Kids and Money

Teaching kids about money involves several aspects. First, kids generally learn about the face value or denomination of money, usually when a parent or relative gives them a few coins, and may explain that a penny is 1 cent, a dime 10 cents, etc., and what each is worth relative to one another. 10 pennies is equal to a dime, 5 nickels equals a quarter, and so on. Later on, but they do not have to necessarily be in order, kids learn that money can be exchanged for goods, such as when a parent might explain that in order to get a toy that the child may see in a store, or on TV in a commercial they (or you) must exchange money for the toy. A little later on usually, kids learn that when they receive money, they can save that money up to buy something they want. They may not have enough money at the time, but if they save up money they receive, one day in the future they may be able to buy that certain toy or item.

Unfortunately, this is where a child’s education about money sometimes ends, even into adulthood.

The “real” value of money, in essence, is that it can represent future opportunity and freedom. Money should not only be thought of as a vehicle to purchase things, but as having value to allow one to make choices in life that one would otherwise be unable to make without it, have the means to take care of oneself or family, and have the freedom to make choices that being in debt does sometimes not allow us to make. Often, we are constrained by financial obligations and all of those things we must have and save up for, that we do not realize we are limiting opportunities and the freedom of choice when it comes to our lives that financial freedom can bring us. Not having enough money can limit our job choices, where we live, and what we do with our lives.

How do you teach kids about the value of money ?

• Start them saving early-Give them an allowance starting at a young age, and get them used to saving money-just for the sake of saving.

• Teach them not to save just to spend- If they save money for things, instead of saving for their future, it will be difficult for them to realize the freedom money can give them in the future. Making them save a percentage, and not taking every cent in the piggy bank to buy a new toy or game, is a good idea.

• Stress the importance of choice and freedom- saving money for education, experiences, etc., as opposed to materialistic things. It’s not always about things. Sometimes having money in the bank allows you to do things you would not be able to do without money.

• Use real life examples- Explain that if they buy the new Star Wars toy, they won’t have any money left. This will limit their choices in the future.

• Let them make mistakes, but point them out so they learn from them. It’s OK to let them make mistakes, but try to teach something when they do.

• Teach them to be generous- All the money in the world won’t buy friendships, relationships, or love. While money can be an important tool, relationships with people are more important in the grand scheme of things.

Photo by Eliazar

There’s a new company on the block to help you save more money for college for your children. Called the Freshman Fund, it allow you to receive direct contributions to a 529 Plan, and is free for both the gift giver and the receiver. In the past, for most 529 plans, someone would either have to send you the money and you would have to write a check and send it in to your kid’s plan, or they would have to fill out a special form every time they wanted to make a contribution. Not really very convenient when it comes to gift-giving. The Freshman Fund takes care of that problem, and makes it simple for grandparents, other relatives, or friends contribute directly towards your child’s college education.
You now have an answer for the question “What should I get Johnny for his birthday“, or Christmas, etc. I don’t know about you, but it seems like my kids get a lot more toys than I ever did. Receiving a few less toys for their birthday or Christmas is not going to be a problem-for them or me. So if someone asks you what to get them, or you have a relative or friend who like to give them a check, cash, or a savings bond, you now have a place you can direct them that can help pay for your child’s education. This is a much better alternative than thinking up another toy suggestion that will will likely no longer be played with in a few months.

This also works especially great for relatives, such as grandparents, or others who might want to get the child a small gift and then give them a check or savings bond. Instead of receiving a Series EE savings bond (currently paying a paltry 1.40%), your child can receive a contribution to their 529 Plan. It can then earn decent interest and reap the benefits of compounding until your child is ready for college.

How does it work?

You sign up for a free account on the Freshman Fund website, and then link your child’s 529 Plan to the account. Don’t have a 529 Plan yet? The website will help you get started with information and direct you where and how to set one up.

Let people know where to go- Let people know that they can contribute to your child’s 529 plan by going to the Freshman Fund website. You don’t have to be pushy with this, but I will let my children’s grandparents know about it and that it would be preferred to a check or savings bond. I think most people will be happy knowing that their gift will be used for education. And if someone else asks what to get them, I will certainly let them know about the Freshman Fund.

I don’t know about you, but this sounded like a great idea when I first heard about it. As soon as I get my children’s 529 plans completely set up-which I have actually already started- I will be signing up with the Freshman Fund. I will update you on my experience with it.

Additional information-

• The website keeps your personal information private and encrypted, so you don’t have to worry about identity theft, etc.
• You can send someone without a 529 Plan a gift certificate, which the FF holds until they set up a plan-seems like a great way to get someone started!

Teens are always looking for extra spending money; and the one thing they usually have in the summer is time. So instead of having them sit in the house all summer on the internet or text-messaging, get them out of the house and put them to work! Seriously though, encouraging your teen or child to start earning money and saving some of their earnings is a great way to lead them down the path of financial responsibility as well as learning to take personal responsibility. Here are 15 ways your teen can make extra money this summer.

Washing & detailing cars- A task that a lot of people don’t like to do; but everyone wants a clean car inside and out.

Babysitting- The old standard.

Household chores for others-Especially for elderly neighbors, or just someone too busy looking for a little help with cleaning, etc.

Pet sitting- Most people would rather leave their pets at home than board them when they go on vacation.

House sitting/watching- I used to do this one also for a couple of neighbors when they went out of town, taking in their mail, watering plants, etc.

Dog walking- Offer your services to neighbors who work.

Minor home improvement- Like painting, house washing, etc.

Cutting grass/yard work- I used to mow lawns myself when I was a teen, and it paid pretty well back then. They could also do gardening, raking leaves, etc. Many people don’t really like to do this themselves, but grass grows like crazy in the summer.

Lifeguard-The YMCA and country clubs are always busy during the summer months. if you have a pool, give swimming lessons to younger children.

Summer camp counselor- Another great seasonal job for teens.

Daycare centers- These usually have higher enrollments during the summer as well.

Tutoring- May parents are looking to give their kids an edge or additional contact time in certain school subjects during the summer.

Computer lessons/help- Let’s face it, most teens are a lot more computer literate and web-savvy than adults. Why not pass the knowledge along to others?

Sell things on Ebay- Old CD’s, movies, video games, and books are just a few things that can still be sold used for money.

Or have them get a part-time job at a restaurant, the mall, or even a fast-food joint.

Alternatively, you can pay your teen to do work for you, either for many of the ideas above; or for extra chores or projects you have been putting off and can’t find time to do yourself.

If they start earning money, it is great time to teach them about saving and investing a portion of what they have earned. Suggest to them that they save certain percentage, and open a high-interest savings account for them. If they are saving up for a big purchase, try out smartypig.com as a way to track their savings toward their goal.

Many of these ideas can translate into something they can do with their free time during the school year as well.

Any other suggestions for ways for teens to make money?