RSS Feed for Family & FinanceCategory: Family & Finance

How To Teach Kids About Money

teach kids about money

teach kids about money

This is a guest post from Daniel Packer over at Sweating The Big Stuff. Daniel writes about negotiating, saving, and conscious spending while attempting to maintain a high quality of life. To read more, subscribe to his feed or follow him on twitter.

First of all, I’d like to congratulate Neal on his nominations in the Plutus Awards! If you haven’t done so yet, go vote right now!

Most kids don’t want to talk about personal finance. That’s because they don’t know that they will have to make lots of personal finance decisions in the future. They decide how they spend their money, where they go to college, and how much to save up for big trips. Talking to them now will help them a lot in the future.

Last Wednesday, Neal wrote about teaching your kids about money. He outlined two ways to teach kids, but I’d like to add a specific topic for three different age groups.  It’s important to start young.  The longer you wait, the greater chance you take of them having to learn about money through a crisis or 3rd party financial intervention.

Teach Kids About Money

Ages 13-16

I have always been one to delay gratification, but I have heard my generation referred to as the “instant gratification” generation. Teach your kids about saving today and planning for tomorrow. They budget their money when they decide that they’ll see a movie at the expense of getting a new video game. Limit the cash supply and they’ll learn an important lesson about spending money wisely.

Ages 16-20

I didn’t know much about student loans until I realized that I would actually have to pay them back. I knew they were helpful, but I didn’t know any of the specifics until my junior year of college. All I remember is filling out a sheet for my guidance counselor and I checked the box “money is not an important factor in my decision.” My father looked over this and nearly tore his hair out. I didn’t know anything at the time and maybe I would have benefited from learning a bit more about student loans and my responsibility.

Ages 20+

It may sound like a million years away, but describe the process you went through to plan for retirement, what you did wrong, and what you could have changed. Let them know what your financial situation is and what they can expect. The most important lesson they can learn is that before they pay any other bills, they should pay themselves first. If they don’t put money aside early and often, they’ll have a longer list of mistakes to explain to their kids. Plus, if they are on the right track, you may end up in a nicer retirement home!

Have That Conversation Today

They may not be eager to learn at first, but it’s very easy to have a casual conversation about money. For the younger kids, ask them how they decide to spend their money. Then explain the impact of their decisions. For the older teens, describe what their responsibility will be and when choosing a college and make it clear how it will be paid for. For the ones nearing or out of college, drill it home that planning now will save them a lot of worry in the future.

Learning from experience is great, except that the experiences sometimes aren’t pleasant. Do your kids a favor and let them learn from your experiences.

Neal here. The following posts may help you learn about money and thereby increase your ability to teach the youngsters.  Enjoy

Mental to Physical Connection –  This particular post really got me thinking.  Well worth your time.

Is it OK to copy your kids’ DVDs? This should make for a great discussion around the breakfast table.

Where does the money go when share prices drop? That’s a question my kids ask me all the time…

Can plummeting real estate prices be good?  Yes!

Customer Service – Something every kid should understand.

Tell me.  So far….is there one single post that your kids wouldn’t learn something from?  And I haven’t even gotten started!

Are Babies Expensive.  You could have fooled me…

Improve Your Memory — This will help out around test time.

US Historical Asset Class Returns OK…this one might be a tough sell to those under age 6.

Be a minimalist – a must kids of all ages!

The Rise of the Woman Bread Winner -   Suffragette City!

Ninja Turtles Do Battle With Debt - What kid doesn’t love the Ninja’s?

One Car Family This Week We went through this ourselves this week and found it wasn’t all that bad.

Giving People Handouts – Tell me this isn’t something you should talk about with the kids?

Downsizing Party! This author is super interesting.  Make sure to subscribe to his blog.

Saving Money One of my favorite blogging buddies.  Great reading.

How should we help the poor?

Can I Retire Young?

Sam Walton

What is financial literacy?

Keeping Up With The Joneses

Pilgrim sightings:

Carnival of Personal Finance

Like this article? You will love getting my free brilliant financial updates! No spam, and I won't give your email address to any other person or company.That's a personal promise. Neal Frankle, Certified Financial Planner, Los Angeles, California

Mar 12, 2010 | 5 comments | View Post

Simple Ideas for a Balanced Life

Simple Ideas for a Balanced Life

photo by Spendtrails, Flikr

Are you looking for simple ideas for a balanced life?

If so, I have a very counter-intuitive idea.

Unautomate it.

I know this idea may surprise you.

After all, automation is supposed to be a good thing….right?

You set it and forget it.  Automation saves lots of time and lots of money.  What could be less complicated than that?  How could having less automation give you a more balanced life?

Well I’ll admit that I value automation.

In fact, if it were not for the ability to automate a variety of functions, I would not have been able to build my business.

When you put some task on automatic, you know it’s going to get done and (if your systems are set up correctly) get done right.

So how could anyone have an issue with automation?

That’s where Adam Baker comes in.

He thinks we have gone too far in automating our lives and he’s written an e-book about it.  Even though I love automation, I’d like you to consider purchasing this e-book for a few reasons.  Before I go into this in detail, I must disclose that Adam is one of my core blogging buddies and somebody I really care about.  Also, I have affiliated with Adam on this e-book.  That means if you buy a copy, he’ll throw some shekels my way.

Having said that, I’m going to do my” Pilgrimest to” keep this somewhat objective.

So why do I think “Unautomate Your Life” gives you simple ideas to a balanced life?

1. Lessons Learned

Adam’s main thesis is that by automating much of our (financial) life, we lose touch with it. We’re not mindful about our spending and as a result, our energies and resources aren’t maximized.  This argument makes a lot of sense to me and I’ll give you an example.

I used to have a person in my office take care of all my bookkeeping but I took back responsibility for that task about a year ago.  When I did, I was floored.

I soon realized how much money I was spending mindlessly.  And this is coming from a person you wouldn’t normally characterize as a spendthrift – just ask my wife and kids.

Was it nicer when I didn’t have to do this task myself?  Yes.

Do I like going through every single expense?  Not really.

But is the unautomation worth the time.  Absofreakinlutely!

You might come to the same conclusion by reading his e-book.

Adam takes readers through the steps of identifying what’s important and then shows them how to get it — immediately.  One step is being mindful of how we spend our time and money.  By unautomating, you do just that.

2. Writing.

Adam is a master wordcrafter. (He rarely uses words like “absofreakinlutely”.)  I love reading anything he puts out.  When I went through his e-book, I heard a clear voice and personality.  He’s passionate about this e-book and the message and you can’t help but pick up on that.

In fact, there was one exercise that especially got my attention.  In it, Adam asks readers to describe what they want their lives to look like right now. Not ten years from now…today. Then, he walks us through steps on how to achieve it.

I’ve seen plenty of exercises on imagining our lives in the future but I’ve never seen anything so direct and useful.

Is this e-book for everyone?

I don’t know.

I know my kids will enjoy it as will my wife but I don’t know about you.  If you are happy and content and feel that you live life to the fullest, you probably don’t need the e-book

If, on the other hand your life isn’t running the way you want it, this might be the ticket that gets you back on track.

If so, you can grab your copy here.

Do you think that  unautomating your life is a good simple idea for a balanced life?  Or do you think that you need to automate more of your life to simplify?

Mar 10, 2010 | 4 comments | View Post

Use Your Definition of Success To Regain Your Mojo

photo by FoodBev, Flikr

photo by FoodBev, Flikr

For some reason, we forget that we already meet our own definition of success.

I don’t know why that is…but as a result, we tend to beat ourselves up for absolutely no good reason. If we fall into this trap, it can be expensive.

Here’s an example of someone who forgot what his own definition of success was and what it almost cost him.

The story comes from Martha, a Pilgrim reader who sent me an e-mail about her son.

It turns out that her son Mark, a freshman in college, was suffering from “I’m-a-loseritis”.

This was really difficult for Martha to hear.

Mark did fantastic in high-school.  He had a great GPA and was super involved in the community.  He was elected to many leadership positions in clubs and organizations.  He volunteered often and was just a great kid.

His only problem was that he had an older sister who was also a super high achiever.  While her accomplishments were in other areas, Mark always thought he was operating at a lower level than his sister.

Push came to shove soon enough

Mark was considering running for office on the student council at college.  The position he had his eye on was normally occupied by juniors and he wasn’t sure if he should run or not.

He consulted with his mother prior to applying.  He told her he didn’t have the juice to make it –  despite all the evidence to the contrary.

That’s when Martha put on her genius hat.

She told her son to make a “victory list” — an accounting of all Mark’s achievements, good qualities and examples of what an amazing kid he was.

Being a good son, Mark made the list and read it to his mother.

1. Captain of the Golf Team
2. Outstanding Soloist Award – Lincoln Center Jazz High School Competition
3. President and Co-President of 3 community service groups

Mark’s list went on and on.

Mark’s mom asked him if he’d hire a person with a resume like that and Mark responded with an immediate “yes”. At that point he was convinced that he had the right to run for office and the ability to do a great job.

His “loserites” was gone.

My experience is that Mark isn’t the only one who lost sight of his abilities and strengths.

Lucky for Mark, his mother helped him snap out of it.

But what about you?  Have you ever forgotten about your strengths?  Have you ever lost your mojo?  Do you think a victory list would help you?  What other tactic have you used to get yourself back in the groove? Have you ever been in Martha’s position?

PS….Totally off the subject.A great resource you should check out is Festival of Frugality

Feb 24, 2010 | 5 comments | View Post

Tiger Woods’ Update: Lessons in Saving Your Money and Marriage?

photo by bensonkua, Flikr

photo by bensonkua, Flikr

Here’s  a Tiger Woods update you weren’t expecting; his’ damage control skills offers you many important lessons in how to manage  your money and marriage problems.

Of course the obvious lesson is to be faithful, honest and true. Those are the easy ones.

But consider the idea of “damage control”.

For a moment, put aside your feelings about what he did to himself, his family, his fans and his sport.

Tiger’s mea culpa on Friday is a text book example of how to handle a crisis well. And if you and your “Sponge Cake” ever fight – about money or anything else – you’d be well advised to take a good look at how Tiger handled the crisis.

Let’s break it down to see which nuggets you can use:

1. Take a  “Time out”.

Once Tiger’s insane behavior surfaced, he realized he had no idea what to do. He gave himself time to think and regroup. He didn’t deny anything – which as former President Clinton will tell you, can make matters infinitely worse.

Your take-away?

When in doubt, shut up. A quick verbal response to allegations of doing something wrong never ever helps. Don’t lie and don’t attack. Just be still. Give yourself time to think.

2. Be honest — in private.

Tiger and his family sailed away into the wild blue yonder. This gave everyone time to let the reality of what was happening sink in – and it also isolated them from the media. Good move.

Your take away?

If you are in a social situation and some problem surfaces, financial or otherwise, don’t air it out right there. If your spouse throws a metaphorical golf club your way, duck…but don’t respond. Try your best to make the exchange private. Make sure the only people who are part of the negotiations are the parties directly involved.

3. Get help.

I don’t follow golf and I don’t know anything about Tiger, but I hear he’s not very down to earth. Say what you want, but my guess is that it wasn’t easy for him to check into a rehab center. I have to give him credit for getting help.

Your take away?

Simple. If you have a problem, don’t let you ego stand in your way. Ask for help. There are so many resources available to you…just use them. I don’t care if the problem is debt, spending or planning. Whatever it is, there are tons of resources. Just ask for help.

If you don’t know who to ask…….search the internet. Heck…..send me an email….I’ll try to help if I can. Don’t stay stuck just because you don’t know where to find a solution. Admit what the problem is, admit you can’t do it on your own, and ask for help.

4. Make amends to the people you hurt.

You may or may not believe that Tiger is sorry for what he’s done. You may believe it’s all about the money and restoring his image. I personally believe that he was being contrite and honest. I believe that he’s going to try to get himself on track. But all that doesn’t matter at this moment.

The lesson is that he got out there and made an effort to apologize to all the people he’s hurt.

Your take away?

If you made some financial blunder that hurt others, you’ll be doing yourself and everyone around you a huge favor by getting by trying to set things right again. Why? Because if you walk around with shame about some past behavior it’s going to come out side-ways. Ever noticed that when you feel bad about yourself, you aren’t all peaches and cream to  other people? I don’t know why this is true, but it is.

Shame is toxic to you and everyone around you. The best way to do a toxic clean up is to be honest, admit your mistakes to the people you hurt and try to make it right.

That’s the best way to get rid of the shame that keeps you hurting yourself and other people.

5. Stay alert.

Tiger said that he’s not through. He’s got a long road ahead and he’s going to keep working towards staying healthy.

I like that idea.

If you have some recurring financial issue, don’t put a band-aid on it and expect the problem to disappear. Stay alert. Continue to educate yourself and stay accountable. There is no magic wand that makes problems go away.

What Tiger didn’t talk about was the risk of failure.

In my opinion, Tiger has a serious  illness. An addiction. Not everybody who suffers from addiction recovers immediately. Sometimes they slip up.

If you blow it, it’s important to take all the steps I’ve outlined above, but it’s also important to remember that you’re only human. You might make mistakes too. You might not do it perfectly. You might fail.

That’s the price of being a human being and you have to make allowances for that. Don’t give up if you mess up again. Get back on the saddle.

Sure Tiger had handlers and helpers coaching him on every move. He likely had speech writers and lawyers crafting every word he said.

On the outside chance that you don’t have those resources available when you mess up, don’t sweat it. The basics of what Tiger Woods did counted most – not the exact words or the way he did it.

Take some time out to gather your thoughts. Get honest in private and get help. Make amends to the people you’ve hurt, stay alert and don’t expect perfection.

Damage control isn’t about making problems go away but it’s a critical skill to master.  Of course I hope that your “mistakes” aren’t as grave as those Tiger committed.  But none the less, there is much to learn by how he handled himself on Friday.

What say you?  What have I missed?  Is there a better way to handle damage control?  What have been your experiences?

Feb 22, 2010 | 3 comments | View Post

How To Fix a Marriage After Financial Infidelity


photo by LeibiDich, Flikr

photo by LeibiDich, Flikr

Is it possible to fix a marriage after financial infidelity?

I came across an interesting story about a newlywed couple who illustrates how difficult it may be.

A few weeks after the marriage, Karin,bought a laptop without first consulting her husband Jim.

It made the groom so angry he started reconsidering his decision to get married in the first place. Now he’s seeing red and the bride is scared to death.

It’s true that Karin bought the very expensive laptop without first talking to Jim. But she bought it with her own money.

Jan 22, 2010 | 22 comments | View Post

How To Increase Your Widow or Widower’s Benefits

Photo by E E Cummings - FLIKR

Photo by E E Cummings - FLIKR

Do a Google Search on “Widow Benefits” and you’ll get 4,530,000 hits. (“Widower Benefits” only gets about 700,000 hits….sorry guys.)  I bring this up because most couples do no planning and that means the survivor is going to have to sift through between 700,000 and 4,530,000 articles and pieces of information in order to educate themselves about what benefits they are entitled to.

Apart from the “widow benefits” issue of course is the overall concern about financial and emotional survival.  According to an AARP survey of 600 men and women age 40 to 79, women struggle more than men when they considered four life crises: divorce, death of a spouse, long-term job loss, and serious illness. Specifically, 46 percent of the widows reported a significant impact on finances after their spouse died.  Only 17 percent of widowers said the same.

I feel pretty strongly about this issue for a few reasons.

First, I see first hand what people go through when their spouse unexpectedly passes away.

Second, my parents died when I was in high-school.  They failed to do any planning before they died and as a result my life and the lives of my siblings were thrown into complete chaos, turmoil and fear.  It makes me really angry when I see other people go through the same thing when I know they didn’t have to.  Maybe it just triggers my own fear from the past.  Maybe this is my problem.  Whatever……it’s still a huge problem and if you are married to someone you owe it to them to talk about this now.

You have no idea how painful it is for the survivor unless you see someone go through it…..and usually by the time you do, it’s too late to help. OK.  Enough sanctimonious speech.

Let’s move on to the solutions.

I see a series of solutions to this problem and I’m going to outline them for you below:

1.    Admit it.

Both of you have to admit the truth. Sooner or later, there is going to be “one less egg to fry”.  It’s likely that the woman will survive her husband.  Facts are facts.  Now how are you going to deal with it?

2.    Understand the nature of the problem.

Survivors face two issues – income and assets.  Income is by far the primary concern.  How is your survivor going to…eh…..survive?  How much income will s/he need?  For how long?  What are the potential sources of income? Are expenses going to increase because of lost health insurance (or other) benefits?

3.    List possible solutions.

Life insurance, investments, pensions, assets and social security are all elements of your personal solution. I’ll admit that I haven’t taken the time to really understand social security survivor benefits.

I’ve tried to build a survival plan for my wife without even considering social security – but I know I’ve been foolish. She’ll quality for benefits and social security will very likely still be there.  Why would I subject her to the drudgery of having to figure all that out just when she’ll be least able to deal with the headache?  I owe it to my marriage and it’s ultimately her money.  Seems selfish on my part….right?

How does she make a claim?

How long does it take before the checks start rolling in?

How much will she get?

I know how much she’ll get but I don’t know the other answers. OK…so I’m going to find out more about social security survivor benefits and let you know what I find out. So what are you going to do?

No…scratch that…..what are you going to do today?

Are you going to schedule time with your spouse to start laying out your “Widow Benefits Plan”?  Are you going to pick up the phone right now to schedule that meeting? Are you going to list all the issues that must be addressed?

How long do you think this entire process is going to take you?  When I wrote up my “Widow Benefits Plan” it took me about 2 hours – and then I only had to think about it once a year when I updated it.

Don’t make me come over there.

This is a huge pet peeve for me.  Come on.

Have you created a plan?  Have you updated it recently?  Have you met with your spouse to go over the plan and to answer all the questions?

Jan 06, 2010 | 15 comments | View Post

How To Repair A Cheap Man – Save Your Money and Marriage

While far from universally true, my experience tells me that between men and women, it’s the man who is usually the cheap SOB.

Is this really so?

I can only speak for myself of course but I’ll be the first to admit that you could consider me a cheap man.

(My middle daughter, while proof reading this post, was quick to confirm it so I suppose there is no room for doubt anymore.)

I don’t consider the label of being “cheap” all that bad to be frank. It’s almost a badge of honor in my opinion.

Dec 28, 2009 | 13 comments | View Post

Three Steps to Improve Your Money and Marriage for Free

Even if you have a great marriage, you can really improve your relationship (and finances) by talking about money – if you do it correctly.

In fact, no matter how great your relationship is, money inevitably comes between most couples. I don’t care how wonderfully you and your beloved get along – money separates you – even if only a little bit (at first). You may not be aware of it. You may not admit it. But money…….it’s a problem.

Let me go out on a limb a little further.

Even if you have great investments, plentiful income and no debt, it’s likely that you and your partner resent each other’s financial behaviors – even if only a tiny bit and even, as I said, if you aren’t aware of it.

Dec 21, 2009 | 15 comments | View Post

Who Is The Financial Decision Maker In Your Family?

wears the pants Pictures, Images and Photos

Who wears the financial pants in your family?

Does the person who earns the most make most financial decisions?

This question came to mind after I read your comments on Monday’s post.

In case you forgot, the post shared the story of a couple who is clawing it’s way out of a deep pool of red ink. They have successfully vaporized a lot of credit card debt (they’ve brought it down from over $75,000 to less than $8,000 in 3 years) which is great. But they way the dealt with their spending and debt left a lot to be desired.

At first, Vic made the financial decisions because he had more time than his wife Jessica (who was busy working her tail off and bringing home most of the money).

But Vic ran their financial ship into the ground. When Jessica discovered this, she took over and that’s the reason the couple is doing so much better now.  She was able to save the marriage.

My question is, does the person who earns the most usually sit in the financial captain’s chair in your house?

Dec 16, 2009 | 18 comments | View Post

Friend Discovers Hubby’s High Credit Card Debt and Screams “I Want A Divorce”.

debt Pictures, Images and Photos

Over the weekend, my wife and I had a chance to sit down with a good friend of ours. She asked me what I was up to and I told her that I just published Money School for Couples – (re-launched & available today) and she was particularly interested.

(As an aside, a few weeks ago readers told me to be loud and proud about the course I created to help couples get control of their finances and stop fighting and arguing. I am and I’m not shy about telling folks about it if I think it might be helpful to them.  For those of you who aren’t familiar with it you can click the link above to learn more.)

While I think Money School is great, I was surprised to see her take such an interest. And I was even more shocked to hear about the financial situation she and her husband were in.

They have been together for over 7 years now. She’s an architect and he’s a professional (struggling) photographer. While it was clear they weren’t swimming in cash, it never occurred to us that they were so financially troubled.

Jessica told us that her financial fiasco started years ago even though she only realized what a predicament she was in late 2006.

Dec 14, 2009 | 28 comments | View Post
Next Page »
Powered by WishList Member