Recession hands kids a tough money lesson

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Sacramento Bee

By: Claudia Buck

February 28, 2010

 

Even kids can get rattled by the recession.

Jordan Fox, 12, is a middle-schooler in Rocklin. Both his parents are working, with steady paychecks, but he's seen the headlines and heard the stories of families who have lost their jobs or homes.

 

That's why Jordan, who really wants a cell phone, is biding his time. "I want one but I know that it is not a 'need' for me ... We're in a not-so-good economy and I don't want to make my parents spend more than they have to. So I don't pester them; I'll wait until they're ready."

 

That kind of financial sense is what Jordan's parents are trying to instill in trying times. His mom, Lynn Fox, recently signed up Jordan and his 9-year-old brother, Kai, for an online kids-and-money program tied to America Saves Week, which ends today.

 

"We wanted them to know the value of money," said Fox, a preschool administrator. "We both work and have jobs; our kids are not wanting. ... If we teach them to make wise decisions now, they'll have good habits to carry forward."

 

Fox said she talks with her boys about spending vs. saving their $5 weekly allowances. She and her husband also match dollar-for-dollar any amount their sons want to invest, as they've done with Disney and Starbucks stocks.

 

"Teaching children the basic rules of good money management -- like 'spend less than you make,' 'pay yourself first' and 'keep a budget' -- is key to their success as adults," Karen Anderson, chairwoman of the California JumpStart Coalition, which promotes financial literacy, said in an e-mail. "The economic difficulties many families are dealing with in this recession are, ironically, also an opportunity to help kids learn these critical financial concepts."

 

Studies show children, particularly teens getting ready to live on their own, are hungry for a little more financial food. According to a Capital One survey last year, 50 percent of high schoolers wish they knew more about personal finances.

 

That appetite for money knowledge is all too familiar to Karyn Hodgens, a Rocklin-based personal finance educator who teaches classes at elementary and middle schools. Last week, she launched "Beyond the Piggy Bank," a free, 15-day money-management program for parents and kids on her Web site, www.kidnexions.com. It sends a daily e-mail on money-management topics designed to get kids and parents talking. About 30 families across the country are participating.

 

One of last week's topics is the classic: "needs vs. wants." Or as Hodgens puts it: "Shoes are a need but are Nike Air Jordans? Clothes are a need but are designer jeans? A cell phone may be a need, but does it have to be the iPhone?"

 

If the answer from your youngster or teen comes back an emphatic "Yes!" she says, they should learn how to earn enough to pay for those "wants."

 

"We need to teach kids to live within a budget and make those choices themselves. It's learning life skills."

 

Sometimes, it's as simple as talking out loud about your own choices. Eyeing a sweater at Macy's or a Target housewares item while shopping with kids can be a chance to ask: Do I need it? Can I afford it? Would I make the same choice a week from now?

 

Kai Fox, who's the family banker for himself and his brother, has nailed that needs/wants lesson. "Wants are things you would like to have but don't need to get on in life," he said. The fourth-grader has saved up about $140 for his wants: "Maybe a new Lego set or basketball ... or a laptop."

 

As America Saves week comes to a close, here's a look at other money-smart efforts aimed at kids and teens:

 

Talking to teens The California State Lottery, University of Phoenix and the nonprofit YoungBiz Foundation California are hosting a series of free Saturday financial skills workshops for Sacramento-area teens. The five-hour sessions, scheduled at various local University of Phoenix campuses, will be held in March, April and May. Topics include identifying debt traps, banking and budgeting, college savings and credit card use.

 

"We're trying to fill the gap that school budget problems have left and to get these life skills to teens while they're still young," said Marie Hall, executive director of the YoungBiz nonprofit.

 

The sessions are free to the first 175 teens who sign up. For more details, call (916) 806-3989 or go to: www.bemoneysmartteens.org.

 

Golden tips The Golden 1 Credit Union is hosting a one-hour "Money Management for Teens" session Saturday at 11 a.m. in the South Natomas Community Center, covering checking accounts, credit cards, loans and basic personal finance. Golden 1 is hosting other free financial classes for teens and parents. For more details, call (916) 732-2900.

 

Need a reality check? Teens can get a clue on what life costs after leaving home using the "Reality Check" calculator, recently updated by the national financial literacy group JumpStart Coalition (www.jumpstartcoalition.org). You type in your ideal living arrangement, plus estimated costs for entertainment, food, utilities, eating out, etc. It then calculates what hourly wage -- and types of jobs -- you'd need to live on. For instance, entering a typical young adult's lifestyle yielded this: "Based on what you told us, and after deducting 20 percent for state and federal taxes, you would need to make at least $17 per hour and $680 per week to support your lifestyle."

 

Not exactly a burger-flipping wage.

 

Disney, too Even Disney hopped on the kids 'n' money bandwagon. Last year, it announced a partnership with investment management company T. Rowe Price to add an interactive financial planning game at its Disney World theme park in Orlando, Fla. To play the virtual version of "The Great Piggy Bank Adventure," go online to: www.piggybank.disney.go.com.

 

For financial teachers like Hodgens, managing money is not about how much, but how well you use it, such as giving to charity.

 

"Kids love handling money and they love knowing you respect what they think," said Hodgens. She suggests: talking as a family about ways everyone can pitch in to save; conducting a "money-tour" of the house to find energy savings; letting kids choose less expensive family entertainment.

 

The country's stubborn recession, she notes, has made talking finances with kids "more in vogue than it ever used to be." And it's vividly given parents additional incentives to pass on some hard-earned financial lessons to their kids.

 

Elizabeth Comiskey, a Pennsylvania parent who said she and her husband are just now "getting our heads out of the sand financially for the first time in 10 years," signed up for the online "Beyond the Piggy Bank" to help her two kids, 5 and 9.

 

"Perhaps our children won't be as intimidated by finances as we were and can make sound decisions at a young age," she wrote in an e-mail. "We haven't been able to offer them many luxuries, but empowerment and education are worth so much more."

 

BY-THE-NUMBERS * 53 percent of parents say their child thinks money "grows on trees," according to the Networks Financial Institute at Indiana State University.

 

* 47 percent of adults said the recession has brought their family closer together, by changing spending habits and priorities, according to an informal online poll last year by TheMint.org. Only 27 percent of kids 17 and younger agreed.

 

* Financial literacy scores of high school students fell to their lowest levels in 10 years, with an average score in 2008 of 48.3 percent, according to the most recent scores from the national JumpStart Coalition for Personal Financial Literacy. The good news: College students fared significantly better, with average scores of 62.2 percent.

 

* Although teens prefer learning about money from parents -- over friends, reading a book or taking a personal finance class -- only 24 percent said their parents discuss money management concepts with them regularly, according to an October survey by Capital One Financial Corp. Thirteen percent of teens said their parents never discuss money with them.

 

* Among graduating high school seniors last June, one-third (34 percent) said they were either unsure about or unprepared for managing their personal finances, a Capital One survey found.

 

Source: Bee research

 

ADDING IT UP Lots of Web sites offer money-management tips aimed at kids and teens. Among them:

 

DON'T BUY IT www.pbskids.org/dontbuyit Our personal favorite, funded by the Center for Public Broadcasting, teaches kids and teens how to be smart shoppers and avoid advertising "tricks" and slick marketing gimmicks. It's even got computer wallpaper and banner ads you can download as reminders to: "Don't Buy It."

 

THE MINT www.themint.org Loaded with info for kids, teens and parents on all things money: earning, saving, spending, investing and donating. Includes financial conversation tips for parents with kids from 2 to 22.

 

U.S. MINT FOR KIDS www.usmint.com/kids What easier way to save than collecting coins? The Mint's site makes heads and tails out of coin collecting with games, puzzles and history.

 

FAMILY MONEY www.smartaboutmoney.org Lots of free "economic survival tips," including booklets on family finances and talking to kids about money, from the National Endowment for Financial Education.

 

KIDNEXIONS www.kidnexions.com Launched in Rocklin in 2007, the site sells money-saving software for kids, but also offers a free newsletter, money-earning how-tos and a new "Beyond the Piggy Bank" challenge.

 

SAVINGS QUEST www.mysavingsquest.com Geared to teens, it lets you pick a personal character and a career, then go on a "savings quest" to reach a goal, whether it's a new big-screen TV or five days at a theme park. Sponsored by Wells Fargo, it's an entertaining budgeting guide.

 

FINANCIAL SPORTS www.practicalmoneyskills.com/ games Geared to students ages 11 to college, these Visa-sponsored video games offer multiple-choice questions on loans, credit card debt and other financial topics. The games are co-branded by the National Football League and the soccer World Cup.

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This page contains a single entry by Ernest Roberts   published on March 1, 2010 4:22 PM.

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