Banks and other financial institutions are going after kids’ lemonade stand money. According to an article in the 7/29-30 issue of the Wall Street Journal, many financial service providers are offering everything from stick-on tattoos to iPods to entice kids to bank with them. And they’re offering more than just passbook savings accounts. Today, kids can get checking accounts, debit cards, online account access, and small loans. USAA even offers a kid-targeted mutual fund, First Start, that invests in the stocks of companies children are likely to recognize and can be opened with as little as $20.
Matt’s View
Giving kids access to debit cards and other financial instruments might strike fear in a parent’s heart. And we should tread carefully here. However, despite the growth of personal finance education programs in the nation’s classrooms, a recent report found them largely ineffective. So, with strong parental oversight, putting real financial tools in the hands of children may help teach lessons that stick.
One caveat is to make sure the tools are age appropriate. A good source of information about what financial concepts kids can understand at what age is offered by the National Endowment for Financial Education
, click on “Simple Steps to Raising a Money Smart Child”. By far, the most important key is for parents to demonstrate wise money management practices themselves. With the average household saving very little and carrying heavy consumer debt loads, that may be the biggest challenge to raising money-smart kids.
Organic products, once limited to specialty food stores, have become mainstream. With so many products now labeled as organic, and especially because of their higher prices, it’s important to know which ones are worth the extra cost. A New York Times article on 7/29 cited a Consumer Reports study (pdf)
that helps shoppers make informed choices. The study recommends taking a pass on organic seafood, for example, which may be no freer of mercury or PCB’s than non-organic seafood. For guidance on which seafood is safe, the Times article recommended a web site run by the Monterey Aquarium Foundation
.
The foods where it does pay to go organic, according to Consumer Reports, include: apples, bell peppers, celery, cherries, imported grapes, nectarines, peaches, pears, potatoes, red raspberries, spinach and strawberries—all of which tend to have high pesticide residue, even after washing. Also recommended are organic meat, poultry, eggs, dairy, and baby food.
Matt’s View
Standard money-saving advice is to eat out less often. However, with two-thirds of households now buying organics, which can cost twice as much as their non-organic equivalents, eating in is becoming less of a bargain. The six-page Consumer Reports study is worth reading in its entirety. It adds clarity to a food-buying experience cluttered with misleading health claims, and keeps us from paying for benefits that, in some cases, are more perception than reality.
The start of a new school year may not seem like a holiday to school kids, but for retailers the back-to-school shopping season, now in full swing, is the second biggest ìholidayî of the yearósecond only to Christmas. According to the National Retail Federation, the average family with school-age children will spend nearly $530 this year on school supplies, school-related electronics, and clothing.
Mattís View
Most of the back-to-school shopping advice articles now filling the personal finance pages of newspapers and magazines offer up the usual ideas: shop around, compare online prices with offline prices, and, while itís too late for this year, get the list of items your childrenís schools will require before the summer break begins and then be on the lookout for summer sales. One story recommended leaving the kids at home while doing your back-to-school shopping. I couldnít disagree more. Back-to-school shopping offers a great opportunity to teach kids money management lessons such as budgeting (how to make and, yes, stick to a budget), comparison-shopping, and making tradeoffs (Letís see, do I buy a trendy new messenger bag or keep using last yearís backpack and buy three pair of pants and a new pair of shoes instead?).
An MSNBC article on 8/11 highlighted the trouble many college kids get themselves into after signing up for their first credit card at collegeónamely, lots of debt. According to student loan provider Nellie Mae, the average freshman accumulates over $1,500 of credit card debt, a figure that more than doubles by their senior year. Almost half of all college students with credit cards have at least four cards.
Matt's View
When kids are away from mom and dad for the first time is not exactly the ideal time to introduce them to a piece of plastic with seemingly magical powers to make pizza arrive at their dormitory door. Better to educate kids about the proper uses of plastic while theyíre still at home, teaching concepts they're not likely to stumble upon on their own such as using credit cards only for pre-planned, budgeted purchases and always paying the balance in full. Even better is to give them real-world, supervised experience by co-signing for a card before theyíre old enough to have one in their own name.
