![Growing Smart Kids William F. Powers III- Financial Representative Northwestern Mutual Financial Network 631-592-4079 Direct [email_address] www.nmfn.com/williamfpowers 07/30/2010 Perfectcents™ Tips for Raising Money-Smart Children Northwestern Mutual Financial Network is the marketing name for the sales and distribution arm of The Northwestern Mutual Life Insurance Company, Milwaukee WI (NM) and its subsidiaries and affiliates. TITLE is an insurance agent of NM. It makes cents](https://image.slidesharecdn.com/growingsmartkids19031701-12804956072947-phpapp02/85/growing-smart-kids-19031701-1-320.jpg)
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- 1. Growing Smart Kids William F. Powers III- Financial Representative Northwestern Mutual Financial Network 631-592-4079 Direct [email_address] www.nmfn.com/williamfpowers 07/30/2010 Perfectcents™ Tips for Raising Money-Smart Children Northwestern Mutual Financial Network is the marketing name for the sales and distribution arm of The Northwestern Mutual Life Insurance Company, Milwaukee WI (NM) and its subsidiaries and affiliates. TITLE is an insurance agent of NM. It makes cents
- 37. Our Children Our Responsibility
- 38. Q A &
Editor's Notes
- Welcome and introduction
- The best answer is “c.” It doesn’t matter how much money your child earns if he or she doesn’t know how to manage it. That’s where your role as a parent comes in. So how is this accomplished? (NEXT SLIDE)
- To help children become all the more successful, it’s important that you as parents focus on what I call rule #1 – making conversations about money and how to use it wisely a priority. This commitment starts early, but believe me, it’s not easy sometimes. That’s why we’re all here today, to look at ways to help our kids become all the more financially savvy. But as you’ll see, it’s not an easy task ahead… In today’s session, we’ll take a look at some of the roadblocks both our kids and we as parents face offer up some ideas to help overcome these roadblocks and ultimately help you begin to look at the big picture for your family and most importantly, your children’s future, and how you can help make their future brighter than ever. (NEXT SLIDE)
- Money is not the easiest thing to talk about with kids. With all the commercialism of products, from fast food to the newest toys, kids see it and they want it. And as parents, you naturally want a happy child. So then the question becomes – How comfortable are you talking to your child about money? You’re NOT alone – money is a difficult concept to explain to kids. In fact, one recent study found that most parents feel more comfortable discussing sex with their children before a discussion on money. Now granted, maybe in your case this seems like a drastic statement. But the reality is that conversations about money and how it works is something that must start at home. But it’s tough to do. What makes it such a hard subject to discuss? (NEXT SLIDE)
- There are a variety of reasons why parents struggle to discuss money with their children. These are just a few, maybe you have others, but in general, here’s what I’ve found to be true across the board. Exposing your own poor habits - How can you teach your own kids if your own checkbook is out of line? If you have poor habits, your kids will learn them too. Make sure your house is in order I never learned it myself growing up How do you teach it if you never learned it growing up. Change the cycle for your kids Is money good? My syndrome – show kids that money is good, and multiple ways to use it (give, spend, save, donate) Complicated Math wasn’t your strong suit? And now you have to teach your kids about interest rates, about savings, about tax breaks, etc…?. Lots to think about – SIMPLIFY the process – we’ll talk about that more later So now that we’re clear on why it’s difficult to talk about, what makes it an important discussion? Because your kids rely on mom and dad for the info (NEXT SLIDE)
- Simply put – they’re counting on you – Your children count on you, as most schools do not teach money management and budgeting. In fact, only 7 states require students to take a personal finance course in order to graduate. So, if they’re not actively getting financial education from you…then what are they learning? Much of what children learn is taught indirectly from observation or through television or the Internet, which both have become trusted sources for information. If they see it on TV, they’ll believe its true. Or, your children may be asking their friends about money. As a parent, you have a responsibility to make sure they are getting accurate information from a trusted source, and that you are reinforcing this message at home as you help them grow. And if they don’t learn it, the price we as a society will pay is mind-boggling. Consider the price of financial illiteracy – (NEXT SLIDE)
- The reality is that we aren’t teaching our children enough. We have a nation of adults and youth alike that are financially illiterate. A 2006 study on the financial knowledge of Americans found that the vast majority of Americans failed and failed hard when it comes to financial matters. The average score: 50% correct ---if it was school, they’d get an ‘F’. (“Northwestern Mutual – Financial Matters Survey, April 2006) The price of too much spending and too little saving will likely be great for future generations. Consider the facts: Only one-third of teens know how to read a bank statement. The average undergraduate college student has an average of four credit cards and have racked up almost $3,000 in credit debt. Foreclosures in the U.S. have skyrocketed. The total number of foreclosures in 2007 spiked up 75 percent. (NEXT SLIDE)
- For high school seniors, the future is still pretty cloudy. JumpStart Coalition is a national coalition that has helped bring financial literacy to the forefront. They released results of a survey they do every two years on the status of high schoolers knowledge of financial literacy, and though they have improved, overall they’re still not up to par. Much like their parents (as you can see, they learn from home), they get some of the basics, but beyond that its not a pretty picture. The average score was a 48.3%. No matter how big a teacher makes a curve, that’s still not very good. Only 17% felt that stocks are likely to have a higher average return than bonds over the next 18 years. This has NEVER happened in an 18 year time period, so the other 85.8% that feel bonds are better could be in trouble Only 4 out of 10 understand that they could lose health insurance coverage if their parents become unemployed. So now that you can see what kind of odds and obstacles we’re up against, the question becomes how do we start to fix it? Let’s look at some ideas that you can take with you to show your kids the right choices to make in their financial future. (NEXT SLIDE)
- OK, let’s talk about some of the ways you can make money a positive part of your child’s life. As the saying goes, “money makes the world go ‘round.” Money is an inevitable and important part of life, so why not also use it to teach other important lessons? While helping your children become financially savvy, you can help them develop other important life skills such as: Adding and subtracting Independence and making good choices Setting goals and delaying gratification Empathy and sharing Interacting with others; social skills As you begin thinking about ways to introduce money to your child, you’ll need to examine your values about money. What is really important to you? Take a close look at how you use it and view it and make sure that your actions are consistent with the messages you’re teaching. Kids are quick to pick up on inconsistencies, and if you’re not practicing what you’re preaching, they’re likely to pick up on these habits. And then, the cycle just continues… (NEXT SLIDE)
- Consider creating an open dialog with your children so that you can foster positive attitudes and behaviors. The more open you are to talk to them about money, purchasing decisions, and other important issues to you and your family, the more likely they’ll be to come to you when tough questions come up. Most importantly, turn everyday moments into teachable money moments. For example, if you use coupons at the grocery store, explain how much money you saved and give your child the savings when you get home to show the tangible results of wise shopping. Maybe have them help clip coupons with you or look at the ads to get their mind going from a young age. (NEXT SLIDE)
- Many parents want to know when they should start talking about money. The ‘experts’ advise starting early, as it’s easier to shape children’s behavior before they begin spending. But ultimately, there is no one size fits all solution as to when to start. We’ll explore some options soon. Make it a family affair -include all family members in money discussions and activities that are appropriate for their age. Explaining the concept of amortizing a 30-year mortgage would not be appropriate for a four-year-old, but you can certainly mention how you did a good job at work and now you’re able to put extra money toward paying for the house each month. But don’t forget, kids will be kids. They are going to make mistakes with money, so you may be hesitant to let them make decisions. But it’s important to let them make mistakes with small amounts of money now to help avoid more costly money missteps later. If junior forgets where he puts his allowance and can’t pay for something he wants, he’ll be more careful next time. Better here than 10 years down the road when his habits have led to habitual late payments on credit cards and a car payment and his credit score is plummeting. (NEXT SLIDE)
- Ultimately, every day is a new adventure for kids and parents alike, and every adventure presents new challenges and opportunities, especially when it comes to instilling the importance of making positive financial decisions. Much like a physician measures your child’s height and weight on a regular basis, its important that you work with them to measure their financial progress, and hold them accountable for areas of improvement. It won’t be easy, but it’s an important part of the ‘growing up’ process that needs to be addressed, and it starts with YOU. (NEXT SLIDE)
- So we’ve looked at some of the obstacles that both kids and parents face, as well as some very general concepts for you to consider to make conversations about money part of your daily life. But now let’s look at some specific age-appropriate lessons that you can use with your children, grandchildren, nieces and nephews, friend’s kids, or even the kids next door, to help them make smarter choices with their financial future. (NEXT SLIDE)
- Before your child can utter his or her first word, there are a number of easy ways for you to begin helping them manage money. Time is on your side - take advantage and start right away. Later, use this foundation as a basis for money discussions with your child to show how much you set aside dollars when they were a baby and how it grew over time. Look to Uncle Sam – Government savings bonds can be a great gift for a newborn that grows over time. They start as little as $50 each, and are backed by the government. Think long term – College Funding - start early, especially as the cost of college continues to rise –know and explore your options (529 plans, etc.) Long term investment vehicles - mutual funds, savings accounts and money market accounts, etc. – put money you receive from family and friends for your child’s birthdays right into savings and let it grow. Set up an automatic savings plan– withdraw $10 or $20 per month to an account for your child. It can add up quickly and build a nice nest-egg when they are older. Protect their future – consider a life insurance policy on your newborn - ensure their future insurability regardless of future health, and financially protects against the unthinkable. Also review your own insurance policies and consider an increase in your death benefit to provide adequate protection for your child. At this age, it’s your job to get your child off on the right foot. They’re too busy learning to move and communicate to learn about money. But again the foundation you and other family members lay will be seen down the road. Now let’s look at some practical activities you can use with your little one (NEXT SLIDE)
- There are a few simple ways to introduce money to your infant or toddler. #1 - lead by example and make smart choices on their behalf. Simply putting money aside at this point for a future date can be a huge future lesson. #2 - as you read to your little one, why not throw in a book about numbers like Dr Seuss’ One Fish Two Fish Red Fish Blue Fish or Pigs Will be Pigs: Fun with Math and Money by Alex Axelrod. Though they likely won’t grasp everything, introducing numbers and money to them early will reinforce it down the road These are years of excitement. Enjoy them, but make sure you’re doing your homework and ready for what’s next. (NEXT SLIDE)
- Ages 2-6. A fun yet trying time as a parent. You have the ‘terrible twos’, kids learning to talk and play at ages 3-4, pre-school and kindergarten, and much more. Potty training, eating ‘real food’ and becoming a ‘big boy’ or ‘big girl’ are in progress. And so too do the lessons of money. Here are few brief items to consider: Make sure the first steps are in place – leading by example, insured, savings plans like we talked about earlier Show them how to put coins in a piggy bank and how to save. Make it fun. Consider giving them change when you get home at night to add to their bank. Be careful not to start too young though, as coins and kids can lead to trouble. If you haven’t already opened a savings account, a 529 plan, or other vehicle to begin saving for them and for education – start early while you have time. Allowance? Already? Some experts think kids are ready at age 4, some wait until 6 or 7. You should do what’s best for your own situation, as long as they understand how money works How much? Your discretion. Some advise on $1 per year old per week, while others base it on work. Do whatever fits best into your budget but also isn’t too much. Teach good habits by example. Are you saving a portion of your paycheck and putting aside money for larger purchases, rather than buying on impulse? Are you investing? Do you give back to the community share by making regular donations and talking to your kids about it? Lead by example for your kids. Here are a few ideas of things you can work with your kids on at this age. (NEXT SLIDE)
- Some activities to consider: Incorporate money talk into reading, its to your advantage. A book like The Coin Counting Book is a great place to start, and then you can reinforce what you read by giving them a few coins for their piggy bank, bringing the book to life. Play grocery store/bank with your little one. Use play money and help them learn they need enough to buy things so they understand how money works. You can talk about what Uncle Joe or Aunt Karen does for a job, or where Grandma works and that’s how she can buy you nice toys and food. Reinforce the importance of working hard to earn wages. See if your company has a bring your child to work day and when they’re old enough to show them how it works. Talk about the products they see on TV – As you watch TV with them, talk to them about commercials and the products they see and how much they cost. They ‘want’ everything, but you need to explain to them the price associated with it and how it all works. You can also take this same example with you when you visit malls and gift shops and show the value of products, even to little kids. This age is still pretty young, but they’re growing up quickly. Get ready for what’s ahead, and hopefully the foundation is strong from the last 6 years of work. (NEXT SLIDE)
- Here we go. We’re off and running towards the teenage years. Hopefully at this point the foundation has been laid for your son or daughter’s financial future. You’ve used the piggy bank system, have started a college savings account and more. But if not, luckily you still have time to get a good start. First off – start with goals for your child. Do you want them to go to college. How much money would you need to set aside today for college down in 5-12 years? What others goals would you like to help your child achieve? Traveling? A car when he or she can drive? By thinking long term, you have a chance to put together a larger plan, while also showing your child the same lesson – that of preparation. Secondly, reinforce the messages of earning vs. spending, investing vs. donating. If they’re young enough, use the four-piggy bank model (or even milk can. If a bit older, show them as they use their own money, and lead by example. This allows you foster your child’s social responsibility and learn from mom and dad about giving back and investing wisely. Finally, another option you might want to start at this age if you haven’t already are allowances with a possible matching program. Allowances should be a comfortable amount everyone agrees upon, but there should be a work-reward concept involved. Consider awards for regular work well done (bonuses), annual pay increases (raises), and maybe consider a bill-pay system, where you teach your youngster the role of paying bills for household items (want to have a sleepover with friends and use the entire den? It will cost you a $1 rental fee. Allowances and matching programs, similar to your company 401K can be tricky. So let’s look at some common issues surrounding them and how they might be beneficial for you. (NEXT SLIDE)
- If you decide to give your child an allowance, there are four questions you should ask. When to start? Some begin giving one before age six or seven – as soon as the child recognizes the different values of coins. Others feel grade school children have a better understanding of money. When they start saying, “I want,” it may be time. This discussion on ‘when’ is really something you need to feel comfortable with, and it’s really important that they know why they are getting an allowance How much? Some parents use their child’s age or year in school as a rule of thumb and give 50 cents or a dollar for each year. A second grader, for example, might receive $2 a week. Others prefer to set an allowance based on what the child will be expected to purchase or use the allowance for. If they will be using their allowance to purchase school supplies, $2 a week won’t get them very far. Still others base it on chores completed, which we’ll get into in a bit. Whatever way you feel works best for you and your kids to reinforce the value of an allowance, the better an option it will be. So we’ve discussed when and how much, the next question becomes -- how often? (NEXT SLIDE)
- How often? Again, there is no set answer here. Many experts believe if you start younger children on a weekly allowances, you naturally have more opportunities to teach them about saving, spending, donating and investing. Weekly may not be right for you, but whatever you choose, its important to be consistent with both the frequency and the amount. Giving a dollar here or there without consistency as a reward doesn’t help stimulate to kids how the work/reward aspects of money work, especially as they grow older. How Long? Many experts advise that maintaining an allowance through the ‘growing years’ is critical, as it teaches youngsters how to handle their money while growing. However, naturally you’ll want to wean them off as they start to work part-time jobs. Use your own discretion. So what about tying allowances to chores? (NEXT SLIDE)
- Tying allowances only to chores: This is a very controversial issue that must be looked at from both sides. Again, its your call, but you must understand the advantages and disadvantages the approach this approach. Advantage Teaches the core fundamental value of earning money, and that it is not something they are entitled to. It’s the same lessons our grandparents taught us when we were little, that you have to work hard to be successful in life. Disadvantage If your child doesn’t do his or her chores and therefore doesn’t earn money, how can you teach the money management lesson without them earning any money? Where do you draw the line between doing something vs. what is expected and any rewards that come with the work? Again, you can see some of the issues that arise when allowances are tied to chores. A few other allowances tips to consider: (NEXT SLIDE)
- Don’t cave in . Stick to your budget and help your child learn to plan ahead and be accustomed to it (like a paycheck). Don’t give in every time they ‘need’ more money now. Sometimes yes, there will be situations when you’ll need to help them out with an advance to buy a new baseball mitt or pair of dance shoes that are on sale. But doing so on a regular basis defeats the purpose of a budget, and teaches your child that there is no need to be patient with money nor budget (which by not doing so can lead to lots of problems down the road) Pay on time . Your company (hopefully) pays you on time on a regular basis, and you expect it. Make it part of your weekly routine to pay out allowances. Maybe its Saturday morning after chores, or Friday night after dinner. Whatever day works for you, the biggest thing is consistency. Be flexible – rewards are good. If your child is grasping the concepts of using money and their allowances, reward them with a bonus, much like your company would for a job well done. Again, this helps reinforce the value of making smart decisions, which they’ll remember down the road. A final item for you to consider -matching programs, or 401(K)ids accounts. (NEXT SLIDE)
- What’s a 401 Kids program? It’s similar to a company sponsored 401K plan, where the company matches a certain percentage of income, uses investment professionals to manage money, and the money cannot be accessed until a certain point without incurring a fee. Developing this type of program with kids helps them develop the mindset of savings early. Maybe the money goes into a savings account or CD, but wherever you put it, explain to them how it grows and how they can’t access it until a certain age (18 or 21) Now that you understand some general concepts on allowances and matching programs, let’s look at some practical activities you can use with your kids in this age group to teach them the importance of earning, saving, spending, investing and donating. We’ll start with the Tween Years. (NEXT SLIDE)
- Activities: Explain how the bank works – consider opening a minor savings account for them, track interest rates, etc. How to use an allowance – not just spending -- T each your child how to use it – don’t just hand them the cash and expect them to save or donate a portion of it. Use a 4-slotted system, and help them keep on track (show Penny the Pig if you have it). Price to Quality Comparisons -- Teach kids how to be smart consumers and look at the price of products vs. the quality of the product. Is XYZ brand really worth more money? Is it better to buy something inexpensive that will break sooner than a sturdier, more expensive item? Wants vs. Needs Discussion – Discuss the things your child may want versus what they really need – like a new pair of shoes because of usage vs. a new pair of shoes because the cool ones are out. By helping them think ‘need’ vs. ‘want,’ you can have a tremendous impact on their financial decision making down the road. Use everyday shopping experiences to reinforce this topic. Let’s look at some additional activities to teach kids about the value of earning pay (NEXT SLIDE)
- First, let’s start with earning activities because before they can allocate their money, they have to receive some. Earning activities : Assign unpaid task to all family members – everyone in the family has roles and responsibilities, not just to get paid for them. Reward for ‘overtime’ – If they do more than expected, reward them. Help them find pay for outside work - Cut the neighbor’s lawn, rake leaves, shovel snow, etc. . Little chores and activities outside the home can reinforce the work-reward relationship. Balance expenses and rewards – Show kids how to track of earnings and expenses for jobs. If they mow lawns in the neighborhood, they’ll need to keep track of their hourly or set wages vs. their out-of-pocket costs for gas, etc. Get them a small notebook or an old checkbook and make sure they write down what they are doing. And keep them on track by checking up often on their progress (mini-audit). Helps them learn how to manage their time, money and resources. Pay Yourself First – Teach kids to set aside money for themselves each time they receive pay. This lesson should continue on as the child grows and is something you as parent should also foster. Now that they’ve earned the money, what do they want to do with it???? (NEXT SLIDE)
- Spending. Who doesn’t like to spend money on things. Kids are no different, and at this age, its important that you teach them how to spend wisely. Here are some tips. Kids will be kids, and their instinct to buy something that is ‘cool’ even though they won’t like it will happen. It’s ok to let them fall financially with a bad choice (in reason), but be sure to use it as a learning experience to do it better next time. Introducing the concept of balancing a checkbook or savings account booklet. This helps them begin from an early age to keep track of their money. Give them an old checkbook or a notebook with a spent and saved column, and have them add it regularly. This helps them practice their math skills while also learning to balance money. Cash vs. Credit - Teach kids at this age how cash and credit are different and how credit works. Kids think it’s cool that you put a plastic card in a machine and voila!, money comes out. What they don’t get is where that money comes from and how you have to repay credit cards with interest. Clear up the Magic Money Machine Myth early, especially when talking about credit and debit cards. But how do you go about teaching the difference? (NEXT SLIDE)
- “ Will that be credit or debit?” - a tough concept to teach kids. What’s the difference to a kid? It’s all plastic money. Explain where ATM money comes from vs. credit advancements when you stop by the bank. Avoiding the leap from savings to credit - A common mistake many parents make is jumping from having their child help manage their own savings account to signing them up for a credit or debit card. This usually happens in the high school years, but it’s really important you’re aware of it. But nonetheless, it’s is very applicable to this tweener age group, especially considering the pressure on parents - According to a 2004 Washington Post article, a representative for the Hello Kitty Debit MasterCard said, “we think our target age group will be from 10 to 14, although it could certainly go younger.” Hello Kitty’s financial lesson comes at a cost. The activation fee is $14.95, plus $14.95 a year for renewal, a $2.95 monthly maintenance fee, a $1.50 ATM-withdrawal fee and a $1-per-minute fee to talk with customer service. (“Girls Go From Hello Kitty to Hello Debit Card,” Washington Post, 10/3/04 There is so much exposure to credit and debit cards even at a young age that you must be prepared to help your child make smart choices. The smartest choice? Best learning tool remains cash, but… - Use cash as rewards and to teach lesson best you can, but if you decide to give your child a lesson in buying with plastic, start with a pre-paid debit card so that you can control how much they spend – some allow you to monitor their purchases, too. Also show them your bills so they see how it all works. Now that we’ve talked about earning and spending, let’s talk about what really should be your first priority with your children – savings. (NEXT SLIDE)
- Saving and investing activities: Talk about how much is being saved and what it will be used for – Give them a goal they’d like and help them save to get there. Power of compound interest - Show them how interest can work in their favor to help their money grow. There are a number of good Web sites, such as TheMint.org , that offer examples they can practice the concept. Exploring Investments - Help your child learn the basics of investments. Talk to them about how they work, and explore child-friendly investment programs and those that allow kids to learn about investing risk free. Even opening a minimal account and showing them once per month or quarter how the investment is doing is a good place to start. Next up, let’s talk about borrowing and loans. (NEXT SLIDE)
- At this age, loans shouldn’t be too complicated nor used often. However, there will be opportunities at this age group when your son or daughter really want something and you can use it as an opportunity to explain how loaning of money works. Here are three activities to consider: Be realistic in the amount and what the child can repay. If they make $10 a week on allowance and want to borrow $500, that would take a year’s worth of savings to pay back. Be realistic and within your own budget for the loan. Treat it as if it were a true loan account, including rules for interest and rules of reconciliation. Explain to your child that this is how loans work, and reinforce the responsibility involved. But even before the loan, really use the situation to explain the difference between saving for something vs. borrowing money and paying interest. By saving up to buy something you learn the importance of goal setting, you do not pay interest and, when you buy something with the money you saved, you actually own it. And now we’re off to our last part of the 4-tiered bank – donating. (NEXT SLIDE)
- The final lesson to teach this group is the value and importance of donating to causes you believe in. Let them know it doesn’t have to be money. Maybe it’s an hour or two a week cleaning up the park or volunteering elsewhere or maybe it’s money. Regardless, instilling a sense of giving back teaches your child how important giving back is. A good way to help lead by example is volunteer with your kids for a community event. Maybe it’s a walk for charity or the annual plant a tree day. Make it a family project to make a difference. Finally, even in the tough times of the world, there are a lot of opportunities to help people and show your kids the importance of helping those less fortunate. Maybe it’s a fire or a bad storm that hit your area or clear across the country. Whatever it might be, it presents an opportunity for you to support and also teach the invaluable lesson of being a humanitarian. As is the case with all these examples, do what’s best for your situation, but also don’t forget the importance of reinforcing all four usages of money with your kids at this age. The tween age-group is a critical one to get kids steered in the right direction when it comes to money. Now that we’re through the tween years, you’re no doubt soon to feel the pressure of the High School Years –(NEXT SLIDE)
- The High School years -many financial temptations, from the coolest clothes to the newest technology, not to mention the costs of participating in sports, theatre and other activities. It’s a period where many kids may get their first job, so it’s important to make sure they’re being smart. Here are a few tips you can consider to keep your child on track: Open a student checking account, with parental custody options - Check around at credit unions and local banks for options and conveniences. Encourage entrepreneurialism - This is a period when many kids see the opportunity to be successful – babysitting, baking, cutting grass, shoveling snow, etc. Encourage them to pursue their entrepreneurial interests, within reason, of course. Get a plan on paper – Sit down with your child and make a plan to save X amount each month, each year, etc., to meet goals. Track the results. Show them the benefits of savings and spending. But you also need to let them be kids and enjoy their high school years as a model for their financial future (work hard, enjoy vacation, etc.) Continue to focus on college saving - As the cost of schooling rises, show your kids the importance of homework, the benefits of scholarship, and also the importance of saving early. Consider a matching program like we discussed earlier to help them save for their educational future. So what activities can you as parents do to help them in this dangerous time? (NEXT SLIDE)
- So what can you as parent do to help make sure they’re on track? Bill Responsibility Program – Have your child begin paying for some of their purchases (clothing and phones, etc.) so they learn to be more cautious with their money and how everything won’t always be provided by mom and dad. Opportunities for increased financial responsibilities – Have kids help with shopping and budgeting items, helping plan the family vacation, father day’s trips, etc. The more responsibility you give them now, the more they can learn and hopefully take to the next level down the road. Training with Taxes - If they’re working, they’re earning an income, and will need to file a tax return before April. Help them fill out a tax form, explain that this a regular event in the US each year, and talk about how the tax system works if you haven’t already done so. Budgeting 101 - the importance of setting and staying within a budget. Hopefully this has been reinforced as they’ve grown. But if not, now it becomes all the more important, especially as financial temptations grow and grow. (NEXT SLIDE)
- Protecting against risk - Explain the concept of protecting against risk through insurance - why the need for auto, medical and life insurance. Highlight how protecting against the unknown is important to protecting your financial future. Researching Major Purchases - This is a time for some major purchases (TVs, cars, computers, etc.). Don’t let your kids become impulsive buyers, but rather help them research expensive items and make smart decisions with their money. Safe Debt Levels - Show your kids what happens if you make the minimum payment on a loan and how long it takes to pay it off. Further discussion on college financing options (scholarships, grants, loans, etc.) The High School Years are the last stage, in many instances, of your kids being under your roof. Use the time wisely, so that hopefully, whether they’re off to college or off to work at 18, they’re ready to be financially savvy consumers for the next stage of their life. (NEXT SLIDE)
- By the time your child reach college, hopefully they ‘get it’ – an understanding of the importance of being smart with their money. If not, it’s never too late. Here are a few suggestions to keep your child on track. Credit Card Dangers – Beware -- Remind them about the dangers of credit cards. Getting cards in college is easy, but also very dangerous to their credit scores and financial future. Preserve Savings – Don’t dip into savings to compensate for extra spending. Reinforce the importance of being smart with money, especially with new expenses (rent, food, book, etc.) Continue to Pay Self First - If your child is working to earn money, remind them about the adage to “pay yourself first.” Pay yourself just like it was a bill. They should continue to invest and save, even if it’s in smaller amounts. Good debt vs. Bad debt - Help your child understand how they’re different. Investing money toward a college education is an easy way to explain good debt and how money can be used to further one’s goals. Buying a new car that will depreciate immediately only to impress friends would be bad debt. Importance of allocating assets - As your child makes more money during summer jobs or after graduation, point out tips for allocating assets and diversifying investments. The sooner they can get started the better. The college years are their first taste of independence, and if you’ve laid the financial foundation early, a good chunk of your role is done. But as a parent, your job is never done. Continue to support them on the smart decisions and provide advice, but ultimately, they’re grown up, and they will live by the lessons you’ve hopefully formed in them over the years. (NEXT SLIDE)
- If you’re like many parents, until today you probably had not given much thought to how you were going to teach good lifelong financial habits to your child. Here are a few questions to ask yourself to see how you’re doing at this point – these are many of the things we’ve talked about today. Feel free to write them down writing these down. You’ll also see the overall concepts of these in the Growing Smart Kids booklet in front of you. Here we go… Have you started talking about money with your child(ren)? Are you setting a good example? If not, what do you need to get a better handle on? Have you helped your child set up a plan for saving, spending and sharing? If you have a younger child, do you have a plan for saving for them? Is your child involved in family discussions about money? Do you give your child praise for good money decisions? (NEXT SLIDE)
- Do you let your child make reasonable mistakes with money, and use these mistakes as an opportunity for learning? Have you started looking into college funding options? Have you set out both short-term and long-term goals for teaching your child about money? It can be as simple as your short-term goal being they will save $X by July for a family vacation, and long-term, you help them set up a plan and save for a bigger purchase a year or two out, like a car, or possibly college funding. Make sure the goals are realistic and achievable but also not pushovers. Finally, if you don’t know where to turn without contacting someone, consider the wealth of trusted online sources available to you and your kids, especially. Websites like TheMint.org provide a wealth of information for the entire family, including newsletters, games and more. I encourage you to visit at your convenience. (NEXT SLIDE)
- Ultimately, our financial future as a nation rests in the hands of our children . It’s our responsibility to equip them with the knowledge and strong examples to be financially strong so they can then pass on the same lessons to their kids. It starts with you, and the foundation you start. I hope that today we’ve at least given you some ideas to take home with you. Thank you for your time today. (NEXT SLIDE)
- At this point, we’ll open it up to any questions you might have. You also will find a booklet called Growing $mart Kids – from diapers to diplomas, which includes many of these same helpful tips as a resource guide. We hope you find it helpful and something you’ll hold on to as your child grows and you help track his or her progress.
- For presentations that may include more moms, consider adding the following slides. The best recommended place to add them would be prior to the age-specific tips (slide 12). Ladies, as you and more women continue to achieve success in business and other areas and build wealth, the financial hurdles you will face can be daunting. And for your daughter’s future, it’s likely they will face similar obstacles. Did you know that women typically have more to prepare for than their male counterparts when it comes to their finances. Why is this? The facts speak for themselves. (NEXT SLIDE)
- The fact is according to the 2006 Center for Disease and Control Health Statistics, the average life expectancy of women in the U.S. is about 81 years, while the average man is about 75, meaning women have an extra 6 years to financially prepare for, based solely on research. According to the 2007 US Census Bureau’s Median Earnings Reports from 2007, women earn substantially less than men. According to the Census Bureau, the average man still makes over $10,000 a year more than a female. Women also leave the work force for longer periods of time or work part time to spend more time with their children. The stay-at-home mom has, in many instances made a comeback. A March 2006 study by the Center for Economic and Policy Research found that the number of full-time women workers is down, and in Minnesota, where the number is above the national average, many speculate it’s because of the return of the traditional family. (Associated Press article by HJ Cummins, April 19, 2006). And finally, many women simply don’t put enough aside for retirement, meaning they have less money ready to use over a longer period of time than their male counterparts. More time and less money – not a good situation. (NEXT SLIDE)
- Here are some common mistakes that research shows that most women make. Not Getting Involved in the Family Finances - Though finances can be difficult to understand, having your husband make all the decisions leaves you blinded should something happen. It’s important you’re kept up to speed with what’s going on. Make it a point to be at the table when it comes to financial decisions for your family. Not Prepared for Life’s Changes – Many women aren’t prepared for life changes. A new career. A move. Illness or even death. How do you handle these changes from a financial standpoint and have you done your homework to make sure you’re financially ready (as best you can be) to handle the situations. No Goals - This is a critical to a good financial future. But too often, women are never taught the basics of setting financial goals early so they never learn it moving forward. By setting goals, you have something to shoot for and can see where its going. Don’t take this step lightly. Not Investing - Yes, it can be scary and complicated, especially with all the stocks and investment vehicles available. But just because its complicated it shouldn’t be overlooked. Get help of a trusted professional that understands your needs if you’re not comfortable. Procrastination - We all do it, and especially with savings, it can be tough to overcome. But you really need to get on it and save now vs. later. Debt - Credit card debt is something many women face. The allure of new clothes or trips comes fast, and it’s easy to put it on the credit card and pay the minimum. This will get you into trouble fast. Be careful with debt, and if you’re already in trouble, try to consolidate and pay off as much as possible. (NEXT SLIDE)
- Ultimately, it’s up to you to help break the cycle. Get involved in the family’s finances, and see the big picture as well as your own. Take every opportunity (that we’ll explain in the age specific activities) to help your daughter understand the importance of a bright financial future, and be a good role model for her as she grows. It’s a big burden that will fall on her shoulders, but you can definitely help take some of the weight off by helping her start early. Finally, start saving today vs. tomorrow. The sooner you can start, the better. (NEXT SLIDE)
- Good slide to include if you plan on giving out pigs. Still can be used as part of overall presentation, but should not be used if not giving out pigs (recommended usage: between 19 and 20).
- Optional questions to include, probably the best place would be after the Tween section and before the High School years.
- READ SLIDE