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Is It Time for Your Teen To Start Investing?

While many parents are worried about teaching their teens basic money management, there is also an interest in getting teens to understand investing and how it can benefit them over time. In that vein, Steve Rosen's recent article in the Kansas City Star highlighted an option for teens saving for retirement.

After you stop laughing but before you stop reading, it's worth considering what the article has to say. The emphasis is on how older teens (and young twentysomethings) can use target-date mutual funds to put their savings for retirement (no laughing!) on autopilot at a very low cost. Target date funds that mature in 2055 can be a great option. It starts out being invested heavily in stocks migrating to less stocks over time.

Think your teen is not at all interested in retirement? You are probably right. But, target investment funds hold all kinds of lessons that can be worth talking to your teen about. Here are some ideas.

• Starting young allows the magic of compounding to work. It also allows early mistakes to be made up for.
• Investment strategies need to change over time - no matter your age. It can be due to getting older or a change in your goals.
• Fees matter. If you pay 1% every year out of your account, you have to make much more than than just get those fees back. The steeper the fee, the better the fund performance has to be to hold your investment even - let alone grow.
• No investment fits everyone. That may mean that saving for retirement makes your teen yawn or just flat out fall asleep. It could mean that they are not ready to commit to any type of investment - a savings account at the local bank (or their own school bank) is just fine, thank you.

And don't forget the last important point: most kids and teens don't get it the first time around. Talking to them now about retirement and savings in general can go miles towards them making better decisions as they get older.

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Does Your Child Have a Credit Report?

Twice within the last month, I've seen articles indicating that parents should monitor their kids' credit reports. To be fair, I've seen suggestions of this before but usually from a business trying to sell me a service. The value of these services ranked right up (or down) there with the value of Gerber life insurance. Not a good deal at all.

But the articles I've seen recently, including this one at WalletPop, are more serious and not trying to sell anything. The issue is that fraudsters have found a new and creative way to commit identity theft. The targets: dead people and kids. Nice.

This AP story provides the details but the general idea is that criminals are using computers to find dormant social security numbers - including those issued to kids who aren't yet using them - and then selling them to help people get credit and run up huge debts. It starts small as the person buying the social security number establishes a solid score - and then blows up.

Parents can protect their kids by monitoring their credit scores the same way they monitor their own. (You ARE monitoring your credit, right?) Go to annualcreditreport.com, the only federally sponsored free annual credit report Web site, as a start. In addition, check out the tips in this recent article from the Chicago Tribune.

I'm on my way to check my kids' scores now...what about you?

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Help for the Family Budget: Expenses You Don't Need

As you look at your family budget and personal budgeting categories, it pays to keep in mind expenses that you just don't need. You may have even heard of many of them before. That doesn't mean that everyone is doing a great job of avoiding them.

This article from Kiplingers on these expenses is a nice reminder. Here are my top 5 favorites (out of their 10).

• Overdraft fees. There are at least 2 ways to fix this. If you are not good at tracking your balance and tend to run it on the low side, then sign up for automatic transfers between a savings account and your checking account. They have to be at the same bank but it's usually free - and beats that $25 or so charge for an overdraft (or 3).
• ATM fees. If you are going to be hitting the ATM frequently, how many ATMs a bank has that you can use free of charge should be one of the things you consider when you choose a bank. That doesn't mean that you have to go with a mega-bank. You can get the same ATM network options through smaller banks that are members of a larger network. Just be sure it matches where you will be when you need cash.
• Coin counting machine fees. This is a great lesson for kids in (almost) hidden charges. Kids can usually spot these machines across the store and may even want to bring their piggy bank in to get dollars for their coins. But the cost can be high - like 10% high. Teaching kids about money can also mean teaching them how to hold on to it and this is an easy example of that.
• Pet care. People love their pets. There are plenty of businesses starting and making great money because of it. Doggy day care, pooper scoopers...you name it. These services can charge quite a bit. Consider instead switching off duties with neighbors - or even giving the job to a kid that wants to make money.
• Water. You are driving through McDonald's and want a water. You can get it in a cup for free or pay at least $1 to get the bottle. Lots of people opt for the bottle. And not just at the drive-thru. Plenty of people are opting to drink bottled water at home and paying the price. Just say no - and teach your kids to do the same.

These are also great tips to use when teaching your teens money skills. Being able to understand expenses and fees that they can experience in daily life is critical to their financial success.

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Get Ready for The Money Messenger's Fall Chore and Allowance Issue

The next issue of The Money Messenger (the money-and-kids.com monthly newsletter) is all about fall chores and allowances. Here is a sneak peek at what you will get:

• Feature article on Fall Chore Programs for Kids and Teens
• Feature article on Allowance Updates for the New School Year
• Answering a reader's question on keeping track (and staying on top) of chores for her 3 kids
• Four great new resources for chores and allowances...including online chore tracking and a great book resources on allowances from a very trusted source in financial education
• A preview of what's to come in October...aren't you curious?

If you aren't subscribing yet, what are you waiting for? Click on over here and get set up in an instant. Be sure to let your friends and other parents know too!

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The Best Defense When It Comes to Smart Spending

Sometimes the best defense is a good offense. It's an old sports adage (not that I'm a huge sports fan), but it can also apply to money skills that you are teaching your kids.

What does a good offense look like when it comes to money?

First, it starts with a solid budget. You can use your family budget as a starting point or try starting one specific to your kids. This is especially a great thing to do if you are looking to teach your teen money management. A budget will help you get a handle on what comes in and what goes out - and where it goes. This WalletPop article does a great job of explaining this and also has some great tips on how to get started.

Second, try to get the best prices on items you buy. That may mean clipping coupons and shopping sales. You might start buying items off of Craigslist or ebay. The thing to keep in mind that all the bargain shopping in the world won't help you if you don't start with a budget - that's why it's the first step.

Third, keep learning about money. The more you know, the better you will be able to handle your money. This is especially true for kids and teens and why it is important for them to learn key money lessons while they have time to make mistakes at home. But learning isn't just for kids. There are plenty of adults who don't understand all the terms of their credit cards or their mortgages (yes, still even after the mess we've seen).

If you and your kids can focus on these three main lessons, you will be miles ahead in money defense and offense - not to mention in your financial education and security.

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Kids and Money: The Price Tag of Kids' Sports

I've already bought one new pair of soccer cleats and shin guards and am getting ready for Round 2. We'll likely need new basketball shoes, shorts and some sort of football equipment too. Did I forget the goalie gloves? I'm not sure I put enough in the kids' sports budgeting category this month for this!

Does this sound familiar? You may have just gotten over the sticker shock of school supplies to run head first into the cost of sports. Some of your costs may be on the higher end like the parents whose kids got to the Little League World Series even though such expenses are not just isolated to baseball.

Many parents pay to travel to gymnastic and wrestling meets, soccer tournaments and dance competitions. In those cases, your sports budget starts to include hotels, meals out and maybe even less income for missed work (unless you are using vacation time). It can be a definite hit on the family budget.

Most parents I know say it's worth it. These are priceless experiences whether their kids turn into sports stars or not. Still, it makes sense to look at what you are trying to do as a family including volunteering as a family or having your kids trying their hand at earning money or just taking it easy for a change. Sure, many of those decisions aren't about the money. Just like many other decisions in life aren't, but it pays to keep it all in perspective...as you set off to find that perfect pair of cleats!

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Leaving a Summer Teen Job the Right Way

Whether your teen had a summer job or an internship, they need to leave that job on good terms. In many ways, this is using simple common sense. Still, for teens that haven't held a job in the past leaving a job may foreign territory.

These tips from US News and World Report's Alison Green can be just what they need. Here is a quick summary to get your teen started.

• Say thank you for the opportunities that were given. Everyone likes to be acknowledged - yes, everyone, including the boss.
• Get feedback on what could have been done better and what was done well. It's good information for future jobs and even for school.
• Talk about future plans so people can keep you in mind for opportunities both at the place worked as well as other places. Plus, it can help when your teen needs recommendations or career advice.
• Update (or start) a resume. Many teens don't have one yet, but after a first job or internship, teens can start building a solid resume for future employers. Updating it now when all they learned and did is still fresh in their minds is important.
• Reflect on learnings from the job. This goes hand-in-hand with getting outside feedback. You can help your teen reflect by having them think about what they liked (work hours, air conditioning, their boss) and what they didn't (filing, the culture, being the new hire).
• Stay in touch by sending a short e-mail or making a quick call every month or two. Having your teen keep their former co-workers updated and staying in touch can pay dividends down the road. It's an informal way of networking that will really set them apart from most other interns.

A big key in all of these tips is helping your teen understand that you just don't walk out the door on the last day never to look back. It's a lesson that will serve them throughout all their future jobs.

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Talking Money with Kids and Teens

There are plenty of surveys being done on whether parents are talking to their kids about money including one by Schwab as well as one by American Express. This last one points out some key gaps in terms of how the conversation is going. Among other things, it shows that parents think they are having more talks than the teens remember having.

While that is a pretty standard gap to occur in the teenage years - about any topic to be honest - it has consequences to everyone's financial future. Similarly, the majority of parents (80%) and kids (70%) think that a key way that kids learn how to manage money is to have a budget. But only 40% of them actually have a budget to work with. Hmmmm...

That's where having a Money Night Talk scheduled can help. And, yes, it's exactly what it sounds like. It is a night where parents and teens sit down to talk about the money skills that are most important to them. The first National Money Night Talk is scheduled for September 16th, but you could have one when it works for you. There is no TV special, teleseminar or webcast to worry about.

There are, however, some great resources to get your discussion started at moneynighttalk.com with tips for how to talk to middle school, high school and college-age kids in separate sections. Be sure to scroll down past the video clip to get the downloadable PDF or to see the tips on the screen.

Fair warning - American Express is highly involved in this which is fine. I am a little bugged, though, at the ad placement on the front page which advertises credit cards for teens. The suggestion is that these are part of teen money management skill development - and maybe even part of your money night talk. There's enough good stuff here for me to get past that - and it might not bother you at all (just wanted to let you know what to expect).

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Family and Teen Budgeting: A New Way to Budget?

Does your family budget get updated as often as it should? If you are like most people, doing it or keeping personal budgeting categories up to date is one of the last things on the list.

That's where a new approach from Julia Scott via WalletPop.com can come in handy. This 15-minute budget approach using a money pot is explained in this short video clip.

What a I really like about this approach is that it separates your fixed expenses from ones that are going to vary each month. That provides a great basis for knowing which expenses you really can influence immediately and reduce as you are looking at your budget. Plus, it also gives you a quick glance at the fixed expenses that you could work to reduce over a longer term, such as refinancing your mortgage or trading out of an expensive car lease.

This quick budgeting approach can also be a great way to get your teen to do their own budget as part of teaching them teen money management skills. It's not complicated and can be done so fast that even their eyes won't glaze over. There is definitely something to be said for any approach that can accomplish that!

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Teen Money Management Tools

Are you looking for a great resource for teen money management (besides money-and-kids.com of course)? Weeding through all the options can be time-consuming and frustrating. That's why I love it when I find resources that really deliver (and I'm pretty picky about what I'll spend money on).

I’m also pretty particular about who I recommend when it comes to teaching kids and teens about money. There are so many people ‘selling’ so many products and services, it’s hard to weed out the good from the great. Patti Handy falls into the great category.

She is the founder of Teens Cash Coach, and her passion is educating and empowering teens with money smarts so they won’t struggle the way many adults are today. To that end, she has a number of great resources that are sure to help you as you work with your teen on money skills. Here are a few you might want to check out:

• How to Ditch your Allowance and be Richer than your Parents is Patti’s book is a must-read book for all teenagers and young adults ready to be empowered with the tools to make them money-smart, money-responsible, and money-independent.
• The Prosperous Teen Home Study Course is a two volume DVD program that brings an amazing amount of money skills to you. With the ability to watch over and over, if needed, this invaluable information will teach your teens how to create financial independence and financial peace.
• The National Association of Properous Teens membership gives you access to the amazing money lessons found in her popular DVD program, The Prosperous Teen. These lessons are delivered weekly, in a digital format, at a fraction of the cost of the DVD program. With the ability to watch over and over, if needed, this invaluable information will teach your teens how to create financial independence and financial peace. PDF downloads are also sent, so you may take notes and do the action items for added support. The course is 40 weeks, but allows you to cancel at anytime.

If you are struggling to figure out where to start with your teen's financial education - or if you need a new resource - Patti really has this stuff covered. She does such a thorough and quality job in all her products that you just can't go wrong checking them out. Of course, not every resource is right for everyone, but one of these options may be for you.

(Please note that I am an affiliate of Patti's so I may receive compensation if you buy something from these referrals. However, I never recommend any product or service just to receive a commission. I highly believe in Patti's products or I wouldn't be passing them along to you.)

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Getting Kids to Save for Christmas

I'll admit it. I am struggling to save for Christmas buying in the middle of all the back-to-school expenses. In fact, I'm struggling to even think about winter holidays in the middle of a 90-degree day. It's coming, though...and as we all usually find ourselves saying "It will be here before you know it."

What a lovely overused cliche.

As we come upon the countdown of four months until Christmas, now can be a good time to look at your family budget and how much you are putting in your for holiday spending. Even if you don't have the $1,000 goal that this MoneyTalkNews article uses as its baseline, you and the kids can set some holiday savings goals and get started on them now.

Many of the easiest ways to do this are to go back through your current spending categories and see what can be cut. This is a worthwhile exercise even if you did it at the beginning of the year. For example, you may have thought then that you couldn't live without your landline phone. Is that still the case? Have you really been going to the gym the way you promised yourself you would?

Get the kids involved by asking them to come up with three things that could be cut down or eliminated. Challenge them to find stuff for a garage sale or to sell on EBay or Craigslist. Make it a contest to see who can come up with the best savings or earnings idea.

And, don't forget to consider the Christmas savings clubs being offered by Sears and Toys R Us. Both offer matching incentives for saving (and then spending) with them - which are completely worth considering IF yo shop there.

So...how much can YOU save?

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How Kids Can Make Money on EBay

My kids want a computer. Given where they are in their education and some supplemental things we want to have them learn, this is becoming a necessity (I cringe as I write that). The kids don't really know that part, so they have come up with a plan to make their own money to buy the computer.

Their grand plan? Sell a bunch of stuff on EBay and use that money. What they want to sell should net them a fair amount towards their goal. We are willing to match what they earn, and that total will buy a respectable computer. There are a couple of issues with their plan to be sure. The biggest one being that most of the stuff being sold is coming from one child, but that's a different post!

This list from Raising CEO Kids on what you need to sell on EBay is a great starting point. The irony that you need a computer wasn't lost on me. With this list in hand, the kids have started going through things, researching prices on the web (using my computer) and getting ready to take the pics for the listings.

We are still debating whether we should invest in some pricing guides for specific items that may have more value than what we know. These are collectible items - although not all of them have the same value. This is really the reverse of what we try to do in teaching kids about shopping, and it's been very interesting trying to teach them marketing skills.

Have you or your kids sold items on EBay? What lessons did they learn in the process? Post your ideas and thoughts here.

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Are You Teaching Your Kids Illegal Money Habits?

Geez...here you are trying to do your best to teach your kids about money and then you find out you could have some habits that are illegal. Think that sounds like someone else? That surely you don't have these bad habits?

It's not as clear cut as it sounds as this article from Bankrate points out. Sure, some of these seem really obvious no-no's - like lying on a home loan application. But what about writing a check that you know will be covered by your overdraft protection? Or signing a check for someone else?

Both of these are illegal not to mention just bad money habits. Most of what kids learn about how to handle money (or mismanage it as the case may be) comes from what they see their parents doing. So, while you are teaching your teen money management or opening that first savings account for your 8-year-old, be sure to keep these habits out of your lessons.

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Comics, Cartoons and Teaching Kids About Money

It doesn't seem like that title makes any sense. How often do you hear about comics and financial education in one sentence?

The Federal Reserve intends to change that.

You can find 12 comics on a variety of money topics for kids at their site. You can order most of the comics (maximum of 35 copies) or view them online. The bulk order option is a great idea for schools and teachers while viewing online might work best for parents and families. (You will need Adobe Acrobat to read the files, but you can download it when you get ready to read the comics if you need to.)

Here are just a few of the titles...

• The Story of Money which explains the purposes of money in a modern economy as well as characteristics that items used as money have and the way the banking system creates money.
• A Penny Saved which focuses on savings - why it's important and different types of savings instruments.
• Great Minds Think...teaches the basic concepts of financial decision making in an informative, fun way including lessons on earning, spending, opportunity cost, budget basics and saving.

Finding new fun ways to teach kids about money can be challenging at times, but these comic books can really be a great find. They may not be the only resource you need but they will be a nice addition to your kids' financial library.

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Garage Sale Tips: Pricing

When pricing items, think of how much YOU would pay for the item if you were to sell it. Don't have it be too much, but if its too low, you won't make

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