finances

Parenting Q&A: “I Can’t Afford to Give My Kids Everything. Will They Suffer Emotionally?”

Written on October 2, 2012 at 3:39 pm , by

 

Teen parenting expert Rosalind Wiseman answers your tough questions.

Q. How do you keep your family happy? And by “happy,” I mean comfortable without cost. Times are tough now, but I don’t want my kids to suffer emotionally because I can’t afford to give them everything.

A. Although life can be horribly stressful when money is tight, it’s so clear to me from my work around the country that having a lot of cash is no guarantee of a child’s contentment or a family’s harmony. So I’d like you to consider redefining happiness as striving for these four things in life: curiosity, hope of success in something you feel good about, being a part of something beyond yourself, and feeling connected to your loved ones and your community. I’ve found that’s where true joy lies for adults and kids. And if your children still complain about not getting the latest iPhone, have an honest conversation with them that includes a look at the family budget. When you do this calmly, your kids are more likely to accept (and appreciate) why their entire Christmas list isn’t going to end up under the tree next month.

Do you have a parenting dilemma for Rosalind? Send an email to askrosalind@familycircle.com.

Rosalind Wiseman helps families and schools with bullying prevention and media literacy. Her book “Queen Bees and Wannabes” inspired the hit movie “Mean Girls.” She writes the Ask Rosalind column for Family Circle, and blogs about parenting tweens and teens on Momster.com.

An Age-by-Age Guide to Teaching Kids How to Invest

Written on May 1, 2012 at 9:10 am , by

 

By Stacey L. Bradford

Investing can be child’s play. A little wisdom now can lead to long-term gains for your kid’s future.

UNDER AGE 9: As soon as your child grasps the concept of a dollar, start talking about saving and delayed gratification.

1. Implement a weekly allowance. While some parents use it as a reward for completing chores around the house, it can also be a teaching tool to show that earning money is a separate and important skill, says Joline Godfrey, author of Raising Financially Fit Kids.

2. Help kids create a simple budget. Explain the benefits of putting money aside for toys, ice cream outings or other things Mom and Dad usually pay for.

AGES 9–12: Tweens are mature enough to appreciate the concept of using money to make money, says Godfrey.

1. Once your child has saved $100 from his allowance, take him to the bank to open a savings account. Allow him to fill out the paperwork so he gets comfortable interacting with financial institutions, says Carrie Schwab-Pomerantz, a senior vice president with Charles Schwab.

2. Consider gifting your child one share of a publicly traded company that he likes, such as Walt Disney, Microsoft or Coca-Cola (share prices range between $30 and $70), suggests Justin Fulton, a principal at Signature in Norfolk, Virginia. Show him how to monitor the stock’s price online.

AGES 13–15: Teens are ready to grasp more complex financial lessons and may ask if investing is risky. While there’s no guarantee stocks will increase in value, over the past 10 years the stock market as a whole has appreciated 2%; in the past 20 years, 4%. Investing is also the best way to beat inflation, says Schwab-Pomerantz.

1. When your teen has at least $100 that is not earmarked for something else, open a custodial brokerage account and invest the money in an S&P 500 index fund. Buying this sort of mutual fund limits risk (you’re investing in a diversified basket of holdings). Review the monthly account statement with your teen.

2. Evaluate one of your own investment portfolios together. If you’ve been saving for your teen’s education, for example, share that account so she can see the choices you’ve made and how your -money has grown, recommends Fulton. It also helps her understand how much you’ve saved for her college years.

AGES 16–18: Let your teen manage her portfolio. It’s okay if she makes mistakes—the point is for her to get comfortable so she knows what to do when she’s eligible to contribute to a retirement account.

1. Arrange a meeting between your teen and a grandparent, friend or colleague who is knowledgeable about the market, says Fulton. Ask that “expert” if he would be willing to mentor your teen and touch base semi-regularly about her strategy.

2. Encourage your teen to invest in one or two companies or mutual funds. She should research potential investments online—your brokerage firm may even offer free tools.

Online Resources

schwabmoneywise.com: Topics include saving, credit cards and investing, plus definitions of terms such as stocks, bonds and exchange-traded funds.

oneshare.com: Purchase one share of a company for your kid and he’ll receive a framed stock certificate and starter kit.

orangekids.com: Planet Orange, ING Direct’s interactive, space-themed game, teaches kids in grades one through six how to earn, spend, save and invest.

weseed.com: Kids can create virtual stock portfolios and track the real market’s returns.

investopedia.com: From market basics to sophisticated strategies used by day traders, this comprehensive site offers tutorials, definitions and news.

Have you taught your kids to invest? Tell us how in the comments below.

Financial expert Stacey L. Bradford is an award-winning journalist and author. When she isn’t writing, she’s busy teaching her kids the value of a dollar.

Saying “No” to Your Kids’ Material Demands

Written on April 2, 2012 at 6:02 pm , by

 

By Stacey L. Bradford

Recently my daughter begged me for an American Girl doll. Fortunately, a simple no was all it took to end the discussion. But I realize in a few years it won’t be so easy to deny her, particularly when the new toy or gadget is something all her friends have. What’s funny is that I always thought if I gave her enough love she’d never compare herself to other people. Boy was I naive.

In fact, kids are neurologically hardwired to crave the same stuff as their peers. “As tweens approach middle school, they passionately seek acceptance from friends,” says Wendy Mogel, Ph.D., author of The Blessing of a B-Minus. It doesn’t take long for them to realize that one way to fit in is to dress like everyone else. “That explains their ‘need’ for the right stuff,” Mogel says.

While I don’t want to impact my daughter’s social life—and I cringe at the thought of consumerism playing a role—I do hope to safeguard her from irresponsible spending decisions using this approach.

1. Define Your Values: Parents should outline their family’s values with their kids, says Gregory Jantz, Ph.D., author of When Your Teenager Becomes the Stranger in Your House. Draft a mission statement and try to live by its principles. Jantz’s family’s statement, for example, includes having a strong work ethic. So when his boys requested a Nintendo DS system, he reminded them of their family’s commitment to hard work and asked how they -intended to earn it. “Simply telling teens they can’t have something doesn’t work,” Jantz says. “You’re dealing with constant comparisons to their friends.”

And it shouldn’t come as a surprise that those friends’ parents may believe in a different set of principles than you do. In other words, they give their kids just about anything. The best way to counteract that is to refrain from criticizing them in front of your kid, says Jantz. Instead, explain that every family has its own rules and you are doing what you think is best.

2. Set Limits: It’s also necessary to create and enforce financial limits, says Mogel. This teaches kids that there are restrictions on how much your family can afford. Implement a spending cap of, say, $200 for a back-to-school wardrobe and ask your teen for input on how she would like to allocate it. And under no circumstances should you apologize for setting a budget.

3. Empower Through Earning: There will be times when your kids’ desires exceed their limits, or when they’ll want something you cannot afford. As long as the product doesn’t go against your values, help your kid come up with a plan to purchase it. For example, if your son wants a reasonably priced digital camera, assign him some extra projects around the house. By earning small amounts of money over time, he can save up to buy the camera himself—and he’ll probably appreciate it more if he’s forking over his own cash.

4. Retain Veto Power: Remember that you always have the right to say no, whether or not your family can afford something. You don’t have to justify your decision to not let your 13-year-old get an iPad—even if he saved up for it. Your job during these years is to send your kids off to college prepared to make smart, sensible spending choices on their own.

What have you refused to buy your kid? Share in the comments below.

Financial expert Stacey L. Bradford is an award-winning journalist and author. When she isn’t writing, she’s busy teaching her kids the value of a dollar.