My American Girl

"Can we just stop in the American Girl Doll Store?" These are ten words that really, truly scare me.

Now, before you get all "what do you have against dolls?" on me, let me explain. Although I can appreciate the theory behind American Girl (learn about history) and the strength of the brand - the colors, the numerous dolls, the consistency (the hair salon? the cafe?), American Girl dolls are first and foremost about one thing - consumption. And those prices? Your entry level fee (doll and costume) is about $100 (the "starter kits" hit you with two bills, including tax). These aren't dolls - they are status symbols.

My question is, "what type of status are you trying to show?" That said, I think it's important in the process of teaching kids about money to let them spend the money they've earned via their allowance in their Spend Smart jar with a reasonable amount of autonomy. So I answered yes when my daughter asked me to go in. For those who know me at all, that was a big step. Also, she had brought only six bucks with her, so I knew there was no real chance that we'd purchase anything at an AG store.

I quietly walked around with her as she pointed out various interesting features on the dolls (she of course knew many of the names). It's a testament to their marketing machine that even someone as jaded as I am gets drawn in by the brand (that just screams to be parodied in Warholesque style for it's impressive sameness). Finally, Quinn asked me the price of the Chrissa doll (which she calls, "Little Eileen," as it bears a striking resemblance to my wife). As objectively as I could, I told her that the Chrissa (who apparently took home 2009 AG "Girl of the Year" honors) was priced at a cool $95. I explained that it would take her about four months to save for the doll, and that was accounting for the fact that she had already saved over forty bucks in her Save jar. She stared at the doll.

This wasn't our first conversation about AG dolls and I have consistently tried to steer her toward other, less expensive dolls. See, I'm not anti-doll! I think dolls are a natural part of a girl's development, just like Han Solo in Bespin outfit was for me (I kid, I kid). I mention that this wasn't our first conversation because, without prodding from me, she looked up and asked to leave. I imagine this won't put an end to her AG fascination (the fact that so many of her friends have them is a big driver), but it's part of the process. I'll keep you apprised.

-John

A $10 Gift Card? A Coupon Teaching Moment

"Dad, look, here's a $10 gift card to Toys R Us. Can we go?"

"Well, honey, that's not really a $10 coupon. It's $10 off if we spend $75. We would have to spend $75 in order to save $10."

"Ok. Let's go."

The world of children is often described as very black and white (I want this and if I don't get it, I am going to die), but it's the nuances of gray that most often challenge us as parents. Some coupons are good, some coupons are not so good - white and a slightly grayish-black. Our neighbor gave our 6-year-old a coupon organizer filled with various coupons that would seem to both of them to be a very noble gift.

I will say this - it led to a teaching moment. We were able to explain to our daughter that a coupon for something you intended to buy or something you actually needed is an excellent way to save money. Because she now somewhat grasps the basic idea of marketing and advertising - to get people to spend money - we explained to her that the coupon she thought was a gift card, "$10 off if you spend $75 at Toys R Us," was really just an invitation to spend $65 or more dollars. Granted, money spent at Toys R Us would likely yield something she wanted, but we were able to turn the conversation back to her Save jar. Because she's currently saving for a $79 item (one of those folding chair/bed combos), and she was aware of how much time that was taking her, we were able to explain the purpose of that coupon a little easier.

Teaching moments are terrific and the more context you can provide for your child, the more relatable to her experiences, the more valuable it will be. This lesson certainly doesn't mean she wouldn't love to go on a $65 shopping spree at Toys R Us (she would...heck, I would), but it does help her to understand the concept that the money spigot must be turned off regularly in order for it to provide money when it's turned on.

Oh, and we're going to go use a 40% coupon at Aaron Brothers to get some canvases we planned on buying for an art project this afternoon. Teaching moments rule.

Just Add Kids

We are really fortunate. Our Money Mammals teaching guide, for kids 1-2, just won the Oregon State Desjardins award for leadership in youth financial literacy, courtesy of Rogue Federal Credit Union and Kerrie Davis. Thanks, Kerrie! I also happened to be using the teaching guide this week in my daughter's K-2 class at Larchmont Charter Schools here in Los Angeles, California. The guide provided a nice framework for a "Share" (charitable giving) lesson tied to the school's Thanksgiving food (and money) drive. I brought in some jars and the kids decorated them with fun Share labels and Goal labels for the amount they planned to save over the two weeks until the Thanksgiving drive ended. I enhanced the lesson with video from my show.

The kids really enjoyed setting the goals and I just know that they will do an incredible job bringing in food and money for the needy. The take-home lesson for me was that, once again, you just need a good framework and just add kids. The kids are ready to learn about many aspects of financial literacy at a young age (five and six in this case) and they make any lesson so much more than you could have imagined prior to going into the classroom.

Share YOUR Insights with Marketplace Money

The good folks at American Public Media's Marketplace Money are planning a show focused on kids and money and they want to know how you teach your kids about money. You can check out the questions here, http://bit.ly/1mCR7H. Fill out the questionnaire and share your insights on kids and money.

Stunning Stats & the Solution!

Here are some stunning stats to think about regarding financial literacy:

-62% expect of college graduates will have a student loan debt averaging $27,236 (Student Monitor)

-Only 11% of workers under 35 years of age indicate they are participating in their company's 401(k). (American Institute of Certified Public Accountants)

-40% will never gain a net worth in excess of $10,000 (American Dream Education Campaign)

-In most cases, economics and personal financial literacy programs are elective classes so “only 12% of Americans graduate from high school having learned anything about money at all.” (FoxNews.com)

-Less than one-quarter of students and only 20% of parents say students are very well prepared to deal with the financial challenges that await them after graduation. (KeyBank)

We spend so much time trying to fix bad habits in teens, young adults and adults. It's not working! When are we going to realize that the lion's share of our focus must be on the children. We must be good habits in our young children.

Still don't believe me? Please read this.

-John

6 Great Youth Financial Literacy Links

These are some of the top resources that I've found that can help you teach your kids about the value of money:

Allowance Magic - Short, simple authoritative allowance system. Full disclosure - We sell this book on our site, www.themoneymammals.com.

Thrive By Five - What can kids learn about money BEFORE they enter kindergarten? A lot!

Early Childhood Financial Literacy - Great study about the importance of teaching kids and building good money habits young.

Frugal Dad - This Dad is on a mission. Join him.

First National Bank of Dad - I LOVED David Owen's book. His wit and wisdom can help you teach your kids about money. Incredibly well written.

The Money Mammals (www.themoneymammals.com) - Full disclosure - I created this DVD. Like Frugal Dad, I'm on a mission to teach kids about the value of money and I believe it's important to make the process fun. Our DVD is a family affair - my wife and I came up with the concept to teach our kids about the value of money, I wrote the script and my brother wrote the songs. Your kids or grandkids will love the DVD and they'll learn something in the process. If they don't, holler at me (john@themoneymammals.com) and we'll give your money back.

Let me know what you think and post YOUR favorite resources.

Don't Forget the Family

Times may be tough, but whatever you do, please don't lose your focus on the family. I know I posted on this recently, but it bears repeating because I've seen and talked to so many families under stress trying to shield their kids from the burdens they are facing. This is EXACTLY the time to enlist your family in the effort to help work things out. Your kids are going to "feel" any stress that you may be feeling, whether you talk to them directly or not. So talk to them, reassure them, let them know that you are working hard to make sure that everything is going to work out, no matter how bad things may seem.

Make them a part of the process, "we need to conserve, kids, so please don't run the faucet when you're brushing your teeth, pour only enough milk into your cereal bowl and please only flush once." They will want to help. Let them.

-John

Share - Charitable Giving For Kids

The least utilized used bank in my daughter's Share / Save / Spend Smart bank set is that pesky Share (charitable giving) one.  I say pesky because we need to provide here more guidance.  We require that she put $1 of her $4 allowance dollars (she's 6) in Share and she did give to a Leukemia society last year, but I think it's time to bring the goal-setting ideas we use for the Save bank (which have worked) to the Share bank as well.  I thought this article on eHow was very helpful in giving us a framework to create a better Share program.

-John

Twitter Updates

Don't forget to check out the interesting information and articles I'm tweeting about on the sidebar to the right.  

My Twitter Account

Financial Distress? Focus on Family

"I don't want my kids to be stressed about our financial situation.  They're too young."  One mom said this to me at a recent event and because it has become such a common refrain, I felt that I needed to highlight a post I made about Sue Schellenbarger's WSJ article last September.  It's even more relevant today.  Many families are in serious financial distress and a common reaction to this is to shield the kids.  This is virtually impossible to do.  Your kids are going to feel your stress and if you don't explain to them what's going on, they'll make their own leaps.  

Talk to your kids about difficulties you might be having and assure them that you are working to make things alright.  Enlist them to help - they typically want to be involved.  Give them simple things to do (e.g. don't run the water while brushing teeth, turn lights off when you leave a room).  Use Ms. Schellenbarger's article as a guide for your conversations and, if you still don't believe that involving your kids is important, look at they study she cites about the importance of focusing on the family in times of distress.  Your problems are your family's problems.  Face them together as a family.

Allowance for Obama Kids

Janet Bodnar of Kiplinger is right on the money when it comes to the Obama kids, Sasha and Malia, and how their parents handle their allowance.  Janet points out that the paltry $1 allowance they each get is likely counterproductive.  There is virtually no way that 10-year-old Sasha is going to learn about money management by receiving $1/week.  Think about it.  If she saved for one year - an eternity for someone that age - she'd have $52.  What could she buy for $52?  A pair of sneakers?  Maybe.  A videogame?  Again, maybe.  Very little that would likely convince her that the time was worthwhile.  

I hope that Janet's article makes its way to the president's desk.  I won't hold my breath waiting for that to happen, but I will suggest that it's very important for us as parents to have an allowance system that is not tied to chores and allows kids to save an amount of money that would have a stronger psychological impact on them.  

For example, imagine if Sasha were to receive $10/week and her parents incentivized or required her to give some portion to charity (say $1 or 10% per week), save some portion (minimum 10%) and then allocate the rest as she saw fit (with guidance and requirements that she would have to pay for some amount of her own clothes and/or friends' gifts).  Then, at the end of the year, she could give $50 or more to her chosen charity (think of the potential impact on other kids) and save $200 or more for a goal she set with the assistance of her mom & dad.   How about a custom bed for the new dog?  What an opportunity for the Obamas.  I know they're busy, but I hope they listen to Janet.

-John

Money Mammals in Wall Street Journal!

My DVD, "The Money Mammals: Saving Money Is Fun," appeared in the Personal Journal section of The Wall Street Journal on Thursday.  Click here to check out the piece on "Toys to Teach Saving Savvy."  

Willa Plank writes about the DVD, "Teaching simple concepts such as money transactions, saving allowance money, and sharing in the form of gifts through catchy songs and funny dialogue, it isn't hard to see why our 5-year-old tester enjoyed it."  The article reviews other financial literacy products for kids, including The Money Savvy Pig, The Millionaire Kid$ Club books and Big Pay Day.  

It's great news for all of us involved in getting the word out that it's imperative to teach kids about money as early as possible.  

-John

The Thrift Shift?

I heard a very interesting story this Thursday on NPR's Morning Edition.  Linda Wertheimer chatted with the Wall Street Journal's David Wessell about the recent rebound in the savings rate from near zero to 5%.  

Click here for a link to audio and print

Click here for NPR's Savings Rate Tracker

I'm hopeful but skeptical that America's relatively sudden interest in saving will keep but I'm mostly curious to know what you think.  Once conditions improve economically, do you think Americans will go back to their spendthrift ways or do you think that the current crisis has or will radically alter American consumption and that we're entering an "Age of Frugality"?  In short, are we seeing a "Thrift Shift?"  Please comment.

-John

President's Council Report

"While there are many causes to the economic problems facing this country, it is undeniable that lack of financial literacy is a contributing factor."

-Charles Schwab, Chairman of the President's Advisory Council on Financial Literacy

You can click here to read the 2008 report.  

Keep in mind that although I have highlighted this very important government foray into improving financial literacy in America, I still firmly believe that parents are at the heart of the solution.  Although we should all appreciate the effort being put forth to improve youth financial literacy on the national and state levels in our schools, children will ultimately learn their most important lessons from parents who model behaviors, good and bad, for their children.

-John

40,000 Reasons You Can't Ignore

"Children are already a major target audience for advertisers. American companies currently spend $15 billion a year on marketing and advertising to children under the age of 12—twice the amount they spent just 10 years ago. Each year, the average child sees about 40,000 ads on television alone and collectively influences $500 billion in spending annually on fast food, junk food, toys and other advertised products.

Due to their susceptibility to persuasion and the amount of media they consume, children are the perfect targets for television advertisers. Children under the age of eight do not recognize the persuasive intent of ads and tend to accept them as accurate and unbiased. In fact, 30-second commercials have been found to influence brand preferences in children as young as two years old."

This excerpt is from a report by Children Now, "Interactive Advertising and Children: Issues and Implications." These numbers are eye-popping reasons for why we must speak to our children about advertising and the value of money as young as possible. It's unfortunate that kids are preyed upon, but they are and it's essential that we educate them so that they start to think about the messages that they are inevitably receiving.

-John