Education Archives - The Free Financial Advisor

Teaching Your College-Aged Child About Money – 2 Guys and Your Money 45

September 12, 2013 by Average Joe Leave a Comment

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In the episode, OG & I discuss how we were both horrible with money while in college. We learned many lessons, but today’s college-aged child needs to know about topics many parents didn’t confront. We describe the college landscape and how to help your child cope with financial complexity while in college.

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<> From Broke College Kid To Financial Whiz

Summer Money Activities for Kids

May 21, 2013 by Average Joe 20 Comments

Shannon Ryan joined us to kick off the new Stacking Benjamins podcast yesterday, and we received a ton of great feedback and requests to “get this in writing.” So, we owe a big thank you to Shannon, who sent over her tips for us. If you missed the podcast, here are some great tips to help kids learn about money. Enjoy!

Summer is the perfect time to start talking to your kids about money as life is less structured, and you have more time to slow down and have these important conversations. And don’t worry–money conversations do not have to be boring! Position them correctly and you can have fun while teaching your kids good, life-long money habits.

1. Set Clear Goals and Make It Fun

Over a favorite family meal, we discuss how we’re going to use our family money in three areas – what will Save our money for; what will Spend our money on; and who will we Share our money with? If your children are older than 6, have them create their own summertime money goals. For example; Save–for a new bike; Spend–during a trip to the ice cream store; Share–with a local charity, such as the humane society where you can deliver your donation in person. Once your kids have their goals, help them find fun ways to earn money. For example, post jobs in the house, a lemonade stand, etc.

Fun Activity: Make goal-setting a fun event and your kids will no longer dread the word “goals”. Celebrate achievements and create friendly, sibling competitions on who can reach their goals first.

2. Slow Down and Have Regular Money Conversations

Some of my best money conversations with the girls happen during our normal activities. For example, take your kids shopping. Have them help you prepare the shopping list to create a clear understanding on what the family “needs” are and where “wants” fit in. At the store, be sure to talk through your purchases with your kids instead of making internal comparisons. For example, why you buy a name

brand vs a store brand for one item and not another.

Activity Idea: See how much money you can save on groceries for the summer. Make a list of needed items and search for coupons and specials. Use the money saved for something fun.

3. Make Your Goals Visual

Post family and individual goals where everyone can see them. You can cut out pictures from magazines or print pictures from the internet to create a vision board for your goals. Set up jars or envelopes for their Save, Spend and Share goals. When they earn money, discuss with them how they want to allocate their money towards their goals.

Activity Idea: Have you kids decorate their jars or envelopes with images of the things they plan to save, spend and share their money on or with.

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4. Post Jobs so the Kids Learn How to Earn Money

I am not a believer in allowance, but I do believe you need to find a way to put money in your kids hands, so they can learn to make decisions around it. Each week create a job posting that consists of various chores that are important to running the house, but outside the children’s expected responsibilities (in our house, this includes–making beds, cleaning dishes and cleaning up after themselves).

Fun Activity: Weekly job postings allow kids to pick and choose which jobs they want to do. Plus, they can choose whether to do a lot (and earn a lot) or do little (and earn little). We treat this like a real job and on pay day, if they haven’t done their work to my satisfaction, they may not get paid. Or if they have gone above what the job entailed, they could earn bonus.

5. Let Them Flex Their Decision-Making Muscles!

We all have a finite amount of money, so the earlier you can teach your children to make wise choices with their money–the better! One of the best ways to teach them is to involve them in the decision-making process. You want them to figure out what makes them truly happy, rather

than listening to what others tell them they need. Once they master this, they will spend their money on the things they want and learn to create joy with any amount of money.

Fun Activity: Create an entertainment budget. Give your kids multiple options, some expensive and some not, then let them figure out how to use the money.

Photo: Mosieur J.

Shannon Ryan, CFP® is a Mom on a mission to help busy parents teach their kids simple, value-based principles that guide their money decisions and support their long-term financial well-being. Shannon wrote The Heavy Purse to help parents start money conversations with their children through a fun, bedtime story and developed companion workbooks to help deepen those conversations. Visit www.TheHeavyPurse.com to learn more on how to raise Money Smart Kids.

Graduation Gifts: What Should You Do With Your Money?

June 14, 2012 by The Other Guy 21 Comments

‘Tis the Season!

Well, not that season, but another highly anticipated one: graduation season. Hundreds of thousands of college and high school graduates are donning caps and gowns, shaking hands, having parties, and most likely cashing checks. The real question is what to do with all of this money?

Let’s break our discussion into two categories: high school graduates and college graduates.

High School Graduates

We’ve talked about it periodically: most kids aren’t taught anything about how to handle money and for some, graduation gifts can be their first experience with large amounts of cash. If there’s not an exact plan, it can blow away faster than the autumn leaves. This is job number one for parents: sit down with your kids and discuss what the plan is with the graduation money. Here are the top 3 things high school graduates can and should do before cashing a single check.

High school graduates entering local church for graduation mass, May 2009 (Photo credit: Wikipedia)

Establish the maximum dollar amount of your graduation gifts that you’ll allow yourself (or your kid) to spend on fun. I don’t have any problem with high school graduates blowing a certain amount. I mean, it is a joyous occasion and high school graduations should have a certain amount of indulgence. But, just like anything finance related, you have to go in with the end in mind. Failing to plan is planning to fail.
Decide what’s going to be set aside to be spent during the first semester of college. Assuming you’re heading to college in the fall, no matter what you think you’ll need from graduation gifts, you’ll want more. Accept and embrace the reality: college will cost more than you think. If you can set aside a couple hundred dollars today for those rainy October weekends far from home, you’ll feel a lot less guilty about skipping the meal plan and ordering a pizza for your roommates.
Take at least 1/3 and either invest it or give it away. Those two options sound like opposites, but they require similar mental acuity. We only give things away when we have an abundance mentality – we only invest if we have a strong faith in the future. Take one or two hours and pick a solid blue chip company, set up an online brokerage account, buy some stock and don’t touch it for 30 years. You’ll thank me later. Oh, and don’t forget to reinvest all your dividends from your graduation gifts! You’ll want those growing, too!

Don’t let this great opportunity for teaching kids about money slip by. There are only a few “found money” times throughout one’s life. Use graduation gifts wisely. Any high school graduate should be able to take this money and use it to get ahead in life.

Next week we’ll talk about what college graduates should do with their “found” money…stay tuned!