Age Old Goals

I've advocated the idea that saving for a short-term goal is a good way to teach young kids about the value of money. So, for example, during the Money Mammals Challenge, my daughter saved her weekly allowance over a month to buy a new shirt (she's now five and needs some new clothes). My wife and I both saved for tangible things as well so that she could see that we were engaged in the Challenge as a family. As I've noted in this blog, I've used this approach of short-term savings goals numerous times in order to teach the concept of saving. My wife - who is much more financially savvy than me - asked me if it's such a good idea to associate saving so directly with spending, albeit delayed gratification spending. I told her that I thought it was, but I figured another source could more effectively make my case. So I turned to a classic. I read a nice piece in a terrific book I picked up from Amazon from 1969, The Time-Life Book of Family Finance. This 40-year-old tome makes a terrific case for the need to be practical in our approach to teaching kids to save:

"One idea about money that nearly all parent try to inculcate in very young children is the importance of saving. The effort is frequently wasted, perhaps because so many people go about it in the wrong way. Too often saving is not presented in its true light, as a practical method of satisfying needs and desires, but as a vague ideal, a Good Thing symbolized by the ubiquitous piggy bank...Saving can be either a negative action - a self-denial - or a positive action leading to some desired goal. For most of us, saving must be positive: The desire for some future good has to be stronger than that for an immediate satisfaction...the reward must always be attainable and attractive. If it is not, we will not save, and neither will Junior.
Against this backdrop, let's try to imagine what goes in Junior's mind vis-a-vis his piggy bank. [When he receives pennies] he is instructed to "put them in Piggy." This is accompanied by smiles and a general air of "we're doing a good thing." It seems to be a game that adults enjoy playing, possibly because of the interesting noise the pennies make when Piggy is shaken. It is also an interesting kind of magic, because the pennies do a disappearing act. You never see them again. In fact, Junior is admonished that you never take money out of Piggy. That money is being saved.
It is not clear what Junior is learning from all this, unless what the parents have in mind is training him to be a miser. It certainly is not teaching him that a deferred use of money can be more satisfying than a present one..."

The article also makes a great case for using clear or translucent savings jars or banks.

Books That Help Teach Kids About Money

I stumbled across Susan Beacham's blog and found this terrific post about children's books that can help teach kids about the value of money, addressing topics like setting goals and making money choices. Moreover, she's separated her selections by age level, making the list that much more parent-friendly. For those who may not know it, Susan is the creator of the Money Savvy Pig, a terrific all-in-one bank that is available at www.msgen.com.

-John

Frugal is Cool!

An article in today's NY Times noted that the recession has brought frugality into vogue. Let's hope that this is more than temporary. Click here to read the article.

-John

Coloring Is Cool - Going Green Saves Green

With both Earth Day and Credit Union youth week coming up next week, I just had to post this really cool coloring page we created with our friends at Carbonfund.org for our Money Mammals "Saving Money Is Fun Kids Club." One of the panels is specific to the club, but the overall message that Going Green saves Green is universal. We hope you download it here and print it out and use it with your kids, class or whomever else might enjoy it.

-John

Interesting - Compounding for Kids?

I came across an interesting post on frugaldad.com - he taught the concept of compounding to his eight-year-old. Good stuff.

-John

Financial Literacy's time is NOW!

A terrific recent article in The Economist (click the link above) highlights the global push towards improved financial literacy. It shines a bright light on the desperate need for financial literacy worldwide and it underscores two of my core beliefs and what drives The Money Mammals project:

1. TEACH KIDS YOUNG - Jeroo Billimoria, a social entrepreneur who founded Child Savings International, teaches kids 6-14 in 35 developing countries about money through a course called Alfatoun ("Explorer"). She notes that it's imperative to start young because "by 14 most of their habits are formed." Not surprisingly, she encountered skepticism but has fought past that to create a successful worldwide financial literacy program for youth.

2. USE NOVEL METHODS - Lewis Mandell, winner of the William E. Odem Visionary Leadership Award in financial literacy, says, "clearly the way we are going about teaching personal finance needs to be improved" The article notes, "the only classroom method that seems consistently to raise financial literacy among high-school pupils is playing a stockmarket-investing game - which rewards taking high-risk bets."

Kids need to be engaged to be educated. Bland presentations or classes don't cut it. Saving Money Is Fun?! It can be.

It is clearly important to do something and to do something for our children NOW. We cannot wait. We all must work together to improve financial literacy education in this country. But we also can't wait for education system to handle this. Take advantage of the numerous services offered by many of your local credit unions to help teach you and your children about financial literacy. But more than anything else, start educating your kids yourselves. If your discomfort with the subject is holding you back, keep it simple. Teach them to share, save and spend smart, understand the difference between needs and wants and to make smart money choices. Want to get started? Take The Money Mammals Challenge (see previous post this month).

The Challenge Continues

How is your Money Mammals Challenge going? I thought it might be helpful if I posted a completed challenge sheet right here. Take a look and you'll see that our daughter is saving for a new pair of shoes. She's turning five and tells us (oh, about every five minutes) that she's getting bigger and will need some new clothes and shoes that fit her better. This is a bit of an exaggerating (she's doing just fine with most of her clothes), but her choice was pretty practical and she could use some shoes. $3/week (her allowance) will net her $12 by the end of the month. Enough for the pair she'd like.

We used to have a beautiful hibiscus plant that recently died so my wife is saving for a replacement plant - a new palm tree. We're lucky enough to live in Southern California and she's always wanted one of these iconic trees.

I have a good friend who has multiple sclerosis and I missed the MS Walk in which my wife and kids recently took part. So I'm saving to "Share" my money with MS. $80 is only a dent, but it will help.

For the month, my wife and I will be making a point to show our kids the money going into our clear "Save" and "Spend" jars for the month. I want them to physically see that the money is being saved and that's it's accumulating over time (albeit a short time).

Comment here to let me know how your challenge is going.