William Elliott III, Ph.D., a professor at the University of Kansas recently published findings that "kids with a savings account in their own name are six times more likely to attend college than those without an account."
Dr. Elliott continued, "It's helping them to be thinking of college, to have it on their mind in a more concrete way than simply saying, 'I expect to go to college. They've taken some actions, they've got a savings account, they're saving some money. Positive expectations aren't quite enough."
Would these conclusions have been true for you or your children??
Showing posts with label Teaching Your Children About Money. Show all posts
Showing posts with label Teaching Your Children About Money. Show all posts
Jul 26, 2011
Nov 22, 2010
Should Your Teen Have a Job? (Carole)
Janssen's last post about buying your teenager a car, brought up the subject of teenagers working during their high school years. My goodness there were some very strong opinions of this subject! So, of course, I'm going to bring it up again and really get those strong feelings flowing.
As Janssen mentioned, high school jobs are mandatory at our house. I remember spotting the "Help Wanted" sign in the local Cold Stone ice cream shop and telling Janssen about it when she was just turning 16. A few days later, she girded up her loins and marched in to ask for a job application. Despite the fact that she probably looked 13 years old, they hired her -- and eventually Merrick, Landen and just about every other friend they had! She was the gateway employee for probably a dozen kids this Cold Stone store hired during the next 2 years.
The girls ended up holding a number of different jobs during their high school years including regular babysitting gigs, early morning paper route, ice skating sink guard and instructor, working in their dad's dental office doing some assisting/front desk/errands (endless errands)/computer /janitorial work, and who could forget J's short, but painful stint at the Krispy Kreme donut shop?
My own lack of work experience during my high school years was what convinced me that a job was a good thing. Like many of you, my parents told me that my schooling was my job (even though both of my older siblings had held jobs as teens -- not sure why I was different). Me, being somewhat lazy and a also bit fearful of new experiences, didn't complain. I did live up to my end of this bargain and earned myself a full-ride scholarship to the university of my choice -- however, I lost it after my first year. I also didn't work while attending college.
Later, I felt these decisions put me at a huge disadvantage in a number of ways:
I was determined that my children would have a different experience. And they did. I think they would all say that their work experiences during high school were as valuable to them as anything they learned in a classroom. (They can feel free to comment on this.) Each of them continued to be excellent students, learned some real life and financial lessons, entered college with thousands of dollars saved away, and had very impressive resumes.
As Janssen mentioned, high school jobs are mandatory at our house. I remember spotting the "Help Wanted" sign in the local Cold Stone ice cream shop and telling Janssen about it when she was just turning 16. A few days later, she girded up her loins and marched in to ask for a job application. Despite the fact that she probably looked 13 years old, they hired her -- and eventually Merrick, Landen and just about every other friend they had! She was the gateway employee for probably a dozen kids this Cold Stone store hired during the next 2 years.
The girls ended up holding a number of different jobs during their high school years including regular babysitting gigs, early morning paper route, ice skating sink guard and instructor, working in their dad's dental office doing some assisting/front desk/errands (endless errands)/computer /janitorial work, and who could forget J's short, but painful stint at the Krispy Kreme donut shop?
My own lack of work experience during my high school years was what convinced me that a job was a good thing. Like many of you, my parents told me that my schooling was my job (even though both of my older siblings had held jobs as teens -- not sure why I was different). Me, being somewhat lazy and a also bit fearful of new experiences, didn't complain. I did live up to my end of this bargain and earned myself a full-ride scholarship to the university of my choice -- however, I lost it after my first year. I also didn't work while attending college.
Later, I felt these decisions put me at a huge disadvantage in a number of ways:
* It took me a very long time to build up any substantial savings in my personal account
* I had to depend on my parents for most of my spending money & living expenses
* I didn't have a clear sense of what money was worth for many years
* No experience with co-workers and a boss
* No job interview experience
* No work experience as a 20 year old
* No resume
I was determined that my children would have a different experience. And they did. I think they would all say that their work experiences during high school were as valuable to them as anything they learned in a classroom. (They can feel free to comment on this.) Each of them continued to be excellent students, learned some real life and financial lessons, entered college with thousands of dollars saved away, and had very impressive resumes.
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Nov 17, 2010
Buying Your Child a Car (Janssen)
As far back as I can remember, my parents made it clear that they would not be buying me or any of my siblings a car when we got our licenses. If any of us wanted a car, we'd have to buy it ourselves.
In December of my senior year, the inconvenience of me not having a car (and having early morning seminary, school, daily play practice, and a part-time job) changed their minds. They bought me a car. It was a 10 year old car and it. . . .was not a great car. In a year, they probably put more money into it than they paid for it in the first place. (Needless to say, I loved this little car with all the ferocity a seventeen year old can muster).
Eventually, about a year after I went away to college and the car became Merrick's main transportation, they replaced it with a much nicer, new little red Hyundai and that car eventually went to my youngest sister who still drives it.
When I was driving my parents' cars, they paid for the gas and I paid a small portion of my insurance. When they bought me my own car, I was now solely responsible for the gas and paid a slightly larger portion of my insurance.
Although I could have afforded a car, I never ever ever considered buying one because doing so would have cost the vast majority of my savings and I was unwilling to do that. Better to drive the minivan.
Bart's parents also said they wouldn't buy their children cars. To the best of my knowledge, all but one of their children purchased their own cars while in high school (there is one amusing picture I've seen of four of the children lined up beside their four cars along the sidewalk in front of their home). Bart said he wasn't, for a moment, willing to not have his own car. He saw it as a complete necessity.
Of course, buying a car, insuring it (as a teenage boy), and paying for gas meant that practically every dime Bart made went directly to the car. He worked three jobs his freshman year in college. He paid a high price to have his own car, including having no savings.
Because this is an issue that was such a big deal to both of us in high school, we have talked at length about what we plan to do as far as cars go for our children (seeing as our daughter just turned sixteen weeks old on Friday, I think we have some time).
Our plan (which we reserve the right to alter) is to buy a car that our children can drive when they turn sixteen. It won't be a particularly nice car, but it'll be reliable and nice enough that we don't spend a fortune on upkeep. They'll pay for gas and part of their insurance. And when they go off to college, the car will stay with us and become the primary possession of the next child. They'll have some of the financial responsibility for a car, but not such a huge burden that it prevents them accumulating any savings or forcing them to work an enormous amount to shoulder the burden.
What about you? How did your parents handle a car? What do you plan to do with your children?
In December of my senior year, the inconvenience of me not having a car (and having early morning seminary, school, daily play practice, and a part-time job) changed their minds. They bought me a car. It was a 10 year old car and it. . . .was not a great car. In a year, they probably put more money into it than they paid for it in the first place. (Needless to say, I loved this little car with all the ferocity a seventeen year old can muster).
Eventually, about a year after I went away to college and the car became Merrick's main transportation, they replaced it with a much nicer, new little red Hyundai and that car eventually went to my youngest sister who still drives it.
When I was driving my parents' cars, they paid for the gas and I paid a small portion of my insurance. When they bought me my own car, I was now solely responsible for the gas and paid a slightly larger portion of my insurance.
Although I could have afforded a car, I never ever ever considered buying one because doing so would have cost the vast majority of my savings and I was unwilling to do that. Better to drive the minivan.
Bart's parents also said they wouldn't buy their children cars. To the best of my knowledge, all but one of their children purchased their own cars while in high school (there is one amusing picture I've seen of four of the children lined up beside their four cars along the sidewalk in front of their home). Bart said he wasn't, for a moment, willing to not have his own car. He saw it as a complete necessity.
Of course, buying a car, insuring it (as a teenage boy), and paying for gas meant that practically every dime Bart made went directly to the car. He worked three jobs his freshman year in college. He paid a high price to have his own car, including having no savings.
Because this is an issue that was such a big deal to both of us in high school, we have talked at length about what we plan to do as far as cars go for our children (seeing as our daughter just turned sixteen weeks old on Friday, I think we have some time).
Our plan (which we reserve the right to alter) is to buy a car that our children can drive when they turn sixteen. It won't be a particularly nice car, but it'll be reliable and nice enough that we don't spend a fortune on upkeep. They'll pay for gas and part of their insurance. And when they go off to college, the car will stay with us and become the primary possession of the next child. They'll have some of the financial responsibility for a car, but not such a huge burden that it prevents them accumulating any savings or forcing them to work an enormous amount to shoulder the burden.
What about you? How did your parents handle a car? What do you plan to do with your children?
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Sep 27, 2010
What Would You Tell a Teenager About Money? (Carole)
A few weeks ago, I was asked to speak about money to the teenaged girls in our church congregation. Thanks to all of you and your many good comments on this blog since January, I felt like I knew what kind of information would be most interesting and helpful to these girls who are just on the cusp of adulthood.
Here's what we discussed:
1. Getting a job and saving 50% of what you earn while in your teens. I also shared with them examples of impressive teenagers I've known through the years and the amounts of money they've been able to save in their bank accounts by the time they graduated from high school.
2. The cost of tuition at local and out-of-state colleges and universities. We even took a look at the cost of elite schools like Harvard and Stanford, just so they would know.
3. Typical salaries of standard jobs: surgeon, fire fighter, grocery store clerk, pilot, flight attendant, lawyer, school teacher. . . and what the monthly take-home pay (after federal taxes) would be for each of these jobs. So. . .is a college education really worth the time and money invested for your particular profession?
4. How much adult life costs: housing, groceries, transportation, utilities and insurance. True to one of my previous examples of teaching children about money, I brought in $3,000 (which is a typical take home salary if you make $50,000/year -- the average salary in Las Vegas) in cash -- in $10 bills. Together we paid the bills of a typical family in southern Nevada. Much to their surprise, we ran out of money, long before we ran out of bills. This was very eye-opening to this lovely group of girls.
5. How compound interest works. We walked through how compound interest works in your favor if you're saving money or investing, but how it works against you if you're paying off a loan or a credit card bill. We also discussed how the length of the loan (or investment) and the interest rate influence your payment (or return) and the total you will pay (or earn) over the lifetime of the loan (or investment).
It was a fun night, and I felt like the girls were right with me. But I'd love to know what YOU would have said to them? What do you wish someone had told you at their age?
Here's what we discussed:
1. Getting a job and saving 50% of what you earn while in your teens. I also shared with them examples of impressive teenagers I've known through the years and the amounts of money they've been able to save in their bank accounts by the time they graduated from high school.
2. The cost of tuition at local and out-of-state colleges and universities. We even took a look at the cost of elite schools like Harvard and Stanford, just so they would know.
3. Typical salaries of standard jobs: surgeon, fire fighter, grocery store clerk, pilot, flight attendant, lawyer, school teacher. . . and what the monthly take-home pay (after federal taxes) would be for each of these jobs. So. . .is a college education really worth the time and money invested for your particular profession?
4. How much adult life costs: housing, groceries, transportation, utilities and insurance. True to one of my previous examples of teaching children about money, I brought in $3,000 (which is a typical take home salary if you make $50,000/year -- the average salary in Las Vegas) in cash -- in $10 bills. Together we paid the bills of a typical family in southern Nevada. Much to their surprise, we ran out of money, long before we ran out of bills. This was very eye-opening to this lovely group of girls.
5. How compound interest works. We walked through how compound interest works in your favor if you're saving money or investing, but how it works against you if you're paying off a loan or a credit card bill. We also discussed how the length of the loan (or investment) and the interest rate influence your payment (or return) and the total you will pay (or earn) over the lifetime of the loan (or investment).
It was a fun night, and I felt like the girls were right with me. But I'd love to know what YOU would have said to them? What do you wish someone had told you at their age?
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Sep 3, 2010
The 10/50/40 System (Merrick)
As long as we're talking about teaching finances to your children, let me tell you a little about what my parents taught me. From several of your comments, it sounds like your parents taught you similarly.
We did the 10/50/40 system:
10% to church tithing
50% into savings
40% for personal spending
Every dollar from babysitting, working at Dad's office, and lemonade stands was divvied up this way.
It's not quite as cut and dry anymore, but as adults, we still try to think in the same way. For us, 10% tithing always comes first, and after that we pay all our bills. Once that is done, I have budgets for groceries and gas, and then try to save 100% of the remaining money. Obviously that doesn't always happen, but that's the goal.
Although I no longer follow the 10/50/40 system meticulously, I fully intend to pass along this system to my children. I think it's a great and very simple way to help your children understand the importance of saving. Especially because that college savings fund could easily be blown on candy if you don't teach them how to save.
What are your saving/spending systems, and what you do currently (or plan to) teach your children?
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Sep 1, 2010
What I Wish I'd Known (Janssen)
I think my parents did an excellent job teaching me about money and finances growing up, but there are two categories where I felt like I didn't have any frame of reference until I was well into my college career.
1) I had no idea what a reasonable adult job paid. Was $100,000 a year a lot? A little? Could you live a decent life on $15,000 a year? And what kinds of jobs paid good salaries? I mean, I assumed a doctor or a lawyer made pretty good money and a teacher made less, but I didn't know HOW much less or how much was "pretty good money."
2) How much did a house cost? I had no idea until a few years ago what either of the houses we lived in growing up cost or how they related, percentage wise, to my parents' income. I remember seeing signs for neighborhoods that said things like "Houses starting in the $250s" and thinking "well, that can't be two hundred and fifty dollars, but it certainly can't be two hundred and fifty THOUSAND could it?" I was just completely clueless.
What financial information do you wish someone had shared with you?
1) I had no idea what a reasonable adult job paid. Was $100,000 a year a lot? A little? Could you live a decent life on $15,000 a year? And what kinds of jobs paid good salaries? I mean, I assumed a doctor or a lawyer made pretty good money and a teacher made less, but I didn't know HOW much less or how much was "pretty good money."
2) How much did a house cost? I had no idea until a few years ago what either of the houses we lived in growing up cost or how they related, percentage wise, to my parents' income. I remember seeing signs for neighborhoods that said things like "Houses starting in the $250s" and thinking "well, that can't be two hundred and fifty dollars, but it certainly can't be two hundred and fifty THOUSAND could it?" I was just completely clueless.
What financial information do you wish someone had shared with you?
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Aug 27, 2010
Teaching Your Children About Finances (Merrick)
I've been thinking a lot lately about how I, as a mother, will teach my children about finances. Obviously with only one child who is four months old this might seem a little soon to be thinking about this, but I don't want to be one of those parents whose child is suddenly eighteen and I have yet to give the topic much thought. By then I feel like it is much too late.
I found this great article on Penniless Parenting that talks about this, so today I thought I'd share:
Teaching Children Good Money Habits
Enjoy, and Happy Friday!
I found this great article on Penniless Parenting that talks about this, so today I thought I'd share:
Teaching Children Good Money Habits
Enjoy, and Happy Friday!
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Apr 9, 2010
Teaching Your Children About Money #1 (Carole)
When I was in college, I took an education class from a professor who always had a hands-on method of getting his point across. One of the many great lessons he shared with us was a powerful way to help your children understand the value of money and how it works within your own family.
He suggested that one month, instead of depositing your paycheck in your account, you cash the whole thing into $20 bills. (You may need to hire yourself some security for the evening. . .) Bring all that cash home and stack it on the living room floor. Sit your kids down on the carpet (enjoy watching their eyes bug out) and explain that this is ALL the money your family has to buy things with during the coming month. They will be very impressed with your piles of cash at this point!
Then bring out a poster with the monthly family expenses listed in a large font. Have them count out the bills to "pay" the bills -- mortgage, grocery bill, electricity, water, sewer, insurance, gasoline, car insurance, piano lessons, etc. They will watch those stacks of green backs disappear just like you do every month. When you've paid all the bills, let them count up how much money is left. This just might be the most sobering moment of their young lives, and will help them understand why the $80 tennis shoes or $150 jeans they want might not be in the best interest of the entire family.
If you are uncomfortable using real money, try using Monopoly money or cutting up green paper and writing $20 on each one. But, as you can imagine, it would be much more effective using the real thing.
I
Then bring out a poster with the monthly family expenses listed in a large font. Have them count out the bills to "pay" the bills -- mortgage, grocery bill, electricity, water, sewer, insurance, gasoline, car insurance, piano lessons, etc. They will watch those stacks of green backs disappear just like you do every month. When you've paid all the bills, let them count up how much money is left. This just might be the most sobering moment of their young lives, and will help them understand why the $80 tennis shoes or $150 jeans they want might not be in the best interest of the entire family.
If you are uncomfortable using real money, try using Monopoly money or cutting up green paper and writing $20 on each one. But, as you can imagine, it would be much more effective using the real thing.
I
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