Holiday Financial Conversations for the Generations: Children

 The hustle and bustle of everyday life does not always give us the chance to have meaningful conversations with our children about money and charitable giving.  The long holiday vacation is the perfect time to have these conversations, but does any child want to spend school break listening to lesson from their parents? 

Some ways to sneak in teachable moments around money and giving this season: 

• Keep extra change with you when you are out shopping and have your children donate to the Salvation Army red kettles.  Have a conversation about where the money goes and how it helps.
• While shopping for Christmas gifts, have your children pick out an extra toy to give to Toys for Tots or other charitable organization. Again, talk about where the toy is going.
• As part of your family holiday tradition, consider adopting a family to provide Christmas or Hanukkah gifts.  Have a conversation about helping others to have a holiday that they might not otherwise have.
• After your children have opened their gifts, ask them to go through their old toys and clothes to find those that they have outgrown.  These gently-used items can be donated to an organization for others to use and enjoy.

These are just a few ideas to help you instill the spirit of giving in your children this holiday season; to teach them that this time is as much about giving as receiving.

In my next blog, I will provide tips for talking to your teenage children about preparing for college funding.

Sandra Adams, CFP® is a Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012 and 2013, Sandy was named to the Five Star Wealth Managers list in Detroit Hour magazine. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

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Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

What Better than the Gift of Financial Education and Support?

 I don’t know about you, but I can hardly believe that it is already time for the holidays.  It seems like just yesterday that I was racking my brain to come up with creative gift giving ideas for all of those people on my list.  I find that it is just as hard to find gifts for adults as it is for children.  But there is one gift I’ve found that transcends generations – the gift of financial education. 

I know, financial education does not sound as attractive or exciting as say, an iPad or a Wine of the Month Club membership, but it is a gift that can keep on giving for a lifetime.  What am I talking about when I suggest a gift of financial education?  Here are just a few ideas:

For Younger  Kids (elementary – high school):

• If you’re trying to stay away from more electronics, there are hundreds of books, workbooks and other resources available from Jump$tart Coalition (JumpStart.org)
• Games like Monopoly, The Game of Life, and PayDay are great (Most are available as both traditional board games or for the computer, Wii, etc.)
• Make a contribution to a 529 College Education fund to support the child’s future education.

For Older Kids (college - young adults):

• If your gift recipient has had earned income during the year, consider contributing to a ROTH IRA in their name. 
• Gift shares of a mutual fund or stock introduce them to investing and help them start an investment portfolio.
• Make a payment towards their outstanding student loan debt.

For Young Adults and Beyond:

• Fund a year of a credit monitoring service to protect their credit and financial identity from fraud.
• Purchase financial software to help them with budgeting and financial tracking (i.e. Quicken)
• Pay for a consultation with a Certified Financial Planner ™ (my personal favorite!).  This can help provide basic financial education and guidance for getting them set on the right financial path.

Giving a gift tied to financial education and support may not make you the hero of the holidays, but you can be certain that the gift will long be remembered as one that lasted long after the holiday decorations are put away for another year.

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Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.  Investments mentioned may not be suitable for all investors.

Financial Fitness is a Family Affair

Improving our health – physical or financial – may mean changing the habits we  learned as children.  What was your family’s attitude about money?  Is yours still the same?  Financial health is so much more than how much money you make or save: it’s about who you are and what you want from life.  The bottom line is that it’s “All About You.” 

As soon as kids begin to handle money, it’s time to start teaching them how to handle it wisely.  Concepts like saving for something valuable, financial goal setting, and basic money management are all important lessons that generations of children have learned from parents and extended family members.   

Here are five fundamental exercises that will develop financial muscles for kids as they move through the various stages of money maturity. 

1. Allowance.  Giving children an allowance is a good way to begin teaching how to save money and budget for things they want.  Allowances can be coupled with opportunities to earn extra money by doing chores that fall outside normal household responsibilities.
2. Saving.  Piggy banks are a great way to introduce the concept of a savings account.  By elementary school the next step is to open a savings account at a bank or credit union. This teachable moment can highlight the value of earning interest on your savings.
3. Critical Thinking.  As kids get older, television commercials and peer pressure are constant temptations to spend money.  Teach them how to compare items by price and quality and encourage care thinking about purchases they make.
4. Part-time Job.  Teens that have part-time jobs begin to experience greater financial independence.  This is an opportunity to show how withholding for FICA and federal and state taxes take a bit out of their paychecks.
5. College bound.  When young adults head off to college a prepaid spending card can offer an opportunity to learn about using credit responsibly without accumulating bad debt. 

In many ways, financial health is like physical health.  Both of them require:  knowledgeable advice, a long-term view and proactive participation.

What Does MOM Stand For?

The other day, my teenage daughter related to me a quip she received by way of Twitter.  It goes something like this… a child was pestering his mother about his urgent need for a new cell phone.  The mother continued to answer “NO,” without an end to the requests.  She finally asked in frustration, “Do you think I’m made of money?”   The child replied, “Isn’t that what MOM stands for… Made Of Money?”

My first response to this story was to chuckle; it is a very clever play on words.  However, after my own children continued to use the Made Of Money reference over the next several days, I realized that this is a clear indication of a real problem.  Most school age children and younger adults are receiving little to no financial education at school or at home.  They see the kids on TV and their friends at school ask and receive anything they ask for, without understanding what it takes to earn the dollars that are being spent.

As a parent, what can you do to begin to teach your children about the value of money?

• Help them learn the difference between wants and needs. 
• Pay them an allowance, but make them earn it with specific weekly responsibilities.
• Put them in charge of something (financially) at home; put them in charge of something at home (like food for their pet).  They are in charge of buying it when it runs out…using part of their allowance.
• Encourage saving (i.e. if they can save ½ of something they want, you can match it to make up the difference).

For list of Financial Education Resources for Parents and Children, visit the Certified Financial Planner Board of Standards, Inc. website at http://www.cfp.net/learn/resources_children.asp

Back-to-School Shopping -- 5 Financial Lessons for Your Kids

It’s that time again – the first day of school is right around the corner!  You likely received your supply lists weeks ago and stores have been advertising back-to-school items since the Fourth of July.  If you’re like me, you’re dreading the last-minute crowds…and the bill at check-out.

I have read several articles recently telling parents that the easiest way to save money on school supplies is to leave your children at home.  As tempting as this may be, I urge you to take your children on this shopping trip.  Back-to-school shopping can be a great opportunity for financial education. 

Here are 5 financial lessons you can teach your children:

1.  Take inventory of what you have.  Before you leave the house, make sure you know what you have and what you need to avoid purchasing duplicate items.

2.  Comparison shop.  Search printed newspaper ads or shop the internet to find sales and compare prices on the items you need.  Coupons are also a great savings tool!

3.  Set a budget.  Set the maximum dollar amount you can afford to spend, and stick to it.  This is a basic cash flow planning principle we should all stick to!

4.  Stick to a list.  Make a list of the items you need, and don't deviate.  Just like a trip to the grocery store, straying from your list can be detrimental to your wallet.

5.  Make smart choices.  Within your budget, there may be items you choose to spend more on.  Consider buying store brands for basic items, and spending a little extra for others (backpacks, clothes, etc.) to enhance quality or style.

Prepare a plan and stick to it for the start to a successful school year!