Weekly Family Finance Picks (#12)

We’re constantly scouring the Internet looking for articles related to family finances and teaching kids good personal finance habits. You can visit the FamZoo delicious page to see our ever growing list of family finance bookmarks. Each week, we pick our favorite articles from the previous 7 days and post them here.

It was another big week for family finance articles and posts — we collected 32 links in all. Here are our top 3 picks for the week:

The Great Allowance Negotiation
by Alison Griffiths
on Calgary’s Metro News

I like how Alison’s article walks through a very short, real-world scenario of setting an allowance based on a budget rather than using an arbitrary figure. I recreated Alison’s allowance negotiation vignette in FamZoo — even capturing some of the dialog from the article in the budget comments. Here’s a screenshot:

Click to see full size

How to Prepare Your Kids for Money Challenges
with Jill Schlesinger
on CBS News

Molly Wood’s interview with Jill on the CBS News web show “Eye On Parenting” provides an excellent overview of allowance approaches through the various phases of childhood. She doesn’t mention FamZoo in the online resource section at the end, but it’s a great segment nontheless! Here’s the video:

4 Tips for Kid-Friendly Savings
by Constance Gustke
on Bankrate.com

When it comes to virtual FamZoo accounts vs. real-world bank accounts, it doesn’t have to be an either-or proposition. Using the two together is an excellent best-practice. Whenever your child’s FamZoo savings account hits a certain level — say $50 — consider “rolling it over” to a real world savings or investment account.

This article suggests some low cost options for your kid’s real-world accounts along with 4 tips on teaching kids about savings.

Weekly Family Finance Picks (#11)

We’re constantly scouring the Internet looking for articles related to family finances and teaching kids good personal finance habits. You can visit the FamZoo delicious page to see our ever growing list of family finance bookmarks. Each week, we pick our favorite articles from the previous 7 days and post them here.

There were a ton of excellent articles over the past 7 days — nothing like back-to-school time to get families focused on kids and finances. Here are our top 3 family finance articles culled from around the Internet last week:

Do What You Love — Damn the Economics
by Dan Kadlec
on The Bank of Dad column for CBS Money Watch

Photo by Colin B

I’m a huge fan of the sentiment expressed in Dan’s article: follow your passions not the money, and good things will happen — often in ways you never could have imagined.

Just be sure you learn to live within your means along the way.

Consider my oldest son’s experiences with his off-the-beaten-path passion for fixed gear trick biking. Cynics dismiss this as a meaningless pursuit. But here are just a sampling of the wonderful opportunities, lessons, and rewards he’s encountered along the way:

• Learning what it takes to prepare for and excel in competition. Discipline, determination, focus, passion, just plain hard work — all those good qualities.
• A peek into the business side of biking through his sponsorships with bike manufacturers. How to conduct himself professionally in business relationships — even when they go south.
• A wonderful summer job with a bike bag manufacturer - Rickshaw Bagworks (of course, it helped that Uncle Mark is the owner, but my son’s knowledge and zeal for biking made him a valued contributor and someone they were more than happy to put in front of customers).
• Admittance to his college of choice. I can’t completely prove this, but I believe that my son’s unique trick biking video submissions on his college application had a lot to do with him being accepted to his college of choice. Who’d a thunk it!

Last week, my son headed off to college to study his other passion: Philosophy. Am I disappointed that he isn’t focusing on something more “practical”? Not a chance!

Just proud.

Can’t wait to see where his passions will lead him next.

The Friday Podcast: Allowance, Taxes And Potty Training
with Joshua Gans and his daughter
on NPR

Skip to the 7min 55sec mark in this NPR Planet Money podcast to hear economist Joshua Gans explain his experiences with "inter-generational transfer payments" (that’s economist-speak for "allowances").

Joshua relates several entertaining stories around his experiments with allowance incentive systems within his own family. Listen to the segment to hear about his sinister exploitation of purchasing control to enforce dress codes, the 100% "health tax" on candy, the grandma candy “leakage” effect, and how the relationship between kids and parents mirror the relationship between bankers and regulators.

You can also read Joshua’s follow up comments to the podcast in his blog post here.

How to Set Your Child’s Allowance
by Jennifer Saranow Schultz
on The New York Times Bucks Blog

Not only does this article feature a FamZoo competitor, but I also think the recommended approach for setting the amount of your child’s allowance is pretty darn goofy.

So why did this article make our pick-of-the-week list?

I think the comments (excluding mine of course!) are fascinating. They point out the incredible diversity of thought around how to handle teaching kids about money. Read through them. To me, the comments underscore how important it is for FamZoo to supply parents with a flexible set of tools. There are a lot of right answers. Use the tools and techniques that work best for your family, your situation, your values.

New: Get-Out-Of-Debt Goals and More Timezones

Last night, we deployed a minor upgrade on FamZoo.com. It included two nice little features:

Get-Out-of-Debt Goals

Until now, the progress on a savings goal has always been measured relative to an account balance of zero. In other words, if you had a goal to save $50 in your General Spending account, we’d always assume that your starting point was a balance of $0. So, when you reached $10 in your account, you were 20% of the way to reaching your $50 goal. This works great in the typical case where your child is saving up for a future purchase.

But what if you’re using an account to track the repayment of a loan? What if you want the saving progress to show how far along your child is in paying off an existing debt? Maybe you purchased a phone or a computer for your child up front or paid off a speeding ticket for your teen (it happens, trust me!) with the expectation that your child will pay off the debt over time using a percentage of allowance and/or money earned from odd jobs.

In this case, you start out with a negative account balance (the loan) instead of zero, and you’re tracking progress in shrinking a negative balance instead of growing a positive one. To address this scenario, we’ve added one additional field to the Savings Goal form: the Starting Balance Amount. Just set this to the initial negative account balance of the loan account (i.e., the negative value of the loan amount). Now your savings goal will track your child’s progress in getting that balance back to zero and getting out of debt.

By the way, the loan repayment experience can be a great way to teach the real value of a dollar. The extra bonus is that kids take a lot better care of things they’re still paying for!

More Timezones

We expanded our timezone coverage to do a better job of accommodating our families in Europe and elsewhere. Now folks outside the US and Canada can get their checklist item reminders on time.

New families will see more timezone options on the registration page. The timezone selected on the registration page serves as the default timezone setting for any additional family members added later. Existing family members can update their timezone setting by visiting the Family tab, clicking on the Settings link, and selecting the desired timezone option on the form.

If you don’t see an option for your timezone, just contact us and we’ll see if we can add it for you.

Weekly Family Finance Picks (#10)

“Guest blogger” and FamZoo summer intern Haley Dwight is headed back to college soon, so her weekly summer posts have come to an end - sniff, sniff! Haley’s family finance picks-of-the-week have been very helpful and popular though, so we’ve decided to do our best to keep the tradition alive in her absence.

Here are our four favorite family finance articles culled from around the Internet last week:

Money Matters: How to Make Allowances Work
by Marie Hartwell-Walker, ED.D.
on PsychCentral

Marie makes a solid case for why an allowance (when delivered intelligently) is a very effective tool for teaching kids how to manage money well. She bolsters her case with 9 tips for making an allowance work based on input from participants in her parent study groups. Note the emphasis placed on enumerating expenses, making simple budgets, remaining unemotional, avoiding lectures, and letting children make (and learn from) mistakes.

Advice for Parents as Their Kids Head Back to School
by Janet Bodnar
on NASDAQ.com

The transition back to school provides prime opportunities for parents to share financial teachable moments with their children. Janet provides excellent examples and suggestions broken down by age group: elementary, middle-school, high school, and college. One of my favorites: Would your college-age child join a fraternity or sorority if they had to pick up the fees? Half the fees? Hmmm...

Q and A About Kids and Money
on MoneyBunny.com

This article provides a concise Q & A for parents who want to start teaching their kids good money habits. It’s part of a larger site put together by the nonprofit Money Management International "to give kids a fun, interactive way to learn about money management." It looks like the interactive content is geared primarily towards the younger end of the age spectrum. If you have youngsters, check out the stories “Money Bunnies Take a Vacation” and “Brownie Wants a New Bike” on their video page.

5 Crucial Tips for Raising Money-Smart Kids
by Jean Chatzky
on USA Weekend

Jean Chatzky, the financial editor for NBC’s Today and author of "Not Your Parents’ Money Book: Making, Saving and Spending Your Own Money", shares her top 5 tips for parents who want to teach their kids the critical life skill of basic money management.

I like Jean’s advice on matching an allowance amount to a set of explicit expectations about what your kids need to purchase — i.e., a budget-based allowance. This makes an allowance less arbitrary and a mechanism for learning to control spending; otherwise, it becomes just a handout for arbitrary purchases. We’ve had really good learning experiences with giving our teenagers clothing allowances — they submit a budget to us, we agree on it (after revisions if necessary), and we give them an allowance equal to the budget. Then, we step back and let them manage their spending through the year. When it’s gone, it’s gone. There’s virtually no complaining or nagging, and they appreciate the responsibility and freedom.

Weekly Family Finance Picks (#9)

This is entry #9 in a weekly summer series typically penned by “guest blogger” and FamZoo summer intern Haley Dwight. Haley was out of the office last week, so I’m filling in with some of my favorite finds over the past week.

There were a number of excellent family finance articles last week. Here are my top four:

Chores for Kids by Dad Labs on Man of the House

The guys at DadLabs make some pretty darn amusing videos. Check out this one about getting kids to do their chores. Have you been through all 6 phases? I think their suggestions are really good for kids on the younger end of the spectrum — before they turn into jaded t(w)eens at which point you may need to turn to an approach with more stick than carrot.

4 Lessons to raise Money Smart Teens by Kim McGrigg on Money Management International’s Blogging for Change

Kim covers four solid tips for putting your teen in control over the money they receive. I particularly like the speeding ticket example in #4. That’s happened to Haley. I paid the fine right away since she couldn’t afford it, but had Haley pay me back over an extended period of time. We used FamZoo to track the progress on her loan payback.

Why You Should Give Your Teenager More Money by Stacey Bradford on The Money Watch Family Finance Blog

A provocative title for a wise article containing 7 excellent reasons to hand over more purchasing decisions to your teen. The emphasis on budget-based allowances is key: when used properly, an allowance is all about constraining spending, not expanding it.

Teach Your Children Well: Money Lessons for Kids by USAA on Divine Caroline

This article offers 8 solid tips for how parents can lead by example to teach their kids good money habits. I like the distinction made in tip #6 between Medium and Long-Term savings and having separate buckets for each. That’s an option we should probably add to our quick Bank Setup wizard.

Note: if you’ve created our common Spend/Save/Give account setup, you can add an additional account for Medium-Term Savings at any time. Just click on the "Create Account" link at the bottom of your Account Balances section on the Overview page.

Fill in the fields to create the new account for Medium-Term savings.

Click on the Go To Allowances link to see your existing allowances.

Hover your mouse over an allowance and click on the pencil icon to edit it.

Then, you can edit the existing allowance to flow into all four accounts using the proportions that make sense for your situation.

Haley's Weekly Family Finance Picks (#8)

This is entry #8 in a weekly summer series by “guest blogger” and FamZoo summer intern Haley Dwight.

This week, I have just one top family finance pick:

Teaching Kids Financial Literacy by Dr. Michele Borba from her Reality Check Blog

Have you taught your child to track expenses or set a budget yet? If not, you aren’t alone according to popular parenting expert Dr. Michele Borba. Michele shares 7 solid tips for teaching kids about money management from her book The Big Book of Parenting Solutions

I especially like the suggestion to keep a spending log. I keep one for my clothing purchases so I can stay on track with my annual clothing budget and avoid impulse buys. Of course, I keep my clothing spending log in a handy FamZoo virtual account!