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The End of Overdraft Fees?
Despite many of our best efforts to keep tabs on what we've spent and where, admittedly there are times when you forget about that $50 trip to Target. You don't write it down in the check register or remember to check your online balance to see what debit card transactions (and checks) have posted. Then you buy $10 of gas - which puts your checking account in the red. Mostly, instead of being declined, your gas buying will get approved...and you get socked with an overdraft fee of $25.
Has this happened to you? Even the best recordkeepers can get surprised by these fees. The fees, which tend to compound your errors instead of acting as a saving grace, have also been a great source of revenue for banks. Many consumers and consumer advocates, though, feel like these do more harm than good especially as people are shifting to more and more debit card use. They don't stop consumers from overspending, and in fact, can cause even more damage to family budgets.
The latest news here has Bank of America is going to stop issuing overdraft fees on debit cards. It's expected that many other banks will do the same. So, come this summer, you won't have to worry about those overdraft fees still having their own budget category. That doesn't get any of us off the hook for keeping track of spending, though. If you don't have enough money in your account, these debit card transactions will now get declined unless you have overdraft protection (which is where you can link your checking account to a savings account and have automated transfers if you need them).
Bank of America indicates that this change to their debit card policy is largely driven by their customers. Even if you are not a BofA customer, what do you think about this change? It could be coming to your bank soon.
What is National Consumer Protection Week?
This week, March 7th through the 13th, is National Consumer Protection Week (NCPW). Being a smart consumer by not falling for scams and bogus offers is an important part of financial literacy and growing your money instead of losing it.
To that end, President Barack Obama included the following goal in his proclamation:
"I call upon government officials, industry leaders, and consumer advocates across our
Nation to share information about consumer protection; and I encourage all Americans to learn more about marketing and business, whether they are shopping at their local store or in the global online marketplace."
What does this mean for you and your family?
It can be a great reminder to focus on being a knowledgeable consumer and becoming more aware of the pitfalls of the financial world. There are a variety of options to help in that goal.
- Check out the local events
occurring as part of NCPW and see if there is one in your area that you might be able to attend.
- Watch a video or two on fraud by visiting DeliveringTrust.com. Here you will find free fraud education and prevention videos about identity theft, work-at-home scams, internet fraud, foreign lotteries, investment scams and more.
- Test kid and family smarts about online safety including quizzes on spyware, ID theft, online friends and investing at www.onguardonline.gov.
Many of us take consumer protection for granted - until we or someone we know has an issue. Using the tools above and remembering to be a smart consumer can be a great way to increase your family's financial security.
Financial Literacy Around the Globe
It's no secret that I live in the United States. Most of what I observe is somewhat limited to the questions that face my home nation. I'd like to think that this is true of all of us during non-crisis times (natural disasters in other nations being the obvious exception). Still, I've noticed that the financial literacy issues that have faced the U.S. are not an isolated one.
That is not to say that the issues themselves are not different across the various places around the globe. I don't know for certain that the mortgage and housing mess that is plaguing most parts of America is being repeated in Australia, Canada or parts of Europe. But there is a growing emphasis on financial literacy through a variety of ways. Here are just a few:
How is financial literacy being addressed in your part of the globe? Is it an issue - and is it getting attention?
Are You are Private Label Shopper?
Store brands or private labels have gained more popularity as people are looking to trim their family budgets. Shopping this way has
gained more steam with the economic conditions of the past year or two.
A recent Nielsen survey shows that sales of private label goods have jumped 8 percent since 2007, while brand names have declined roughly 4 percent. Plenty of shoppers find that basics such as sugar, shredded cheddar, and milk sold under store labels can cost up to 40 percent less while tasting just as good as national brands. Some items are even made by the same manufacturers.
I know our family is buying more store brands. In some cases, this is because the store brand offerings have gotten better (or we've gotten less picky!). In other cases, there are actually new products being introduced. Sure, there are some things that we won't buy in a private label - peanut butter and ketchup among them. Still, there are plenty of other things that are great.
Interestingly, there can be more than one private label option. In our area, there are both Best Choice and Always Save brands on the grocery store shelf. Plus, Target and Wal-Mart both offer private label brands that have great selection and quality. Many store brands are also cashing in on the organic food trend, so the product selection is growing even more.
What about you? Have you increased your shopping for store brands as part of maximizing your food
budget category?
The March Money Messenger Is Out!
The money-and-kids.com monthly newsletter, The Money Messenger, is available for March and focuses on saving and investing. Feature articles in this issue cover:
- What Is Investing Anyway? Talking to Your Kids About Saving and
Investing
- Easy, Low-Cost Ways to Start Investing
Plus don't miss Ask the Editor! where I answer questions from YOU the reader. John wants to get his kids and family started on the investing path - or at least the investment education path. Ideally, he'd like to do this as a family so they can all learn together. The issue? The kids are 9 years apart in age with one being 5 and the other 14. How can a family learn investing together with these age differences? Get some ideas on how to manage all this in my response.
For this month's helpful resources around the web there are four new suggestions. Ever hear of YouTube? This great video-sharing website not only has entertainment value is also has some great educational (and short) videos to help increase financial literacy for everyone in the family. Be sure to check out the the videos along with the 3 other sites in the newsletter!
April showers bring May flowers...and Financial Literacy Month! Next month's issue will focus on various topics related to financial literacy and what it means to kids, teens and families.
Sign up for your FREE copy now at this subscriber page.
The National Financial Capability Challenge
The National Financial Capability Challenge is joint program of the U.S. Department of the Treasury and the U.S. Department of Education. It is an awards program designed to increase the financial knowledge and capability of high schoolers across the United States so they can take control over their financial futures.
During February and March, educators teach students the basics of personal finance, inside or outside of the classroom. They can use the free Educator Toolkit, their own materials, or a combination. By April 9th, students will take a voluntary online exam designed to show what they have learned as well as assess their financial knowledge. In April, educators and top-scoring students will receive award certificates, and schools and states with the highest participation rates will earn special distinction.
All educators working with U.S. high-school aged students (ages 13-19) are encouraged to register for the Challenge, download the Educator Toolkit, prepare their students, and administer the online exam. The goal is for 1 million students to take the Challenge. To make that happen, lots of educators from all across the country will need to sign up and prepare their students.
This is a free program. Registration ends on March 14, so please spread the word to high school educators in your local community. They may already be signed up! If not, they can learn more about it here.
Saving Money on Summertime
In many places there is still enough snow on the ground, that it is not even beginning to look like sprint let alone summer. But thinking about your summer plans can sure make a winter day go by a little faster. While you are daydreaming and planning for those warm weather activities, it might be time to dust off that family budget and take a look at the personal budgeting categories for summer entertainment and fun.
To make the most of those dollars, consider purchasing a season pass. Many season passes are now relatively close to the same price as a one-day admission. A great example of this is the Six Flags parks. The difference in admission rates between season and one-day passes can be as little as $5. Go for two days and you come out ahead. Here are a couple of other places to check out to maximize that family budget for vacation. Be sure to check them out in the next month or two as many expire as we get into spring.
- Six Flags' season passes has some added benefits that make that season pass price even better. You get free admission to all 15 of the parks with your pass. So, you could buy a pass for your hometown park and use it when you travel during the summer. That includes the seven parks with water parks inside of them.
- Knott's Berry Farm season passes are $6 more than the price of a single day for adults. There is more of a difference for kids 3-11 (it's odd but the age brackets for the single day and the season pass are slightly different), taking you 3 visits to pay for a kids' season pass vs. the less than 2 for adults.
- Cedar Fair, owner of a number of amusement parks including Knott's Berry Farm, Cedar Point and Valleyfair, is offering a platinum pass that buys admission to all its parks for $160 for adults. At an average price of $80 for each single day pass, this season pass would be covered in two visits.
- Some Disney Parks offer discounts to residents living in the same state as the park. For instance, California residents can pay as little as $169 (vs. $299) for a season pass to a California park.
Saving money on the admission prices is a good start, especially when you start adding in the cost of parking, eating and souvenirs. There are options on the last two but not the first. So, before you buy any passes, keep that summer thinking going and take a good look at your plans and your budget. Also, be sure to consider teens that might be working this summer plus any other commitments. Getting a good bargain isn't really that great if you don't use it!
Building Financial Literacy with Girl Scouts
Do you have a Girl Scout in your family or know one? In addition to many of the great things we parents may remember about scouting (and not just the cookies!), today's scouting includes programs that teach real-world skills. That includes plenty of options on learning about money and financial skills.
Here are just a few of the choices available:
- The Penny Project is for younger girls in Brownies. It focuses on basic money understanding and learning the responsibility that goes with it. The Penny Project workbook is narrated by Penny, a cute coin with blond pony tails, who leads readers through a girl's room to find her friends, Nisha Nickel, Delia Dime, Quentin Quarter and Daria Dollar. Within the workbook are counting and math exercises, examples of savings (for a friend's birthday) and being a smart spender. It is a great way to get kids to think about money at this age.
- CentsAbility is for girls from age 9 to 11. The projects included in this kit offer opportunities for girls to learn and put into action personal money management skills. They will learn to set a realistic goal, create a budget, and establish a savings plan plus other key concepts.
- Studio 2B is for preteens and teens from ages 11 to 17 and includes a series of 4 books that have topics ranging from saving and investing to running their own business. This also has an online option where girls can do interactive activities - scroll down until you see "Making Cents of Her Life". Once inside, girls can choose a character that is best for her age.
If your child's Girl Scout troop hasn't used these resources yet, this could be a great way to volunteer your time. Each of these programs has plenty of resources for volunteers (leaders or guests) to use to teach the girls some great skills for their level. Check them out and let me know what you think.
Kid Shopping Online, Kid Spending
Making kid shopping online part of their money education is a key to those being good buying decisions.
Permalink -- click for full blog post "Kid Shopping Online, Kid Spending"
Roth IRAs for Teens?
IRAs are individual retirement accounts. In some form or another, they've been around for a number of years. There are deductible IRAs, non-deductible IRAs, rollover IRAs and Roth IRAs. It's this last one that is the newest version. There are a couple of big selling points to a Roth:
- The money you put in grows tax-deferred. Yes, this is a pro to all IRAs, but with a Roth, you pay no taxes on withdrawals, meaning all growth is tax-free.
- There are no required distributions when you reach 70 1/2 as there are with other IRAs.
- You can get to the money you put in without a withdraw penalty at any time for any reason. You can only touch the earnings after 5 years (or if you reach age 59 or have a qualifying reason).
As good as those things all might sound to working adults, none of those really seem to apply to teens. A recent AP article makes some good points, though, as to why teens might want to rethink that (or their parents might want to think about it and encourage accordingly). Here are a couple of highlights:
- To open a Roth IRA, you do need to have earnings from wages. Those can be either from self-employment or working for someone else. You can contribute an amount equal to all you make up to $5,000 (in 2010), even if the actual cash comes from another source (like parents or grandparents).
- The younger you start, the longer that money has time to grow without paying taxes. It's a classic math problem on compound interest. In this case, you can save $2,000 for 10 years (say from age 15 to 25) and stop. Your friend can start saving a similar $2,000 at age 25 and save for 20 years. Assuming the same rate of return for both, at the end of 30 years, you will come out ahead by about $16,000 on $20,000 less in contributions.
- It establishes a good savings habit. Sure, most teens can't fathom the idea of saving money for their own retirement. But a Roth a is a great way to get into the habit of savings in general. With its flexibility, a Roth can be a way to save for a variety of things, including college, even though its primary intent is for retirement (it is still an IRA). This can be a teen's first introduction to a truly long term savings goal.
There are other good points and some examples of real ways to make this work for your teen in the full story at msnbc.com. You can also check out more teen money management tips here.
Giving Back: One Family's Story
Every person, every family has their own way of giving back. It might be kids who are youth volunteers or families that are working on a project together. I continue to be surprised (pleasantly, of course) by all the options that kids, teens and families come up with to meaningful contribute to something they value.
One such family took this to a whole new level. The Salwens of Atlanta, GA were living comfortably, really comfortably by many standards when daughter Hannah challenged the family on it. Fourteen years old at the time, Hannah was upset about the differences between the haves and the have-nots in the world. And she was willing to give up alot. As it turns out, so was the rest of the family: They decided to sell their dream house, downsize by half (in price and size) and donate the difference to charity.
Wow. This is the starting point for what become a journey that brought this family closer together in a number of ways. You can read even more details in this recent Parade magazine article. But, even that is just a glimpse into the whole process of what the family learned and how it changed their lives and so many others forever. The ongoing part of this - which is the real challenge for many of us in our day-to-day busy lives - is what you do next. How do you go forward? How do you continue the cycle, pay it forward, encourage others?
The Salwens have done two things to that end. First, they have a blog that details their ongoing involvement with plenty of posts from now 17-year-old Hannah as well as dad, Kevin. Second, they wrote a book, "The Power of Half: One Family's Decision to Stop Taking and Start Giving Back" about the experience.
Even if your goal of giving back is not quite as daring as the Salwens (mine isn't...yet), they are inspiring and can help you think more creatively. Why not check out their blog and The Power of Half: One Family's Decision to Stop Taking and Start Giving Back? Who knows what volunteer inspiration you might find? If you already have your story, share it with others here.
National Entrepreneurship Week: Celebrating the Next Generation
The 4th annual National Entrepreneurship Week is "...a celebration of the heritage of entrepreneurship in America and NEW opportunities for a NEW GENERATION!" according to its website. Sounds good enough - but what does that really mean for kids and teens?
The key is not just in what this particular week in February means to entrepreneurship but what the sponsoring Consortium for Entrepreneurship Education is doing all the time as part of their mission. They want to mix entrepreneurship into all school subjects and to get students thinking with an entrepreneurial mindset.
An entrepreneurial mindset doesn't just have to be about starting a business either. It's about problem solving in general and finding unique solutions. Even if teens aren't starting their own businesses, what business owner wouldn't love to have them as employees?
To get some idea of what the Consortium is doing, check out their website. Here you will find:
As if that's all not quite enough, the Small Business Administration is hosting a series of free Youthpreneur webinars celebrating both National Entrepreneurship Week and America Saves Week. These happen from February 23rd to February 25th with a variety of topics and speakers including talks on why every student should be an entrepreneur and youth entrepreneurship and financial literacy. Check them all out here.
Whew! It's a busy week with all these options. Plus, there are also the resources right here at money-and-kids.com including an entrepreneur quiz to see how it might fit you, business ideas, and how to write a kid or teen business plan. Happy National Entrepreneurship Week!
America Saves Week
America Saves Week starts today, February 21st. It is - you guessed it - a whole week devoted to encouraging and assisting people to take a look at their savings progress and take action to move it along. The goal is to improve the financial security of individuals and families.
This week is spearheaded by America Saves and has plenty of useful features on the America Saves Week website. Check out these pages...
- Take a quiz to see how your savings knowledge stacks up. (To be fair, you really need someone to quiz you since the answers are right after the questions. You'll probably learn something no matter what - I certainly did! - but where's the fun in just reading it?)
- Real-life stories of other people who have taken the savings message and acted on it. Be sure to check out the story of a Georgia teen who has changed her own future as well as that of her family.
- Assess your own progress by answering the questions and using the resources here.
You can also check out these ideas for getting kids to save money and helping them open a bank account. The key is to use America Saves Week to jumpstart the savings habit with your kids (and maybe the entire family)!
Teaching Kids to be Smarter Consumers
Teaching kids the value of a dollar (or ten) seems to get harder each year. There seems to be an endless array of commercials, gadgets and games vying for their attention and money. While being a smart consumer is just one part of teaching kids about all aspects of money, it is a pretty important part.
One great place to start (besides money-and-kids.com of course!) is the Federal Trade Commission's You Are Here website. This site is great for 5th to 8th graders and is set up as a virtual mall with a variety of places to explore and learn something at the same time. There are also extras for parents and educators. Here are just some of the highlights:
- The West Terrace is all about marketing including target marketing (be sure to check out Claire at Target Market Wireless), advertising techniques and suspicious claims.
- The East Terrace is all about offers and products that aren't as they seem from bogus modeling offers to miracle products. Don't miss the Free Vacation wheel spin!
- The Parents and Teachers section that has great resources and lesson plans that go along with the various areas on the site. The lesson plans are a great way to point out things (and maybe even learn a few yourself) whether you are in front of a classroom or in your living room.
Teaching kids to be smarter consumers can be an uphill battle. There are plenty of temptations and lots of money being spent by the companies and stores who want to sell you and your family stuff. This site is a great step in getting everyone more educated about how key consumer concepts affect you each time you see a commercial, advertisement and go shopping. Get started here!
Grocery Store Economics
Steve Rosen, a writer for the Kansas City Star, recently wrote an article about teaching kids economics at the breakfast table. He calls it "Eggo-nomics." Simply put, the waffle shortage caused by manufacturing plant shutdowns are a great chance to teach kids about supply and demand. There are all kinds of other lessons in here, too, but you can keep it simple if you choose. (You can read the whole article here.)
By focusing on the simpler aspects of fewer waffles being produced than those ready to be bought by families like yours, you can teach kids about money principles they may not often get to see. In this land of plenty, especially in the grocery store aisles, these moments can be few and far between. Use this one to your advantage.
Start by reading the tags that have become familiar fixtures under the shelves where Eggo waffles used to be stacked in various flavors and choices. Ask your kids what that means - to the store, to anyone who would want to buy the waffles and to the company that would normally make them. Then ask them what people who want to buy these waffles, but now cannot, should do. Take time to figure out which option might make the most sense.
If waffles are not on your family's menu, you can make it hit closer to home by using the waffle crisis as the starting point but then changing it to your favorite cereal, french fries or snack food. Making it personal should help the discussion and bring out more creative ideas. If you have teens, this may work better with something that's not even food.
What are your thoughts? Have you talked to your kids about the waffle crisis and what it means?
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