Posts for July 2010

Tips on Giving an Allowance

By Bob Masterson

An allowance is a great means to teach children how to manage money, develop budgeting skills and encourage independence.  By giving an allowance and giving the child the responsibility to pay for the things they want and activities they like to do, it helps them see money is a limited resource and they must budget it wisely.

But an allowance should never be looked at as a salary or something a child is entitled to.  Being part of a family means pitching in around the house and doing ones part to help out and an allowance should not be tied to this.  Certain chores, though, can be assigned above and beyond their daily and weekly duties as a means for your child to  earn extra money.

How much should you give as an allowance?  As a general rule, allowance should be tied to what expenses you want your child to cover, leaving some room for savings and giving.  In our house, we  begin giving an allowance of 50 cents a week when a child turns six, as they are beginning to have a decent grasp of how money is used.  10 percent of their allowance goes towards charity, 30 percent towards college and 20 percent towards long term savings.  The rest is up to them.  They save for toys or games they want to buy, but if they want to get a treat of some kind, they are expected to pay for it themselves.  This gives them the opportunity to see the cause and effect of their spending decisions.

As our children get older,  their responsibility towards money and associated allowance grows along with the expenses for which they are responsible.  For example, extra curricular activities such as Boyscout dues, camping trips and movies are the responsibility of our three older boys.  They enjoy the responsibility of managing their own money and make adjustments to their finances as priorities or unexpected events happen just as we adults do.

In the end, allowance and the responsibility that goes with it is a means of preparing your child for adulthood.

Copyright Tips on Giving an Allowance © 2010. All rights reserved

You’re Never too Young to Learn About Managing Money

By Michael Grosvenor

“When it comes to teaching kids about money, the sooner the better” says CNN Money. Early understanding of earning and managing money lays down such an important foundation for your child’s future. The more your child understands money the more conservative with it they will be. The concept is that the more they understand the value of the money they earn and the financial responsibilities that come with life, the more they will carefully pay attention to where the money is going.

A good way to teach your children good spending habits is by involving them in yours.  Whenever I have a big dollar purchase coming up, I research.  Much time is spent comparing features, quality, and of course, prices.  Include your kids in this process on some of your purchases. Show them why you choose this over that, how to compare prices and stick to a budget.

An allowance is another great teaching tool, according to the CNN article. This money can show the impact of the choices they make. “Make it clear to your children what kinds of expenditures the money is for, and that they are expected to save some of it.” Don’t forget to give them some freedom to make their own choices. This will help them learn from poor decisions as well as the value and reward of the good choices they make.

Teaching your child financial responsibility at a young age is not about taking away their childhood, but preparing their mindset for adulthood at a time where kids are most receptive to learning. You will be amazed at the impact this has on the rest of their lives!

Link to: http://money.cnn.com/magazines/moneymag/money101/lesson12/

Copyright You’re Never too Young to Learn About Managing Money © 2010. All rights reserved

Paying for College in a Down Economy

By Rebekah Johnson

Now, more than ever, there is an incredible amount of pressure on young people to graduate from college.  Employers are demanding an educated workforce that is willing to compete globally.  To give students the best advantage, we want them to attend college – but in a tough economy, one or more parents may have lost a job or taken a severe pay cut.

However, despite the down economy, there are several ways parents and teens can work together to save for college without taking out a second mortgage or losing the house.

1.  Consider community college.  First, if you have a brand new high school graduate, look for local community colleges in your area.  Many community colleges offer courses in a number of disciplines for any major.  This will help the undecided students find their niche, and help those degree-driven students achieve their two years of their bachelor’s degree at nearly a third of the cost.

2.  Apply for scholarships.  Search online, inquire at work, and at your local school.  Fastweb.com is a great site to search for scholarships that your teen may be eligible for.  Many employers have scholarships for their employees’ children or dependents, and most high schools offer scholarships for their graduates.  In addition, most colleges offer scholarships for prospective students based on academic record, involvement in sports, leadership, or other skills.  Even by earning several small scholarships, students can combine them to pay for a majority of their tuition, if not all of it.

3.  Fill out the FAFSA form (www.fafsa.gov).  Completing the form online is the only way to see if your student could be eligible for government financial aid or work study.  It’s a lengthy form, but completely worth the effort for subsidized government loans, grants from the government, or assistance from the academic institution.  Without filling out this information, it is extremely difficult to get the financial help that could help your student go to college.

4.  Get a part-time job.  Sometimes “working your way through college” just works.  By getting a part-time or work study job during college, your student will earn cash to pay bills but also teach time management skills.  Working his way through college will help your student value and appreciate their own investment in their education and future.

The college process is a long one and requires commitment and hard work from both parents and teens.  Easing the financial burden on both parties will make the college years easier and much less stressful.

Copyright Paying for College in a Down Economy © 2010. All rights reserved

Sandy K. – Ann Arbor, MI

I am a 5th grade teacher at Burns Park Elementary in Ann Arbor Michigan, and had the pleasure of using Family Mint with my 5th graders.  I used it as a way for each child to create academic and social goals for themselves.  We had whole class goals as well as individual goals.

Some examples of class goals were:
• Behaving well in specials classes.
• Keeping the classroom clean.

Some examples of student personal goals were:
• Reading a certain amount.
• Turning in homework.
• Not “gossiping” about others.

Right off the bat, the students loved it for a variety of reasons.  First off, they got to make a personal profile with a variety of pictures to represent THEM.   Secondly, they got to track their goals as they were met (or not met), so they could see in front of them how far away they were from achieving what they wanted.  They also loved trying to get a lot of money for free (but the banker wasn’t fooled ).

From a teacher’s standpoint, I saw the entire class striving for real goals which they may not have paid attention to as much.  I saw confidence growing.  I saw some children pushing hard and wanting to achieve, and others pushing hard for the intrinsic value.  It helped define goals.  My room was cleaner too!

This program also allowed the students to get used to the world of finance in an introductory way, noticing their transactions and totals as they went.

I would highly recommend this program.  The company cares.  They take care of you.  The program is a definite teaching tool.  Kids love it.