Teaching Teens How to Manage Money


iStock_000017126556XSmallToday’s teenagers have a lot to handle — from worrying about social media, to keeping up college-worthy grades, to making the varsity team — their schedules are jam-packed. Add to the mix, a job market that’s not as welcoming as it was in the past, and you’ve got all the ingredients for a challenging situation. There are fewer jobs for teens, and because of this, they are harder to land.

So how can you prepare your teen to be a contributing member of society, with responsible financial habits? Start by letting them know how important it is to be smart about managing money. It’s an essential first step toward becoming a responsible adult. Consider applying the strategies below so that when they do enter the workforce and get their first paycheck, they’ll make the most of their hard-earned money.

Be persistent. Kids tend to live in the moment and be preoccupied with friends, so conversations about something as boring as a budget can make them want to stop listening. But don’t give up. Insist on helping your kids understand money basics — how it’s earned (no, it doesn’t grow on trees), where it goes (taxes are an adult reality) and what happens when it’s gone (savings are a good way to build a buffer). Encourage questions — even uncomfortable ones, such as, how much do you make? Are we in debt? — to build trust and gradually introduce adult realities. If your teen isn’t willing to talk, turn to the experts. Find a financial book aimed at teens or simply write down some of the financial principles and expectations you want to impart and make it required reading.

Set limits. Handing your teen a blank check or limitless credit card is unwise for many reasons. Spending without limitations tells kids they are immune from responsibility. An endless supply of fun money will prevent your teen from taking steps to reach financial independence by reinforcing reliance on your resources. Conversely, creating a budget with built-in limits teaches teens to be better stewards of the money you entrust to them. A budget provides accountability and can create a greater sense of security, because it puts your teen in charge. If you teach your teen how to live within a budget, you give them a gift that keeps giving into adulthood.

Check out the latest apps. Today’s teens are tech savvy, so why not meet them where they prefer to live? Smart phones and tablets are valuable teaching tools, even if they’re primarily used for texting and connecting with friends. Look for apps that track spending or provide financial coaching. Many are free or available for a nominal fee. If the financial talks remain stalled, try sending your child a link to an article on a financial topic, or a pertinent YouTube video as a conversation starter. You may just discover that they’re open to discussing these topics via text or email.

Although it may feel challenging at times, teaching your teens about money is worthwhile. And who knows, they may even thank you for it one day.

Smart Strategies for ‘Spoiling’ Your Kids and Grandkids


ImageIf you enjoy financially helping out your children and grandchildren, you’re not alone. Giving to them is fun and often provides immense satisfaction. The question is how to help without breaking the bank — and keeping everything in check. Here are some strategies and tips that can help.

  •  Give only what you can afford. Your own financial security should be your first priority. Since there is no way to know with any certainty how long you will live or how the market will perform, make sure you give within your budget to avoid compromising your own financial health. Doing so will help ensure your generosity today doesn’t create a financial hardship for you — or your family members — down the road.
  • Give the gift of time instead of money. Even if you want to give money to your children and grandchildren, it may not be appropriate to do so. Many young couples and/or parents take pride in their financial independence. The experience of letting those we love live within their own means is an important life lesson. If your children prefer to make their own way in the world, consider giving the gift of your time instead of your money. Whether it’s spending the day at the beach, taking in a movie or volunteering, you’ll enjoy the time making memories together.
  • Discuss your intentions. If you would like to help support your grandchildren or save for their future goals, such as college, talk with your children to let them know your plans. This can help your kids do a better job with their own financial planning. For example, if they know how much you are saving toward a grandchild’s education, they may be able to save more of their dollars for retirement. Be sure to talk with your financial planner or tax advisor before setting up education accounts to identify the opportunities that are best suited to your goals and financial situation.
  • Give season passes. Instead of giving money or material goods, treat your children and grandchildren to experiences. Depending on their interests, give them an annual pass to their local zoo, science museum or water or theme park. If you can afford it, think about season tickets to the theater, orchestra or a local sports team.
  • Plan a vacation. Treat your family to a multi-generational family vacation. To help keep spending in check, create a budget and let everyone know what you do and don’t plan to cover — from travel expenses to food, lodging and excursions — so that everyone knows upfront what to expect. Also, be thoughtful of those who have to take time off of school or work by scheduling travel over national holidays or school breaks.
  • Give equally. To help prevent family battles and avoid damaging relationships, give equally to your children and grandchildren to the best of your ability. If you need to give more to one person to help him or her through a rough patch, consider adjusting your will if you want to even things out.
  • Clarify whether you’re making a loan or giving a gift. If you are loaning money, be specific about the terms and a repayment plan. Also, make sure you have a written document that both parties sign and date. This will help safeguard your financial situation if things go bad by providing you with legal recourse. If you are giving a gift, be upfront about it. Let the recipient knows it’s a gift to alleviate any uncertainty about whether or not they need to pay you back.

For help determining how much you can give and/or ways to leave the legacy you desire, consult your financial professional. He or she can evaluate your financial situation and create a strategy to help you meet your goals.

Are You Creating A Money Monster?


Originally posted on Smart Money Parents:

An allowance can be a great way to teach your children the value of money and basic management through regular income. It can also be a great way for parents to define which expenses belong to the children and how family values affect spending. In her book Kids and Money, however, Jayne Pearl writes that parents often give allowances with certain terms and conditions without fully realizing the potentially negative consequences that loom.  Here’s our take on the big three:


We don’t make money in the real world for being thoughtful, using proper language or abiding by the law.  We are rewarded with appreciation, friends and freedom.  Bribing your children to behave teaches them to put a monetary value on their actions and achievements, and is likely not a big enough reward to encourage consistent good behavior long-term. Experts instead suggest reinforcing good behavior with special trips or…

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Kids Need Resolutions Too!


Scott Serfass:

Happy New Year!

Originally posted on Smart Money Parents:

New Year's ResolutionsAs a child, I remember my parents asking me about my New Year’s resolutions. Feeling motivated at the time, I would come up with ideas such as being nicer to my sister, paying attention in church and getting better grades. While I made every effort to stay true to my resolutions, although my sister might say otherwise, they were a distant memory by March.

Each New Year, I now make the same resolution – to set my goals for the year ahead. Goals differ greatly from resolutions in that we are much more likely to complete them given they follow certain guidelines. I find setting goals as a family to be invaluable because as a parent, you get to know what drives each person in the group, create accountability to each other and most importantly, help your children focus on controlling their own destiny.

So what makes a goal better…

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Lessons Fantasy Football Can Teach Your Children About Investing



Fantasy football has long been a popular game among friends, co-workers and families as a means of entertainment and competition during the NFL season. I willingly admit my fascination with the game and continue to learn valuable lessons each year that help me in my quest for the championship.

Parents often struggle to find ways to connect with their teenagers and while I don’t condone teaching your children gambling, getting your children involved in fantasy football can create valuable lessons that translate well into the financial world.

Taking risks

If you’ve played fantasy football then you are familiar with the term “kicking yourself”. This often refers to the self-loathing that occurs after you played a bad quarterback matched up against a bad defense with the expectation that the quarterback has a magical day. By Sunday night you realize that you simply played a bad quarterback. Meanwhile, Peyton Manning throws 4 touchdown passes in cold weather against the best defense in the league… on your bench.

Taking financial risks can be a very similar experience. When making investment decisions, it is important to understand the facts and possible outcomes. The last question being “Can I live with myself if this fails?” If you have done your homework, understand the downsides of the investment and feel the risk is worth the reward, then you should be able to live with the result. Great investors understand these trade-offs between risk and reward and are generally able to sleep at night knowing they made the best decision given the information.

Finding the coveted sleeper

Finding value is an important aspect of fantasy football. Championship teams are made in the late rounds of the draft and on the waiver wire by finding the players that outperform their projections. Did you draft Browns WR Josh Gordon this year despite a 2-game suspension to start the season or pickup Rams RB Zac Stacy after the injury bug hit St. Louis?

Finding the next great sleeper is about recognizing value before it becomes general knowledge. Once everyone knows about it, the value diminishes. This skill can help your children be proactive in finding simple deals on everyday purchases or eventually larger purchases such as a college education or a car. Not to mention, the ability to discover value investments can have a great impact on your net worth in the long run.

Knowing when to walk away

Ever have your stud running back turn into a dud? Past performance and name value can make a player very hard to drop. Just ask Ray Rice owners this year. One of the most difficult parts of fantasy football is learning to let go. It’s never easy admitting you were wrong but if you don’t, you will ride your team to the basement.

Financial mistakes are going to happen. Hopefully you are teaching your children about money and using tools such as an allowance to lessen the odds of big future mistakes. Learning to address problems as they arise and move forward can be an invaluable tool in the investment world and life. Whether it is making a poor purchase or poor investment, you can use these experiences to better your decision-making in the future and cut your losses.

Surrounding yourself with knowledgeable people

While I enjoy fantasy football, I am far from an expert. I rely on great, experienced analysts to help me shape my draft and weekly roster decisions. After all, they are doing this day in and day out at a level that I could not possibly attain as I tend to my family and career. Success is very difficult to achieve alone. Everybody needs a good team to help them win championships consistently.

The ability to form a talented team of people is a fantastic skill children need as they approach adulthood. Hiring a financial advisor or investment manager has shown to greatly increase your odds of financial success. I firmly believe that anyone can become expert in investment management, fantasy football or any other skill for that matter. However, if you are not willing to put in the endless hours of work to become an expert, find the people already doing it and get them on your team.

Want more thoughts and ideas on being a smart money parent? Visit smartmoneyparents.com to view the article archive or follow me on Twitter @scottserfass

Keep your Finances in Check this Holiday Season


iStock_000001753925XSmallHave you ever entered the New Year financially strapped because you spent more than you intended to over the holidays? If so, you’re not alone. The good news is that there are steps you can take today to help avoid “paying the piper” when the credit card bills arrive in January.

  • Write down the names of everyone on your gift list. This includes family members, friends, business associates, household service providers and so on. It may be helpful to create your list after you’ve determined how much you’re comfortably willing to spend on gifts this year. This way, you can keep your list controlled to a certain number of people and be more critical of those gifts that may not be crucial.
  • Set a budget and stick to it. Assign an affordable dollar amount to each recipient category, for example your spouse, parents, nieces and nephews and children. If something they desire costs more than what you’ve budgeted, ask someone else to go in on the gift with you or give the recipient a gift certificate that they can apply toward the item they desire.
  • Discuss your approach to holiday spending with your spouse, significant other or partner. If your money personalities and approach to holiday gifts differs greatly, look for common ground and agree to compromise to enable you to stay on track financially. If you’re worried your partner will spend too much from your shared account, talk about how overspending over the short-term on the holidays will affect your day-to-day finances and long-term goals.
  • Comparison shop for the best price. Thanks to the Internet and mobile device scanners, comparison shopping is quick and easy — and well worth your time. If you’re making an online purchase, take a moment to search for coupon codes for the site you’re purchasing from. Doing so can amount to some savings. Also, if free shipping isn’t available, see if there’s a free “ship to store” option to help stretch your holiday dollars.
  • Check out your local dollar store. You can often find high quality gift bags, bows, ribbon and tissue paper for cheap. If possible, go earlier in the season when the selection is at its best.
  • Control holiday party costs. Gifts aren’t the only expense during the holiday season. Parties are another, especially if you host one. To help reduce costs, send out electronic invitations and host the event with a friend to split the costs. It also helps to keep the menu simple – and ask others to bring something to share. If you’re serving alcohol, offer a signature drink instead of stocking a full bar or ask guests to bring a bottle of their favorite wine.
  • Keep your holiday receipts together. This makes it easier for you to track your expenses and stay within your budget. It also makes it easy to locate a receipt if you find an item at a significantly lower price elsewhere and want to return or exchange your original purchase. 

Staying on track with your finances during the holidays is all about being realistic about what you can afford. It may be tempting to overspend especially on the cutest kids ever, but it’s important to think about the impact that doing so may have on your overall financial situation.

Want more thoughts and ideas on being a smart money parent?  Visit smartmoneyparents.com to view the article archive and sign up to receive email and Twitter updates.

Begin your Child’s College Education with a Lesson in Finance


Originally posted on Smart Money Parents:

GraduationManaging finances as a college freshman can be an even bigger challenge than navigating an unfamiliar campus or acing a calculus test, but parents can help new students get off to a good start. You may have found it hard to squeeze in time to talk with your college-aged child about money before he or she packed the car and set off to begin a new chapter, but it’s essential that families set aside time for a financial conversation over a weekend at home or holiday break. Consider covering the following topics during this important conversation:

1. “You’re spending real money.” Understanding where tuition and other funds are coming from may inspire your child to spend more carefully. Clarify that loans will have to be repaid with interest and while scholarships, grants and gifts may seem like “free money,” there are expectations that they’ll be used responsibly. If you’re providing…

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