Family & Finances: Teach Kids About Careers & Money Early!

This week's #MoneyChat guest is Alisa T. Weinstein, author of Earn It, Learn It and @EarnMyKeep on Twitter.  Alisa has a wealth of information to share about helping kids understand the value of money and how we as parents can shape their view of work early on!  
Q1. #MoneyChat: Why do kids view their parents as bottomless ATMs?

Alisa: First off, money’s now digital. There’s direct deposit, online banking, ATMs—to kids, it’s like magic. You stick a plastic card into a machine and POOF! There’s money! It’s not like when we were kids and we’d watch our parents deposit their paychecks at the bank teller’s window. Another pitfall is our desire to give them everything they want. Parents have a hard time holding back because of so many reasons: working long hours, wanting our kids to have more than we did, even just “keeping up with the Joneses.” Unfortunately, indulging our kids too often can inflate their sense of entitlement.

Q2. #MoneyChat: What are some easy ways to help kids learn where money comes from?

Alisa: Make it personal! At dinner, bedtime or in the car, share one specific task or event that took place at work that day. (Did you have a big meeting? How did you prepare for it? Did your customer have a complaint? How did you solve it? Even better: ask your child what her solution would be.) Then explain that adults get paid for the work they do. You can also put your kid to work, adult-style: find a toy or game with a missing piece. Have your kid create a new piece to replace it—in his choice of style, color and material. Then pay him $1 for being a Toy Designer! You can replicate so many careers in this same fun way.

Q3. #MoneyChat: Why not just pay them for completing household chores?

Alisa: Chores are a great opportunity to practice basic life skills. But adults don’t get paid for making their own beds and folding their own laundry. So why pay kids to do it? Plus, paying for chores can negate the “team” atmosphere that occurs when everyone pitches in. Another big one is that paying for chores can send the message that work isn’t fun. Of course we know work’s not always a day at the park, but helping kids explore their passions—and learning one day they could get paid for it—can have a profound effect on their self-efficacy.

Q4. #MoneyChat: What’s the benefit of teaching kids about money and work early?

Alisa: We’re never too old to learn. But the earlier we learn, the more natural the experience is. It’s true for learning a language and riding a bike. Why not financial literacy? The sooner kids start to learn about money and work, saving, sharing and spending, the less they’ll likely labor with these concepts later. For them, responsible money management will be second nature—unlike for so many of us, who struggle to undo money mistakes and break unproductive money habits (NOT fun).

Q5. #MoneyChat: Does teaching kids financial responsibility strengthen more than money management skills?

Alisa: Y-E-S! It’s an exponential effect: teaching kids about money is not just about money. There’s goal setting, decision-making, self-efficacy and more—financial lessons can shape so many different facets of their lives in positive ways. Giving children the opportunity to be in charge of their own money is empowering. It gives them a sense of control and responsibility. And it helps clarify how hard Mom and Dad work to earn money, which ups their appreciation for what we do every day!

Q6. #MoneyChat: What’s the best lesson your parents taught you about money and work?

Alisa: That the work we do can be worth more than the numbers on a paycheck. And that a job well done is worth doing. Both sound cliché, but my parents enjoyed their careers, often sharing stories of their workdays with my brother and myself. And they were honest. I knew there were days my dad couldn’t wait to leave the office, and days my mom’s students gave her a hard time. But it didn’t diminish the message that it was worth finding a career doing something I enjoyed. Would love to pass that on to my own kids.

  

Q7. #MoneyChat: How can parents make working more exciting to children?

Alisa: Try (and some days it’s way harder than others) to stay positive. Remember that our kids are itching to know what it is we do all day. I still get a kick out of how something that seems trivial to me is exciting to them. And look for ways to let kids experience working, hands-on. Bring your kid into work for a half-day. Or give your child one of your projects and see how she’d solve it. Help your child interview an adult who does what she’d love to do one day. You’d be surprised how many professionals love to talk about their jobs with kids.

  

Q8. #MoneyChat: What’s the most surprising thing a kid has said to you about working for money?

Alisa: I’m less surprised by the kids than I am by the parents—I’ve received many wonderful notes from those who never thought their children would be interested in earning money by tackling an Earn My Keep career! One of the best was the mom who said her daughter wanted to be pinched, because she thought she was dreaming. But when you position work as a positive experience, and see that little light bulb go off in your kid’s eyes, it’s a welcome reminder of just how satisfying the real world can be.

Want more? Sure you do! Check out my interview with Alisa about her book Earn It, Learn It  here! 

Where to Stash Your College Savings Cash!

You are ready to begin investing for your children’s education – kudos to you! It’s understandable that deciding where to save may be a tough decision to make. We’re here to help! Below are four college savings options for you to evaluate, consider which one or the combination that is best for your family.

529 College Savings Plans

529 College Savings plans are a very attractive solution to saving for college. They were created in 1996 in section 529 of the IRS code – hence the name. They are essentially mutual funds for college savings. Therefore, they contain a mix of investments in stocks, bonds, real estate, and money market funds. Over the life of the account, contribution limits range from $100,000 - $300,000 based on the rules of your state and your money grows tax free. You don’t have to buy a 529 only in the state you live in; research which state offers the best plan for your goals and you can invest there. Another bonus is the low investment minimums – you can open an account with as little as $25 in most cases.  There’s no age limit on beneficiaries or time limit on distributions..... (More)

-Dorethia 

Looking to jump start YOUR 2012 money management or business game plan? 

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Choosing a College: In-State vs. Private Universities....

So you are thinking about what type of college your child might attend and calculating the costs. Should they go to public, should they go to private and how will you pay for either one? It’s important to be prepared and intentional, as planning for college also affects how quickly you reach other personal finance goals. We all know that private schools can cost up to 3x’s more than a public university.   Therefore not only consider  your budget, but also make sure the school is a good fit for your child’s personality and study habits.  Here are a few tips   to help you along the way.

Know the difference! 

• Public colleges – (average tuition, room/board range: 13,000 - $30,000 per year) funded by the State, therefore tuition isn't the only source of funding allowing for lower tuition rates, more scholarships available.  In-state college is going to be cheaper as they give preference to residents. 

• Private colleges – (average tuition, room/board range: 35,000 – 50,000 per year) funded by tuition and ... (More)

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College Savings: You Don't Have to Be Rich, You Just Need a Plan!

Here's another post from my column over at Adaptu.com (@Adaptu on Twitter).. I write about all things college savings related.. check it out and be sure to comment!

One question I get all the time is ‘when is a good time to start saving for my child’s education?’ My answer – as soon as you can! Whether your children are toddlers or teenagers it’s never too late or too early to start saving for college. Of course the amount you can save is based on your budget and household expenses, but it is important to set a goal, even if you will have to begin later. Don't allow the costs of college to overwhelm you, do what you can. Create a strategy for where you are now, and stick to it.

 Two key things you need to consider are:

1. How long you have before your child/children graduate high school &.....
2. How much you can afford to set aside each month

Let’s just say the average cost of college whether private or public is $25,000 per year. Remember this amount fluctuates depending on the school.  It also doesn't take into consideration inflation or annual tuition increases - but it’s a good starting point, so let’s crunch the numbers.... (More)

Looking to jump start your 2012 financial or business goals? Visit ConnerCoaching.com

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A Chat with Alisa T. Weinstein, Author of 'Earn It, Learn It'

I'm an avid reader, especially of financial/biz related books. When I read Alisa T. Weinstein's, Earn, It, Learn It - I knew I had to have her share with the #MoneyChat family! 

It is the coolest book I've read that assists parents with teaching kids about careers in a way they actually want to learn - HANDS ON! Kids learn about money and careers; while also enjoying the quality time with parents as they do the various career explorations together. I love it and definitely recommend you share with the kids in your life!  ~ Dorethia

In Earn It, Learn It’s introduction is titled Battle of the Lip Balm. I know there’s a good story there.

[BIG LAUGH] It’s now Weinstein family legend. I was in Target with Mia, who was four at the time, and she wanted another Lip Smackers lip balm. She had too many of them as it was, but she had to have another. In my exasperation, I told her to “Get a job!” so she could pay for it herself. And this light bulb went off. I decided she was going to have a “real” job with a “real” task and earn her money the same way adults do. 

She chose to be a market researcher, like her dad. With his help, she surveyed friends and family about their favorite ice cream flavors, created a pie chart and presented her results to me. Then I paid her. It was so much fun—so educational without feeling that way—that we all wanted to continue with new careers!

  

So you started with market researcher, but the book has 50 careers. How did you jump from the one career to an entire program?

It was marine biologist that did it. Mia was a few careers in when she asked to be something I knew nothing about. And while there’s information online about what marine biologists do, I couldn’t find anything that described how they do it. I needed outside help. So I worked with 49 professionals—like a chef, an investigator, a toy designer and, yes, a marine biologist—who told me what it is they do for a living. 

I then translated their daily tasks into the more than 950 kid-friendly tasks in Earn It, Learn It. Families pick a career and a task, kids do the task, and then get paid for their efforts on Payday.

This sounds different than other financial literacy programs. Why do you think that’s so?

Because Earn My Keep starts at the beginning. Most financial literacy programs start with what I call the Part II: the spending, saving and giving. Regardless of how children get money into their hands (by chores, odd jobs or a string-free allowance), focus has been on what to do with money once it’s earned. 

Earn My Keep, however, starts with Part I: how adults earn money in the first place. By experiencing the beginning of the fiscal process, children are more likely to grasp how the real world works. Plus, kids are exposed to science, math, art and manners. They foster self-motivation and self-confidence. And one of my favorites: they learn to appreciate how hard Mom and Dad work to provide the things they want and need!

Some say four is too young an age to start learning about money…

Not even remotely. By age four, many children know what money is. They don’t know where it comes from. They don’t know where we keep it. They don’t even know to question where it comes from or where we keep it! But if your kid has ever had a “gimmies” moment, he’s ready to learn how money works. And the earlier we start teaching, the more natural the experience will be. That said, it’s never too late to learn. Earn My Keep works from age four all the way up to 12.

A lot of parents pay their children for doing chores. Where do they come into play?

I’ve long felt chores get a bad rap. But chore completion is a great way to prepare kids with basic life skills. It’s also an important tool in creating a team-like family unit—“we all live here, so we all pitch in.” But I do not believe that kids should be paid for them. Adults don’t earn money for making their own beds, so it’s not realistic. And it reinforces the message that work isn’t fun. So my children earn money for their Earn My Keep tasks, only. Knowing, however, that this is a very personal family decision, it was important to me that the program worked with or without paying for chores. So, it does!

Can you identify the best part about the Earn My Keep method?

[REALLY BIG LAUGH] When my very first video about Earn My Keep was edited, I noticed that I started almost every sentence with, “The best part of Earn My Keep is…” And every time I named something different! It’s easy and fun. It’s expert-approved. It’s an amazing way to pack a whole bunch of parenting priorities into a really hectic schedule. But at the end of the day, I think my favorite part is that it teaches kids that the work we do can be worth more than the numbers on a paycheck. It helps them learn to love work for the sake of work. And it doesn’t get much better than that!

READERS: What about you? What methods have you used to teach your children or classroom about careers, chores & money? 

Alisa T. Weinstein is the mother of two; author of Earn It, Learn It: Teach YourChild the Value of Money, Work, and Time Well Spent; and founder of Earn My Keep—the first and only program that allows kids to earn money by having “real” jobs. To purchase the book and other fun Earn My Keep merchandise, explore Alisa’s informative, family-friendly blog at earnmykeep.com. You can connect with Alisa on Facebook and Twitter

It's MY Money!!! #Teens.. eh!

You are trying to teach your teen financial responsibility, so you set standards for what they do with money. Yes, their money. Money they get from you, grandma, their job etc. I have yet to meet a parent who hasn't had to have the 'MY money conversation' with their teen...something like...

teen:     i need to pull money out of my account for (some must have thingee)

parent: you spent all your spending money - all that's left is your savings.... which you aren't to touch

teen:     i can put it back later, I really want (this must have thingee)

parent: no. 

teen:     i DON'T understand, it's MY  money!

parent: blank stare (trying not to think of violent things)...eh

Here are a few suggestions to keep the peace and prepare your young person for financial responsibility.

• Set a standard of give some (10% to any charity), save some (20%), spend some (budget) - in this order. This habit instills smart financial responsibility, don't just tell them - show them WHY you are teaching them this system. Have them read (short) financial articles, add money **apps to their phones, etc.

• Make sure they set goals - what are they saving for? That makes the saving more realistic for them.

• Let them manage their own debit card, balance their checkbook and keeping track of spending with a *check register or online banking. Show them how to do it 1st, 2nd time - 3rd time let them do it themselves and review. Teach them to set aside a regular time of month to do this, put it on the calendar. 

*I know they won't be using checks - still recommend a register to log debit and EFT transactions. **Also - I    don't suggest mobile banking for teens. Simple money budgeting apps are okay, but don't link to their actual accounts.

• If you allow them to dip into their savings - hold them accountable for replacing the money. Remind them that saving is how wealth is created.

• Allow them to SPEND their money - as long as they don't buy anything you don't allow in your home or aren't going crazy. Example - if my daughter only has $100 - I'm not going to let her buy $75 jeans. I'd explain that it's 75% of her income and she won't be able to buy anything else. (although, every now and then you might want to let them make this mistake for the lesson...)

Here's to creating a family legacy of wealth! 

Your Financial Coach, 

Dorethia

#Follow: @DorethiaConner @MoneyChatLive  

On the Virtues of Making Your Children Do the Dishes by Sue Shellenbarger @ WSJ

Quiz for the day: How much time each day, on average, does a 6- to 12-year-old child spend on household chores?

If you guessed more than a half-hour, you're wrong. Children are spending a mere 24 minutes a day doing cleaning, laundry and other housework -- a 12% decline since 1997 and a 25% drop from 1981 levels, says Sandra Hofferth, director of the Maryland Population Research Center at the University of Maryland, based on a forthcoming study of 1,343 children. In the glacial realm of sociological change, that amounts to a free fall....

Click title for the rest of the article.....Enjoy! -Dorethia

Paying Your Kids for Chores

Okay, in the previous post we discussed chores your children do get paid for and chores they don't...now how do you pay them and help them manage their money?

Make sure the amount you pay is reasonable for the job done. Just because lil' David NEEDS $50 for a video game he wants doesn't mean you give him $50 for just sweeping out the garage.

1. Assign a value for each task
2. Have a specific pay day, pay on time, pay with cash
3. Take money away for a job not well done, misbehavior at home or at school, but be fair

The Evelope System - an ancient chinese secret....

Paying with cash let's them 'see' their profit and is a great motivator. Teach them to have an envelope system:

Saving:
Teach them to always save something - 20%; at minimum 10% - not saving is NEVER an option

Also, have bank accounts for them so this money can be deposited and they can learn how to handle bank transactions.

Spending:
It's okay for them to spend, it may be tempting not to, but let them buy whatever they want - offer some guidance and common sense help, but they did work for this money.

Giving:
Teach your kids the importance of tithing and helping others who are less fortunate.

Make Them Work For IT!!!

Who???? Your Kids!!! Stop GIVING them money....and please, please give them CHORES!!! Yes, chores those ancient tasks we had to do to justify taking up space in our mom's house!

I am blown away at the number of our youth that do not have to do anything except stick their hands out! Just giving them money does not teach them any kind of work ethic, nor set an example for them to guide their own children one day!

Now to teach them responsibility and money management there are chores they get paid to do and those they don't...see big mama's outline below:

Chores They Don't Get Paid For:

Cleaning their own rooms!!!!!

Younger Children: pick up thier toys

Age 7/8: Dust, clean mirrors, clean their own room, clean the bathroom,picking weeds out of the garden

Ages 9/10: Add washing dishes, sweeping the floor, begin to teach them how to properly mop. By the age of 10/11 they can begin learning how to cut grass. Yes, I know, it won't be those nice neat lines you like, but remember you are training and if you just can't take it, let them do a small section. You can also introduce washing clothes. Even if you sort them yourself and just have them to switch the loads.

Jr./Sr. High: By the time they reach this age your little darlings should have long since had a regular schedule for house cleaning assignments and have consequences for not doing them well.
At this point your child should know how to thoroughly clean a house, even if he or she seems allergic to the notion, they have been taught!

Chores They DO Get Paid For:

• Doing your household duties - cleaning your room, washing dishes on your day


• Cleaning out the garage/basement/other extremely cluttered areas


• Helping with major yardwork projects


• Cleaning out closets/re-organizing cabinets


• Other household projects that go above and beyond the call of duty

(see post: 'Paying Your Kids For Chores')

Softy #1: Oh no, my son/daughter will not wash the dishes (insert any task really) well, they'll either be broken or still dirty....

Taskmaster: You make him/or her do it over and over until they get it right!!!!

Softy #2: I'd rather do it myself and get it out of the way, plus they are just children let them enjoy their childhood.

Taskmaster: Childhood is to be enjoyed, but it is also preparation for adulthood....what are you preparing your child for if they don't acquire work habits in their youth? oooo pick me pick me....you are preparing them to live with you forever!!!

Now, here's my BALANCE tidbit. It is important to have a reasonable schedule. Often we are taking our kids to this practice or that game on top of homework, etc. It is important to have a schedule for chores so you don't do away with it altogether. Also, the chores should be fair, but firm and the expectation should be that they are done correctly or done over.

Also, for those of you who have housekeepers, still set aside some time for your children to wash dishes, do laundry, etc. It is important that they learn these skills.

Okay, one more thing. I think it is important to teach our son's and daughters the same household skills. Son's learn how to cook, daughters learn how to cut grass. Son's learn how to wash clothes, daughters take out the trash. The schedule rotates.