kids

How to Get Your Kid Started With Investing

Carrie Kirby — Sat, 08 Aug 2020 17:32:44 +0000

My daughter recently lost $80 in her bedroom. It's just gone. One theory is that we accidentally donated it to Goodwill, since she had stored it in an old book and we'd been clearing out a lot of junk. But it got me thinking: What would be a better place to keep money she's not using?

She's been bringing in some respectable allowance earnings with the chores she's taken on recently. Plus, she always receives some money for birthdays, and she doesn't spend much. Maybe an investment account?

While the investing rules are a little different for minors compared to adults, it's not hard to get your child started investing. Even if they only make a little money, the experience may encourage them to start investing for retirement early in adulthood, which can set them up for life. Here's how to show your kid the basics of investing.

Determine what kind of account to set up

Children can set up savings, checking, or brokerage accounts using the Uniform Transfers to Minors Act (UTMA) or the Uniform Gifts to Minors Act (UGMA). All they need is an adult (presumably you) to sign on as the account's custodian. This means you have to approve what your child does with the money until your kid is of age, which is 18 or 21, depending on what state you live in. Because the funds or investments in a UTMA legally belong to your child, once they're in this account, they can only be spent for your child's benefit. You can't deposit $100 in your child's UTMA account and later decide you want it back or transfer it to another child.

Setting up a UTMA account is much like setting up any other account. You can walk into a bank or credit union and open one for your child by filling out some paperwork and showing your identification, or you can go online to sign up for one with a firm such as Vanguard.

Your child could also set up a UTMA 529 savings plan. The 529 is a college savings vehicle that has tax advantages, but also comes with restrictions on how it can be spent. More on that below.

Aside from a traditional brokerage account, your child could also try a micro-investing account, since they're likely to be starting with a small amount of money. You can set up a custodial account through Stash or Stockpile — in fact, Stockpile even works with BusyKid, an app that helps families track kids' chores and pay their allowances digitally.

Besides an investment account, you may also need to open a checking or money market UTMA for your child and link it to the brokerage account, as a way to fund the brokerage account and a place to receive dividends and other proceeds.

Unless they have earned income from working, your kids can't set up a traditional or Roth individual retirement account. (See also: 9 Essential Personal Finance Skills to Teach Your Kid Before They Move Out)

Figure out what investment vehicles to use

Once their account is set up, kids have access to the same investment products that adults do, such as mutual funds, individual stocks, or exchange-traded funds. Which products they choose depends on their interests, how much money they have to start with, and how actively they wish to invest.

A child who is interested in following one or more companies in the news and making active investment choices may want to buy individual stocks. Look for a brokerage firm with no minimum initial deposit (or a low one) and low trade fees. While this is a concrete and exciting way to start understanding the stock market, make sure that kids understand that for the long haul, many financial advisers recommend investing in funds over individual stocks.

If your child doesn't have any individual companies in mind, but would like to invest in the market as a whole, a mutual fund such as an S&P 500 index fund is a great way to go. Good ones have low expenses, meaning that your kid gets to keep more of his/her investment. Unfortunately, mutual funds do tend to require minimum investments. For instance, to buy shares in Charles Schwab's often-recommended S&P 500 index fund, you need to open a Schwab brokerage account with a $1,000 initial deposit. However, there is one way around that: You can also open a Schwab account with a $100 deposit — but you have to deposit an additional $100 each month until the account has a $1,000 balance.

Your child could also buy exchange-traded funds, which work a lot like mutual funds but tend to have lower minimum investments.

Another way to get started with a small initial investment is to use one of the micro-investing apps mentioned above, which split one share of stock or of an ETF and sells the investor a fraction of it. These apps can make getting started very simple for young kids by characterizing investments by category. In exchange for making things this simple for you, these services usually charge a monthly fee; Stash's is $1 per month.

While your child could also opt to invest in Treasury bonds or certificates of deposit, at today's low interest rates, this probably wouldn't be a very exciting way for them to learn about investing.

What about taxes?

Does your child have to pay taxes on their investment gains? Do they have to file their own tax return? The answer to both questions is, "It depends."

If your child's investment income is less than $1,050, don't worry about it; you don't need to report this to the Internal Revenue Service. If the child's investment income is less than $12,000, the parent can opt to report it on their own tax return, or file a separate return for the child. At more than $12,000, you have to file a tax return for your child.

What rate will your kid pay? Unearned income up to $2,100 will get taxed at between 0 percent and 10 percent, depending on what kind of income it is. After that, your child's unearned income will be taxed at your rate, no matter if you file separately or together. So don't imagine that you can save a bundle on taxes by transferring all your investment accounts to your kids — the IRS caught on to that gambit years ago.

If your child chose to put their money in a UTMA 529 plan, they never have to pay federal taxes (and generally not state taxes either) on the earnings, as long as they spend it on qualifying educational expenses, such as tuition and textbooks.

Will investing hurt their chances of getting college aid?

It's important to note that when it's time to apply for college financial aid, assets in the child's name count against them more than assets in the parents' name. Unless you're sure your family won't qualify for financial aid — and outside of the 1 percent, that's not usually something you can be sure of in advance — encourage your child to choose shorter-term goals for their investment account. They could choose a goal of anything from buying a new Lego set, to a week of sleep-away camp, to their first car.

Again, putting their investments in a 529 plan changes the situation a bit. Even if the child is the account owner, the financial aid officers consider assets in a 529 account a parental asset. This is great, because only about 5 percent of parental assets count against financial aid eligibility, compared to 20 percent of student assets in a non-529 UTMA account.

If your student does invest college savings in their own name, have them spend their own money first before you tap into a 529 plan or any other savings you are holding for their education.

Like this article? Pin it!

This article is from Carrie Kirby of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

9 Essential Personal Finance Skills to Teach Your Kid Before They Move Out

Tim Lemke — Fri, 06 Jul 2018 09:00:10 +0000

Your child is on the verge of moving out and living on their own. Are they prepared?

Arming them with the right personal finance knowledge will give them a strong foundation to go and achieve many of their life goals. If their understanding of personal finance is lacking, they could begin their independent life on the wrong foot (and they may even come back home).

Consider these ways that you can help your child build a base of financial knowledge before they move out.

1. Show them how to budget

Perhaps the most important personal finance skill is consistently spending less than you earn. There are a million different ways to budget, and whatever works for you may not work for your child. But encourage them to develop a system to track and categorize spending and then compare those expenses to their income. Of course they'll need to account for housing, food, and utilities but also let them know it's OK to include "fun money" in their budget. It will help them stay motivated to stick to their budget. (See also: How to Help Your Kid Build Their First Budget)

2. Teach them how retirement plans work

If your child is moving out, they likely have some earned income. That means they can start contributing to a Roth individual retirement account. They may scoff at the notion of saving for retirement so early, but if you help them open a Roth IRA and demonstrate how much money they can accrue over time, they'll get on board. Urge them to save as much as they can each month, invest in simple things like index funds, and simply watch their account balance grow over time through compounding.

If they have a 401(k) plan through an employer, take time to review the plan document with them and encourage them to contribute as much as they can. Be sure to explain the advantages of getting a company match on contributions, if one is offered. (See also: 11 Basic Questions About Retirement Saving Everyone Should Ask)

3. Explain bank interest rates

Chances are, your child already has a savings account. But it's still helpful to explain that they don't necessarily need to put their money in the first bank they see. Show them how interest rates can vary, and that it's OK to shop around for the best rates so they can earn a little extra money. Explain terms like APR and APY, and the factors that impact whether rates go up or down.

Also outline the pros and cons of placing money in certificates of deposit. These days, it's also helpful to explain that while interest rates are rising, they're still quite low, and that it might make sense to invest some funds in ways that generate a higher return than savings account interest. (See also: 12 Places to Keep Your Money Safe — And Growing)

4. Tell them about bank fees

Once your child understands how bank interest rates work, they'll need to know about the tendency banks have to charge fees to account holders. These fees could be for anything from low balances to the use of paper checks. Tell your child how they can avoid these fees by researching the best bank accounts and reading the fine print. Let your kids know that if a bank is charging too many fees, it's OK to switch to another bank that doesn't. (See also: Are You Paying These 6 Unfair Banking Fees?)

5. Teach them the pros and cons of credit cards

Credit cards can help a person establish credit, and that's important when you are starting out. And some credit cards offer nice benefits, such as cash back on purchases or travel rewards miles.

You can help your kid apply for a card, but it should come with a series of warnings. Young people must know that credit card balances should be paid off in full each month whenever possible. Show your child that credit card interest rates can be exorbitant, and that high balances can lead to a debt spiral from which they may never escape. (See also: How to Get Your First Credit Card and Build Credit)

6. Outline the pain of debt

Arguably the most important lesson you can teach your children before they leave the nest is that debt is not a good thing. Take time to explain the basics of borrowing so they understand how expenses can continue to increase if debt is not paid off. Show them calculations with interest rates for credit cards, auto loans, student loans, personal loans, and mortgages. Give them an understanding of debt-to-income ratios, and what that means in the context of their financial well-being. (See also: 8 Common Causes of Debt — And How to Avoid Them)

7. Explain the concept of net worth

When your child leaves home, they may be focused on finding a job that pays a high income. That's fine, but it's important for them to understand that income alone is not what generates financial security. It's more crucial to acquire assets that increase in value, while eschewing things that will decrease in value or be a drain on your finances.

This means saving money and investing it. It means avoiding debt. It means purchasing a home instead of renting, if possible. Your net worth — that is, the total value of your assets minus your debts — is the true indicator of your financial well-being. (See also: 6 Money Moves to Make If Your Net Worth Is Negative)

8. Urge them to shop for value

Saving money isn't always about spending as little as possible. It's also about spending your money wisely and getting the most bang for your buck. For example, if your child needs to purchase a refrigerator for their apartment, convey to them that they should seek out the best quality model at a price that fits their budget.

Shopping for value involves understanding quality and longevity of products, and knowing what features matter and which don't. It also involves doing extensive research of products and prices before you buy. Shopping for value is a skill that can be learned, and one that could save your child a considerable amount of money over time. (See also: How to Shop With Purpose — And Save More Money)

9. Teach them basic car maintenance

You don't need to teach your child how to replace a catalytic converter, but it helps if they have a decent foundation of car knowledge. Teach them how to put air in a tire and change the tire. Demonstrate how to swap out a headlight bulb and replace a hubcap. Urge them to read the car's manual and learn what all of those warning lights mean. Get them in the habit of changing the oil every few thousand miles.

Finally, teach them how to research the cost of car repairs, so they don't get ripped off at the mechanic. Your child won't be able to avoid car repair expenses, but they'll know enough to avoid getting stranded on the side of the road. Moreover, these basic maintenance efforts could help prevent the need for a major repair later. (See also: Bookmark This: Save Money With an Easy to Follow Car Maintenance Checklist)

Like this article? Pin it!

This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Smart Money Moves Your Kids Can Make Over Summer Vacation

Emily Guy Birken — Thu, 05 Jul 2018 09:00:11 +0000

Summer vacation when you're a kid means endless days of bike riding, swimming, playing video games, and fighting over who gets the last purple Popsicle in the freezer.

It's not nearly as idyllic for Mom and Dad. Not only do parents need to line up (and pay for) alternate child care for the kids during the summer months, but they also have to worry about Junior and Sis spending their allowances on Dilly bars and Star Wars sunglasses that break immediately, only to ask for more money to go to the movies every weekend.

That's why summer is a perfect opportunity to teach your kids about money management. Not only will these money moves help to improve your kids' money skills, but it will also help them to retain the math and reading skills they might not otherwise be practicing while school is out.

Here are five great money activities your kids can enjoy this summer vacation.

1. Lemonade stand

There's a reason why this classic introduction to entrepreneurship is a perennial favorite. Encouraging your kids to set up a lemonade stand gives them an opportunity to think about all the aspects of making a business successful, including venue, startup costs, pricing, advertisement, and signage.

Your kids will learn all sorts of important lessons about economics through this summer project. For instance, they can charge a higher price for homemade lemonade made from real lemons as compared to lemonade mixed from a powder — but they have to do more work to make the more expensive product. Is the increased price worth the increased work for these budding business owners?

In addition, your kids can learn that choosing a popular spot on a hot day will increase their sales, as opposed to setting up shop on a quiet street on a cooler day.

The one caveat about lemonade stands is the potential legal aspect of this kind of business. There are laws in many parts of the country that prohibit these kinds of sidewalk businesses without a permit, even when such businesses are run by adorable 10-year-olds. Help your child research the local laws before she sets up shop.

2. Investment club

Have your older kids form an investment club together. This club will invest a hypothetical $1,000 in whatever stocks the kids decide on together. Encourage them to choose stocks from companies that they already have a relationship with, like McDonald's, Facebook, Disney, Coca-Cola, Nike, Apple, or Microsoft. Remind them of what Warren Buffett says: Invest in what you understand. Their understanding of these brands will make them better investors than if they try to just pick something they are unfamiliar with.

Once they have "invested" their money, ask them to provide a weekly report on how their investments are doing. They will need to track the prices of their stocks and record those prices, which means they will learn how to look up stock information online. They can even make charts plotting the movement of their stock choices, so that they can have a good visualization of what their money is doing.

This project will help to encourage them to think of investing as something that anyone can do, even a kid, and can get them excited about potentially investing some of their real allowance money rather than spending it on Legos. (See also: 10 Investing Lessons You Must Teach Your Kids)

3. Grocery store math

When you take your child with you to the grocery store, put him in charge of keeping track of how much you have spent. For each item that you place in the cart, ask your child to write down the cost, which he will add to a running tally. Not only will this help him practice his math skills, but it will also give him an opportunity to do price comparisons, learn how pricing works for loose items like produce, and offer you a chance to talk about sales tax and how that affects your total at the cash register. (See also: 6 Fun Games That Teach Your Kids About Money)

4. Create a practice budget

One way of doing a practice budget is with a toy catalog. If you can't find one in print, check online, as many retailers upload versions of their toy catalog digitally. Tell your kids they have $50 to "spend" in the catalog, and let them go through the pages circling or noting what they are interested in. Then, ask them to add up the costs of all the items they circled to see if they stayed within their budget. Depending on the age of your kids, this can be a tough exercise, since they may be overwhelmed with how much they want.

For younger kids, another practice budget exercise is to take them to a dollar store and give them $5 each to spend. While they will be able to pick out at least a few items each, they will need to do some important thinking about which things they want most. This will help them understand opportunity cost — buying one item means you have less money available to buy a different item.

Similarly, if you have an older kid who loves video games that offer in-app purchase upgrades, ask them to list the cost of all the upgrades they want. These types of purchases tend to be low dollar amounts, but they add up quickly — and asking your kid to do the math on how much all of the character upgrades will cost can be very eye-opening. (See also: How to Help Your Kid Build Their First Budget)

5. Save up for a trip to a theme park

Going to an amusement park is a great family outing, but such day trips can be expensive. Between the price of tickets, the cost for things like ride photos and other souvenirs, extras like face painting, and the high markup on food, a family can drop quite a lot of money in a single day at a theme park.

Have your kids plan the budget for your trip to their favorite amusement park. Ask them to research how much entrance tickets cost and if there are ways to lower those costs. For instance, there are often reduced rates for purchasing tickets online as compared to at the gate, and amusement parks will often pair up with major retailers or brands to offer promo codes to reduce rates even further.

Let the kids know how much of the trip you will pay for, and ask them to cover any extras. For instance, you might offer to pay for half the cost of the admission, and will help them pack food for the trip. The kids will have to cover the rest of the admission price, as well as any extras or food purchased on site. This will help them figure out the best ways to budget, and determine whether having Dippin' Dots or a souvenir from the park is more important to them. (See also: 8 Affordable Amusement Parks That Are Just as Fun As Disney)

It's summertime, and the money lessons are easy

This summer, help your kids learn how to make responsible choices with money. These fun activities will ensure they go back to school in the fall with a clearer understanding of economics, budgeting, wants versus needs, and money management.

Like this article? Pin it!

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Should You Get Life Insurance for Your Kids?

Emily Guy Birken — Thu, 21 Jun 2018 09:00:27 +0000

My father was a financial planner, and he got his start by selling insurance. That meant Dad had some very strong opinions about insurance in general, and life insurance in particular. He was not shy about sharing those opinions with a captive audience — aka, his daughter.

Even though I heard Dad opine (and rant!) on any number of finance-related subjects, the viewpoint that stuck with me most was Dad's stance on life insurance for children.

"There is no reason whatsoever to ever buy such a product," he told me on more than one occasion. "Life insurance is for income replacement. Policies for children are morbid."

While part of Dad's objection to life insurance for kids stemmed from the exploitative practices you can find among disreputable insurance salespeople, he was also quick to admit that his own superstitions about tempting your children's fate added to his distaste for the products.

Though dear old Dad was right more often than not, I have come to see much more value in children's life insurance than he did. Here are some compelling things to consider before purchasing life insurance for your child. (See also: Term vs Whole Life Insurance: Here's How to Choose)

Funeral expenses

The average funeral in America costs about $10,000. Financial experts (including my father) might say that parents needing to pay such expenses for a child should use their savings to do so. But considering the fact that half of all Americans couldn't come up with $400 in an emergency, the expert opinion may not match most people's financial reality.

My dad did have an answer to this objection, however. There are many funeral homes that will offer their services free of charge for families who cannot afford the burial costs of losing a child.

That means parents who are considering life insurance for their children just because of the potential cost of final expenses might not actually need a policy. Not only is it unlikely that you will ever need the insurance payout, since it's relatively rare for children to die, but you will likely be able to find financial help or free-of-cost services if the worst should happen.

Income replacement

Dad made it clear that he believed life insurance was for income replacement only. So unless you're raising a child star, there is no reason to purchase a policy for your kid. (And you didn't want to get Dad started on parents who pushed their kids into show business.)

However, Dad's view didn't consider whose income will need to be replaced after the death of a child. The majority of children do not have an income, of course — but it's important to remember the very real cost of grief. Heartbroken parents may find themselves paralyzed by their grief and unable to work.

Having a financial cushion can help keep a family afloat during a terrible time when work may be the last thing on anyone's mind. If you absolutely have to bring in every cent of your paycheck to manage your family's finances, a life insurance policy for your kids could potentially protect you all from the devastating costs of grief.

Coverage protection

Something that never came up in Dad's comments about children's life insurance was the importance of future insurability. While a child's life insurance policy is generally much smaller than those purchased by adults, they will often include a rider known as the guaranteed additional purchase (GAP) that a child can rely on once he or she reaches adulthood. This GAP rider will allow the child to purchase additional coverage as an adult without medical questions or underwriting.

I have seen firsthand just how important such coverage protection can be. My best friend's son was diagnosed with autism at 15 months of age. My friend had not purchased a life insurance policy for her baby, even though she had intended to do so.

Unfortunately, this means her son is now permanently ineligible for life insurance because of his autism diagnosis. Once he reaches adulthood, he will not be able to purchase a policy for himself. And autism is only one of several juvenile medical diagnoses — including diabetes, severe asthma, cancer, or a heart condition — that can render a child ineligible for life insurance in the future.

This is why my friend now recommends that every parent buy life insurance for their children when they are still babies. At the very least, it will allow the child to have coverage throughout his or her life, no matter what medical surprises may be in store.

Don't fall for the "investment" promises

Many children's life insurance policies provide an option to cash out the policy once the child reaches adulthood. There is nothing wrong with this — unless you are worried your kids will cash out the policy and go on a shopping binge — but it is hardly the "investment" that it is often touted to be. (In fact, you could make Dad go purple with outrage just by mentioning it.)

For instance, the Gerber Grow-Up Plan, one of the most commonly advertised life insurance products for children, promises that "each time you make a monthly premium payment for your [policy], Gerber Life sets aside a small amount of money. Over time, this becomes the cash value of your policy. It represents how much your policy is worth at any given point in time."

However, the cash value can potentially be less than the amount you have paid in premiums, since only a portion of your premiums are set aside. And the cash value will certainly be less than you would have earned through a traditional investment had you invested the premiums instead.

While there are legitimate reasons for choosing a life insurance policy for your child, the investment strategy is not one of them.

Buying life insurance for your kids is a personal decision

Despite my about-face on children's life insurance, my two sons are still uninsured. Dad's superstition about tempting fate has stuck with me — and my husband and I are lucky enough to be in a financial situation where we could handle the monetary costs if something terrible should happen. My only big concern is if either of my kids receive a diagnosis that will make them ineligible for future insurance. But we have decided to live with that risk.

It's important that all parents think through the full consequences of buying or not buying life insurance for their children. It is a distressing train of thought, but a necessary one. No matter what you choose, a well-thought out decision will lead you to what's best for your family.

Like this article? Pin it!

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

28 Free Ways to Entertain Your Kids This Summer

Ashley Eneriz — Mon, 11 Jun 2018 09:00:24 +0000

Making memories with your kids this summer doesn't have to drain your bank account. Your children just want to enjoy time together, and there are plenty of ways to do that on a budget. Here are 28 free ways you can have a blast with them.

1. Head to the library

The library is a great resource for free books, and you can make your trip even more enjoyable by letting your kids pick out any books that interest them or by using a printable library scavenger hunt to discover new reads. It will keep them busy, they'll have tons of fun, and they'll end up with new books to enjoy. Check your library's calendar for fun activities and story times as well. (See also: 7 Modern Reasons to Visit Your Local Library Today)

2. Turn your backyard into a water park

Turn on the sprinklers, have your kids change into swimsuits, and allow them to run wild. You can also add a tarp and some dish soap for a DIY slip and slide. It's really the perfect way to keep cool on a hot summer day.

3. Host a family game night

Pull out your board games and dedicate a whole night to playing a game together as a family. If you have a big family, you can play the games as teams and compete for a prize like, the winner gets to pick the movie on movie night, or the last place team has to do the dusting for the next week. (See also: 6 Fun Games That Teach Your Kids About Money)

4. Let them play dress up in your clothes

Who needs fancy dress up costumes when Mom and Dad have dresses and suits to throw on? See what funny combos your kids can come up with and even organize a mock fashion show.

5. Create a fort in the living room

Hunkering down inside a homemade fort is a fun activity for kids and adults alike. All you need is a few chairs, some sheets or blankets, and a lot of comfy pillows to make the perfect indoor fort.

6. Have a camp out in the backyard

A camping trip won't always fit your schedule or budget, but you can still enjoy the experience by pitching a tent in the backyard. Roast hot dogs and s'mores outdoors with a grill or fire pit, tell ghost stories, and sleep under the stars. And make sure to use bug spray!

7. Bake some sweet treats

On a rainy day that can't be spent enjoying the summer sun, stay in and whip up some treats. Scour Pinterest for fun baking recipes to try out. What kid wouldn't want to make unicorn poop cookies or rainbow s'mores dip?

Or you can turn a regular meal into a game by letting the kids make funny food art. My girls always love when I turn their pancake breakfast into a dog, cat, or something holiday themed, like a turkey or Santa.

8. Have a picnic

Take meal time out in the fresh air with a picnic blanket and paper plates. Enjoy your family picnic at the park, in your backyard, or even in your living room if the weather isn't cooperating.

9. Make bath time extra fun

A bath with glow sticks, extra bubbles, or a few drops of food coloring can make tub time a blast. You can even add new toys or bring in water toys for the special occasion. Or you take bath time outside by filling a kiddie pool with bubble bath solution and letting kids get clean in their swimsuits.

10. Go hiking

A family hiking trip can be a wonderful bonding experience, especially if there is a lot of wildlife and plants to see along the way. Get kids more involved in the hike by making it a scavenger hunt or by bringing binoculars so they can birdwatch. American Trails lists hiking and equestrian trails available in each state. (See also: 10 Most Breathtaking Day Hikes in the U.S.)

11. Have a spa day

Everyone loves a little pampering from time to time. Whip up DIY face masks for you and your kids from ingredients in the kitchen, like yogurt or avocado. Enjoy a bath with a homemade bath bomb or treat yourself and the kiddos to a mani/pedi and let them pick their own colors — even if it's a different color on each nail. (See also: 10 Spa Treatments You Can Do at Home)

12. Conduct a science experiment

No need to make your kids sit through a dull science lesson. Get them interested in the subject by trying fun experiments that will blow their minds like making homemade ice cream, rock candy, or creating invisible ink for writing secret messages.

13. Hold an impromptu dance party

When your kids are complaining that they're bored or are fighting with each other, turn up the music and just start dancing. Watch the anger or antsiness fade into endorphins as they enjoy a subtle workout.

14. Visit Petsmart or Petco

My kids love going to the pet store just to walk around and look at the animals who've come in with their owners, and the smaller pets like fish that are available for adoption. Some locations have dog and cat adoption days on the weekends, so the kids can meet and pet four-legged friends, too!

15. Turn your garage into a roller skating rink

Clear out the garage, put on your skates, and blast some tunes for a fun DIY roller skating party. If you have a disco light, even better!

You can also check out Kids Skate Free to find free skating rink passes in your area.

16. Write and star in your own movie

Want your kids to take a break from the screen? Encourage them to make a movie or show of their own. If you don't have a video camera, you can use your smartphone and upload clips to a free movie editor, such as Blender or iMovie, to add special effects and cut and paste scenes.

17. Throw a tea party

Serve herbal tea, cookies, and tea sandwiches on your fanciest plates and drink with your pinkies up. Talk in accents or listen to a narrated audiobook like the Harry Potter series while you and your kids fancily dine.

18. Blow some bubbles

Bubbles are not just for babies and toddlers. Older kids (and even adults) love them, too! Create giant bubbles with this homemade recipe or reusable bubbles with items you already have on hand.

19. Try geocaching

Geocaching is where you hunt for a hidden object through GPS coordinates. Many people around the world have made the experience a thrilling one for families with kids to enjoy. (See also: 6 Outdoor Adventures That Don't Cost a Dime)

20. Go bowling

Who doesn't love using a giant heavy ball to knock down several pins at once? Bowling is great for kids and adults, and it doesn't have to cost you a thing. Get free bowling passes through Kids Bowl Free or see if your local bowling alley gives away free games for good grades or birthdays.

21. Start a kids book club

Invite your children's friends over once a week for a book club meeting and read something that everyone will enjoy. Make themed snacks, crafts, or have the kids re-enact their favorite scenes.

22. Paint outside

Get creative without the mess. Use paint that you have on hand and make masterpieces on paper, rocks, or old shirts. You can even lay down an old bed sheet and let the kids paint with odd objects around the house, like a whisk or straw.

23. Set up a scavenger hunt

Hide a prize, such as a pan of brownies, and write and hide clues all over the house. They will have a blast solving riddles and trying to guess what the ultimate prize is. (See also: 15 Free Ways to Entertain Kids for an Afternoon)

24. Host family Olympic Games

Inspire some friendly competition among your family members by holding your own Olympic Games. If you have enough people to split into teams, you can even make your own uniforms with old T-shirts. Try fun games like a three-legged race, carrying an egg on a spoon, and water balloon toss.

25. Tour museums for free

Sign up for your local museum's mailing list to get notifications of free events and fee-free admission days. (See also: How to Visit Museums for Free)

26. Take a factory tour

Give your kids an inside look at people hard at work in various industries. Search FactoryToursUSA under your state to discover free factory tours near you. There are 565 tours listed, and many of them with free or little admission cost.

27. Sign up for a free class

Many stores offer free classes for children. Check with your local library, bookstores, schools, and community center for more offerings.

Here is a short list of free classes to get you started:

The American Girl Store occasionally offers free events and crafts.
Michael's Craft store offers free craft activities along with $2 and $5 craft classes.
The LEGO store allows children to complete a free mini-build once a month.
HomeDepot does a free workshop for kids each month.

28. Visit a nearby farm

It's so important for kids to see where their food comes from, and visiting a local farm is the perfect way to show them. Use LocalHarvest to find nearby farms and free events. You can also connect to pick-your-own farms near your area. Check to see if admission is free and if you can walk and picnic on the farm for free.

Like this article? Pin it!

This article is from Ashley Eneriz of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Does Your Teenager Really Need a Credit Card?

Holly Johnson — Tue, 08 May 2018 08:30:26 +0000

Giving your teenager a credit card may seem like a scary proposition, but it could be the safest way to teach them about credit. Credit expert John Ulzheimer says it's just like teaching your teenager how to operate a car, but in a controlled environment. "Nobody would just let a teen hop in a car and drive," says Ulzheimer, who formerly worked with Equifax and FICO. "And nobody should just let their kid get a card on their own someday without some teaching by the parents."

Yet, that is exactly what many people do. The problem is, for a teen, a credit card may seem "no different from using a gift card or some other stored-value card," says Ulzheimer. And that can be dangerous. If they charge more than they can afford to repay, they might wind up dealing with years of debt and regret.

The reality is that your child will need credit to borrow money one day. If they don't build a solid credit history during high school or college, they may start their adult lives at a disadvantage. "Helping your teenager build their credit can make their life easier in the future when they go to purchase a big-ticket item on a line of credit, like a vehicle or home," says Gina McKague, president and CEO of retirement planning firm McKague Financial.

And while some financial experts like Dave Ramsey insist that nobody needs a credit score to get by in life, many argue that thinking is outdated. The reality is, good credit improves your life significantly. "Not only is establishing credit vital for obtaining something significant like a loan, but as more and more vendors exclusively accept payments via credit cards or even smartphones, it can be necessary just for buying lunch," says Jeff Motske, financial planner and CEO of Trilogy Financial in Huntington Beach, California.

Besides lenders, everyone from car insurance companies, to landlords, to employers can ask for modified versions of your credit report. They can influence your ability to get a job, an apartment, or good car insurance rates. If those aren't reasons enough to get your teen on the right track with responsible credit use, what is?

How to get your teenager a credit card

Ulzheimer says there are several ways to know if your child is ready to learn about credit. If they're already using debit cards, prepaid cards, or their phone to make purchases with your credit card information, then they're probably ready to get a credit card with your help, he says. (See also: 8 Websites to Help Your Kids Learn About Money)

Still not sure? A teenager's senior year in high school is often a good time to start. "That way, they're as mature as possible while still living under your roof," notes Ulzheimer.

Once your kid is primed and ready, the best way to introduce them to credit is by adding them as an authorized user to your own credit card account. Doing so comes with several advantages, including the fact that your own positive credit movements will be reported to your teenager's credit report. Not only that, but you will receive the bill, so you can keep tabs on their activity. Just be aware that you and you alone are responsible for repaying every charge your teenager makes.

Ulzheimer suggests teaching your kids to use credit cards only for purchases they were going to make anyway, such as gas or movies. If they have a job, you can even require that they make payments from their own money, he says.

This should be easy to do even though you're the one receiving the bill. When your statement arrives in the mail or via email, simply tally up your child's purchases and let them know what they owe. Ideally, they will also keep a record of what they paid for with credit and have the money saved to pay their share of the bill — just like in the real world.

And if you're worried your teen will fall into some bad credit habits right away, Ulzheimer suggests setting up text alerts so you know exactly when the card is being used. This way, "you can make sure they're not using the card outside the boundaries you set," he says. (See also: How to Help Your Kid Build Their First Budget)

Other ways to introduce the concept of credit

If you're not sure if your teen is ready for a credit card, you can always start them off with a prepaid debit card. "Be sure to establish some ground rules," says Motske. For example, explain what expenses the card should be used for, how long the funds on the card should last, and what criteria would cause you to revoke the prepaid card.

Many prepaid debit cards, such as the Current Card, are geared toward teens. The Current Card runs on the Visa system, so it's accepted at most merchants. Like any other prepaid debit card, you have to load funds into the account before it can be used. But the Current Card also offers enhanced features that help kids budget their money, save for a rainy day, and donate to charity. Parents are able to manage and oversee the teen's purchases with a mobile app and add money to their accounts instantly.

A regular debit card tied to a bank account can also be a good way to get the ball rolling, or it can be a transition tool between a prepaid card and a credit card. You may even want to link it to the child's own bank account, so they can only use money that's given to them or that they earn from chores or a job.

Eventually, however, you want to introduce them to credit cards by adding them as an authorized user to your account. Ideally, you'll want to do this before they leave the nest and wind up dabbling with credit on their own. "Be sure to establish a new set of ground rules with the new card, including the familial and financial consequences of not following those rules," advises Motske.

The idea of giving your teenager a credit card may be the stuff of nightmares. But it could be even scarier to imagine them learning about credit through the school of hard knocks — by racking up a huge mountain of debt or ruining their credit score by not paying their bills. (See also: 10 Credit Card Truths You Wish You Could Tell Your Younger Self)

"By educating your children early about credit and credit cards, you can hopefully help them avoid the pitfalls that so many stumble upon the hard way," says Motske.

Like this article? Pin it!

This article is from Holly Johnson of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Money Lessons Kids Can Learn From the Tooth Fairy

Carrie Kirby — Wed, 11 Apr 2018 08:00:06 +0000

My first visit from the Tooth Fairy is my first specific memory of holding money in my hand. I ran to my parents bedroom excitedly exclaiming, "I got a quarter!"

"Actually," my sleepy dad told me, "You got a 50-cent piece. That's worth two quarters."

I know firsthand that kids can learn a lot about money from the Tooth Fairy, since I did. I also know that my own kids have been able to learn some valuable money lessons based on the under-the-pillow payouts that they've received.

1. The values of different coins and bills

Like my father before me, I like to provide my kids with unusual coinage when they lose a tooth. My thought was that it makes it seem more magical if they receive a denomination that they never see otherwise. So my husband and I have always slipped Sacagawea golden dollars under their pillows.

The funny thing is, for years my oldest child hoarded these coins in her room and never spent one. One day she was gathering up all her money and was frustrated that she didn't have enough to buy something. I suggested she raid her trove of tooth money, and she told me that those weren't "real money." We had neglected to tell her that golden dollars were legally accepted currency, and she had gone years thinking that she was exchanging her teeth for mere trinkets.

Besides using it as an opportunity to introduce unusual coins, you could use the Tooth Fairy's visit as a lesson by alternating between different combinations of coins, so they learn that four quarters equal ten dimes which equal 20 nickels. But good luck slipping 20 nickels under the pillow without waking them up! (See also: 21 Things You Should Make Your Kids Pay For)

2. How to handle a windfall

As an adult, handling a surprise influx of cash can be one of our tougher decisions. It's always tempting to see a windfall as license to spend freely, but then again, a wisely invested windfall could have a vastly different effect on your life than one you decided to blow.

If allowance is a kids' "salary," Tooth Fairy money is analogous to a tax refund or a Christmas bonus. Let them decide how and whether to spend it, and watch them learn.

3. How to make sure you're getting paid fairly

Just like sharp-eyed employees at a company, my kids pay attention to what the Fairy pays their siblings. If someone gets more, they do not fail to speak up about it, and the Tooth Fairy seems to get the message, because future payments tend to be more equal. My kids have also had some success in investigating market rates by asking friends how much they get. Once they reported to me that other friends got more money for top teeth, for example, the Fairy started paying a premium for those as well. Lesson learned: It pays to do your research and demand equal pay. (See also: 4 Parenting Mistakes to Avoid When Teaching Kids About Money)

4. Sometimes money doesn't show up when you expect

As a freelance writer, I know the excitement of hearing the mail carrier approach my door, followed by the disappointment of seeing a pile of bills and no checks coming through the slot. Many children will at some point wake up to find that the Tooth Fairy forgot to come. According to a report by Delta Dental, more than half the parents surveyed at some point forgot to leave money under the pillow — which gives children an opportunity to practice their patience and learn that sometimes you have to wait longer than you expected to get paid.

5. The spending power of money

Just like me with my 50-cent piece, most little children have no idea what their first Tooth Fairy payout can buy. Take them to the store and let them shop. Next time, they'll have a more concrete understanding of what 50 cents or a few dollars is worth. This will help them better budget their allowance once they start earning one. (See also: The Easy Way to Set an Allowance That Won't Ruin Your Kid)

6. How to forecast future earnings

Most kids lose their first few teeth in kindergarten, at an age when thinking about the future at all is a challenge. As they get older, kids may realize that they can count on a payout every time they lose a tooth. Really canny ones may even consult a medical text or ask their dentist how many more baby teeth they have to lose so they can figure out how much they've got coming to them.

7. No pain, no gain

Sometimes one of my kids will let a loose tooth dangle by a thread for days because they're afraid of the small amount of pain that might happen if they pull at it. When this happens, sometimes one of the other kids will comfort them by reminding them that they'll get money once the tooth finally comes out. Sometimes it's just the push they need to face the pain.

Like this article? Pin it!

This article is from Carrie Kirby of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

4 Things Teens Can Do Now to Prepare for Financial Independence

Emily Guy Birken — Tue, 03 Apr 2018 08:00:06 +0000

In the past couple months, it's become abundantly clear that today's teens are tenacious and enterprising. Add in the fact that they are "digital natives" and have a firm grasp on social media and technology, and it seems as if there is very little teens cannot do if they put their minds to it.

Unfortunately, there is one area where teens feel a little less optimistic: Money.

According a 2013 survey by Junior Achievement, an organization dedicated to teaching kids about money, 25 percent of teens believe they will not be able to support themselves without the help of parents until they are between the ages of 25 and 27. In addition, only 59 percent of teens feel confident that they will be able to support themselves between the ages of 18 and 24.

Some of this pessimism about future financial independence is a natural reaction to the relatively high unemployment rate among teens. But teens, with a little judicious help from Mom and Dad, can set themselves up for financial independence down the road. Here are a few things that every teen can do to prepare for financial independence in adulthood.

1. Set financial goals

One of the best ways to learn how to handle finances is through financial goal setting. Parents can help teens set realistic financial goals, such as saving up for a coveted iPhone, making a contribution to a college fund, or paying for the class trip. Teens can learn how empowering it is to create a written plan for achieving their financial goals and find ways to earn or save money toward those goals.

Parents can help foster this ability by asking teens to pay for wanted purchases on their own, while showing them how to create and follow through on a plan. (See also: How to Help Your Kid Build Their First Budget)

2. Track spending

One of the biggest stumbling blocks in achieving financial independence is ignorance of where the money goes. Without financial awareness, it's very easy to spend your way through a great deal of money without ever realizing how much is slipping through your fingers. This is why it's important for teens to learn the habit of tracking their finances now.

There are several ways that parents can help to encourage their teens to track their spending.

Make your teen's allowance conditional on tracking. According to former Vice President Nelson Rockefeller, this was how the famously wealthy family handled allowances: "All of us had to keep a record of where our money went. We were required to give 10 percent to charity, save 10 percent, and then account for how we spent or saved the other 80 percent."

Make tracking a family affair. It's much easier to encourage your kids to join in on something they already see you do than ask them to start doing something that seems foreign to them. Include them in money tracking and find a way to make a game of it among the family. For instance, you could have a contest to see who can get their weekly or monthly tracking done first — which will have the added benefit of encouraging all of you to track your spending as it happens.

Let them embrace financial technology. There are a number of apps and computer programs out there that will help your teen track money on the very device they are generally glued to. The best options for teens are systems like Mvelopes and YNAB, which both allow for manual tracking of cash transactions. Not only will manual tracking help get teens in the habit of always tracking their spending, but even young teens who depend solely on cash can use them.

3. Open a Roth IRA

Any teen who has earned income — that is, who has earned money from a job — can contribute to a Roth IRA. The contribution limit is $5,500 per year, or the maximum amount the contributor earned from a job — whichever amount is lower. For instance, a teen who earns $2,500 per year flipping hamburgers on weekends can only contribute up to $2,500 into their IRA or Roth IRA.

Getting started on a retirement account in your teens can make an enormous difference in your ability to retire. The magic of compound interest has more time to work if you start in your teens. In addition, getting in the habit of paying yourself (and your retirement account) first is an important aspect of achieving financial independence as an adult.

Since few teens will be interested in setting aside every single paycheck for a Roth IRA, parents can encourage their teens to put money in the IRA by offering to match anything they set aside.

4. Start investing

While getting teens into the habit of putting money into retirement accounts is incredibly important, it's also vital for them to feel comfortable with investing in general. This will not only help them make smart decisions with the investments in their retirement accounts, but it is also an important way to build wealth.

There are several ways to help your teens get involved in investing.

Encourage them to buy individual stocks that they find interesting. The stock market offers teens a chance to own a piece of the companies whose products they use every day. This makes investing feel more personal, and gives teens the opportunity to learn how their favorite brands are faring.

Ask them to defend their purchases before they make them. Financial professional Lawrence Sprung told U.S. News & World Report that he asked his 11-year-old son to defend his request to buy a particular stock. The article explains: "When his 11-year-old son declared that he wanted to invest in Walt Disney Co, Sprung asked him to prove his case. His son noted how Disney was unrolling a new Star Wars enterprise, enlarging and redeveloping some of its parks, and that people from all over the world would head to Disney's parks whether the economy was good or bad."

Create a teen-run family investment account to help your kids understand the importance of diversifying. Hold regular meetings to discuss how the holdings are doing and go over investment strategies. This will help teens feel perfectly at home with the ins and outs of investing.

Make financial upkeep a habit

Teens can do a great deal to prepare for financial independence while still under their parents' roof. By getting into the habit of good money management — including setting goals, tracking spending, saving for the future, and investing — teens can be sure that they will reach financial independence and avoid the possibility of living in Mom's basement.

Like this article? Pin it!

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Ways New Parents Can Manage Debt

Ashley Eneriz — Thu, 15 Mar 2018 09:00:07 +0000

Bringing a new little one into your family is an exciting time, but it can also be stressful if you have to juggle new baby expenses on top of debt repayment. Don't get overwhelmed. These tips will help you to pay off debt faster so you can enjoy your baby's first moments without so much stress. (See also: 7 Signs You're Financially Ready to Start a Family)

1. Don't add to your debt burden

Babies can be costly, especially when you're buying diapers and formula weekly. Be as cost-effective as possible when shopping for your new bundle of joy. Do your best to pay for diapers, baby food, and formula out of your normal grocery budget. This may mean juggling some of the normal things you buy to fit in an extra $25 to $50 each week.

That can feel like a stretch, but it doesn't have to be a drastic one. It might just mean you eat a rice and bean meal once per week, or eat only chicken instead of steak and fish. You won't have to make this grocery trade forever, it's just a means to an end.

As far as baby gear and clothes go, buy used or use hand-me-downs when possible. The first six months of your baby's life go fast, and items like swings, baby wraps, bath tubs, and rockers are not needed after that time frame, so don't waste your money. Any baby items that require strict safety regulations — like car seats — should be bought new. (See also: 8 Things You Definitely Don't Need for a Baby)

2. Don't be afraid to ask for help

There is no shame in admitting to family members and close friends that you are working hard to pay off debt and raise a baby. They might be able to take care of the baby one or two days a week so you can go to work, or they might have a lead for someone who is looking to hire out a side job. Many times, parents or grandparents are happy to have you over once a week for dinner, which can save you a small amount on your grocery bill.

Outside of your family and friends, check to see if you are qualified for WIC benefits or food stamps. Furthermore, if your debt is a federal student loan, you might be able to lower your payments based on your income.

3. Refinance and rebalance your debts

Write down all of your debts and their APRs. Are you getting the best deal for them, or are you throwing your money away on high interest rates?

If your credit score is healthy, try refinancing your auto loan, student loan, or mortgage to an arrangement with more favorable terms. The difference from a lower monthly payment can go toward expenses you need for your new baby.

If you're struggling with credit card debt, consider moving that balance to a balance transfer credit card with a promotional 0 percent APR. During that promotional window — typically between six and 21 months — interest does not accrue. This can be a tremendously effective way to pay down debt while saving on interest, especially considering that typical credit card rates can exceed 16 percent. Just be sure to pay the balance off in full before the promotional APR ends and the normal rate kicks in.

4. Try to survive on one income

Another strategy to tackle debt before and after the baby comes is to try to live on one income. Devoting one income to living expenses and the other income to debt repayment can quickly reduce the debt you owe. It takes a lot of sacrifice and budget cuts, but you will get out of your debt situation faster.

After debt is repaid, one parent can choose to stay home with the baby, which might be a better option financially than paying for child care. Or, both parents can keep working and continue to practice living on one income to supercharge their emergency fund and retirement savings. (See also: How to Go From Two Incomes to One)

5. Make drastic cuts

What drastic cuts can you make during this period of your life? Huge budget cuts are not fun, but they don't have to be permanent changes. Can you sell an extra household vehicle and get by with one? Could you sell some of your clothes, gadgets, or furniture? Can you cut your cable subscription for a while? Could you do a spending ban on anything that isn't an absolute necessity? (See also: Becoming a One-Car Family: 5 Points to Consider)

These options aren't for everyone, but talk them over with your partner to figure out how you can get serious about your debt repayment. Remember that it is better to go extremes now and pay off your debt so you can enjoy growing your family with the comfort of being debt-free.

Like this article? Pin it!

This article is from Ashley Eneriz of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Should You Make Your Young Kids Pay "Rent?"

Denise Hill — Tue, 06 Mar 2018 09:30:14 +0000

A young mother named Essence Evans recently posted on Facebook that she charges her five-year-old daughter $1 each for rent, utilities, food, water, and cable out of her weekly $7 allowance. The remaining $2 is the child's money to spend however she wishes. The $5 that Evans takes for "bills" actually goes into a savings account she'll give to her daughter when she turns 18.

The internet went berserk. Some people loved this idea, while others thought it took things too far. Whether you agree or disagree with the method, something has to be said for the initiative Evans is taking to teach her young daughter money management and the value of a dollar.

Should you follow her example and charge your little ones "rent?" Here are five important lessons you'd be teaching them by having them "pay bills."

Financial responsibility

From birth until death, you need and deal with money in some capacity. The earlier you learn how to earn, spend, lend, borrow, and invest, the better off you are. By making your little kids pay for living expenses, you teach them very early how to handle money responsibly. It helps them begin the journey of distinguishing wants from needs and prioritizing taking care of their needs first.

Before your child is allowed to spend any money, they should be required to "pay their bills" and set money aside in savings of some sort. The action of giving money to them and having them give a portion of it back is a powerful lesson in and of itself. It becomes a normal part of having money. You teach them to save and pay their bills first, which is a powerful tool in keeping them out of financial trouble later in life. (See also: 4 Parenting Mistakes to Avoid When Teaching Kids About Money)

How to budget

Making your kids pay bills before allowing them to spend their money on things they want teaches them the power of budgeting. Budgeting is all about setting priorities and planning. Budgeting teaches them that they can have some of the things they want if they plan correctly. It also teaches them that they cannot afford all of their wants. It drives home the point that there are certain bills that they will always have (rent, utilities, groceries) and they should always plan for those recurring expenses.

Teaching them these lessons in a controlled and loving environment is so much more humane than neglecting these lessons and having them learn it the hard way as an adult.

Nothing in life is free

You can't buy love, happiness, peace, or good health. But everything else will cost you. The sooner kids learn this, the better off they will be.

Your kids need to know how the financial system works. You should teach them that in order for you to withdraw money at the ATM, you had to deposit money in the first place. They need to know that every time you use a credit card to buy something, you have to pay it back with interest.

Teaching them that everything costs money — including the bed they sleep in, the food on the table, and the internet they enjoy — is a lasting life lesson that will help guide them into being contentious spenders. It is also important to teach them to always look for the cost in everything. This doesn't mean you should make your kids neurotic, but you do want to ensure that they are aware that everything they ask for costs you something. (See also: 21 Things You Should Make Your Kids Pay For)

The world doesn't owe them anything

Entitlement is one of the leading underlying causes of debt and credit abuse. Teaching your kids that hard work pays off is a valuable lesson. But you also have to teach them that working hard doesn't mean they can have whatever they want. They must learn that they can only have what they can afford.

In life, we don't always get what we deserve — good or bad. Sometimes life is unfair and we have to wait, work harder, or settle for an alternative. The quicker your kids learn this, the more content they will be in the long run. Teaching them to focus on and be grateful for what they do have in lieu of what they don't have or what everyone else has is far more valuable than getting them everything their tiny hearts desire. Helping them develop self-governance and the ability to tell themselves no is more valuable than a giving them a hefty trust fund.

Opportunity cost

Making kids contribute to their living expenses helps teach them about opportunity cost. That lesson is all about being able to pause, weigh all of the options, and make a rational decision. They have to learn that if you have $5 and spend it all on candy, you can't also get a toy. The concept of delayed gratification will slowly be seared into their tiny minds and help them become less impulsive. Even kids who are impulsive by nature will learn (with your guidance) how to stop and consider what else they may want to do with their money.

Teaching your kids about opportunity cost also helps them to become rational decision makers. When you make each transaction more about business and less about emotions, they will learn how to make purchases using logic and practicality. You have to model for them how to talk themselves through paying bills and making purchases. When you ask them questions and help them view money objectively, you will help reduce feelings of buyer's remorse and they will become confident in their financial decision-making.

In the end, you may not agree with Evans' approach, but you must appreciate and applaud her moxie. Your value system may not allow you to charge your kids rent, but it's important to find some system that can ingrain these lessons into your kids.

Fiscal responsibility is one of the greatest things you can teach your children. Failing to teach them how to handle and relate to money will create a type of poverty in them than no amount of money can fix.

Like this article? Pin it!

This article is from Denise Hill of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Help Your Adult Children Become Financially Independent

Dan Rafter — Mon, 12 Feb 2018 09:30:06 +0000

Are your adult children still living at home? Are you sending checks to your post-college sons or daughters to help them pay their student loans, car payments, or cellphone bills? If so, you have adult kids who haven't yet become financially independent.

It isn't uncommon for parents to help their grown children with money matters. The problem is how quickly this can stunt a young adult's financial independence. If you've been supporting your adult kids financially, you may need to make some lifestyle changes to help your children break away from the comfort of your bank account. (See also: How to Raise Your Kids to Be Financially Independent)

1. Don't bottle up your feelings

Are you frustrated that your adult children eat your food, throw their dirty laundry in your hamper, and fall asleep on your couch in the middle of the day? Express yourself.

You aren't required to help your adult children financially or provide them a free place to stay, and it's understandable if this is making you unhappy. Make it clear that this is only a temporary situation. And while changes aren't likely to happen overnight, a conversation will get the ball rolling. Sit down with your kids and form a plan for how they are going to move toward financial independence over the next three months. (See also: 7 Money Conversations Parents Should Have With Their Adult Kids)

2. Change the expectations

Forming that plan also means setting the right expectations. Explain that your adult children need to do something to earn your largesse. If you are providing them with a free place to live, for instance, make it clear to them that they must do their own laundry, chip in for buying groceries, pay at least some rent, and help with other household chores.

3. Teach them about budgeting

The quickest way to financial independence is to learn how to spend money wisely. Your adult children won't be able to do this if they don't know how to create a household budget.

Help them create a list of monthly expenses; ones that don't fluctuate, those that do, and those that are discretionary. Next, have them list their monthly income. This will show your kid how much money they have coming in, and how much is going out. They can better figure out how much to stash away in savings or spend on rent, if they are ready to move out.

With a budget guiding them, it is far less likely that your adult children will run into the financial trouble that might land them back on your doorstep. (See also: How to Help Your Kid Build Their First Budget)

4. Help them learn how to use a credit card

A strong credit score is essential. Lenders use this number to determine if you can get a loan or credit card, and at what interest rate. Your adult children will need to establish their own credit history to build strong credit scores. And a higher credit score will help them become financially independent.

The problem many young adults face is that they haven't built up enough of a credit history to have a strong credit score. In some cases, they may not have a credit score yet at all. You can help your kids build a credit score by teaching them how to properly use a credit card.

The key is for your kids to pay their credit card bills on time and in full every month. As a parent, you can teach your adult children how important using credit wisely can be to becoming financially independent. (See also: How to Use Credit Cards to Improve Your Credit Score)

5. Teach them about wants and needs

Your adult children might want the latest iPhone. But they don't necessarily need it. Teach your children the difference between spending on necessities — food, rent, transportation to and from work — and on toys such as high-tech smartphones, the latest laptops, and expensive clothes.

If your children are relying on you for financial assistance, they shouldn't be buying the most expensive new electronics and fashions on the market. Make sure your children know that your financial support isn't intended to fund their more frivolous purchases. (See also: 4 Things You Should Make Your Adult Child Pay For)

6. Set limits

If you want you kids to only spend the money you give them on necessities like rent and transportation, make this clear. Determine how much they will need to spend on items such as monthly train passes, rent, or groceries. Only give them the financial assistance they need to pay for these items.

If your adult children want to spend on other items such as entertainment or electronics, they'll have to earn that money on their own.

7. Work up an end date

Finally, set a date with your adult kids for when your financial assistance will come to an end. Helping an adult child financially shouldn't be a lifelong commitment on your part. You might decide, for instance, to give your children six months to find a place to live and a job that pays enough to cover the rent.

Your end date might not actually be tied to a date. Maybe instead, you'll determine that your financial assistance will end once your children find that higher-paying job they need.

However you set it up, make it clear that your financial help does have a time limit. Without one, your kids might not be motivated to move on from your monetary support.

Like this article? Pin it!

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

4 Ways to Help Your Adult Kids and Still Save for Retirement

Dan Rafter — Tue, 06 Feb 2018 09:00:06 +0000

It's natural to want to help your adult children financially, whether it's giving them cash for a down payment on a home, or helping them pay off their student loan debt.

But don't make the mistake of shorting your own retirement funds while doing this. Your financial priority should be saving enough for your after-work years. If you want to help your adult children, too, that's fine — but only if you can afford to, and only if you set limits.

Here are several rules you should follow when giving your grown children financial assistance.

Check your budget first

Student loan debt continues to grow for young people. According to data from the Federal Reserve Bank of New York, the national outstanding student loan debt stood at $1.36 trillion as of Sept. 30, 2017.

It's tempting for parents to help their children with monthly student loan payments, especially if their children are recent grads still trying to find good jobs. But before you start helping your kids pay back those loans, take a close look at your own household budget to make sure that you can afford to help.

Your budget should include the money you bring in each month and the money that goes out, including your spending on variable items like groceries, entertainment, and dining out. It should also include the money you need to put away each month for your retirement. If helping your children financially will cut into those retirement savings, either don't provide the help, or offer your adult children a smaller amount of money.

If you discover that helping out will bust your budget altogether, don't do it. Hurting your own financial situation won't help anybody. (See also: Are You Ruining Your Retirement by Spoiling Your Kids?)

Consider giving loans, not gifts

Sometimes the best way to give your adult children financial support is to ask that they pay you back over time. Don't feel bad about helping your children with a loan instead of a gift — it's not unreasonable to ask your kids to pay you back, perhaps on a monthly repayment schedule that they can afford. If your children can't afford to pay you back now, agree that they will start repaying you once they land a better-paying job.

If your adult kids are buying a home, giving them money gets a little more complicated. If you gift your children money for a down payment, they will need to be able to prove to their mortgage lender that the money is a gift, and provide a letter detailing that it does not need to be paid back.

Then, there's the issue of gift tax liability: The annual gift tax exclusion is $15,000 per recipient. Giving your child anything beyond that means you will have to report it on Form 709 of your taxes. However, that doesn't mean you'll pay the gift tax right away. You can apply the gift toward your lifetime exclusion of $5.6 million in combined estate/gift tax exemption. Also note that each parent could gift $15,000 to their child and $15,000 to their child's spouse for a total of $60,000, before having to report the gifts to the IRS.

Loaning your adult children a large sum for a down payment will also come under scrutiny by the IRS. If a formal arrangement is not made, and interest is not being paid, the IRS will view the funds as a gift and subject it to the gift tax rules outlined above. For a loan, a promissory note between you and your adult children should lay out the terms, including interest rate, repayment schedule, and any collateral. The interest rate on the loan should be at least as high as the applicable federal rates set by the IRS, or there could be further tax complications.

Of course, if you can't afford to either loan or give your child money for a down payment, don't. Instead, encourage your kid to hold off on purchasing a home until they have saved enough money to cover the down payment on their own. (See also: 4 Easy Ways to Start Saving for a Down Payment on a Home)

Expect something in return

If you're helping your adult children financially, it's OK to expect something in return. Adults still living in their parents' home should be expected to pay at least a token amount of monthly rent. They should also help pay for groceries and utility bills.

Asking for rent or other payments isn't selfish on your part. Instead, you're reinforcing that your adult children are, indeed, adults. Being an adult comes with financial responsibilities, and it's an important lesson for your kids to learn. You don't have to charge a lot of rent, but charge something. Doing so could be one step toward turning your children into financially responsible adults. (See also: 7 Money Conversations Parents Should Have With Their Adult Kids)

Spell out wants versus needs

Finally, make sure that when you help your adult children financially, you are helping them with something they truly need versus something they want. It's one thing to help your kid pay their student loans. It's another to help them buy the latest smartphone. It's OK if your children don't have the most powerful laptop or an expensive car. They can get those things after they've saved and built up their own financial health.

Like this article? Pin it!

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Afford Your Kid's Braces or Expensive Dental Care

Emily Guy Birken — Tue, 02 Jan 2018 09:30:09 +0000

At their six-month dental checkup earlier this year, both of my sons received the dreaded diagnosis: Each one had a cavity in a baby tooth that would need to be filled.

In addition to feeling like a terrible parent, I was also not looking forward to having to pay for their fillings. Our family dentist wasn't set up to handle fillings for two squirmy young patients, and the pediatric dentist she referred us to did not accept our dental insurance.

Thankfully, my husband and I have an emergency fund for such an occasion, but not every parent is as fortunate. Taking care of your kids' teeth doesn't have to bankrupt you, even if they do need costly dental care or treatment.

I talked to Marissa Miller, DDS, of Shelby, Ohio, to find out what parents need to know about affording expensive dental care for their kids.

1. Preventive care is always cheaper than treating problems

According to Dr. Miller, "To mitigate the costs of dental procedures, my first piece of advice is have kids see the dentist early and regularly." There are two reasons for this. First, kids who get used to seeing the dentist early in their lives are less likely to develop phobias that will keep them from seeing the dentist later on.

This leads to the second reason why it's important to get your kids used to seeing the dentist early and often: It's much less expensive to have biannual tooth cleanings than it is to deal with an entrenched problem.

Even if your child does have a dental problem that will need treatment, finding it sooner rather than later will generally be easier on your wallet. "Having your kids come to the dentist at regular intervals also gives us a chance to catch any problems — such as tooth decay, narrow palate, etc. — early on," Dr. Miller says. "And catching problems in an early stage almost always leads to less costly treatment."

2. Some common pediatric dental procedures can be surprisingly expensive

Most parents are well aware of the fact that orthodontics (i.e., braces, retainers, and other tooth-straightening tools) are expensive. According to the 2013 Survey of Dental Fees, comprehensive orthodontic treatment for adolescents ranged in price from $4,685 to $6,500.

However, parents may not be aware of the fact that other common dental procedures can also cost a pretty penny. Specifically, when there is a great deal of tooth decay in baby teeth, the treatment can be expensive. According to Dr. Miller, "When deep cavities occur in children between roughly three and nine years of age, the costs of restoring those teeth can add up quickly. Fillings, stainless steel crowns, and pulpotomies (similar to root canal therapy but usually just for primary or 'baby' teeth) can all be called for in order to keep those teeth in working order." (See also: How to Handle a Massive Medical Bill)

3. Don't let cost keep you from getting treatment

Parents might assume that dental care for their kids is more cosmetic than necessary. After all, baby teeth will eventually be replaced with adult chompers, and orthodonture is an expensive procedure that just provides a straight-toothed smile. The high cost for something that feels unnecessary might tempt some parents to put off the treatment while they get their financial ducks in a row.

Dr. Miller warns against that: "The whole point of trying to keep these primary [baby] teeth until they're ready to exfoliate naturally is that they are the placeholders of the adult teeth. If primary teeth are taken out early, it is common for the adult teeth to erupt in severe misalignment, resulting in a more urgent and comprehensive need for orthodontic care."

Similarly, while straightening adult teeth for cosmetic reasons is part of the rationale for orthodontic care, it's hardly the whole reason. Properly aligned teeth promote good oral health overall — which is necessary for whole body health.

4. Your dentist wants to help you find a payment plan

Despite what you may remember from Steve Martin's portrayal of Dr. Scrivello in Little Shop of Horrors, you can rest assured that real dentists get into their practices because they truly want to help people. That means they want to see their patients get necessary treatment — and they will try to find a way to work with you on a payment plan. (See also: 7 Ways to Negotiate Medical Bills)

According to Dr. Miller, a lot of dental offices offer a variety of payment options. In particular, she recommends asking about the following:

Cash discounts. If you're prepared to pay the full case fee up front, ask about this option, especially if the cost of the procedure is over $1,000.
Third-party financing. With third-party financing, you can use something that works basically like a dental care credit card to pay for your procedure. Many of these financing companies offer you interest-free payment periods of up to 12 months. Dr. Miller describes third-party financing as "nearly universal," so feel free to ask your dentist about which company they use.
Payment plans. Some dentists will allow you to split payments over several months interest-free, although you will generally be expected to have a credit card on file and a history with the practice for your dentist to agree to this. Orthodontists offer payment plans more often than general dentists due to the nature of their treatment plans and fees.

5. Financial assistance is available

Families who simply do not have the financial ability to pay for their children's dental or orthodontic care can apply for financial assistance. The National Children's Oral Health Foundation (NCOHF, but also known as America's ToothFairy) offers access to dental care to underserved children. If you are unable to afford a specific dental treatment for your child, you can apply for funds from NCOHF through their In the Gap program.

In addition, Donated Orthodontic Services, sponsored by the American Association of Orthodontists, offers pro-bono and low-cost orthodontic services to children of families who cannot afford the regular cost of orthodonture. The nonprofit program Smiles Change Lives also offers low-cost or free orthodontic services to kids in need.

Neglect is more expensive than dentistry

Watching your children undergo dental work is no one's idea of fun — and having to pay big bucks for it can feel like adding insult to injury. But making sure your kids' pearly whites stay healthy and straight will put them on the road to good oral health for years to come.

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Sell Your House Despite Your Messy Kids

Mikey Rox — Wed, 20 Dec 2017 09:30:09 +0000

It takes a lot of moving parts to sell a home, and it can be frustrating when one or more of those moving parts just won’t sit still. I’m talking about kids. Kids who, despite your best efforts to present your home in its optimal condition, don’t give a good gosh-darn that Mommy and Daddy are trying to make a sale.

But there’s still hope. As the old saying goes, if you can’t beat ’em (and you definitely cannot), join ’em — with these helpful tips on how to sell your house despite your messy kids.

Conduct a purge before the house goes on the market

Your house is for sale, which means you’re probably moving soon. Now is the best time to cut your clutter so you don’t have to drag all that junk from one house to another. Set a week aside to organize your purge, then pack up and ship out whatever you don’t want or need anymore.

“We end up with a lot of baggage over the course of our lives, and while a lot of these items have sentimental value, that's about the only thing they're worth,” says Texas realtor Abigail Vytlacil. “Donate what you can, toss what you can't. Then, pare your home's contents down even more by storing anything and everything that isn't being used. Surfboards, bikes, winter clothes, baseball uniforms and equipment, golf clubs — get as much as you can out of the way, out of the house, as possible.” (See also: My 16 Favorite Ways to Get Rid of Clutter)

Have the house professionally cleaned

Kids or not, a well lived in home has years of dust and dirt buildup in the corners and hard to reach places. A deep clean will give that extra sparkle to impress buyers. While it is more expensive to hire a professional cleaning service than doing it yourself, it’s better. It’s hassle-free for you, and you can take the little ones out for the day while the service works their magic. You'll get to spend quality time with your kids instead of screaming at the little buggers because they keep tracking mud across the floor you’ve freshly mopped.

At the same time, have the carpets cleaned. Removing stains and odors from the carpets is just as important as anything else you’ll beautify in the house to make a good impression.

Touch up or repaint the walls and doors in high-traffic areas

A little paint goes a long way to freshen up walls, doors, and baseboards that have encountered your children and pets over the years. You may not even notice how grimy these areas have become, but get up close and you’ll agree that they need tending to. (See also: 4 Paint Colors That Can Boost Your Home's Value)

Organize cabinets and closets

Buyers will absolutely want to look in your cabinets and closets to get a good idea of what kind of space they have to work with. So, take the time to tidy these areas up. Fold and organize the clothing in the closets (a good time to eliminate clutter here, too; donate whatever your kids haven’t worn in awhile or items that no longer fit), and get rid of any expired foods and open bags/containers in the pantry. Streamline the contents of your kitchen cabinets — toss dishes you don’t use or that your kids have outgrown — to make the shelves more aesthetically appealing at quick glance.

Concentrate on areas to clean based on the type of buyer

If the potential buyers stopping by for a showing are not parents, concentrate on cleaning up the areas that have your kids’ proverbial handiwork all over them. These buyers want to know what the house will look and feel like for them, not a family of four. Likewise, if you’re showing to parents, focus more on the family gathering places that will be most important to them.

“If something is going to be messy, let it be the children's actual rooms that are messy,” adds Michigan-based real estate broker Jon Boyd. “I've never had buyers not buy a home because of the condition of the children's bedrooms. However, if there is junk or clutter in the kitchen, bathrooms, dining areas, and living areas, it is going to be a challenge.”

Draw buyers’ attention away from problem areas

Open your blinds and curtains to let in the sunshine; many buyers are attracted to how well a home receives natural light, and that may distract them from your kids’ belongings lying around. Create focal points in the least attractive rooms using art, flowers, or mirrors, the latter of which can also help seemingly expand the space through optical illusion. Whatever works. (See also: 8 Ways to Stage Your Home Without Hiring a Pro)

Offer incentives to your kids for keeping their rooms clean

Yes, I’m telling you to bribe your children. Increase their allowance for helping you keep the house extra tidy. The end result will pay off much bigger than the extra few bucks you’re shelling out per week to keep your kids in line.

Keep the kids’ rooms brightly lit

If you don’t have a magic wand to send all your kids’ bedroom junk back under the bed, use a light bulb.

“Make sure the light switch near the door works in the kid's bedrooms, and make sure it is a reasonably bright bulb," Boyd suggests. “A well lit but messy bedroom won't stop a motivated buyer, but a poorly lit messy bedroom might give them second thoughts.”

Use totes to pick up and store clutter in a flash

If you’re short on time before a showing and everything your kids own is spread across your house, use totes to quickly gather up the mess and toss them in the garage, basement, or attic. This smarty-pants tip is courtesy of realtor Denise Supplee, co-founder and operations director of Spark Rental.

“I tell clients to purchase a bunch of non-see-through totes,” she says. “Keep them on hand. Have your agent provide you a heads-up of showings of an hour or so. Take everything that is on the floor, tables, beds, and throw it in the totes. Stack them neatly. People will expect to see them because you are moving.”

Set specific times for showings so you can always prepare in advance

You’ll have a better chance of keeping the familial chaos under control if you discuss with your realtor a set schedule for showings, with available times on weekdays and weekends. If you know that there will be showings on Sundays from noon to 2 p.m. and Wednesdays from 6 to 7 p.m., for example, you can plan ahead and stay prepared.

Enlist help to get the kids out of the house

It’s difficult to get the joint spick-and-span when your kids are coming right behind you to mess up what you’ve done. Why not pawn them off on their grandparents or a favorite aunt or uncle for the afternoon? They’ll get to spend time with someone they enjoy (and probably enjoy being a little spoiled), and you can focus on your long list of showing-prep to-dos.

Create a "buyer’s book" to showcase what you love about your home

If you don’t have time to douse the house in bleach or make it look like the maid just left, fortify your efforts with a book of photos of your home looking its best — including before and after pictures if you’ve made any improvements — to help buyers see the home’s full potential.

“Add a little extra to your showings by creating a listing binder or 'buyer's book' that showcases why you've loved the home, what it's like living in the area, things your family likes to do, and other pertinent information to a new homeowner like average utilities, association dues, and anything else that would help them make an informed decision faster,” says Vytlacil. “It may seem trivial, but you'd be surprised at how much these little touches affect a prospective buyer.”

Let your family come and go using one door

You’ll reduce your cleaning workload substantially if you restrict your family’s access to the home to one entrance while it’s on the market. Fewer paths of entry equates to less dirt and outside gunk tracked into your home from multiple directions.

Like this article? Pin it!

This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Smart Financial Gifts to Give Your Kids This Year

Damian Davila — Fri, 01 Dec 2017 09:00:06 +0000

American poet Maya Angelou said it best: "When you know better, you do better." The earlier that your kids develop good financial habits, the brighter their financial future will be.

With the holidays right around the corner, now is the perfect time to set your sights on one or more of these financial gifts that will help your kids learn about, respect, and appreciate money.

1. Monopoly

Since 1935, this classic board game has entertained millions of people around the world. Turns out that playing rounds with "Monopoly money" can actually help build real life financial skills, such as negotiation, money management, and diversification. Plus, a round of Monopoly is a good way to practice arithmetic and social skills. (See also: Holiday Gifts: TK Fun Games That Teach Money and Finance)

2. Custodial investment account

Most brokerage firms offer a custodial account that allows children to get a first taste of investing in the stock market under the supervision of a parent or guardian. With as little as $100, you could open a custodial account and let your kid make decisions about what stocks to hold or sell.

In 2017, you can contribute up to $14,000 to a custodial account and still avoid gift taxes. In 2018, the annual federal gift exclusion moves up to $15,000. Your kid's custodial account is under your control until your kid legally becomes an adult, which happens somewhere between age 18 and 21, depending on your state's rules.

A custodial investment account is a great way to get your child excited about investing and let them learn from firsthand experience how the stock market works. (See also: 5 Stocks Your Kids Would Love to Own).

3. Custodial Roth IRA

If your kid is already working a summer job or earning income from their own business, consider setting up a custodial Roth IRA for them. In 2017 and 2018, individuals may contribute up to $5,500 to a custodial Roth IRA. Here are a couple of reasons why this is a good idea:

Your child will have the same contribution limit as an adult, making it a real-life lesson in cultivating a good savings habit.
Your child can get close to a decade of extra compounding interest for their nest egg.
By taking the tax hit now, your child's retirement savings will grow tax-free forever.
Your child will have another "sandbox" in which to make real-life decisions with investments.

Just imagine if you knew how life-changing investing in equities could be at such a young age.

That alone may be the best financial gift for your kid this holiday season! (See also: 10 Investing Lessons You Must Teach Your Kids)

4. 529 savings plan

The average class of 2016 graduate left school with $37,172 in student loan debt. If you could do something now to help prevent your kid from having to take out such costly student loans, that would certainly be a gift worth giving. The good news is you can do this by starting a 529 college savings plan. Eligible education expenses under a 529 plan go beyond tuition and academic fees and include expenses for room and board, transportation, equipment, and accommodations for individuals with special needs.

Contributions to a 529 plan grow tax-free and the money is not taxed when it's withdrawn to pay for college expenses. In addition to federal tax savings, more than 30 states currently offer a full or partial tax deduction or credit for 529 plan contributions. (See also: The 9 Best State 529 College Savings Plans)

5. Cash

Yup, cash is still king. Regardless of their age, your kid will always love receiving a few bills as a gift. The main reason to gift cash during the holiday season is that it opens the door to have an ongoing conversation with your kids about budgeting. With a cash gift, you'll have plenty of chances to talk about what they're planning to buy, what they actually purchase, and how much money they have left. From there, you can start making it a habit to sit down with your son or daughter to talk about finances on a weekly or Bi-Weekly basis. It's a good time to catch up about other non-related finance topics as well. (See also: How to Help Your Kid Build Their First Budget)

6. Checking account with debit card and checkbook

Of course, this would be a great place for any cash gifts that your son or daughter receives from relatives and friends during the holidays (and throughout the year).

While a checking account may not be as exciting as a new Xbox or bike, you can be sure that this gift is the one that your child will be using for the longest time. It's important that your kids start to build experience managing a checking account so they understand how to pay for everyday expenses, build a monthly budget, and safely use debit cards. By covering the ins and outs of how a checking account works when they're young, your kid will have one less thing to stress about as they get a little older or go off to college.

No matter what your child's plans are, anyone can benefit from learning how to use a debit card, write checks, access an online account portal, and read a checking account statement.

Like this article? Pin it!

This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: