Jon’s complaint about his bank statement
April 6, 2009
Jon recently read his bank statement. My kids do not do a very good job of reviewing their bank statements each month. Frankly, I think the bank statements are a little boring. Other than Hannah’s checking account, the children just have simple savings accounts. Once you’ve been teaching kids about their savings accounts for ten years, well, they get a little boring. It’s not like the kids have a bunch of transactions to reconcile each month. They just see how much money they have. And considering they make deposits only every two months or so, it’s not like there is much going on in their accounts from month to month.
But once in a while my kids really look at their bank statement and revel in how much money they have saved.
But Jon had a different reaction the last time he looked at his bank statement. He finally took some interest in looking at other parts of his statement, and figuring out how the statement really works. He noticed that he has a starting balance, and then Interest Earned, and then (if there were no deposits that month,) the ending balance.
Ouch, Jon did not like that Interest Earned number. Jon has over $3,000 in his savings account, but he earned only $.36 in interest last month. And he saw that he earned only $3.64 for all of last year on his balances.
Jon wanted to know what happened. Isn’t his money worth more than that? I told Jon that, certainly, his money was worth more than that. He just needed to find someplace where his money would be more valued and someone would pay him more for keeping his money there. We talked about Certificates of Deposit and other alternative places to save his money.
And that was that. Jon hasn’t moved his money. Not yet at least. But at least he noticed the problem and that is part of learning.
Justine
My friend Heidi and her first job out of college
March 20, 2009
My friend Heidi graduated from college in the spring of 1983. For you young kids, that was a time of a really bad recession, when unemployment rates were higher than they are now and when it was very difficult to find a job coming out of college.
Heidi recently wrote me her story in response to one of our posts. I loved what she had to say. I thought it had great insight for the parents who read this blog, as well as the teens who read it, who are thinking about their futures.
“I remember the 70s recession well although not as well as the 1980′s market place when I got out of college and unemployment was rampant and banks and home builders were failing. My first real job was at a savings and loan in Texas in the department where they managed and resold all the foreclosed properties! Sound familiar?
“Three or four years ago I was telling people not to make risky real estate investments because the economy reminded me of the 80s. But then I went and bought a house in Phoenix! I guess I should practice what I preach! I think many of the kids, including my son, that were born in the late 80s through the 90s have been exposed to much excess and have become a bit spoiled. It’s like many of the 20 somethings these days just don’t want to work!”
Thank you, Heidi!
Justine
Measuring money by the number of hours mom works
January 30, 2009
I spoke with a colleague recently who was trying to teach his kid the value of a dollar. He was trying to help his child understand the family’s finances and the large amounts of money that were spent on the child’s private education and vacations.
The terms “$3,000″ or “$15,000″ often don’t mean a lot to a child. And this parent with whom I was speaking felt that this was the case with his child. So this parent put it in terms of how many hours mom had to work to earn a certain amount of money. The colleague I was speaking to was the dad, but he is an entrepreneur and business owner, and clearly not on a salary, so I think maybe the family decided it was easier to package this lesson in terms of mom’s salary.
So let’s say that Mom earns a salary of $65,000 a year. That’s about $1,250 a week, and if she works 40 hours a week, about $31 an hour. The family probably explained taxes to their child, saying that, in the end, mom probably brought home $23 an hour. So to pay for a $3,000 vacation, Mom had to work 130 hours, or a little more than three weeks.
That kind of math can make a kid think!
That kind of discussion can be taken further, in discussing with a child what a fast food worker makes, a firefighter, a teacher, a lawyer, etc. Or even what he makes for chores or for allowance.
That’s another great way to help kids learn about money.
Justine
Hannah’s Clothing Allowance – Part One
January 16, 2009
A few years back, we gave Hannah a clothing allowance. We wanted her to learn to budget and we wanted her to be responsible for buying her own clothes. A few of Hannah’s friends, and their parents whom I admired, had clothing allowances, so David and I thought it was something we should try.
It has worked really well for us.
I am surprised at the number of Hannah’s friends that do not have a clothing allowance. When I spoke to a high school class last fall, and surveyed the class, of the fifteen or so girls in the classroom, only one had a clothing allowance. The other girls could not really tell me how they bought their clothes.
I am sure there is some way that these girls get clothes on their backs. But I am wondering if the system in each of their families is one that mimics real life and one that helps prepare their daughters for the task of buying her own clothes when she gets out on her own.
When I am with Hannah and her friends, I always ask money questions. I like to learn how other families do it.
I get all kinds of answers from Hannah’s friends. Some girls say that they don’t get any clothes and only where hand-me-downs. (I have a strong suspicion that this is a slight over-exaggeration!) Other girls say that their moms take them shopping. But to me, that means that mom is controlling the purse strings and the decisions about what the teenager wears. That is not something I want to do in my family. I want Hannah to practice buying clothing and managing her budget, so I can help her along as she has questions or makes mistakes.
Others of Hannah’s friends have clothing allowances. Some have complex schedules of weekly amounts tied to their age. Some just get money whenever they ask for it.
We have Hannah somewhere in the middle of those two. More next time.
Justine
Selling Girls Scout Cookies
January 13, 2009
My daughter, Hannah, is a Girl Scout. And it is Cookie Time! Time for Girl Scouts across the country to sell Girl Scout cookies. Selling Girl Scout Cookies is an important fundraiser for the Girl Scouts, both at the local troop level as well as at the regional district levels and at the national level.
Hannah has sold Girl Scout Cookies every January for the past eleven years. And she has learned a lot about money by selling cookies. She has also learned a lot about sales.
I’ve been a Cookie Mom a few times because I am passionate about girls learning about money, sales and fundraising. Being a Cookie Mom has been a great way to try to teach kids other than my own about these things. Particularly in teaching the importance of these topics to girls.
Hannah is becoming an old hand at selling cookies, but we try to up the ante every year. This year, Hannah is targeting former customers that she knows will buy. She finds that single professional women who are friends of mine love to buy cookies from her. Hannah has figured out who her best customer base is and then goes and sells to them. And she sells in a fashion that suits the customer, which to this customer base is typically via email that is read by the prospective customer on a PDA. I love that Hannah is figuring this out and that this will help with larger life and business lesson regarding making a sale later in her life.
I also love that Hannah (and my sons, who are Boy Scouts) learn about fundraising through their fundraising activities as well. I think that these activities help them understand how non-profit organizations raise money and hopefully will help them become more philanthropic when they are adults.
Justine
Teamwork in running the babysitting business.
January 12, 2009
Jon had a big babysitting assignment over the weekend. We had a big NFL playoff game here in town and Jon’s customer needed Jon to sit from 3:00 in the afternoon until very late into the night.
Jon’s customer is a fairly new customer for him, and a very good customer. Mrs. N asks Jon to sit on a very regular basis and it is a reliable way for Jon to earn money.
Jon committed to sitting for Mrs. N a couple of weeks ago when our town found out about the big game.
But on the morning of the game, Jon got invited to a game-watching party and was having second thoughts about sitting. I told Jon that we NEVER back out on a customer, and we expect the same from our customers. But I pointed out that Jon is part of a babysitting team and maybe we could find an alternative for him.
Me: “Jon, maybe your sister could sit for you tonight.”
Jon thought that was a great idea, and as he is prone to do, started reflecting very earnestly on the prospect.
When Hannah finally got out of bed on this lazy Saturday morning, Jon made his proposal to her. He proposed that Hannah come in and substitute for him starting at 8:00 p.m. He noted that the rate she would get paid would be at his lower rate of $6 per hour versus her rate of $10 per hour. It would not be fair for Jon to penalize his customer with a higher rate just because he wanted to watch the game with friends. But Jon noted that Hannah would be collecting their joint compensation and if there were a tip, Jon would allocate all of the tip to her.
Hannah had to think about working for the evening and the financial consideration involved, but she finally accepted the proposal. She could have negotiated further, asking for part of Jon’s compensation to make up for the deficiency in her rate, but she told me that she had decided that she didn’t think that was fair.
I watched the whole negotiation, and of course helped it along when needed. Jon and Hannah came to a deal. Then I pointed out that Jon needed to call his customer, Mrs. N, and get her permission for the substitution. I didn’t hear the conversation, but she agreed and they both said the conversation went well.
Mrs. N knows what I am up to in raising my kids and she helps me out considerably. She is a friend and neighbor, a good one at that. It takes all kinds of teamwork to teach our kids about money.
Justine
Managing Money: Getting Enough to Manage
December 31, 2008
I have a friend by the name of Ward. Ward is a more experienced parent than I am. His kids used to babysit my kids. Now, his son is in the workforce, after graduating from college, and his daughter is in college.
I have learned a lot over the years about teaching my kids about money from Ward. I’ve viewed Ward as a mentor in the process and have gotten lots of good ideas from him for teaching money to my own children.
Ward recently talked to me about teaching his kids about money. I actually told him how much his lessons and ideas meant to me through the years. I told Ward that he is one of the reasons I am writing this blog.
So Ward took another tack in our ongoing conversation about kids and money. He confessed to me that he felt he didn’t teach his kids enough about managing money because his children didn’t get enough money to manage.
It is interesting to hear Ward say this, because his son is in the workforce and Ward is seeing situations in which his son maybe isn’t as adept and nimble in managing money as he would like him to be.
Ward asked the question out loud in from of me: What is the right amount of money that a child should manage in order to learn how to manage it well? $20? $80? $150? Ward and his wife differ – and that is where the conumdrum came in. Ward always felt the figures should be higher. His wife always felt, and still feels, that the figures should be lower.
I can understand both sides. I can understand Ward’s perspective. And I can understand his wife’s point of view – she may feel that it is inappropriate to just hand a lot of money over to a child. But I bet there are lots of solutions to that issue.
Now these folks, Ward and his wife, have the means to provide money to their kids. Don’t get me wrong – I know that we don’t all have that. By giving their children smaller amounts of money, Ward and his wife possibly felt they were teaching their kids frugality and modest living, despite their affluent means, which was noble. But they look back now and say that the amount of money their children managed should have been larger so that their kids would have had more practice in actually MANAGING that money.
Fascinating.
Justine
An interesting example of how a parent taught her kid about money
December 29, 2008
A while back, on October 17th, I shared a story from National Public Radio with you. The link to the NPR story is at http://www.npr.org/templates/story/story.php?storyId=95793263 or you can find it at right via the story Tough Economic Times Hit Teens, Too.
I went back to look at the story and saw a few comments there. I loved this comment, which you can find at the cited link:
“OK. I have a nearly 21 year old that pays her own car note, and buys cell service for her dad and I. Yes living at home; but a full time college student and works 20 – 30 hours a week and is an athlete. Now more teachers than you can count yelled at me furiously… I payed her 20 bucks a report card A starting in the 3rd grade and never questioned how she spent it. It did not take long for her to learn not to buy junk; save; budget… A B was worth 10 a C zip a D (happened once) was a $50 fine payable directly to me. Look we ask them to do so much, its hard to teach “work ethic”.. it probably wont work for everyone; but it worked for us. Today my husband has had 3 months of work in the last 18.. things are getting thin, but our daughter understands that it make take all three of us to pay the mortgage etc… its a family responsibility! **beaming** (not that she doesn’t have typical young adult growing pains – )”
I love this comment. This mom worked hard to teach her daughter about money. She used some creative methods and didn’t think too hard about what others might think about her methods. Both she and her daughter have reaped tremendous rewards from those lessons.
You and I could go on and on about whether parents should pay for grades. And from what I hear, most people think that paying for grades is a horrible thing. But who cares? This mom was teaching valuable lessons about money. She was teaching valuable lessons about money because she was facilitating ways for her daughter to access money so that her daughter could learn how to manage money.
It is all about sharing ideas. I think that is cool.
Justine
Household Finance Rules – Yoder and Son, continued
December 16, 2008
Yesterday, I introduced you to Steve Yoder and his son, Isaac. They write together about Isaac’s process of learning about money in a column at the Wall Street Journal. (Nice gig!)
They’ve written another column which I want to share with you. The link is at the right for the article titled The Joys of Paying for Things Yourself. You should read it.
Steve and Isaac talk about Household Finance Rules and the particular rules the Yoders have in their family.
I particularly like the part about how the kids in the story got their money. I think the story line demonstrates well that kids who obtain their money through some process, such as allowance or working, value their money much more than the kids who just get a handout.
There are no handouts in real life, so why hand money out to your kids? Rather than having your kid ask for money every time he or she needs it, think about setting up an allowance program instead, whereby your child can then learn to budget and plan with her money.
There are others ways to get money to your kid, such as by making them work at home for it or allowing them to work outside the home for money.
But if you just give your kids handouts, you are missing out on teachable moments. Handouts are easy. But they certainly are not smart.
Justine
Raking leaves – and making money
November 17, 2008
Our family raked leaves yesterday. It was a glorious sunny autumn day and loads of leaves had fallen due to the rainstorms that had just gone through the two days before. So everybody had to get out and rake and bag leaves.
And I didn’t get many complaints.
But that is because we pay $2 per bag.
I’ve talked with lots of teens lately who do not get compensated for chores and do not make an allowance. Their families believe that if you live in the house, you do the chores in the house, just like mom and dad, for free. It think that is a good idea.
But I pay for chores, particularly for raking and bagging leaves.
My primary aim to to get my kids enough money so that they can learn to manage money. And my kids can’t learn to manage money unless they get some money. So I am willing to pay them to bag leaves.
I’ve also wanted to teach my kids to be motivated by money – to know that hard work helps to make a living to support yourself and your family. And my kids are motivated by money – I’ve hardly heard a peep today about bagging leaves.
Paying the kids alleviates a lot of problems. I don’t have to cajole them during the hours it takes to bag the leaves. Because they are motivated by the two bucks they are making. I don’t have to nag them when they start goofing off and having some good fall fun and start throwing leaves at each other. Because, well, maybe with a little coaxing, they realize that a break is a good thing but they’ve got to get back to work to make the money. They also realize that leaf season comes just once a year – so you gotta make hay while the sun shines — or rake leaves when they fall on the ground.
I am happy to pay out the cash to my kids. Their help saved me a load of work. And when you think about it, $80 for 40 bags of leaves is quite a bargain, in my view. Especially when it is staying in the family and going to my kids.
Justine
