money lessons

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.

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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:

10 Money Lessons Your Kids Can Learn While They Travel

Holly Johnson — Mon, 21 May 2018 08:31:15 +0000

Think back to what you loved most about your latest family vacation. What's the first thing that comes to mind? Maybe you enjoyed teaching your kids about new places, new cultures, or the history of the destination you visited. Or perhaps you were just tickled to give your kids some undivided attention without work or life getting in the way.

What you may not have considered, is the fact that any kind of travel can be a learning opportunity — even if it's not too far from home. This is particularly true when it comes to lessons about money, because travel requires so many financial decisions.

If you're angling to broaden your children's perspectives on money, keep an eye out for learning opportunities that may be less than obvious. Here are some lessons your kids can pick up no matter where you go.

1. The importance of budgeting and tracking spending

No matter how careful you are when you set your travel budget, it's easy to let your spending get out of hand. You're away from home and on a different schedule, and you're probably around food, souvenirs, and constant temptations to spend.

That's why a family vacation may be the perfect time to introduce your kids to the concept of tracking your daily spending — it's one of the best ways to stay within your travel budget. To get your kids into this mindset, you just need to set a daily spending limit, then clue your kids into how it works. (See also: 7 Fool-Proof Ways to Stay Within Your Travel Budget)

My husband and I typically take our kids on a three- or four-week trip to Europe every summer. On these trips, we set a daily spending limit to cover food, souvenirs, and snacks. While the spending limit depends on where we are, it's usually enough to cover one meal "out" per day and a daily splurge like gelato or candy. We eat the rest of our meals in our condo or hotel.

This really annoys my kids (ages six and nine) sometimes, but I explain that we have a budget for the entire trip and the only way to stay within our budget is by breaking it down by the day. They don't always like when we're in our hotel eating sandwiches for dinner, but they do understand why we do it.

2. How credit works

Tanner Calais, founder of Cruzely.com, says cruises are another opportune time to teach kids about spending and credit, since cruise lines have you charge all your expenses to a key card tied to your account. The system is similar to credit cards in that you're using "invisible money" to buy things, and you pay your bill at the end of the cruise. "This is a great opportunity to introduce kids to the power of credit cards and how they work," says Calais.

For instance, it can be tough to track your spending when you don't see it because you're using a card. By forcing the kids to watch you keep track of your daily purchases with a notepad or your smartphone, you can help them see how spending can add up over time. "It's also not free money simply because cash doesn't come out of your wallet when you buy something," he says. (See also: 6 Money-Saving Items to Bring On Your Next Cruise)

3. Money doesn't grow on trees

Here's another lesson kids need to learn: Money is a finite resource.

Eileen Gunn, founder of the blog Families Go Travel, says this is one lesson her child has learned by bringing her own souvenir money on vacation. Having her 10-year-old daughter bring her own stash of cash to spend has helped her learn that "you can't have everything you want," says Gunn.

For example, if she has $20 to spend on a trip and sees something she wants for $20, she has to decide whether she wants the item badly enough to spend her entire budget on it. She also has to make peace with the fact that she won't be able to afford anything else she wants for the duration of the trip.

Gunn says she has occasionally loaned her daughter money when she was desperate to have another souvenir, "but it has to be something really worthwhile." Also, Gunn makes her repay the loan as soon as they get home from their trip. The entire process "makes her a more discerning consumer," says Gunn.

4. The power of compound interest

Travel blogger Kevin Payne, founder of Family Money Adventure, offers the perfect example of how you don't have to travel far to teach your kids about money and finance. Recently, part of his family had an epic staycation in their hometown of Cleveland, Ohio while his two older kids were in New York City. They visited the Federal Reserve Bank of Cleveland, including its Learning Center and Money Museum.

Payne says he and his children learned many money lessons during the trip, including the history of bartering and why money is a better system of exchange. But that's not all.

"I think the biggest lesson they learned was the importance of saving money and the role of interest," he says. The museum accomplishes this goal via a staircase to its second level that illustrates the power of compound interest on every step.

"Each step represented a year more of interest so the kids could see how much money they would end up with after a 20-year period of saving," says Payne. "It was such a great way to illustrate how quickly savings can add up." (See also: 10 Investing Lessons You Must Teach Your Kids)

5. The power of negotiation

In some countries, local markets provide a powerful lesson in bargaining. Travel blogger Shannon O'Donnell, founder of A Little Adrift, has had periodic custody of her niece, and she has used that time to travel with her and teach her about money.

O'Donnell says that, while they were in Thailand, Laos, Cambodia, and Myanmar, her then 11-year-old niece learned to critically evaluate the cost of something she wanted, plus how to respectfully bargain if she wanted a better deal.

"She would use this skill at the local markets if she wanted to buy a souvenir and became quite good at disarming them with a smile as she politely asked for better deals," says O'Donnell. "Overall, by learning that some cultures bargain for better deals, it has allowed her to consider the value of her purchases and how she spends her money even when back home in the states."

6. How you can save money while still having fun

While travel isn't typically cheap, there are still plenty of ways to save. Blogger Lee Huffman of Dads Who Travel says he uses travel to teach his kids that you can save money on some aspects of your trip and still have a blast.

One strategy he uses to impart this message is booking accommodations that have some sort of kitchen. This allows them to save money on food by buying groceries. "For example, on our last trip to Orlando, we stayed at a timeshare property that offered a mini-kitchen with a fridge, microwave, and two-burner stove," says Huffman.

They still have a boatload of fun on their trips, but he goes out of his way to explain to his kids why dining out for every meal would make each trip cost considerably more.

7. Be grateful for what you have

Corinne McDermott, founder of Have Baby Will Travel, says travel has helped her kids understand how fortunate they are. During her family's frequent trips to the Caribbean, they often talk about how people's homes are different and how the children appear to have fewer belongings. Yet, the people they meet are still happy and thriving.

"We've been fortunate to meet and socialize with many locals on our travels, and they work hard and are as proud of their homes and families as we are of ours," says McDermott. "Occasionally we all need reminders to be grateful for all that we have, no matter how it compares to others next door or across the world."

8. Being able to travel means parents have to work

Family finance writer Catherine Alford agrees that travel offers an endless number of opportunities to teach your kids about money. However, the most important lesson she wants to teach her kids is that, in order to travel, Mom and Dad have to work. "I've been teaching them the connection between hard work and purchases since they were babies," she says.

When her children were two years old, Alford and her husband took them on a monthlong European vacation where they visited five different countries. Since she works remotely as a blogger and freelance writer, Alford had to work throughout the trip. "I kept reminding them that we were able to travel because Mommy was working," she says.

9. Experiences are better than things

For many families, prioritizing travel means they need to cut back on other kinds of purchases in their everyday lives. Those are often sacrifices they're happy to make. Shannon Austin, senior communications director at the Center for Financial Services Innovation says one of the biggest lessons her family has learned from travel is that they can have amazing experiences if they maintain a reasonable lifestyle.

Austin and her children had the opportunity to live in Germany for three years when her oldest was six and her youngest was two. Once they moved abroad, she says she told her kids that they planned to "live small so they can experience big." Over the three years they spent in Germany, they took 36 trips to destinations including Slovenia, Croatia, Greece, Portugal, Spain, Italy, and Austria.

"My oldest delights in noticing some flowers that remind her of the plants growing over terraces in Ronda, Spain; my youngest recalls riding donkeys in Santorini. They remember filling water bottles on the roadside at a waterfall in Norway; they remember hikes in the Franconian part of Germany," says Austin. These memories are priceless, she says, but they were only possible because her family prioritized travel instead of "stuff." (See also: 4 Reasons You Should Splurge on Experiences, Not Things)

10. How currency exchange works

Travel can also help teach your kids how money works around the world. Tracey Carisch, author of the upcoming memoir Excess Baggage: One Family's Around-the-World Search for Balance, says her children gained firsthand experience in how currency works when they traveled nomadically for 18 months.

Carisch says her oldest child began to understand how different types of currency work when they arrived in South Africa from Ethiopia. They found a currency exchange booth at the airport and went to exchange their remaining Ethiopian birr for South African rand. As she was talking to the cashier, she mentioned to her daughter that they made a little money on the trip due to the favorable exchange rate.

"My daughter's curiosity was piqued and she started peppering me with questions," says Carisch. "Within five minutes, she understood the concept behind currency trading and cross rates. She researched it on Forex and came up with a home-school module for herself based on reading currency pairs and calculating spreads."

Carisch also says her child "doesn't even like math." This just goes to show how powerful travel can be when it comes to learning about money and math. You can learn and forget almost anything in a classroom, but real world experiences teach lessons that last a lifetime.

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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:

Ask the Readers: What Money Lessons Did You Learn From Your Mom?

Ashley Jacobs — Tue, 08 May 2018 08:30:21 +0000

Editor's Note: Congratulations to Mary, Jen, and Robyn for winning this week's contest!

Parents are often the biggest influences in their children's lives — we learn our earliest lessons by observing our parents. With Mother's Day coming up, let's reflect on the money lessons we learned from our mothers.

What money lessons did you learn from your mom? Did she talk about finances with you, or did you learn by watching how she handles money? What good (or bad) money habits did you pick up from your mom??

Tell us about the money lessons you learned from your mom and we'll enter you in a drawing to win a $20 Amazon Gift Card!

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Tell us about the money lessons you learned from your mom and we'll enter you in a drawing to win a $20 Amazon Gift Card!

This article is from Ashley Jacobs 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.

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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:

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.

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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:

4 Money Lessons We Can Learn From Past Presidents

Emily Guy Birken — Mon, 19 Feb 2018 10:00:06 +0000

Every February, Americans celebrate the presidencies of George Washington and Abraham Lincoln on the third Monday of the month. Presidents' Day is often nothing more than a day off for children in school, and a prime sale weekend for Americans to engage in their favorite sport of shopping.

But rather than spending money on Presidents' Day, why not learn some of the most important money lessons from the lives of former presidents instead?

Here are four vital money lessons that past presidents can teach us.

Lesson from George Washington: Diversify your investments

Our first president was both a canny strategist in war, and a very smart investor. In 18th century Virginia, tobacco farming was an extremely profitable business, and George Washington grew the crop on his farmland. Tobacco growers made a great deal of money by shipping their product back to Europe.

However, in 1766, Washington decided to stop growing tobacco on his land, because the crop was hard on the soil and was becoming less profitable. Instead, he planted several different crops, including wheat, corn, flax, and hemp — all of which had a local demand and did not require shipping overseas. This was a very smart move, as it both diversified Washington's crop production, and ensured that he was not vulnerable to loss during the transportation process. Other Virginia farmers who continued to grow tobacco (including Thomas Jefferson) lost their shirts.

Modern investors can learn a great deal from Washington's decision. Tobacco was the 18th century's equivalent of a "sure thing," but it was much smarter to invest farmland in diverse crops that were locally needed. Instead of betting on one "sure thing" investment, modern Americans should plan to put their money in diverse assets so they are not overdependent on any single asset or industry. (See also: First Rule of Financial Wins: Avoid Losses)

Lesson from Thomas Jefferson: Tracking your spending isn't enough

Thomas Jefferson is one of our country's most beloved founding fathers. The red-haired intellectual was responsible for writing the Declaration of Independence and went on to become the third U.S. president. But despite his overwhelming political success, Jefferson's last years were plagued by financial difficulties, and he died completely broke.

What's even more surprising about Jefferson's money trouble is the fact that he obsessively tracked his spending throughout his life. According to the overseer at Monticello, Jefferson's estate, "Mr. Jefferson was very particular in the transaction of all his business. He kept an account of everything. Nothing was too small for him to keep an account of it."

Unfortunately, the daily tracking of Jefferson's finances did not keep him from spending well beyond his means. Jefferson had very fine tastes, and would spend lavishly on wine, furnishings, and updates to his estate at Monticello. Though he dutifully recorded all of his over-the-top purchases (not to mention each and every small purchase), it did not stop him from spending more than he could possibly afford.

Modern Americans have a much easier time tracking their spending than Jefferson did, since there are now any number of smartphone apps and online tracking programs that can help you get a handle on your money. However, we need to remember from Jefferson's example that knowing where every penny is going is not enough. We also need to reduce our spending if we want to get out of debt and build wealth. (See also: These 5 Apps Will Help You Finally Organize Your Money)

Lesson from Abraham Lincoln: Embrace frugality

Abraham Lincoln's impoverished childhood in a log cabin not only adds to the heroic patina of his life's story, but it also helps to explain our 16th president's lifelong frugality. In fact, Lincoln saved much of the $25,000 annual salary he made as president. According to author Harry E. Pratt, "[Lincoln's] estate grew from $15,000 in 1861 to more than $85,000 at his death. The increment came principally from his $25,000 yearly salary as president."

Lincoln was also frugal with public money, becoming angry when his wife, Mary Todd Lincoln, blew her budget by almost $7,000 while refurbishing the White House — after Congress had already allotted $20,000 for her to use. He recognized that it was unseemly for Mrs. Lincoln to spend $20,000, much less $27,000, on furnishings and upgrades when Union soldiers were going without blankets.

The importance of being careful with one's money is a timeless lesson, but it's worth noting that Lincoln maintained frugality throughout his lifetime, even after he no longer needed to be cognizant of every penny spent. From Lincoln's example, modern Americans can learn that being frugal, even after one's financial situation improves, is a smart way to handle money. (See also: The Only 6 Rules of Frugal Living You Need to Know)

Lesson from Ulysses S. Grant: Only invest in what you understand

Beloved Civil War hero (and the impressively bearded face on our $50 bill), Ulysses S. Grant was a talented Army general and a well-liked president. However, he struggled with money in his personal life from beginning to end. In particular, after the end of his presidency, he decided to settle in New York and try to make a fortune in banking. He partnered with 33-year-old Ferdinand Ward, who at the time was known as the "Young Napoleon of Wall Street," to create the investment firm of Grant and Ward.

Unfortunately, Grant's lack of financial savvy was his downfall. Ferdinand Ward was nothing but a swindler, and Grant and Ward was simply a Ponzi scheme that Ward set up to bilk money out of Grant's famous and rich friends.

When the entire scheme blew up, Grant had been diagnosed with cancer and knew he had only a short time to live. The former president was only able to avoid leaving his wife destitute by writing his memoirs and having his friend Mark Twain publish them. The book became a best-seller, but Grant did not live to see it.

The sad story of Grant's financial troubles can remind modern Americans of the importance of truly understanding your investments. Grant fell victim to a scam artist because he did not understand the investments he was putting his money (and name) behind. We should all remember Grant's misfortune when we are tempted to jump on something we don't understand that seems to be going gangbusters. (See also: 9 Costly Mistakes DIY Investors Make)

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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 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.

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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:

5 Friend Types That Can Hurt Your Finances

Aja McClanahan — Fri, 12 Jan 2018 09:00:07 +0000

Your inner circle of friends can have a direct impact on many areas of your life, including your financial behavior. According to a 2014 study from the Journal of Consumer Research, peers can influence you to make certain decisions. You can even bond with someone over decisions to abstain or indulge in certain activities.The study found, for instance, that friends bond over small shared indulgences like eating chocolate, but were more inclined to abstain as the stakes were raised.

Because of this, you want to be especially aware of how your friends might be influencing your financial behaviors. You don't necessarily have to dump friends who negatively affect your spending, you just have to know how to handle your interactions so they don't cause you to make poor money decisions. If you think it's time to take stock of your friend circle for the sake of your wallet, here are some personalities to watch out for. (See also: 7 Nice Ways to Tell Your Spendy Friends You're Staying on Budget)

1. The risk-taker friend

This person takes a lot of risks when it comes to their money. They aren't necessarily careless, they just tend to leap without looking. Sometimes they win and sometimes they lose. If you're not careful, these seasoned risk takers can take you along for a ride you're not ready for.

The excessive risk-taker tends to be impulsive, and seeing them win can influence you to make similar choices. This friend may encourage you to make major decisions without properly weighing all the risks involved.

How to handle them

Take their "bright ideas" with a grain of salt, but don't shun everything they conceive. They can be good business partners when tempered with caution. Sometimes, you won't be able to talk them out of anything, but you can definitely leverage their passion for risk taking if you find yourself being too conservative for your money goals.

2. The spendthrift friend

This friend spends every single penny that comes into their hands. They take expensive trips, show up at exclusive parties, and seem to be forever shopping and eating at fancy restaurants. In fact, whenever you two hang out it involves spending obscene amounts of money.

The spendthrift is not always broke. They may actually have the money to support this lifestyle; you, however, do not. One minute with the spendthrift and you could easily find yourself swept away by the sheer excitement of spending more money than you can afford. (See also: 10 Types of Friends Who Are Costing You Money)

How to handle them

In some ways, they could actually help you live a little. Just make sure to manage your interactions so that you don't end up in the red. If your friend suggests an outing that could cost more than you've budgeted for, suggest a more reasonable alternative. This way, you get quality time with your bff without the collateral damage to your wallet.

3. The doom and gloom friend

This friend is also known as the conspiracy theory or financially "woke" friend. They always predict that the financial world as we know it will come to a terrible end. Their portfolio consists mainly of assets in precious metals, canned goods, and their homemade bomb shelter. This friend won't save or invest for tomorrow because it might not come, or will be dystopian at best.

At times, they may tempt you to believe that the sky is falling and that you should do something about it. The problem is that many of their "solutions" involve ignoring sound, practical principles for the sake of events that are unlikely to happen.

How to handle them

Listen to your worried friend and see if there are some useful tips or principles in their doomsday preparations. However, avoid joining in on their anti-establishment, anarchy promoting tirades. Instead, offer a voice of reason when it makes sense. (See also: How to Invest If You're Worried About a Stock Market Crash)

4. The perpetually unsavvy friend

This friend constantly makes bad financial choices: the latest MLM scheme, lending to irresponsible people, and falling prey to a myriad money scams. This friend prefers to look for quick fixes, rather than roll up their sleeves and get their finances in order. After all, they make living life on the edge seem easy. This friend might tempt you to ignore financial responsibility or engage in the latest get-rich-scheme that's guaranteed not to work.

How to handle them

Don't look down on them or chide them for bad choices, but definitely don't join in when they're spending recklessly in order make money fast. They won't, and you won't either.

5. The miser

This cheapskate rarely spends money on anything or anyone. They will not spend money for gifts, events, group outings, or investment opportunities that could actually benefit them.

If you're not careful, the miser can actually cost you money. Their lack of desire to pay for things can impact your plans or create unrealistic expectations around your friendship. Maybe you're expected to foot the bill or always plan the cheapest outing possible. It might cramp your style or just end up being incredibly boring!

How to handle them

If you want to deal with this money personality without cutting them out, be patient yet motivating. Treat their hesitation to spend money gingerly. They may have endured traumatic experiences with money as a kid, or witnessed their parents making poor financial choices. Encourage them to spend money on things that matter in a way they are comfortable with.

Just like money goals, maintaining healthy friendships is not easy. It takes a great deal of work, sacrifice, and dedication to make sure you are bonding with people you care about in a way that won't set you back financially.

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

10 Less Awkward Ways to Ask a Friend for Your Money Back

Paul Michael — Mon, 08 Jan 2018 09:30:16 +0000

So, you loaned your best friend some money. Months have passed and there's still no sign of it. Now you need that money back, but you don't want to be rude by asking for it. How do you go about it without causing offense, or jeopardizing the friendship? Here are a few ways to tackle this awkward subject without losing your buddy. (See also: 10 Money Moments That Are Awkward for Everyone)

1. First and foremost, ask politely

People get hung up on the idea of asking someone for money. "What will they think of me?" "What if they say I'm being inappropriate?" Well, let's start with the fact that your friend has already taken that step and asked you for money. Money, by the way, that you gave to them. So sweating about asking for it back is a little silly when you really think about it. (See also: 7 Ways Pride Is Keeping You Poor)

Now, how you go about asking for the money will make a difference. If you say something like, "I'm a little short right now, do you think you could find a way to pay me back that money I let you borrow, please?" then you should be fine. If you yell, "Oy, where's my money, I lent you weeks ago?!!" you risk adding tension to the relationship.

2. Find a way for them to work it off

If money is an issue for them, then maybe you can find some kind of favor they can do to wipe the slate clean. If they're a designer and you need a logo, can they do that for you and call it even? If they fix cars, could they take a look at yours and give an honest opinion about work that needs to be done? Everyone has some kind of talent or skill they can provide, and if you need it, they may appreciate the offer.

3. Barter for something they have that you want

This is another good way to get money back without actually having your friend pony up the cold hard cash. Is there something that your friend has that you would like? It should be of equivalent value to the cash you loaned them, so keep that in mind. Don't go asking for a flat screen TV because you loaned them $20. But if you know of something, and you think they'd be more than willing to part with it, give it a try. Maybe they have two of something, and would be happy to give you one. That would be an ideal way to make everyone happy.

4. Drop a subtle reminder

Presumably the money you loaned your friend was for something important. Very few people are going to respond to, "Why do you need it?" with "No reason" or "Not telling." So, why not bring it up in casual conversation? "Hey, how'd it go with that car repair? Everything OK?" This should be enough of a prompt to let them know you haven't forgotten about the loan, and that they are still obligated to pay it. (See also: How to Talk to Friends and Family About Money — Without Making Everyone Mad)

5. Decline certain activities

Another way to drop hints that you need the money back is to decline offers to do things that involve spending money. If your friend asks you to go to lunch, you can say, "I'd love to, but I'm really short on cash right now." If they ask you to go out on the town with them, just tell them straight, "I don't have the money to do something like that right now." If your friend understands basic social cues, they should pick up on the hints and offer to pay you back, or pay for you when you go out to eat.

6. Offer payment plan options

So you've broached the subject with your friend, and they've refused to pay you back. In that case, come back with a flexible payment plan. They may be genuinely stuck and unable to give you the whole amount back at once. But if they can pay it back in installments over a few months, that's nowhere near as scary. If you aren't feeling like they will honor the verbal agreement, get something down on paper. Or consider using an online payment service and monthly escrow payments. But hopefully, you won't have to go to such lengths with a good friend. (See also: The 16 Cardinal Rules of Loaning Money to Friends and Family)

7. Tell them you need the money urgently

Whether or not this is true is entirely up to you. If you don't need the money badly, but have a feeling you'll never get the money back without creating a sense urgency, a little white lie doesn't hurt. However, it's very possible that the tables will have turned, and your good deed is biting you back hard. Now you are in need of that money as badly as they were when they came to you. Remind them of this. A tiny bit of guilt coupled with a plea can really help your friend see that they need to make good on the loan.

8. Paint them into a corner

You truly need your money back. What do you do? Well, the next time you're out with this friend and you're purchasing food or drinks, tell them they still owe you money, so they can pay for your share of the check. Most friends at this point will be cool about it. If they refuse, tell them you've been waiting for that money and cannot afford to pay right now. If they're out with you at a bar or restaurant, they clearly have some kind of disposable income on hand. (See also: 6 Ways to Split the Bill Without Losing Friends)

9. Ask someone close to them to remind them

If you're a little nervous to approach them directly, consider asking someone close to them. Maybe it's a spouse, another friend, or a family member. If you let them know that you don't want to embarrass them by just coming out and saying you want the money back, they may be able to drop hints on your behalf. Something like, "I saw Jane the other day, she looked like she was having trouble paying a bill. Can you help her out?" might get the ball rolling. They may be more direct and say, "Jane loaned you some cash, isn't it time you paid her back?" It all depends on the people involved and their relationship with the person who still owes you.

10. Consider a credit card repayment

Times have definitely changed. In the past, the idea of paying back that $50 with a credit card would have been unheard of. After all, you're not a business with an Electronic Funds Transfer console and a merchant account. But now, you don't have to be. They can use PayPal or Venmo to send you the money. Or they can use a service like Square, which actually lets you swipe their card with a small reader, and charges a transaction fee of 2.75-3.5 percent plus 15 cents, depending on how the credit card is processed. You can even prompt them to send money to you with the "request money" feature. (See also: 6 Mobile Payment Tools You Should Start Using Today)

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

21 Things You Should Make Your Kids Pay For

Carrie Kirby — Tue, 28 Nov 2017 09:30:10 +0000

Whether they receive it from relatives on birthdays, from you in the form of allowance, or from working once they're old enough to do so, most kids have some access to cash. And yet, many parents still find themselves paying for every little thing kids get, letting their money pile up in their piggy banks.

As a mom of three, I have a few reasons for making my kids spend their own money on certain things. First, I like them to learn early on that every financial decision is a trade-off. Going to the movies on Saturday might mean not buying an after-lunch treat at school on Monday, for example. Second, I don't want to constantly get called upon to make yes/no purchasing decisions, or listen to whining. Third, kids who need money are a lot more likely to work, and working around the house helps me out, while working outside the house helps them develop valuable skills. (Whether you tie chores to allowance is a whole other ball of wax. At my house, allowance isn't direct pay for chores, but you can't receive your allowance if you're not a household member in good standing, which includes having chores done.) Finally, making kids use their own funds teaches them to plan ahead. "Are you going to want ice cream at the beach? Bring your money. Carry it in a way that you won't lose it."

Now, I'm not about to ask the kids to use their personal funds for groceries or rent, but there are plenty of items they should buy themselves. Here are some expenses kids can take over, divided by age group.

Little kids

My children started making their own purchases before they were in elementary school. However, I limited the things preschoolers had to buy for themselves to small luxuries. After all, a four-year-old is quite likely to lose her money on the way to the checkout counter, so you're not going to put her in charge of much cash.

1. Treats

"Mom, the ice cream truck, the ice cream truck, the ice cream truck!"

My kids go into a Pavlovian frenzy at the sound of that music, and no econ lecture from me will ever convince them that they could get a lot more value for their money in the freezer section of the grocery store. From an early age, the ice cream truck was a pay-for-yourself proposition at our house. One unexpected benefit of this policy is that my kids spontaneously started buying for their siblings, if they had money and the others didn't.

2. Souvenirs

Whether it's a trip to the local children's museum or a flight around the world, travel is full of shopping opportunities. To prevent fun trips from turning into begging fests, I remind my kids to pack their own wallets as we head out the door. Having to be choosy about souvenirs will also prevent your house from filling up with clutter.

3. Toys

Saving up for a toy has been a rite of passage in our family, one not without its heartbreaks. I recently got rid of a big, fancy makeup case that had been around our house for about a decade, and my oldest and I reminisced about how excited she had been the day it was delivered to open it up and start applying makeup — and how disappointed she'd been that the play makeup it came with barely showed up on her skin at all. That kit had taken her months to save up for, and minutes to become disenchanted with. But that was just one of the many lessons kids learn by buying their own toys. (See also: How to Use New Toys to Teach Kids About Money)

Preteen

At some point around second or third grade, it clicks for most kids that they have the power to get stuff without taking no for an answer — by buying it themselves. A minor money-obsessed phase may ensue, but don't worry; eventually they'll get used to being consumers and drop the Scrooge McDuck routine. (See also: 10 Fun Books That Will Get Your Kids Excited About Money)

4. Accessories

As a parent, it's your responsibility to make sure your child has something to wear to school and to keep them warm. But fancy barrettes? Earrings? Hair dye? That's on them.

5. Entertainment

Sometime during the middle-school grades, if my kid gets invited to go to the movies with friends, I start asking if they have enough money for the ticket. This is a decide-as-we go category, because some outings, like tickets to an amusement park, my kids just can't afford on their own. I will pay for those outings, if they really want to go. And if we go as a family, I pay.

6. Charity

The elementary years are a good age for the kids to start giving back. If you're out together and you see a collection bucket for the animal shelter, you can set a good example by putting some of your own money in the bucket — then ask them if they want to put in some of their own.

7. Anything they could get for free

If your kid wants a book, movie, or video game that could be checked out at the library for free instead, they should pay for it on their own. This is a good time to start learning the value/cost proposition of convenience. (See also: 7 Modern Reasons to Visit Your Local Library Today)

8. Fundraiser items

So far this fall, my kids have already participated in two kinds of popcorn sales and one candy and nut sale. Then there is the monthly order form for book sales that kick back a small portion to the school. Some parents don't let their kids buy sugary treats with their own money, but I'm fine with letting them help their own and their siblings' sales totals.

9. Treats for their own pets

When my daughter begged for a pair of hermit crabs, I agreed to buy her a tank and the animals if she promised to keep her room tidy for 100 days. She came through, and the animals came home. But part of the deal was that after the initial setup costs, she was responsible for buying their food, their water dechlorinator, and any decorative plants and rocks she felt they needed.

Other parents might pay for the necessary supplies, but let kids spend their own money on treats and accessories. I feed our family cats, for instance, but my daughters didn't even bother asking me to pay for Halloween costumes for the cats, because they knew I'd say no. Poor Myrtle and Katie were then outfitted as mermaids for the holiday.

10. Business supplies

My fifth-grader recently got into the slime business. At first, I thought she was just making slime for fun, and as she didn't have any money, I agreed to purchase the contact solution, shaving cream, glue, and other supplies she wanted. But then she came home with a fistful of cash, announcing that she had made it all selling her slime at school. I told her that was great, but that all further supplies must be paid for out of her revenue. She bought more supplies, sold more slime, and ended up using the profits to purchase a computer game, which I hadn't even known she'd wanted.

The same rule applies for lemonade stands; they get the lemons from our tree, but they have to pay for the cups and sugar.

This is really important, because understanding that profit only kicks in after you cover your costs is a fundamental business lesson. (See also: 13 Businesses Your Tween Can Start)

11. Certain gifts

We don't give our kids money to shop for holiday and birthday gifts for family. If they don't have money, they can always make something.

At this age, we still pay for the birthday gifts our kids bring to parties. However, there is an argument to be made for having kids pay or contribute to birthday party offerings. When they have to pay for birthday gifts for friends, they'll have to decide if the birthday kid is a real friend that they're happy to get a gift for, or just an acquaintance whose party they're going to for the free cake and bouncy house.

12. Things they broke or lost

The first backpack at the beginning of the school year is on me. If my child loses it and needs another one, they'll be paying for it. If they need some time to save up, they can dig out that embarrassing princess-themed backpack from under the bed and use that for awhile.

Broke a neighbor's window playing baseball? I would pay up front, but you bet they are going to pay me back, week by week.

Teens

Once they turn 12 or 13, suddenly your kids have real earning power. My teen has earned $10 a day for walking and feeding pets for out-of-town neighbors, and $8 an hour for baby-sitting. With that ability comes the opportunity for her to get herself things I would not have provided; but it also comes with the opportunity for her to take over some expenses I previously footed.

13. Salon services

Bright hair colors are all the rage in both smaller kids and teens these days, but having this done in the salon is not cheap. I pay for my teen's basic haircuts (because if I didn't, she'd never get one), but if she wants an ombre or a manicure, that's on her. I can always point her toward the local beauty school for discounted services.

14. Clothing

I recently told my teen she is responsible for paying for all of her clothes. I don't think this is a choice that all parents will agree with, but I want to see how it goes. She's already well acquainted with the benefits of thrift store shopping, so it won't be as expensive for her as you might think.

15. Entertainment with friends and dates

While I pay for more expensive outings for my elementary kids, as a teen, my daughter can pay for her own ticket to a theme park or play if she goes with friends. I'd still treat for a family outing, though. As the kids get older, we're grateful that they want to spend the day with us at all, and we're not going to risk them saying they don't want to come along because it's too expensive.

My teen hasn't dated yet, but when she starts, there is no way I'm giving her money to go out on a dinner date.

16. Gifts

At some point during the high school years, teens can take over the cost of bringing a gift to a birthday party they're invited to. This can push them to learn how to put together gifts within their budget. My teen recently bought her friend who loves to bake a gift of frostings and sprinkles in a cute hand-decorated gift bag. (See also: 25 Thoughtful and Frugal Personalized Gift Ideas)

17. Data plan

I bought each of my older kids their first phone (or gave them a hand-me-down) and paid for call-and-text-only service. I didn't want to give my kids the option of not paying for the service, because I wanted it active for safety and so I could keep track of them.

But when the teen wanted a data plan in order to start posting on Instagram, that was on her. So far, she has paid it without complaint, even though she's not getting much value for her money, since she usually forgets her phone at home or forgets to charge it.

18. School extras

I pay for supplies required by school, P.E. shoes, and field trip fees. But if my kid wants a yearbook, she has to pay for it. Same goes for tickets to a school dance or any other nonessential fun thing. When she gets to high school and wants to attend homecoming and prom, she can pay for the clothing, tickets, and dinners that go with those events.

19. A car and driving expenses

Most schools don't teach driver's ed anymore, so learning to drive is likely to require the cost of private driving school in addition to DMV fees.

Once they have a license, should you purchase a car for your teen? What about insurance, oil changes, and maintenance? The answers to these questions are going to vary according to family circumstances. While I am all for teens footing the bill for their own expenses when possible, I can imagine that in some families, having the teen drive may be as much about convenience for the parents as it is for the kid.

When I started driving, my parents happily handed over the responsibility of getting my little brother to all his activities. Because of that, it seemed fair that they gave me use of their old car and paid for the extra insurance cost of having a teen driver on their policy.

However, most families will agree that certain driving expenses, such as gas and traffic tickets, should be footed by the teen driver. Outside of parent-mandated errands, kids need to learn that the number of miles they can drive depends on how much gas money they have. It's also not a bad idea for them to learn to ask friends they transport to pitch in at the pump. And if your child gets a moving violation or even a parking ticket, what better way to remember to behave better next time than to have to work extra hours to pay for the ticket? Oh, and if your child has an accident that causes the insurance payment to go up, or loses their good-grade discount, they should pay the difference. (See also: 6 Mistakes Parents of Teen Drivers Make)

20. Travel without family

Once a year, our middle school runs an international trip led by teachers and a tour company. It costs thousands of dollars. My daughter knows that if she chooses to participate, she will have to raise those thousands of dollars herself.

Family travel, on the other hand, comes out of my pocket. I want her there with me, and I'm willing to pay the fare to make that happen!

21. Extracurricular activities

This is a tough one, because like most parents, I want my kids to participate in sports and other activities that help them develop their bodies and minds. My teen is into figure skating, and I currently pay for classes, new skates, costumes, and competition fees. But this may change as she gets older, especially if she is able to start a regular part-time job.

It's certainly fair to ask teens to split the bill for an extracurricular, or to set a limit on the number of extracurriculars the parent will pay for. If nothing else, kids who want a new pair of cleats instead of accepting hand-me-downs should pay for that.

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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:

Teach Your Kids About Money With Their Holiday Gift Lists

Emily Guy Birken — Thu, 09 Nov 2017 08:00:09 +0000

Giving my children Hannukah presents is one of my favorite parts of the holidays. Seeing their faces light up when they open a gift is one of the best feelings in the world.

However, it can be very easy for kids to overlook the message of generosity that we are trying to teach for Christmas and Hannukah. They are bombarded by advertisements on all sides and constant reminders that the holidays are on their way — which means kids can often fall prey to the gimme gimmes. Many parents see this play out when they ask their kids to create a holiday wish list, and receive an eight-page, single-spaced list of expensive items.

But just because children can learn the wrong things from holiday gifts doesn't mean they have to. In fact, parents can use the practice of writing a gift list to teach their kids about budgeting, frugality, generosity, and managing expectations. This year, try one of the following holiday gift lists to help your children learn about money and the true spirit of giving. (See also: How to Use the Holidays to Teach Kids About Money)

1. The four gift list

Families following the four gift list rule will give each child:

Something they want.
Something they need.
Something to wear.
Something to read.

When your kids are penning their holiday wish lists, tell them to place each item in one of these four categories. You can make it clear that they can put more than one item in each category, but they will only receive one present from each category. This will help them to better understand the things they truly need and recognize how much they value their various wanted items. If everything on their list is a want, this exercise will help them manage their expectations. It can also potentially spur them to find needs, clothes, and books that they are excited to receive.

This rule is also very helpful for parents who often go overboard with gift shopping. When you see something adorable that you'd love to give your child, you'll have to decide if it's worthy of being one of only four "somethings" on the list.

2. Include gifts to others

Last winter, my sons were delighted to watch the animated adaptation of The Snowy Day by Ezra Jack Keats on Amazon. We had long been fans of the classic book, and the sweet story of Peter's adventure in the snow was expanded to tell an animated Christmas story in this short film.

One of my favorite parts of the adaptation was the story of Peter's Jewish friend Layla, who delivers a gift to a charity on the sixth night of Hannukah. She explains that it's her family's tradition to give instead of receive on that night of Hannukah, and she and her mother have picked out something special to give away.

This tradition is very well-suited to Hannukah, which lasts for eight nights. Parents can easily set aside one night to be about giving to those less fortunate rather than receiving — but any family can encourage their children to think of others when making their holiday gift lists.

In addition to writing down the things that they want, your kids can also include a list of gifts they can give to others. These could be traditional gifts for families in need, or they can be more creative, like writing letters to deployed soldiers or volunteering. By including a place for giving back on their holiday wish list, your kids will learn to associate generosity with your holiday traditions.

3. Create a gift-giving theme

For older children, a fun way to celebrate the holidays and teach frugality is to set a theme for gift giving. For instance, Stacia Mcclure's family would give everyone a hard spending limit, and specify where everyone could shop: "One year, we decided all gifts had to come from a truck stop — and gift cards were excluded. My dad still talks about that year because he got an entire box of Necco wafers. The hospital gift shop Christmas was also quite entertaining."

Other types of holiday themes might include only buying "As Seen on TV" items, books, games, or food items.

Picking a "theme" helps teenagers learn to be creative within a spending framework, which is excellent practice for learning how to be frugal. A teen who can have fun and give a meaningful (or at least hilarious) low-cost gift from a truck stop will learn to think outside the box when it comes to tougher money decisions. (See also: 5 Steps to Stress-Free Holiday Gift Giving)

4. Ask them to pick a stock

Several years ago, Stephanie McCullough's daughter asked for a new iPod for the holidays. "Instead, I bought her two shares of Apple," McCullough says, "which cost about the same as a new device at the time. There was no way to know this at the time, but the stock has skyrocketed since then."

If you let your children know that you plan to buy them a share of a company they like, you will not only be giving them a gift that will keep on giving, but you can also help to spark an interest in finance.

They can either pick a publicly-traded company they like, or they can do a little research into how well their favorite companies have fared in the market. The latter will help them start to get a sense of figuring out what makes a good investment. Even if they don't research their stock before including it on their gift list, you can invite them to track the stock's price over time to see how their gift is doing.

5. Include a time gift

As much as your children love ripping the wrapping paper off a new toy, what they really want most is to spend time with their parents. You can give them the gift of your time by asking them to include a request on their gift list for something you can do together. For instance, your child might list "baking cookies together" or "going fishing together" on their wish list.

While you could always create a "coupon" for the requested time gift, you can also find a small tangible item you could give your child to use for their time gift. For instance, you might give them a new cookbook that you can peruse together to find the perfect cookie recipe, or a fishing hat for them to wear next time you go to the lake.

By having your child include a time gift request on their holiday wish list, you are teaching them that the best gifts come from being together, rather than spending lots of money.

The benefit of limits

The magic of the holiday season does not come from tearing into an enormous pile of presents, even though much of our culture tries to convince kids otherwise. Teaching your children to use frameworks for thinking about their holiday gift wishes can help them to better appreciate the real lessons of the season, as well as learn some important money skills that will last them well into adulthood.

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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 Use the Holidays to Teach Kids About Money

Emily Guy Birken — Mon, 09 Oct 2017 08:30:08 +0000

My kids love the holidays. They plan their Halloween costumes as early as March; they ask to help make pumpkin pie the moment there's even a hint of chill in the air; and they have Hanukkah wish lists going nearly year-round.

My husband and I get a kick out of their enthusiasm. It helps us remember the holiday magic we felt as children. But in addition to being fun and meaningful traditions, holidays also offer parents the opportunity to teach their kids about money.

Before this year's holiday season kicks into high gear, consider using the occasions to teach your kids the following lessons about managing money:

Halloween

Your kids' favorite candy-based holiday provides you with several ways to teach important money management skills.

Costume budgeting

Whether you are footing the bill for your child's costume or you are asking them to use their own money, start by setting a dollar limit on the amount they can spend and offer to help them shop around. These limits will help your child understand the trade-offs they will have to make to stay within a budget.

For instance, your daughter might find that the Wonder Woman costume at the local party store would blow her budget — but she could save money by stenciling Diana Prince's WW logo on a red T-shirt she already owns and adding white star stickers to a pair of blue shorts or a blue skirt. Recognizing that she could spend either money or time is an important part of learning to budget. (See also: 20 Simple and Cheap Halloween Costumes for Kids)

Candy negotiations

Not every candy in your child's trick-or-treat bag can be a Reese's Peanut Butter Cup or a Snickers. There's bound to be some candy corn, Good & Plenty, or even just Dum Dums that your kids aren't particularly interested in. You can help them to learn the value of negotiation by fostering candy exchanges.

After they've finished with trick-or-treating, encourage your kids to trade with each other. These candy swaps can help your kids figure out just how much they value coveted candy. Is another Mars Bar worth three Twizzlers? Just how many Tootsie Rolls are equivalent to a Blow Pop? This kind of negotiation can help your kids learn how to compromise and determine what they value.

Thanksgiving

Thanksgiving is a time for family, but it can also provide your kids with an excellent opportunity to learn about the importance of tracking your expenses.

Track spending

The average household spent $342 over Thanksgiving weekend in 2016, according to Statistic Brain. You can involve your kids in your Thanksgiving expenditures by asking them to keep a running tally of your spending for the holiday.

Save your receipts from any Thanksgiving-related expenditures — everything from your purchase of pumpkin pie fixings, to the gas station fill-up on the way to Grandma's house, to the 75 percent off fitness tracker you bought for Aunt Sue on Black Friday. Hand over the receipts to your child so they can keep careful track of just how much Thanksgiving will cost you this year.

Not only will this exercise in tracking your household spending help your kids to practice their math skills, but it will also help them see just how quickly expenses can add up.

Christmas and Hanukkah

Kids get understandably excited about the gift aspect of Christmas and Hanukkah, but these holidays are also a perfect opportunity to teach them how to manage their money.

Gift budgeting

It's so easy to go overboard when buying gifts for loved ones, and it's important for children to learn that you can give presents without breaking the bank. Even very young children can help you to create a list of everyone you want to give a present to. From there, decide on the amount of money you can afford to spend per person. Older children who will be buying their own presents for family can make this decision themselves, with your help. Younger kids can help by writing down the dollar amount you can spend.

You can then start brainstorming gift possibilities. Have your kids comparison shop for prices or figure out alternatives if certain gifts aren't in the budget. This exercise can help your kids understand that generosity and spending too much aren't synonymous.

Wants and needs

Holidays can often be a time of excess, which means it can be tough for kids to recognize the difference between their wants and their needs. One way parents can help their kids learn those differences is to institute the Four Gift Rule. With this rule, each child receives:

Something they want.
Something they need.
Something to wear.
Something to read.

Limiting your children's wish lists to four distinct categories helps your kids focus on the things that they truly need and the wants that they value most. You can make it clear to your kids that they can put more than one item in each category, but that they will only receive one present from each category.

Not only will this system help save you money and time, but it will help your kids keep their gift expectations reasonable.

Holidays, with a side of money management

Enjoying the holiday season with your children is a perfect time to teach them some of the finer points of budgeting, negotiation, money management, and managing expectations.

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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:

8 Money Lessons I Learned From Three Weeks in Europe

Holly Johnson — Wed, 23 Aug 2017 08:30:11 +0000

In early June, my husband and I took a bucket list trip to Europe with our kids. While we've visited countless countries worldwide as a couple, this was our first "big trip" with our daughters, ages six and eight. In addition to the four of us, we took a family caregiver to help with the kids and give Mom and Dad a break. Over the course of 19 days, we spent time in Germany, Italy, and Switzerland. The entire ordeal was exhausting, but it was an absolute blast!

Fortunately, we planned far enough ahead that we didn't spend too much out of pocket while we were there. By leveraging travel rewards credit cards and setting a daily spending budget, we were able to get the entire trip, which would normally cost $20,000 retail, for around $3,500. (See also: 5 Steps to Getting a Free (or Close to Free) Vacation with Credit Cards)

In addition to the virtues of planning ahead as a savings strategy, we learned numerous financial lessons during our travels. While we were aware of most of these lessons already, seeing the world through our children's eyes served as the perfect reminder of the reasons behind some of our most important financial decisions.

Here are a few lessons we relearned thanks to our trip abroad.

1. Failing to plan means planning to fail

One of the most expensive components of our trip was dining, mostly because there were five people in our group. No matter how cheaply you try to eat, feeding five people three meals a day means your food budget adds up quickly.

While we tried to minimize our food costs by eating breakfast in our condo and searching for budget options, there were times where we didn't plan ahead and paid a steep price for our lack of preparation.

One meal in particular stands out. We traveled by train to Rome in the morning and arrived in early afternoon without researching restaurants or stores in the immediate area. In a tired and hungry daze, we entered the first restaurant we walked past near Piazza Navona.

Unfortunately, we paid big time for this oversight. Not only was the food overly touristy (pictures on the menu — blech), but our lunch set us back nearly $90. If we had searched ahead of time, we would have known we could have found much cheaper (and probably tastier) options had we walked a block in the other direction. (See also: 4 Secrets to Eating Great Food for Cheap While Traveling)

2. Expensive does not equal better

That meal also served as a reminder that expensive isn't always better. We paid $90 for a lunch that was mediocre at best on that particular day, but at other times we enjoyed meals that were absolutely delicious and downright cheap.

One that comes to mind was a meal we had in nearby Florence, Italy. In order to keep our food budget under control, we started researching local restaurants once we arrived. Eventually, we stumbled upon a sandwich shop — Panini Toscani — that was uber-cheap but was also the third highest rated restaurant in Florence.

We wound up eating there twice. The food was delicious and convenient, and our total meal for five people was less than $20 both times.

3. Even budget trips can be fun

By the time we got to Switzerland (our last stop), I was pretty tired of spending money in general. So, when we had our final "free day" in the country, I spent some time looking for something fun and affordable to do. (See also: 7 Countries Where You Can Travel on $30 a Day or Less)

Eventually, I remembered a town we drove by that had the most beautiful, clear-green lake I had ever seen. After looking up the details, I found that the tiny village of Lungern had a public beach and a few waterslides with a daily admission cost of about $5.25 per adult.

This relatively cheap day was probably the most fun we had. All of us swam and rode waterslides the entire day, stopping only to have a low-cost lunch.

It just goes to show that budget travel can absolutely be fun, and that you don't have to spend a ton of money to enjoy yourself.

4. There's more than one "right way" to do things

One of the most rewarding components of travel is watching my kids react to the many ways other countries handle things differently. My kids were obsessed with euros, for example. They couldn't understand why anyone would choose to offer two euros in the form of a coin.

I also had to explain why we didn't tip as much as we normally do. Since workers in Europe are paid higher wages, you don't have to tip 15–20 percent like you do in the states.

While we could argue all day over which way is better, I told my kids there is more than one "right way" to do things sometimes. (See also: 7 Countries Where You Don't Have to Tip at Restaurants)

5. We actually need very little

While I wasn't sure we could pull it off, we made it through the entire trip with just carry-on luggage and two school-sized backpacks of stuff. It helped that one of our condos had a washing machine, but I was still amazed we enjoyed ourselves without many comforts from home.

This just goes to show that most of us don't need a lot to be happy. We need clothes, food, and shelter, but everything else is optional. We can be happy and content without having a bunch of stuff to bog us down.

6. Most people are honest, but not everyone

Most of the people we dealt with abroad were both kind and honest — except for a couple of small incidences. First, we encountered a taxi driver who tried to charge us $28 (instead of running his meter) to take us four blocks in Rome. Not only was this outrageous since we'd paid $7 for the same ride earlier that day, but it was illegal for him to do this since the city of Rome regulates official taxis.

Second, when we got home from the trip, we received a fraud alert from Chase. Apparently, someone had swiped our card information and tried to make a purchase in Peru.

This kind of stuff happens no matter where you are, so it's important to always stay vigilant. (See also: 7 Ways to Protect Yourself From Theft While Traveling)

7. Exchange rates matter

Whenever I travel abroad, I almost always struggle to keep track of the currency exchange rate and how it affects everything we buy. But, since a single U.S. dollar is currently worth just .87 euros, this is an important detail to keep in mind. If something costs 10 euros, for example, you're actually paying $11.55.

While I used a credit card with no foreign transaction fees to pay most of our expenses, I tried hard to impart this lesson on our kids. No matter where you are in the world, chances are good the money isn't worth the same as at home. And, if you don't pay attention, you could wind up spending a lot more than you think!

8. Some experiences are worth the money, even if they're expensive

While we definitely saved a bundle on this trip due to the way we leveraged credit card rewards, we still spent $3,500 of our hard-earned dollars. On top of that, I probably spent 30–50 hours planning not only our credit card rewards strategy, but our hotels, flights, and trains.

The thing is, I don't regret a single cent — or a single second. Over my lifetime, I've learned that some experiences are worth the money and the time, even if it seems like a lot.

It's hard to put a price tag on a fun family trip that exposed us to cultures in a completely different part of the world. I believe it was priceless. Some memories are worth saving up to splurge on. (See also: How to Build Your Best Travel Budget)

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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:

6 Lessons on How to Be a Financial Grownup From Bobbi Rebell

Chrissa Hardy — Thu, 08 Jun 2017 08:30:18 +0000

Thanks to Toys 'R Us and its catchiest ad ever, I spent several years never wanting to grow up. Being a kid was easy, and being a grownup always seemed terrifying. It meant being financially responsible for everything and struggling to make ends meet while pursuing my goals.

Luckily, every single person on this planet can relate to that fear, and they are all trying to make it on their own, as well. So when I read the new book by Bobbi Rebell, award-winning TV anchor and former personal finance columnist at Reuters, entitled How to Be a Financial Grownup, I was immediately put at ease.

Rebell's book is a compelling collection of stories from successful entrepreneurs and famous faces, detailing the moments they became financial grownups, and the wisdom they picked up along the way. Rebell brilliantly interweaves these powerful stories with her own expertise, and provides actionable steps to make your financial goals a reality. Here are the lessons on how to be a financial grownup that stuck with me the most.

1. Don't compare your path to others

The third chapter of How to Be a Financial Grownup, titled "Careers Are for Making Money" is my absolute favorite section of the book. Fashion designer Cynthia Rowley, Betterment CEO Jon Stein, Macy’s Chairman and CEO Terry J. Lundgren, and others share their stories of how they made it big. All have extremely different paths to success, and some had significant bumps along the way. But you have your own unique background, which shapes your own unique goals. Follow them, and embrace the fact that you are putting yourself out there as someone new, hungry, and different from the rest.

2. Accept that failure is a given

You're going to fail. You're going to struggle. You're going to get burned. It's inevitable. And failure can come in many different forms, but none should deter you from chasing your goals. An extreme example of struggle is when Jim Cramer, host of Mad Money, shared his story with Rebell of being the target of multiple robberies while living in Los Angeles, and upon returning from a journalism assignment in San Diego, learned he was evicted from his L.A. apartment. Cramer was homeless, and his financial grownup moment came when he realized he never wanted to be that poor again. He switched from a career in journalism to finance.

The good thing about human beings is our incredible ability to adapt to our surroundings. So when you're facing an epic financial or professional failure, you'll still be able to get some clarity, pick yourself up, and try again the next day.

3. Allow yourself to splurge on those lattes, sometimes

Rebell fully acknowledges that gourmet, pricey lattes should not be an everyday occurrence. We've heard a million times before that expensive coffee is the reason we're all broke, why we can't buy houses, etc. Luckily, Rebell finds a healthy balance between overspending on and abstaining from your morning beverage of choice. Her two exceptions to the "never buy lattes" rule are as follows:

"Buy coffee at a coffee shop if you're going there for social reasons. Meeting friends at a coffee shop is going to be a lot cheaper than going out for a meal."
"If you're using the coffee shop as an ad hoc office, by all means buy some coffee. Sitting at a coffee shop for a few hours to get some work done, or having a meeting, is a lot less expensive than paying rent on an office."

See? It's all about balance and moderation. Being a financial grownup shouldn't mean setting restrictive limits on things you enjoy, so long as you don't overdo it.

4. Push bad debt out of your way

According to Rebell, bad debt — most commonly credit card debt and student loan debt — is what's standing in your way of becoming a financial grownup. You don't need all of your bad debt to be paid off to before you become a financial grownup, though. The first step to reaching financial maturity is acknowledging the obstacles in front of you. Then you come up with a strategy to defeat them, including reasonable goals that you can meet on a flexible timeline. This process will never be as simple as, "Day 1: Add up bad debt, Day 2: Pay it all off," unless you stumble upon a pile of cash. But coming up with a realistic plan that works will be immensely rewarding.

5. Nurture your relationship with credit

The thing about credit is that it's not all bad. We all want to be careful about the way we spend money and manage bad debt, but credit is something to be built, embraced, and closely monitored. You need it, even if you'd rather avoid it altogether.

This is something millennials should work on. NerdWallet found that about a third of people ages 18 to 34 have never applied for a credit card. While it's wise to have a healthy fear of how irresponsible spending with credit cards can ruin your life, you still need to build credit in order to eventually buy a car or house, and to do all the other things financial grownups do. Rebell suggests using only a small portion of the credit you have available, "ideally about 10 percent, and really try to use no more than 30 percent."

6. Stop asking the wrong questions

When Rebell asked Kevin O'Leary, successful entrepreneur and star of Shark Tank, to share his financial grownup moment, he recalled a powerful conversation with his stepfather. O'Leary was in high school when his stepfather, George, asked him what he wanted to do with his life. O'Leary wanted to skip college and become a photographer. George told him that "'to be or not to be' isn't the question. The question is: What are you willing to do in order to be what you want to be?"

That shift in mindset helped O'Leary realize he wasn't willing to make the sacrifices involved in becoming a photographer. He wanted to make money, and in his business ventures he has made lots of it. That financial freedom has, in turn, allowed him to take up photography in his free time.

So when you think about each goal you set for yourself, you shouldn't be asking what you want, but rather, how you're going to get it, and strategize from there.

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

5 Stocks Your Kids Would Love to Own

Damian Davila — Fri, 14 Apr 2017 08:30:13 +0000

When taking a look at your 401(k) or investment accounts, you may often daydream about how cool it would have been if you started investing earlier. That way, maybe you could have jumped on investments that turned out to be home runs, such as Apple [Nasdaq: APPL] and Berkshire-Hathaway [NYSE: BRK].

If you have children, you're blessed with the opportunity of granting them the greatest gift any investor could want: time. Let's take a look at some companies whose shares would make a great gift for your kids to not only help them learn about investing, but also get them excited about money and business in general.

1. Snap Inc. [NYSE: SNAP]

Do you know what's cooler than a million dollars? $3.4 billion, which is how much money the parent company of Snapchat raised in its March 1, 2017 initial public offering (IPO). Since it has been estimated that 60 percent of Snapchat users are under age 25 and nearly one in four hasn't finished high school, there's a very good chance that your children use this popular social media app.

Leverage their interest in the app to keep them focused on tracking a stock price and keeping abreast of the effects of company announcements, such as Snap's Spectacles, on the valuation of a publicly-traded company. Bonus: You could use Snapchat to send them their monthly allowance, keep a digital record of when you made that money available, and check how long it lasts them. (See also: 7 Modern Ways to Send Money to Your Kid)

2. The Walt Disney Co. [NYSE: DIS]

"Do you want to buy a stock share? Come on let's go and trade!" If you started reading that in Princess Anna's voice, then you're a Disney parent and your kiddos spend a lot of time singing along to similar tunes. Keeping interested in this stock is easy because your kids will read about movie productions, toy developments, theme park construction, and other family entertainment projects.

Disney is a great stock to hold onto for the long run, which is a maxim that you want to instill in any young investor. If you were to have held Disney stock from March 1, 2007 to March 1, 2017, you would have seen the stock price go from $34.39 to $111.04 (a 222.88 percent increase!). Plus, it's a dividend-paying stock, giving you a segue to introduce the concept of fixed income securities. (See also: What Are Income Stocks?)

3. Amazon.com, Inc. [Nasdaq: AMZN]

Parcel-delivering drones, robots that work in warehouses, and voice-activated speakers that can control other home devices. It'll never be dull moment chatting with your kid about recent news from the Seattle-based ecommerce giant.

If you have the budget, Amazon.com is one of those expensive stocks that are totally worth it. Just when you think that the stock can't hit new heights, an uptick during the early November and December holiday season gives the stock price another boost. Time your gift well before the holiday season and provide immediate gratification to your kids from a stock price bump.

4. Foot Locker, Inc. [NYSE: FL]

On the other hand, here's one stock to develop in your children an appreciation for delayed gratification. If your kid is a sneakerhead or sports jock, they'll include a new pair of athletic shoes in their Christmas list. With a current stock price close to $75 per share, one share of Foot Locker goes for about the same as a brand-new, high-quality pair of athletic shoes meant to last at least one year.

Give your child the option of the shoes or one share of Foot Locker, Inc. (Or pick another company that better matches the price of the shoes that they want, including Nike Inc. [NYSE: NKE] or Skechers USA Inc. [NYSE: SKX].) When your child chooses the stock over the shoes, they'll realize that they'll have more available after a one-year period. If they're still unconvinced, ask them to try selling a pair of old, smelly shoes after one year of (ab)use from a tween.

Setting a strong foundation for delayed gratification will boost your child's ability to save for retirement and build an emergency fund. (See also: 10 Investing Lessons You Must Teach Your Kids)

5. Tesla Inc. [Nasdaq: TSLA]

The concept of saving for retirement is completely foreign to most individuals under age 18, maybe even for some under age 25! Getting somebody to plan about 40 to 60 years ahead is a difficult task. One way to get your kid thinking about the future with a fun and optimistic tone is to gift them stock from Tesla, because this company is in the business of electric cars, energy storage batteries, and solar panels.

Plus, Tesla's CEO Elon Musk is so cool as to inspire the way actor Robert Downey Jr. plays Tony Stark in all Marvel films. By following the decisions of a cool and smart CEO, your child could gain further interest in business and entrepreneurship.

How custodial Roth IRAs can help with investing education

If your kid is under age 18 and makes some money on their own, such as through a hobby or during the summer, consider opening a custodial Roth IRA for them. This is a great way to educate your child about investing and providing a "sandbox" in which to make real-life decisions with investments. (See also: Does Your Kid Need an IRA?)

In 2017, your kid could contribute up to $5,500 to a custodial Roth IRA and watch those contributions grow tax-free forever. Many financial institutions require an account minimum of $100 to open a custodial Roth IRA. You could start with some stocks from this list or other stocks that your kid is interested in and eventually move on to index funds and mutual funds. To minimize fees, just keep post-contribution transactions at a minimum.

Gifting your child stocks paired with several years of retirement savings could be one of the best gifts you could ever give them for a brighter financial future.

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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: