All Posts
A Lesson On Spending
I received this in an email and thought it provided a great, easy way to picture our national debt by comparing it to a household budget.
Subject: A LESSON ON SPENDING
A simplification, I know, but it still holds…
Why the U.S. was downgraded:
- U.S. Tax revenue: $2,170,000,000,000
- Fed budget: $3,820,000,000,000
- New debt: $ 1,650,000,000,000
- National debt: $14,271,000,000,000
- Recent budget cuts: $ 38,500,000,000
Let’s now remove 8 zeros and pretend it’s a household budget:
- Annual family income: $21,700
- Money the family spent: $38,200
- New debt on the credit card: $16,500
- Outstanding balance on the credit card: $142,710
- Total budget cuts: $385
So… if this were your family budget, what would you do?
Turn An Old Smart Phone into a Free Gaming Device for Kids
I’m giving my 6 year old a cell phone for Christmas. Whoa! Hold on. Let me explain. My daughter is really 6, and it’s a real cell phone, but it’s not going to have any cell phone service. I’m “repurposing” a gently used Android cell phone to provide a FREE and pretty darn sweet handheld gaming device for her for Christmas.
She loves playing games on my cell phone (another Android device) and is asking us for “something like her brothers have that can play lots and lots of different games”. Nintendo DS, I’m sorry, but she’s looking for something more.
She would love an iTouch, but at $170+ that’s way out of 
Santa’s price range, and it’s way more than she needs at 6 years old. I’ve heard the LeapPad Explorer is popular this Christmas, but at $130 that’s also way too pricey and, knowing my daughter, she would tire of the included games and I really don’t want to have to buy more.
I found a “just right” option my used LG Optimus S android cell phone. I can connect it to our wifi at home and use it without a cell phone connection or bill. It has access to the Android Market and it can run most the games available there. All of the games she wants to play are FREE (as in free air). I don’t need to worry about her becoming bored with it because there are hundreds of new games available on the Android market each month.
Anyone can pick up a used LG Optimus for less than $40 on eBay (or select from a wide assortment of other used android phones). The games are free. New games are available all the time. You can work in a bunch of educational “games” as well which are also free.
What’s not to love?
Update: as a reader pointed out, old cell phones still have the ability to dial out to 911 even without service. Kids do have the ability to dial 911 from any phone in the house today, and that’s a good thing, but it will be important to emphasize that this is a real cell phone and can really call 911 just like any other “real” phone. There are apps in the Android Market like Call Blocker Gold (paid) that have the ability to disable outgoing calls, but I have not personally tried any of them yet.
For those not familiar with connecting a cell phone that doesn’t have service to wifi, here’s how to do it with an android phone:
- From the home screen, hit the Menu button
- Open Settings, Wireless & Networks
- Check the box to turn on Wifi. You will be prompted for your wifi password if you have one set (which you should!)
- Update: you can also turn on Airplane mode from here before you turn on wifi. This will keep the phone from trying to connect to the cell phone network.
Knowing How to Write a Check Is… Still Important!
Today’s kids will be tomorrow’s adults and we keep on hearing that so many young adults don’t have a clue how to write a check. We’re here to help!
For the next goal your child achieves in FamilyMint, rather than whipping out the debit or credit card at the store, take your checkbook with you and make it a learning opportunity. You could print this tutorial out too to let them follow along visually and review later.
Step 1 – Start with the Date
Write today’s date in the upper right corner of the check.
Step 2 – Payee
The payee is who you are paying. In other words, it’s who you are giving your money to. Write the company or person’s name on the line next to “Pay to the Order of”. If you don’t know exactly what to write in here, ask the person you are paying. Don’t sign the check without writing this in first! If you leave this blank, anyone can write in their own name in there and easily steal from you.
Step 3 – Amount
This is when your hands may start to get sweaty! You need to write in the amount of your hard-earned cash that you are handing over to the person receiving the check. That really is the best way to think about it… writing a check is the same as giving them real cash from your real checking account.
First write in the amount you are paying in the box next to the Payee. Start far over to the left so the person receiving the check, if they’re untrustworthy, can’t write in a “1” and change the check from $87.42 to $187.42!
Then, on the line below Payee, write in amount again, but this time using words. For example, “Eight-Seven and 42/100”. This is read as Eighty-Seven dollars and 42 cents. Most checks will already have “DOLLARS” preprinted on them so you don’t need to write that again. Also, draw a line after the 42/100 all the way to the right so again nobody could write anything extra in there.
Step 4 – Signature
The last step is to sign the check. Your signature needs to match the one your financial institution has on file, so no letting kids help with this step!
Step 5 – Enter a Memo (Optional)
This step is not required, but if you’d like to have a reminder of why you wrote the check, write it next to “Memo” or “For” toward the bottom of the check. Note you’ll only be able to see this memo later on if you’re able to access images of your canceled checks from your financial institution.
Step 6 – Update Your Check Register
Hey, wasn’t Step 4 was the last required step? No way! You need to update your check register so you can track that the money is now gone… and you don’t try to spend it again. If you don’t do this, as well as your overall balance, you could end up with fees from your financial institution for a bounced check (which could be as high as $25 or $30) as well as insufficient fund fees from the merchant you were writing a check to. This is costly!
Here’s an example check register entry for the check we just wrote at the grocery store:
That’s it! ! It’s actually kind of soothing to whip out the old pen to write a check and give my texting thumbs a rest.
Extra Credit – Those Funny Numbers at the Bottom of the Check
We covered almost every part of a check. But what about those numbers at the bottom? These are your routing transit number, which identifies your financial institution, your account number, and your check number. There may be other numbers at the bottom including the amount of the check if the check is created electronically, but this covers the basics.
Letting Kids Participate in Family Money
By Jeff
We had a mom write in with some ideas that she uses with her own kids at home. We thought they were great, so we wanted to share them with you.
This mom said she wanted to find ways to give her kids more visibility and involvement in everyday decisions she was making as a mom about money and budgeting. Here are the ideas she came up with and put into practice:
- Let them open the bills. She said their shocked faces were priceless as they absorbed how much they had to spend each month on their mortgage payment, utilities, and other bills.
- Let them help pick out groceries, but make it a game in that they can only buy things that are on sale. Whoever finds the biggest discount on things they need to buy wins.
- Let them hand over the cash at a store or a restaurant counter. There is a real feeling of loss when they have to hand over cash in their hand to someone else. It helps makes spending “real” vs. just swiping a credit card.
- Put them in charge of some of their own spending. Give them a budget for eating out and, even if they go out as a family, they must “pay” for it themselves out of this budget. She said she set up an “Eating Out” goal in FamilyMint that she makes a deposit into each month, and the kids withdraw from each time they go out.
We think these are all great ideas, and love to hear about ways you are creating teachable moments to make your kids money-smart on a daily basis.
Copyright Letting Kids Participate in Family Money © 2011. All rights reserved
“Deficit” vs. “Debt”
By Bob Masterson
With the national debt currently at $14.9 trillion, we hear a lot of talk about reducing our national deficit. My teen posed a question while watching a recent debate as to what the difference was between debt and deficit. “That is an excellent question my son,” said I, knowing that many politicians bank on most people not knowing the answer or are not paying close enough attention to how politicians spin it.
So, let’s put it into terms of a household. Let’s say our income is $5000 a month after taxes. Now we subtract all of our household and living expenses such as mortgage, insurance, utilities, food, etc. If we spend less than our income we have a surplus. Yea!!! On the other hand, if we spend more than our income, we have a deficit. Boo!!! If we have a deficit, we must borrow money in order to cover the difference, which is called debt. We have to pay interest on this debt until it is paid back in full.
If a deficit happens every month, we are living beyond our means and are forced to borrow more money and incur more interest on the ever growing debt. If we do nothing to change our habits, then over time, the interest on the debt becomes larger than any other item within our family budget. Further, if no one is willing to loan us money to cover the interest payments, we face the possibility of bankruptcy. Not a pretty picture is it?
Now that we understand debt vs. deficit at a family level, let’s return to my son’s original question about our national debt at $14.9 trillion. The government is no different than a household. The government has income it receives through taxes and fees. Expenses are subtracted and the government either has a surplus or a deficit. What do you think the government usually has? If you answered deficit you are correct! Believe it or not, the U.S. government has run a deficit in all but 5 years since 1969[i]. Not fiscally sound practices by any household standards.
Each year the interest on this growing debt gets larger and larger cutting into the government’s budget. So when you hear politicians spouting about how they are going to reduce the deficit, this is just a meaningless sound bite hoping to confuse the voter. Because, as we just learned, any deficit greater than zero requires us to continue borrowing and therefore does not reduce our debt.
By the way, your personal share of this national debt currently stands at over $47,000. That’s $47,000 that you, your spouse, and each of your kids will have to pay to our government in order to help them pay off the debt they have incurred on our behalf.
Here’s an interesting video entitled “Brother, Can You Spare A Trillion?: Government Gone Wild!” to help put this $14.9 trillion national debt into perspective.
[i] http://usgovinfo.about.com/od/federalbudgetprocess/a/Budget-Deficit-History.htm
Copyright Deficit vs. Debt © 2011. All rights reserved
What Teens Really Know About Money
By Bob Masterson
How financially savvy are our teens when it comes to money? Charles Schwab recently released their 2011 Teens & Money Survey Findings and I was quite surprised by the results, especially when comparing them to 2007 results. This annual survey polls more than 1,000 teens 16 to 18 years old and provides insights into their money attitudes, behaviors and expectations.
When it comes to being savvy about money, the line between what teens think and reality is as wide as the Grand Canyon. Most teens surveyed believe they are financially savvy. But when asked about specifics such as establishing good credit, balancing a check book or what a credit score is, the majority of teens were in the dark. In fact there is a notable decline in teen’s knowledge of money management skills between 2007 and 2011, especially around how to balance a checkbook or check the accuracy of a bank statement. Of course a key contributor to this decline could be that far fewer teens have saving or checking accounts than they did in 2007.
On the positive side, the recession has had a significant impact on teens especially around the importance of saving and 73% of teens feel it’s important to have an emergency savings. Teens also reported a shift in their mindset with 64% saying they are more grateful for what they have and listen to this, 56% say they have a greater appreciation for how hard their parents work. Another positive from this recession is it has produced more discussions within the family about money and money management.
80% of teens surveyed, up from 53% in 2007, said learning about money management, including budgeting, saving and investing is one of their top priorities with 82% of the teens saying they primarily learn about money management from their parents. Teens stated they would like their parents to talk with them more about investing, establishing good credit, career aspirations and how to budget their money.
So what does this tell us? Most importantly we need to narrow the financial literacy gap between where teens think they are and where they actually are. On the plus side teens have expressed the desire to learn about money management, which is the most important step in moving forward.
Education begins in the home and it’s never too early to begin. Kids are forming their opinions and behaviors around money at a very early age by watching us parents in how we handle and manage our money. This was the primary reason FamilyMint was developed, to act as the modern replacement for the piggy bank, where kids can learn about money management and goal setting in a safe, interactive environment, while emphasizing the importance of saving, setting and achieving goals.
Copyright What Teens Really Know About Money © 2011. All rights reserved
To Negotiate Life Successfully is All about Negotiation
By Jayne Berkaw
I’ll admit there have been several times over the course of our 31 years of marriage that I have had to walk away as my husband has negotiated for carpet, appliances, furniture and cars. I’ve gotten much better at negotiating as I’ve learned from the “master,” but he is still our go-to guy when it comes to making deals. Luckily, all of our kids have observed him in action and taken away at least some of this mastery.
Every day in life we are presented with opportunities for negotiation, and doing it successfully and where everyone walks away satisfied is an art worth learning at a very early age. Kids are natural negotiators (“I promise to do my homework right after dinner, if you let me go to Andy’s after school,” “I’ll get right up in the morning, if you let me watch one more TV show tonight,” “I know I already take dance and piano and play soccer, but I want to try tennis too!”). If you view their little “nags” as opportunities to teach them how to negotiate, first with you and siblings and then branching out to friends, teachers, coaches, vendors, etc. , you are doing them a tremendous favor.
Here are a couple of ground rules to go over with your child deal-makers:
- First and foremost, always aim for your negotiations to result in a win-win, i.e. you walk away happy and so does the guy you’re negotiating with. This means you have to think out what you really want and what you are willing to give up to make the deal. It’s all about compromising – a trait you most definitely want to encourage in your kids and one that would make the world a better place. “I need a raise in my allowance to umpty-ump so I can… I will use the money to…and you will be proud of me because…” FamilyMint provides a fun, structured way for kids to think through how to parcel their allowance toward goals they set and manage, an excellent way to build confidence and budgeting skills.
- No put downs! Remain calm and always respect the opinion and ideas of the person on the other side by truly listening to their views. No saying: “You’re so stupid!” and lots of: “I understand where you’re coming from. Here’s what I think we can agree on…”
And a few hints for you parents out there:
- Don’t jump in even when you’re bursting at the seams to add your two cents. Letting your kids work out their own deals and differences is GREAT experience!
- Lead by example. Let your kids witness your own constructive deal making – at garage sales, in the carpet store and the auto showroom, and chat with them about it afterward. Ask them what you could have done better, what they would have done in the same situation, etc.
- Praise their negotiating successes when it is done with grace and respect, positively point out how less successful outcomes might have been better and NEVER be judgmental! They learn from everything they do.
You never know when you have a little Henry Kissinger or Madeline Albright in the making, so help your kids develop their inner negotiator and make their way through life in the best possible way.
Copyright To Negotiate Life Successfully is All About Negotiation © 2011. All rights reserved
Story of Goldilocks and the 3 Imitation Bear Skin Rugs
Story of Goldilocks and the 3 Imitation Bear Skin Rugs*
By Bob Masterson
Once upon a time there was a girl named Goldilocks in search of a new imitation bear skin rug for her room. She had worked hard to save up $500 for this purchase. The first rug Goldilocks looked at was by the famous designer, L’bear. L’bear’s rugs were all the rage, but with a hefty price tag of $1,000, it was much more than Goldilocks had saved. But it was so soft and luxurious!. “Of course,” she thought, “I could just charge it. Just think of what all my friends would say when they found out I had a genuine L’bear rug of my own.”
But not wanting to make a rash decision as she worked hard for her money, Goldilocks decided to look at a couple more rugs. The next rug she looked at was made by Fuzzy Wuzzy in a country far, far away that was not known for making the best quality products. This rug was only $200, far below her budget and thus very tempting to purchase. The rug was not as soft as the L’bear rug and the back of the rug seemed much thinner as well. “But the rug is only $200,” thought Goldilocks, “think of all the money I’m saving and what else I could purchase with the difference.”
Of course there was still one more rug to look at before Goldilocks made her decision. This rug was made by Grizzly, a well known reputable rug manufacturer that had always been ranked high in quality. The Grizzly rug felt soft and luxurious like the L’bear rug, seemed very well made and at $495 this rug was within her budget.
Now Goldilocks had to make a decision on which rug she was going to purchase. Should she purchase the famous L’bear designer rug that was double what she wanted to spend, but would greatly improve her status among all her friends? Reflecting on this Goldilocks thought to herself, “It’s not worth the extra debt I would be getting myself into for the brief thrill of showing off a L’bear designer rug.” So she crossed that one off her list.
Next she reflected on the Fuzzy Wuzzy rug and all the money she could be saving. She could even buy two rugs at that price. The temptation to purchase a lesser quality rug for the savings was great. But thinking back to her mother’s wisdom of “you get what you pay for,” Goldilocks thought better and did not purchase the Fuzzy Wuzzy rug. Besides, Goldilocks said to herself, “Fuzzy Wuzzy was an imitation bear that tended to lose its hair and even with great care, she’d be forced to buy a new one in a year.”
So turning to the Grizzly rug, Goldilocks proclaimed “This imitation rug is just right!” and made the wise purchase taking into consideration quality, reputation and price and lived happily ever after.
The moral of the story is…money takes a lot of hard work to earn so we want to make that money work hard for us. Making thoughtful decisions in purchasing the things we want or need will save us money and headaches down the road. Buying something because it’s cheap will often make you weep, and to purchase to impress never works out for the best. Most often paying a reasonable price for good quality will pay for itself in the long run.
*No real bears were harmed in the creation of this story
Copyright Story of Goldilocks and the 3 Imitation Bear Skin Rugs © 2011. All rights reserved
The 5 Secrets to Help Your Kids Achieve Their Goals
“Did you know that an astounding 97% of the population does not take the time to set goals?” This was a question I asked in my post last week (http://www.familymint.com/the-secret-of-setting-goals). That post raised the larger question of: How do we know the right goals to set?
The secret behind these 5 secrets is that they aren’t just for kids. Leaders of Fortune 500 companies go through the same thought process during annual strategic planning as well as their daily priority setting. Start forming these habits now in easy, small ways and you’ll be giving your kids quite a leg up in the world!
Secret #1: Create a Vision
A vision is a picture for what you want to achieve in life. What would make life exceptional and wonderful? For your kids, there will likely be some longer term things like going to college or getting a car, and some shorter term things like games and entertainment or giving back to those in need. Ask your kids to take some time to think about this for themselves and write down what they see. Have them make a collage using pictures from magazines and newspapers to describe their vision. Have fun with this! This can be an eye-opening experience for both of you.
Secret #2: Plan steps to achieve the vision
Take the vision and break it down into separate goals. Some of the vision will require money to achieve it (e.g. go to college) and some may not (e.g. improve my ability to make people laugh). We’ll track those goals that require savings within FamilyMint.
Secret #3: SMART Goals
If you don’t write goals down, you probably won’t achieve them. There are other rules about goals too that we remember with the acronym SMART. Goals in FamilyMint are SMART! That is:
- S = Specific. If your child is saving for a video game, ideally have them write down specifically which video game they want.
- M = Measurable. Once we know which video game we’re saving for, write down the cost to acquire it. Is it $5 or $50?
- A = Achievable. A goal like buying a video game is easily achievable given a little bit of time and focus. A goal of being the richest person in the world? Not achievable (or desirable!) for most of us.
- R = wRitten. We’re strong believers that a goal that remains unwritten in a goal that most likely will not be achieved. There is magic in the simple act of writing down a goal.
- T = Time-framed. Does your child want the video game next week or next year? One may require going out and finding ways to earn money tomorrow, and the other just saving a few cents a week.
Secret #4: Do something every day
Encourage your kids to do something every day, no matter how small, to work toward their goals. How do you eat an elephant? One bite at a time. Doing something every day is a great way to build the awareness, discipline, and endurance to actually achieve our larger goals. Every day they work toward their goal is a small victory in achieving that goal.
Secret #5: Measure progress and update as necessary
This is the biggest secret of them all. “What gets measured gets done” is one of my favorite sayings. FamilyMint provides status bars to show progress over time. Have your kids pay attention to what’s working and what’s not. Don’t be afraid of failure, or of success. If they are not making progress, change something, and try again.
As adults in today’s economy, most of us are overwhelmed and tired and we don’t spend any time on this exercise ourselves. We are too busy and don’t take the time to sit down and create a vision for our own exceptional life. Part of the problem is we didn’t learn these habits in a simple way as children. The great news is it’s never too late—or too early—to start!
Copyright © 2011. All rights reserved