Allowance: Your Kids’ First Money Lesson
One of the most important things you can teach your kids is how to handle money because this skill — and not earning power — will determine their financial success. Allowance is one way to create many teachable moments.
There are many schools of thought on how to approach allowance: give $1 for every year of age or pay a “competitive” wage; use it as payment for chores, or keep it separate from chores. Well here’s a way to make your life easier, limit whining, and give your kids the power and responsibility to make choices. First, you need to track all the money that you spend on your kids. Every cent per month needs to be recorded: candy at the checkout, snacks, games, toys, books, sports, clubs, entertainment, etc. Then, decide which items they will pay for, going forward. For a five-year old, it can be candy, books, or snacks, for example; and for a 15-year old it can be clothing, entertainment and/or hobbies. That figure will determine what you give your child every week, but with the clear understanding that they will now pay for these items out of their allowance. What better way for them to weigh their choices, to understand the cost of goods, and to learn consequences? There can be no bail-outs (which is why paying weekly is a good idea) and they must abide by your rules when selecting items (e.g., “You can buy your own clothes, but if you buy something that I would not let you out of the house wearing, you will have wasted your allowance.”). In this way, you are truly giving them training in money/budget management.
Should you tie this compensation into chores? You can, but then you run the risk of your kids always asking you to “pay” them extra when they pitch in. Let your kids know that, as a family, you all work together to make the household run, and that they have set responsibilities to the group. Again, be clear about your expectations for chores. You can have consequences if they do not do their chores. They can lose privileges, such as going out with friends, or watching TV. You would know what would be the right “button” to push with your child, should you need to.
Give them the chance to make mistakes, to think things through, and show them that they are valuable contributors to the household. Teach them these lessons, and you will have raised confident, wise, responsible, and thoughtful adults who can handle money. All that from a few bucks a week – not bad.
Life’s Unpleasantries
December 17, 2009 by admin · Leave a Comment
My husband was up to something. He was pounding away at the computer and printing like a madman. When I didn’t hear the whir of the printer, there was the distinct sound of the three-hole punch chewing its way through paper.
“I’m working on something,” is all he would say. It seemed to excite him, this project. I wondered what it was.
When “it” appeared, it wasn’t impressive looking. It was a plain white three-ring binder.
“Open it,” is all he said, smiling.
I wondered if it was something romantic. He was beaming like a cat that just dragged home a bird carcass as an affectionate offering.
“What is it?” I asked.
“The Death Book,” for some strange reason, he was still smiling. “In case something should happen to me, this book will tell you where everything is, who you need to contact…” he continued on, but I wasn’t listening any longer.
I recoiled from this stark white book like it was a jinx.
“Look at it, this is important,” he said. He wasn’t smiling any longer. He looked irritated that I didn’t share his enthusiasm for The Death Book.
“It’s morbid,” I said, “I don’t like thinking about this stuff.”
“Well if something were to happen to me and you were stuck digging around trying to find out all this information, then you’d really be depressed,” he flipped open the book.
In it was all the information I could possibly need: Copies of our wills, all the account numbers, passwords, and phone numbers for the kids’ college funds, our joint accounts and retirement accounts, information about his pension, the details of our life insurance policies, and social security information. He had totaled up what kind of payout I could expect. His excitement morphed into relief as he shut the book.
“Well, that’s that,” he said. “Everything is taken care of.”
I had the sense that he would sleep better that night knowing that this was off his shoulders. As for me, I told myself that The Death Book was the best insurance policy I could have that my husband would live a long, long life.
Want to Build Your Own Book?
There are books out there that you can buy, or you can simply get a three ring binder or folder and put the following in it:
- Copies of your wills, healthcare proxies, durable power of attorney
- Social Security cards and statements
- Birth Certificates
- Marriage Certificate
- Divorce Papers
- Titles/Deeds to house and cars and any other real estate
- Current statements for all Bank Accounts, including account numbers and passwords
- Current statements for all retirement accounts, including account numbers and passwords
- Current statements for all taxable individual and joint investment accounts, including account numbers and passwords
- Current statements for all college savings accounts, including account numbers and passwords
- All savings bonds (or list of them with maturity dates)
- Insurance policies (account number, passwords, terms of payout)
- Employer sponsored retirement accounts, including account numbers and passwords
- Pension funds (account number, passwords, terms of payout)
- Any lists of instructions you have for family members
- Any list of personal effects that you would like handed down to specific family members and/or friends
- Some people personalize their books with family stories that they want handed down, or with personal messages (letters) to loved ones
Gift Certificates Available
December 17, 2009 by admin · Leave a Comment
Give a priceless gift: teach your children, nieces/nephews, or grandchildren to be money wise. Help your loved ones realize the importance of setting goals, budgeting, and mapping out a plan to achieve these goals. Whether they are fresh out of college, getting married, saving for their first home, starting a family, or planning for future college expenses or retirement, Real$martica, Inc. can put them on track. Certificates are issued in hourly increments (one, one-hour session for $80 or four, one-hour sessions for a discounted rate of $300). Makes a great gift for all occasions.
For more information, please call us at: 631-675-1420.
Centsability
December 17, 2009 by admin · Leave a Comment
The Centsability program is designed to educate families (especially youngsters) on properly handling their own finances. The goal is to educate and empower people to be ready for the real life application of personal finances,Participants will learn the basics to financial well-being as well as wealth-building strategies.
- Budgeting;
- Saving/investing strategies;
- Properly using debit and credit cards;
- Raising FICO and credit scores and learning their importance;
- Renting versus owning;
- Insurance considerations; The benefits of deferring income into retirement investments; and
- Assessing estate planning issues.
*Note: This program is educational and is not designed to recommend the purchase of any specific investment products.
Green for Grey Matters
December 17, 2009 by admin · Leave a Comment
Green for Grey Matters is designed to help parents understand how to navigate the very complicated world of college financing. For clients who have the foresight to research the process well before their child’s junior or senior year, the benefits can be even greater.
Parents will learn:
- What schools are a good fit for their children academically and financially;
- How to strategically use income and assets to increase their child’s chances of earning aid, merit scholarships, and loans at reasonable rates;
- The time frame and deadlines by which the necessary paperwork must be filed; and
- What avenues to pursue to make a high-priced private education affordable.
Items needed for evaluation:
- Student’s/applicant’s SAT or ACT score (estimate)
- Student’s High School GPA
- Indicate the student’s ethnic origin if Hispanic, Native American, or African American
- Parents’ 2010 Adjusted Gross Income
- Value of parents’ Non-Retirement Assets, if sold today. I.E., savings accounts, checking accounts, mutual fund/investment accounts, and real estate (but not your primary residence). NOTE: Do not include: retirement accounts or any accounts in the student’s name)
- Home Equity
- Business assets (if more than 100 employees)
- Indicate the income tax form you file (1040, 1040 E, 1040 EZ)
- Indicate Tax Filing Status (Single, Joint, Head of Household)
- State of residence
- Age of oldest parent
- Number of dependents (include the student, but not the parents)
- Sum of ages of dependents not in college (do not include the student/applicant)
- Student’s Adjusted Gross Income (Line 37, 1040; Line 21, 1040A; Line 4 1040 EZ)
- Student’s Assets (do not include 529 or ESA accounts)
- Number of students in college (include the student/applicant)
- Student owned ESA or 529 accounts
