8 Ways To Go “Money Active” With Your Kids.

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Children are naturally curious. 

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How do you spark an interest in money?

As a child, I was an observer. My mother didn’t have money and my dad always lived for the moment. He died with nothing.

Today, with your children bombarded with messages you need to attempt to “sneak” money lessons in whenever possible.

Success comes from changing up old beliefs about how you think you should go “money-active” with the kids, creative thinking, remaining interactive.

Praying helps.

Random Thoughts:

Be an Example – Here’s an easy one because you don’t need to say a word – your actions are enough.

You children are monitoring your feelings about finances. What is your outward expression towards debt, savings and general household financial management, especially when communicating with the family?

If your relationship with money is positive or one of control and discipline, your children will learn from the example. If your relationship with money is negative, stressful, extravagant or reckless, the kids will pick up on that, too. Smart money beliefs and actions can lead to smart money imprints by the younger generations around you.

Anytime is the Right Time – One simple question framed in a positive tone may provide the right spark to get a money conversation underway. I call it “financial curiosity.” And you can be financially curious with your child anywhere – at the mall, at the supermarket, in his or her room.  If your teen makes a purchase, inquire about it with sincere interest. Out of non-threatening curiosity I ask my daughter for her reasons behind purchases and services she uses. She never feels like I’m prying (at least I don’t think so).

What compelled your child to buy a particular item? What does it do? What other choices are available? Is this item something the family may find useful? How does it work? Will this make their lives better, easier, more fun? How so? Was it a challenge to save up? You’ll gain information about the motives behind purchases and discussions regarding other money matters will blossom.

Get Them Involved – Talking about money is fine, however, it doesn’t compare to having your kids experience money management firsthand – something I call “money active.” Have the kids be responsible for specific money projects, let them fully experience the rewards and feel the sense of accomplishment when the plan is executed.

For example, provide children an opportunity to budget a family vacation or weekend getaway and then all enjoy the fruits of the labor. Partner with them to set savings goals for future purchases, especially the bigger-ticket items. Assist your teens with the research, or offer to match a percentage of the purchase price as a reward for good money habits.

Are the products or services the kids are using viable investment prospects? Now open the door to the investing conversation. And what better way to ignite the money flame — a possible investment into a company that manufactures a product or provides a service the children are passionate about.

 It’s OK to Seek Help – So you’re still having difficulty getting the conversation going? Let someone else help you get the fire started. Seek assistance from an objective person who would be willing to provide money lessons to the kids; perhaps someone in the family, or a friend successful with money management, would be excited to share an experience. Don’t be reluctant to seek assistance and allow someone else to tee up your involvement. I’ve witnessed grandparents do a great job at getting through to the grandkids with stories and financial lessons.

Make Money Real Life – Be candid. Your kids like to know you’re human, and occasionally make financial mistakes. They also want to understand what you did to correct a money mishap. You may need to be a bit creative; children are accustomed to movies loaded with action and special effects.

Take time to compose a compelling story about how you faced a financial obstacle head on and came out a winner. Or if the story doesn’t end well, explain specifically what you learned.

Kids are very comfortable with technology so become “money active,” and take advantage of online money-management tools to help kids achieve financial success. For example, at www.moneyasyougrow.org  there are activities that guide you to help the children work through money milestones grouped by age, beginning at 3-5 year-olds.

Begin a Money Mindset. Out of each dollar of allowance, figure out how much goes to savings, to charity and to spending. You need to help children establish guidelines early on. There are several products that make this division of money fun. Like the Money Box available from www.Moonjar.com. Also, there is an item called Money Conversations To Go which can jumpstart fun family discussions about money.

Have Children Handle Coins  – It’s a great way to get very young children comfortable with money – When my daughter Haley was 3 I had her handle nickels, dimes and quarters, they were shiny and fascinated her. From an early age I would have her place the coins in a bank and shake up that bank from time to time and it would sound like a rattle of sorts. Placing the coins in the bank was a sense of accomplishment for her and it started her on the road to fiscal success – Now, at age 16, she’s become a first-rate saver!

How About a Funky Money Diary? Purchase a three-subject notebook to help the younger kids keep track of the money they want to spend, share & save. Decorate with stickers related to money or cutouts of items the kids want to purchase in the future.  Interactive fun!

The most memorable interactions with children about money are ones you may overlook.

You’ll find discussing money at different times, in various places.

Out of nowhere.

It’ll become so routine, you’ll be smitten with delight.

Then you can focus on the tough discussions.

Like sex.

I’m still not ready.

kid shock

Out of the Mouth of Babes (It’s Not Just Cupcakes). Why Your Kids Are Better Investors Than You Are.

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“Kids say the darndest things,” Tammy Wynette.

funny child

It’s fun to teach the future generations about money.

Well, most of the time it is.

Those under thirteen tend to be an overly-excited group known to blurt out whatever is on their minds often at the surprise of adults in the room.

I always make sure to have plenty of treats for everyone at the end.

Since it was later in the day, the fourth grade class that made the journey to the office recently was especially ravenous, however I wasn’t going to change the routine-we learn at the beginning, ravage the cakes at the end.

This batch of cupcakes was especially fresh and frosty. But it didn’t matter: I wasn’t going to deviate from the plan I’ve used for years.

Out of the mouth of babes – lessons and behaviors we’ve clearly forgotten.  As adults we are relentlessly bombarded with the noise of daily living and sometimes we just don’t see things clearly based on our own biases. Children are overwhelmed with stimulus too, however they don’t have as entrenched a filter and they’re willing to see things as they are and happy to share an opinion.

There are wise words coming from the mouths of babes if you only listen.

Random Thoughts:

1). Do homework first – Many of the kids believe that before you make an important purchase, you do your homework. Now, their homework may not be as sophisticated as yours, however investors tend to forget, especially when the markets are more erratic, that emotions can overwhelm the desire to dig into facts.

We take action first out of fear or panic and deal with the repercussions later. The kids always seem surprised how many adults will buy and sell investments based exclusively on what they see or hear on television and radio. Mind you, these young students think it’s perfectly ok to purchase a breakfast cereal based on media, however acquiring an investment or “something that can go down,” (their words not mine) requires more time and effort.

During market extremes it’s timely to take your portfolio’s pulse (and yours) to determine whether you’re comfortable with your asset allocation plan-the division of assets into stocks, fixed income, cash and other investments. If your portfolio is gyrating more than the market up or down and you’re uncomfortable, homework is required to narrow down the investments causing the turmoil.

From there, it’s time to decide (based on the homework not heartburn), to take one of three roads as you evaluate financial holdings: Stay the course, buy more, or sell the investments causing distress. Again, base these decisions on your tolerance for risk and then maintain that risk profile through good and bad cycles.

2). Buy low – I know this sounds flippant or simplistic-for the mature crowd, buying low is easier said than done. They children believe they should try their best after research, to buy low into investments or at least they hope to accomplish this on a consistent basis. We teach the kids patience when they want a new video game, it’s time we teach ourselves some patience and let asset prices come to us. I know. Good luck with this one, right?

me know me funny

3). Buy what you understand – Another easy one, (in theory anyway). The kids feel strongly about buying what they know or understand. Occasionally, we make a portfolio allocation too complicated by purchasing investments we don’t fully grasp. There are a plethora of vehicles on the marketplace that are based on currency movement, bet against the markets or particular industries, and promise appetizing returns when the market is directionless.

What is the impact to the overall portfolio? If the addition appears overly complicated and you can’t explain it to a listening party, you may be better off passing on it. A complicated strategy is not necessarily a better one. Your investment plan needs to be realistic, actionable and comfortable based on your personalized goals and aspirations.

4). A sell Discipline, what’s that? – Children seem to embrace the idea of selling investments and moving on. For some of us grownups, this can be a challenge. We tend to be resistant to rebalancing or we allow one investment to swallow up a major portion of the portfolio, resulting in more risk. If you don’t have a discipline around buying and selling assets to restore your portfolio to an original target allocation, then ultimately you’re not controlling risk. Rebalancing requires a contrarian nature whereby you’re shaving down what’s done the best and adding dollars to those asset classes currently out of favor.

A concentrated position means that a stock, industry or sector makes up a disproportionate share of your total portfolio, usually 20% or more. The end results is more volatility in the portfolio as the key driver of returns, good or bad, depends on the performance of a large holding. Investors are sometimes reluctant to trim concentrated positions due to the tax implications of a large capital gain or an anchoring to a past price to minimize a loss. It’s important to maintain perspective on the risk as first priority.

5). Wait patiently for cupcakes at the end – Investing takes patience and a willingness to be disciplined. There must be goals established and when those goals are met, the sweet reward is certain to follow.

It was tough for the kids to focus on the lesson at hand with treats waiting; the children eventually learn that shortcuts to the baked goods don’t exist especially through my lessons! It’s similar with investing. We too, as adults, want our dessert first or seek to get rich quick based on shortcuts.

Ostensibly, when the market are not cooperating, back-to-basic strategies like saving more, decreasing debt or extending the time needed to reach a financial goal are usually the best.

What will you learn from the children today?

Keep an open mind and you may be surprised.

kid eating cupcake

 

Taking Stock In Your Kids – 4 Initial Steps To Get Children Excited About Investing.

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As featured in http://www.nerdwallet.com.

Begin talking with the kids about investing sooner rather than later.

Interestingly, many parents find it awkward to discuss stock investing, especially with their young children. Some adults don’t feel confident in their abilities to do research. What I’ve discovered is the discussion with young children actually helps less confident parents become better stock investors.

The conversation raises the bar for teacher-parents and the children willing to learn.

It’s a win-win.

winning

There are several milestones to reach. The adventure begins with these simple steps to consider when it comes to engaging the children.

Random Thoughts:

1). Build excitement – Creating passion around the investing process is important. Begin with a dialogue around the children’s brand loyalties (and they start at an early age). When I was young, I drove my parents crazy: I always “needed” the latest Mattel’s Hot Wheels car or Hasbro’s G.I. Joe action figure. I would only eat Kellogg’s Frosted Flakes, not the store brand.

GI Joe Vintage

So, what products are your kids passionate about?

Create short-term activities to build interest. Come up with a deadline for completion. For example, have the children begin and maintain journals of the products and services they like or use. Have them track the prices of those items over the internet or when you head to the stores.  Remind the kids how the family is excited to hear about what they’re thinking and plan a family gathering around the topic.

One family created a big event around the journals. They had the children select their own notebooks and personalize them with money-related and other types of stickers. The kids paid for the supplies out of their allowances which created a stronger connection to the project.

2). Organize a family discussion – Once the children share their information at a family gathering, expand the discussion to include the products and services the family purchases or uses on a consistent basis, say at least twice a week. From soap to shoes, batteries to bandages – leave everything open for investigation. Nothing is off-limits. Now, you’re building a research list!

3). Watch your words – I’ll never forget when my uncle who was a specialist on the floor of the New York Stock Exchange, explained how I had the ability to own part of a large company. I was hooked. Wait: A poor kid from Brooklyn can own a piece of McDonald’s?

How does that happen?

kid surprise

The language used around stock investing is important to help the kids gain healthy perspective and a sense of pride in their selections and the investment experience, overall. The phrase “buying a stock,” is confusing when compared to “ownership in a company,” which in essence is what you’re trying to help the children embrace.

The concept of “stock” is nebulous for the younger ones to comprehend so it’s best to keep the language simple. Using words to connect ownership to investing creates a long-term investor mindset. You don’t want the children to focus solely on stock price movement; it’s best for them to strive to build discipline by focusing on the long-term value of a business – and all because you provided the perspective.

4). Begin with the concept of sales – It’s a good idea to introduce one simple concept before you begin specific stock-research homework. I’ve found kids relate well to the concept of sales. Whether you’re talking lemonade, girl-scout cookies, or school-related fund drives, children have an uncanny ability to understand that sales are positive and can lead to personal reward. It’s the same for a business. Generally, the more goods or services sold, the more favorable it is to the stock price over time.

kent soda

You don’t need to work through these initial four steps alone. Partner with a financial advisor to facilitate the discussion or utilize books and other resources to jumpstart the process.

I recommend the book “Growing Money: A Complete Investing Guide for Kids,” by Gail Karlitz and Debbie Honig.  Easy to understand and designed for children ages 8-12.

Want to engage the kids about several money concepts? There are 7 great money apps for kids reviewed by NerdWallet including my personal favorites – Virtual Piggy and Bee Farming.

You don’t need to wait (like I did) until you receive verbal cues from the kids to begin the engagement about investing.

You may never get them.

Even as early as age nine, you can begin a dialogue.

In the next report, I’ll take the investing discussion to the next plateau.

Until then, begin the conversations, start the journals, ignite the passions.

And the kids will never forget.

kids and stocks