Teens, money and mistakes
June 2, 2010
This week we’re on to number three!
The number three mistake we as parents are making: Not holding our kids accountable. If your child does something against the household rules, typically there are consequences. Pull on the dog’s tail and you may get bitten. This is how our kids learn right from wrong, good from bad, etc. When it comes to spending money or using credit cards, oftentimes parents come to the rescue. Bailing our kids out of a financial mess, without having them pay the consequences, isn’t holding them accountable. As a parent of a teen myself, I understand how difficult it is to watch our kids ‘fall’, but fall they must, in order to pick themselves back up. Stop rescuing and instead, use the word ‘NO’ more often. Easier said then done, I get that, but start today and they reap the benefits tomorrow.
Top 5 mistakes parents are making with teens and money: Mistake number one
May 19, 2010
Money is a topic that makes most people cringe. Especially in the present economic climate, it’s generally not a fun conversation to have. I’d like to change that. Some tell me that my mission of teaching financial literacy to teens is similar to turning the Titanic…it’s going to take a long, long time and require a lot of effort.
Fine, we better get moving now then!
Although I prefer to discuss what we as parents are doing correctly, I’ve been asked several times from various people, to talk about what we are doing wrong. Let me start by saying, don’t beat yourself up if you find some of the following issues ring true for you. We are all doing the best we can, so take the information, make the changes that apply and move forward.
Number one mistake: parents aren’t talking! We talk about school, friends, drugs, smoking, sports and more, but never about money. Without question, everything I mentioned above is critical, it’s just not enough. Start the conversation about money over dinner, while driving or when shopping at the grocery store. It doesn’t need to be some heavy, boring talk, which would tune your kids out anyways. The intention is to bring an awareness of spending habits, saving habits, credit card pitfalls, and more, to your child’s radar.
Keep it simple, keep it short. Talk often, listen more.
Stay tuned for next week when I discuss mistake number two!
Forbes article on kids and money
April 21, 2010
Here’s a great article that Forbes put out recently on kids and money. I thought you would enjoy it. Check it out here:
4 Top tips for raising money savvy teens
February 22, 2010
When it comes to teaching our teens how to manage money, the hardest part can be knowing where to start. There are so many pieces to this necessary puzzle, but the time to start is now. Here are the top four factors that every teen must understand to insure financial independence and peace.
Number one: Learn to live beneath your means. Simply stated get a grip on your spending habits and spend less than you earn. Preferably, much less. Seems simple enough and it certainly isn’t rocket science, but this one little tip is what many people struggle with. Use a spending tracker for a few weeks to get a feel of how and where your money is spent. You may be surprised. Spending less than what we earn can sometimes be tough, especially with the peer pressure many teens face. Bottom line, it becomes a choice. A choice of priorities. If I was paid $1.00 for every time I heard, “I just don’t know where my money goes,” I’d be sitting in my beach chair enjoying the Hawaiian Islands.
Number two: Show them the power of saving early. Our teens are blessed with the gift of time, so show them how quickly $40 a month can add up to thousands with the magic of compounding interest. Whenever I show a group of teens the power of time and investing, I get a combination of jaws dropping and eyes widening. I think I have more fun than they do. Check out www.moneychimp.com for easy and fun calculators.
Number three: Understanding credit cards is non-negotiable. We must educate our teens on the pitfalls, as well as the advantages, of credit card usage. Without a complete understanding of how finance charges will sneak up on them, they are bound to get into trouble. Bottom line: if they can’t pay for the item in full when the bill arrives, they shouldn’t be buying it, (excluding emergencies, of course.) This ties in with item number one above; don’t spend what you don’t have.
Number four: Last, but certainly not least, introduce them to the importance of their credit score. A good credit score can mean the difference between being approved for an auto loan, getting a job (many employers will pull credit before hiring) or being able to qualify for a home someday. Without a doubt, interest rates they pay will be higher with poor scores, which equates to money flying out the window.
There are certainly more topics to cover when it comes to money education, but these four are the top on my list. Be sure to talk with your teens and seek help yourself, if needed. As always, I’m here if you need me.
New credit card laws may save the day for college bound teens
January 20, 2010
Credit cards can be a man’s (and woman’s) best friend…or worst enemy. They can save the day when an unexpected expense occurs, a flat tire at 2:00 am blows, or a medical emergency hits you from behind. In the event of an amazing sale at your favorite store, this little piece of plastic can become your biggest nightmare.
For college bound teens, credit card companies have, in years past, made it very easy to obtain credit cards. According to a recent Sallie Mae study, college students carried an average balance of $3,173 on their credit cards last year, a record high since the first analysis in 1998. A whopping 82 percent revolved a balance each month.
On May 22, President Barack Obama signed the Credit Card Accountability, Responsibility and Disclosure, or Credit CARD, Act of 2009 into law. Among many changes, one in particular is geared towards those college kids.
Effective February 2010, consumers under age 21who can’t prove an independent means of income or provide the signature of a co-signer aged 21 or older, won’t get approved for credit cards. The provision protects young people who lack the means or the knowledge to handle credit cards from drowning themselves into debt.
Although credit cards are important, especially for obtaining a credit history, which is necessary for good credit scores, people need to understand the pitfalls.
Given this new law, we should see more debt free college graduates. At least when it comes to credit cards!
Teens are asking, "what's the big deal about credit scores?"
September 30, 2009
College and credit cards
August 13, 2009
The Money Minute-Debit who?
March 3, 2009
Life's Lessons in today's nutty world!
February 16, 2009
With the present day economic situation, many people are in panic mode. All the doom and gloom is making even the most optimistic people a bit fearful. With this state of mind, decisions are being made, that may or may not be best.
While we are reacting to the day’s events, our kids are watching us closely. They are observing our behavior, our decisions and our attitudes. Although this normally happens everyday, it is especially important to be aware of this during these challenging times.
Some kids are asking their parents “are we going to lose our house”, “do we have enough money”, “why can’t we buy this, we never had a problem before”. The very core of their stability, their security and their safety is being rattled. For some, especially younger kids, this can be very traumatic.
So, what are we, as parents, to do? In my opinion, we have two choices: One, we bring our kids into the fear, panic and uncertainty mode that seems to be running amuck, or two, we capture an amazing opportunity to empower our kids with money and life skills. I choose the latter.
First, change your attitude. Take control of your fear and panic and step back for a moment. Ask yourself, “what can I do today to change this predicament?” “How can my lifestyle choices be adjusted so that I now prioritize my expenditures?” “What type of resources, skills and talents do I posses that would help me start my own company?” Be creative, look for opportunities (they are everywhere) and know that ‘this too shall pass’.
Whether you realize it or not, this is a perfect opportunity to teach your kids, whatever their age, invaluable life lessons. They should start to evaluate the way they spend their money, especially teens. How much of their money is being spent on fast food or coffee houses? Do they really need that $100 pair of jeans or would a pair at half the price be just as nice?
What percentage of their money is put into a savings account? This is a great opportunity to show them how that savings account may someday get them out of an unforeseen predicament.
Do they have credit cards? If so, show them how credit card abuse has created this environment of debt gone wild. Teach them the correct way to use a credit card and how misuse will cost them dearly.
I encourage you to involve your kids, age appropriately, in the present day circumstances. Let them realize they have control over their destiny by the choices and lifestyle habits they create for themselves. Once they realize they have this power, much of that fear will disappear. My hope is that you realize the same.
Teen Checking Account – Part Three
January 23, 2009
Is A Debit Card A good Idea?
Attaching a debit card to your teen’s checking account can be quite convenient. That and an ID will get them just about anything they need – from food to gas to books, items, and clothes. If you haven’t figured it out already – this can be a good thing or not so good; depending on how well you teach your child to manage this responsibility.
Here are the basics…
A debit card looks and is used very much like a credit card. However, instead of drawing on a line of credit, the money is moved automatically from your teen’s checking account to the merchant.
Generally you can’t use a debit card to spend more money than you have in your account. The card will usually be declined if your teen tries to make a purchase that exceeds the available funds. Of course, some transactions are allowed where the merchant runs the card at a later time. Beware! If these transactions are made for more than the amount of money available to pay for them, it can cost you big bucks in fees – especially if they try to run the card more than once before you are alerted!
Some banks may have age restrictions on issuance of debit cards, and in addition, may charge an annual fee or have fees associated with use of the debit card. You’ll want to check before you open an account to be sure the services offered meet your needs.
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