 | | New Year's Checklist | | | | To keep yourself on track to healthier personal finances,
start here by setting due dates for your own financial to-dos. Click the button
next to each item to add it to your Yahoo! Calendar or
print out this checklist of
to-do's and check off each item as you complete it. Get ready to
face your
financial fears today!
For more information on each item, refer back to Suze Orman's article:
"
How to Teach Your Kids About Money". | |
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| | Stop caring about the JonesesMany people seem to have convinced themselves that showering their kids with everything they want is good parenting. I see
this a lot with divorced families; both parents are so guilt-ridden they lose the ability to say no to anything their kid
asks for. Then when that kid is out in the real world on a low starting salary, she has no sense at all of financial
restraint and thinks she still has to have everything right now. So what does the kid do? Simple: charge, charge, charge.
Suddenly, that kid you love to death is buried in $5,000 or $10,000 of credit card debt. My advice: stop caring! And stop
spending money you really don’t have to impress people who are probably just as stretched as you. You are all kidding
yourselves. So why not get real and start thinking more about your actual financial well-being, and the money lessons you
want to impart to your kids, rather than worrying about what everyone else thinks? | | | | | |
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| | Teach your children that ATMs are not magic money treesIf you could get inside the heads of toddlers or young children today, their original understanding of money might be as the
prize in a kind of worldwide hide-and-seek game involving ATMs. Whenever you find a machine, you put your magic card in the
slot, punch in a few numbers and voila! money pops out. Cool! Quite innocently, parents are totally messing with their kids
by exposing them to this “game” without providing any
context. It seems to me that when a child reaches four or five years old you have to start explaining how the game really
works. A full-blown lesson on the American banking system isn’t necessary, just a few brief, clear messages explaining why
you’re able to make ATMs “give” you money on command. | | | | | |
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| | Show your kids some shopping etiquetteOne of the best ways to teach moderation and the difference between wanting
and needing is to sit down with your child before you go clothes shopping for
the new school year. Before you ever set foot in the mall, have a clear game plan:
we are looking for three sweaters, four shirts, and four pairs of pants. Period.
And if your kid has a few favorite stores, I suggest you insist they case each
store before any purchase is made. That way, you’ll avoid buying everything
you need at the first store and then having your kid walk into the next store
and claim they will “just die” if they can’t also have this
or that item. The idea is for them to take a look at everything that’s available
and then make choices based on the parameters you’ve set with them. | | | | | |
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| | Involve your children when you're paying your monthly billsIn addition to setting the right spending examples with your kids, you also
need to teach them the mechanics of managing money. Let them begin to learn by
“helping out” when you pay your bills. When a child is a pre-teen
or young teen, let him or her even write out a few bill checks for you to sign
(or handle the clicks on your online bill-pay). Again, there doesn’t need
to be a lecture here, nor is your goal to make your child feel the weight of all
your financial responsibilities. But it’s a good first step in showing them
what it takes to live. Trust me, a child who receives $5 or $10 for allowance
is going to get quite an eye-opener when they see that the gas & electric
bill was $300 during the winter months, that the cable is another $40 or so every
month, and that your cell phone (one of life’s most basic necessities in
their worldview) costs $50 a month. | | | | | |
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| | Help your children build creditYou have a few options in how to give your kid credit. If you have a good FICO
score of at least 720, I recommend that while you child is young you simply add
their name to all of your credit cards as an authorized user. Obviously you are
not to give them your credit cards, or in most cases even let them know you have
done this. But by doing so, your good FICO score will become theirs as well. Then
when your child hits 13 or so, I think it is time to give them a debit card tied
to an account you set up for them. Each month you deposit a set sum in the account
and discuss with your child what expenses are to be covered under it. And because
they can only charge up to the amount in the account, they are going to learn
a lot about money management the first time they try to use the card at the mall
and it is turned down. (A crucial tip, though: make sure the account at the bank
is set up so they will not be covered by a bank overdraft policy; you want them
to simply be turned down if they try to charge beyond their balance.) | | | | | |
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