this line all the time. Our daughter is three so she keeps pushing, but I think she's starting to get the point. Why this line? Neale looks at the primary alternative line, "We can't afford it," and says "...that it doesn't mean anything. In fact, you probably can afford it." Saying that something doesn't fit into a budget will also help us segueway into a larger discussion about budgets when the time comes (of course, we think three is a little young). I have a friend who is also a financial representative and I was impressed by his dogged use of the "budget" line with his 4-year-old the last time we were out. It worked to quash the requests pretty effectively. I was also secretly giddy that his kid suffered from the same consumption issues as our daughter. Let me know what's working for you.

Neale's book is available at most major booksellers.


Monday, October 23, 2006

All About Allowance

I have been asked by more than one parent recently about allowances, particularly for the 2-6 year-old age group to which we cater. I culled through some experts’ books and articles to come up with some pointers that are (hopefully) useful to help you get started:

When? Determine when you think your kids can handle it. I know from experience with my own three-year-old that she is too young (for an allowance, though certainly not too young to discuss and handle money). Five or six seemed to be the consensus amongst experts. Try this poll to see what 5000+ parents think,

Teaching Tool: Let your kids know that allowance is a tool for them to learn how to manage money, but don’t get upset when they manage it poorly. Use it as a teaching tool, not a disciplinary one.

Allowance/Chores: Strongly consider not tying allowance to chores. Though I’ve seen some reasoning to the contrary, all the sources (below) for this post suggest that chores and allowance should be separate. “In my experience, and according to many psychologists and counselors, an allowance should not be tied to personal achievement [grades]…or doing chores around the house…Give an allowance to teach your children the basics of good money management.” -Paul Lermitte from Making Allowances.

Watch yourself: If you’re concerned about how they will treat their money (and you should be), pay particular attention to your own money habits and try to be consistent with what you tell your kids and what you do.

Responsibility: Help them build personal responsibility; let them make mistakes.

Calculating the allowance is a little more difficult and a more personal decision. One prevailing thought (seen on Pearson Education’s Family Education site among others) is to give your child a weekly dollar amount that is half their age ($3/week for a six-year-old). Parent response on this particular site was vehemently against that idea because of the paltry allowance it would create. David Owen in First National Bank of Dad makes a very strong case for a substantial allowance AND providing a substantial interest rate to the children to teach the power of saving and compounding. The experts generally agreed that it’s most sensible to determine what the child will be responsible for (a list that will likely grow as your child grows) and provide them with enough for that. Whenever you start, whether it be four, five or six, keep it simple. Janet Bodnar in Dollars & Sense for Kids (aka “Dr. Tightwad”) suggests making them responsible for one thing (sweets on supermarket trips, trinkets on trips to Target, etc.) Also, give them money in denominations that allow for doling it up and saving, sharing (donating) or spending it (five ones instead of a five-dollar bill).

For more in depth information, the following books were my sources for this post:

Janet Bodnar’s Dollars & Sense for Kids
Joline Godfrey’s Raising Financially Fit Kids
Paul Lermitte’s Making Allowances
David Owen’s The First National Bank of Dad
Pearson Education Family Education Site (featuring National PTA material)

Thursday, October 12, 2006

Kids and Ads

Advertisments are the primary way in which kids are hit with the "spend, spend, spend" message. Parents can help their kids understand how to analyze ads. Commonsense Media has an short, useful paper about how to protect kids under seven from being exploited by advertisters. The main key questions Commonsense lists are as follows:

1. Who created this message?
2. What words, images, and sounds are used to attrach my attention?
3. What is really being "sold" in this message?
4. What does this message mean to me?

These may seem like somewhat adult questions, but with advertisers targeting the massive kids market as young as early as two, it's time we equip our kids with the tools to spend smart.

Wednesday, October 04, 2006

Teaching kids to share - a simple idea

I was talking to a good friend recently and she mentioned a great, easy way to help teach your kids to share their money. If you happen to go to a place of worship that takes donations, have them regularly donate some amount from their "Share" piggy banks (or wherever they're saving it) to church on a weekly basis (or however often you make it). I thought this simple piece of advice was very useful because kids typically have such little money to donate and doing so to larger charities requires a little more work and might even be considered a bit too abstract for them to understand. In the church example, they can see that their money is going to something more tangible and they will feel more a part of the congregation. As any of you with kids know, anything they can do to make them feel more "adult" really makes their day. Of course, we parents are in no rush for them to grow up...but that's a story for another blog.

Saturday, September 30, 2006

Starting Early Is Very Important

Good morning. In the first newsletter for my DVD, "The Money Mammals: Saving Money Is Fun," I included some valuable information from the National PTA that I thought bared repeating in my blog. Teaching your kids about money early is advocated by credit unions, banks, money experts and the National PTA. Below is what the latter has to say.

Get started now:

1. As soon as children can count, introduce them to money. Take an active role in providing them with information. Observation and repetition are two important ways children learn.

2. Communicate with children as they grow about your values concerning money --- how to save it, how to make it grow, and most importantly, how to spend it wisely.

3. Help children learn the differences between needs, wants, and wishes. This will prepare them for making good spending decisions in the future.

-Brought to you by National PTA® by Paul Richard (from

Let me know what's working for you to help teach your kids about money.


Friday, September 29, 2006

MINUS 18%?!

A relatively recent article in The Wall Street Journal (8/7/06) noted that the savings rate for people under 42 in the US was NEGATIVE 18%. My eyes almost popped out of my head! I think I reread that stat about twenty times to make sure I wasn't missing something. I wasn't. How could this have happened? And what can we do about it? As you might suspect, my first thought is that we need to start building good money behaviors early. I thought this was an interesting first blog post because it was such a revealing stat. Granted, a percentage of this debt is due to student loans, but there's no getting around the fact that Americans seem to be ignoring one of the tried-and-true axioms to attain financial independence - don't live ABOVE your means. So how do we help our kids? By starting the money conversation with them early. We must be comfortable talking with our kids about money so that it's not a mystery. That's why we are running community outreach events with The Money Mammals - to help parents begin a dialogue with their kids. We know from surveys that parents want and need help and we will work with schools, banks, libraries, community centers and more to assist parents in their efforts to help them raise kids with good money sense.