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The Money Messenger -- Wrapping Up the Year
December 10, 2009

Hi,

Welcome to Issue #025 of The Money Messenger!

The Money Messenger brings you the latest on your kids and money.

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The Money Messenger


In This Issue

December is a month of celebrations - Christmas, Hanukkah and Kwanzaa - as well as the month to start thinking about the new year. In the US, we've survived the shopping frenzies of Black Friday and Cyber Monday. Many parties at neighbors, friends and work have begun along with the holiday lists of parents and kids everywhere. It's a bit crazy at times but most of us are managing to keep our holiday cheer!

It's also the time when one year ends and a new one begins. December is a great time for reflection on all the stuff that happened in 2009. Did you teach your kindergartener how to count money? What about that teen chore contract you and your son worked through?

January 1st is the traditional time for New Year's Resolutions, but even without those it can be a good time to set goals for the coming months or year. Maybe you've been meaning to start an allowance program for the kids or work on a family budget. What about helping your tween set up a babysitting business or helping your teen find their first job?

But let's not get too far ahead of ourselves. This month, the articles focus on making the most of what we've learned in the past year. It's not about making a list of all that stuff you though you'd do that didn't get done (miss an allowance payment? forget to track those teen chores?) Money education is an ongoing process at all ages, so there's no reason to get hung up on stuff that didn't quite work out. The key is to figure out if something didn't work for a specific reason and get ready to change it in the coming new year.

A reader's question on how to focus on taking small steps to teach kids about money when it can seem overwhelming

What's new and what's next?


Note from Jennifer

The holiday season is in full swing! Our neighbors have their decorations out and many of the neighborhood houses are literally aglow each evening. And now, we've had our first official snow day at school.

With all that excitement and craziness, this newsletter is finding its way to you a tad late. Do you have days and projects like that? Maybe even some of your family money "projects" fall into this category. We find ourselves in this situation at times, too. Our best intentions get overshadowed by the everyday life things that have to be taken care of.

December is a great time for reflection - and not the beating-yourself-up-because-you-fell-behind kind. Instead, think about what you would do differently. Maybe that allowance program was too complicated or time consuming to work for your family. Or perhaps that elaborate chore chart just wasn't as motivating for your kids as you thought it would be.

I personally find that all the self-reflection goes a little better with a nice cup of hot tea or cocoa by the glow of a Christmas tree. If I time it right, I can do this on December 12th which is National Cocoa Day (or you could observe National Eggnog Month instead). Whatever your choice, settle in and enjoy this edition of the newsletter.


Feature Article
2009 Savings Goals: Was It Hard to Save Money?

Saving money is often one of the top money goals for many people. This can be true of kids, parents and families overall. But, so often, it is a goal that everyone can struggle to meet. Things happen in life that cost money, and they seem to happen just about the time you think you have your savings program on track. Whether it's birthdays, holidays or new tires for the car, there always seem to be challenges to reach this goal.

As 2009 comes to a close, it can be helpful to look at what specific things caused your savings goals to be harder to reach. This will help give you ideas on how to design a better savings program and set of goals in 2010. Remember - be nice to yourself about this. This not like you are a teacher grading a paper and making red marks all over your goals. This is about setting yourself up for next year's success.

  • Did you make savings part of your family budget - or was saving something that you were planning to do with anything that was leftover? For me, one of the biggest challenges here is that there is almost always something that I forgot to budget for. Oops - there goes the savings. I find that if I make it part of the budget and actually move the money to savings, it will stay there. And, the things I've forgotten get covered anyhow.
  • Do you use automatic transfers or have a direct deposit to savings? Similar to making savings part of your budget, this helps get the money out of your daily money pot. This really does make it less likely that you will spend it.
  • Have you gotten creative on how to save money on groceries or other things you buy regularly? This may include shopping warehouse clubs, using coupons or buying groceries at discount retailers such as Wal-Mart or Target. Sure, you don't want to spend your grocery savings on gas because you are going to five different places. But take a look at your buying habits and think about new options. Also, you might reconsider buying online. Many retailers offer free shipping even outside of the holidays and cheaper prices.
  • Did you set a savings goal? No matter what the goal, it has been proved that people who have a specific goal are more likely to achieve it than people who don't. The more specific the goal, the more true this is. If your 2009 goal was "save more money" you might want to consider having your 2010 goal be something like "save $500 by June 30" or "save 5% of my paycheck." You can also attach your goal to an event such as a vacation.

These are just some ideas to get you started on how you might want to remake your savings program and goals for 2009. You might need to include some other things that are unique to you and your family to make sure your 2010 will work for you. (The same process applies to kids, too. Have them think about why they may not be saving money and what ideas might work for them next year.)


Feature Article
Helping Kids and Teens Start Investing with Gift Money

If teaching your kids and teens to save money and invest has been on your list for 2009, it's not too late to reach that goal. Money can be a common gift, and there may be even more cash gifts at Christmas. Getting cash is often quickly followed by them hitting the stores sooner than they get it in their pockets or piggy bank.

It's not realistic to expect kids or teens of any age to put every penny he gets into savings or investments. (Heck, it's not realistic for adults either.) But it's not unreasonable to encourage them to put aside part of their money. If you explain how investing works in terms that your child can understand, there's a good chance that he will be eager to try it. Who wouldn't want their money to grow into more money?

If you choose to invest your child's money, it's best to stick with fairly safe investments. A money market account is a good place to start. The return isn't as much as it would be with most other investments, but the risk of losing money is very low. In this way, money market accounts are alot like bank savings accounts. They aren't insured but they are also highly unlikely to go below the amount that has been deposited.

Once your kids have seen how their money can grow in such an account, you might consider investing in vehicles that offer the potential for higher returns, such as stocks and bonds. This can be done in college savings accounts or in a regular brokerage account. Either way, they will learn the benefits of putting money to work instead of spending it all as soon they get it.

If you are still having trouble exciting your kids about saving, think of ways to get them more involved or interested. Here are a couple of ideas:

  • Match your child's contributions. For every dollar he puts into savings, you could put a certain amount in out of your pocket. This could be a certain percentage (say 5% or 10% or even more). It's the same sort of concept employers use with 401k plans. It won't be in everyone's family budget to do some of these suggestions, but they are worth considering even at very modest levels if you can swing it (and it will get your kids started).
  • Get them online to see their accounts real-time. Getting statements in the mail can be great - but they may only come every three months. Even if they arrive monthly, that may not be often enough for short-attention spans. Letting them see their accounts online can be a great way to keep them in touch with their money (and what it is earning).
  • Have them set a goal. Having a goal to measure against can motivate almost anyone. This can be especially true for kids when it involves something they want. It could be something small and inexpensive or a larger item. The idea is that it is something that they choose and get to buy after saving money for it.

If saving isn't quite on the money education list yet, you can still get started on something before the new year. Use these pages to get started on all aspects of kids and money:




Ask the Editor!

Here's where I answer your questions. Katrina writes that she gets stuck when it comes to teaching her kids about money. It's not that she doesn't have ideas. It's that she has LOTS of ideas. In fact, she has so many ideas that it can be a little overwhelming on where to start and that makes it even more challenging. Here's the advice:

There are plenty of parents who are thinking that this must be a nice problem to have. As one of the parents who sometimes struggles with any sort of creative teaching, I am a little envious of anyone who has ideas coming out their ears!

But, I can really appreciate having too many ideas or too many things on the list. It can be just as frustrating as not having any ideas. And, the end result may be the same: it can be hard to get started and get moving.

If you find yourself in either situation, try these tips for getting unstuck:

  • Pick one topic per month to focus on. January might be setting up an allowance program with February being about volunteering or giving back. Then, pick one activity per week to do or discuss. Keep it simple and straightforward and you'll be less likely to get overwhelmed.
  • Have the kids come up with their own ideas. This could be which topics you learn about each month or what activities you do. Kids can be more engaged when they have a hand in the planning so use this to your advantage.
  • Go with some prepackaged resources. As tempting as it may be to come up with your own games, kids and teens can also learn from books, board games (like Monopoly or Life) or even an online lemonade stand gamethat don't require all kinds of work on your part to put together. You can use your energy to read, discuss or play the game instead of on the whole creative process just to get something put together.
  • Check with other parents. There is much to be said for the collective wisdom of parents who have traveled the path before you. Sure, not every family learns about money or worries about teaching key ideas to their kids. Still, some families do. They may be able to help you decide what ideas would work and which ones may not. Although every kid is different, there may be some ideas or games that are more complicated than they are worth. It can pay to run your ideas by someone else to save yourself some grief.

The key is to be realistic and get started. That first step can be the hardest, but it's important to stop planning and start doing. Even an imperfect game that gets played is better than a perfectly planned one that doesn't. Plus, it's pretty likely that the kids won't even know the difference!



What's New?

Don't forget about the new handy reference mentioned in last month's newsletter! It's a free downloadable e-book on tracking holiday spending - and it's not too late to get started.


Coming soon...the next issue of The Money Messenger

January is often considered a time to start anew. From New Year's Resolutions to 2010 goal setting, January starts off full of promise. Next month's newsletter will ideas for setting goals for kids, teens and families for 2010. If you have questions you'd like to see addressed for that issue, just use the Contact Form or email me at jennifer@money-and-kids.com.

Talk to you soon!



Comments or suggestions?

If you have any comments or suggestions for future newsletters, please let me know. I want to be sure that this newsletter meets your needs. Feel free to provide your comments using this contact form.


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