All posts by Lynne L. Finch

“It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children to manage money as a number starting with kids as young as pre-school and continuing through high school.

Don’t Have Cash to Pay Kid’s Allowance? Try the No-Cash alAowance Solution.

The no-cash allowance solution solved my problem.  Seems like I never had the right amount of cash to pay my kids.

One day, I grabbed a piece of paper and wrote their allowance as a number. Consequently, that turned out to be one of my best mom inspirations as it led to the creation of The No-Cash Allowance.

A No-Cash Allowance is a system in which a child controls all funds received from parents through a written account initially kept in the home. Adults act as bankers and the child as account owner.

No-cash allowance solution

Now I realize it was that one simple change–from paying with cash to paying with our version of direct deposit that set the stage for our children to learn how to manage money as a number. Their allowance appeared as a number in their home account, a written log of all their money transactions.

Most importantly, the one rule we were committed to from the beginning was that we would not pay our children with cash. Because we were their bankers they could withdraw cash from their accounts, but surprisingly they rarely did.

Using the debit card concept

My kids quickly adapted to managing their money as a number. Instead of withdrawing cash they used me like a debit card. I paid for all our purchases. They substracted from their written account.

This was back in the 1980s before debit cards became popular. My kids didn’t seem to care how they paid for their purchases. What they did focus on was whether or not they had enough money.

Turned out that kids understand numbers when it comes to money. As a result, all they needed to know was their bottom line. This no-cash solution was going to work!

However, making a decision to buy something meant that they had to subtract from their balance. Voila! Their balance got smaller. Good lesson, I thought.

By finally adapting a no-cash allowance solution, our family was able to  create a financial education at home. Allowance became the tool for teaching our kids about money, decision-making, and responsibility.

 

 

 

Mommy, What’s a Tax Refund?

explain tax refund to kidsWhat would you tell your kids if they asked what a tax refund is?

They hear people talking about tax refunds. Commercials explain how easy it is to get a refund quickly.

Some companies even let you spend the money before the refund arrives. So let’s imagine a conversation between a parent and child about tax refunds. Here’s how it might go.

What’s a tax refund?

A tax refund is money that the government sends back to taxpayers like us.

Why?

Well, it’s because we paid too much money to the government during the year.

Why?

We filled out a form called a W-4 telling the government how much money to take out of our paychecks.

Can’t you change the amount on the form?

We can. But getting a tax refund give us extra money to spend now.

Does the government pay you interest on the extra money they keep during the year?

No.

If you didn’t let them take so much you would have more money every month, wouldn’t you?

Yes.

You could invest that money or put it in a savings account.

Yes.

Then why don’t you fix your W-4. Seems like a no brainer to me.

How to reduce your refund

Based on the average refund of around $2800 a simple change to your W-4  can put an additional $200 to $250 per month in your pocket. For information on how to change your withholding, talk to your payroll office, tax preparer, or follow the instructions on the IRS website. Withholding Calculator

The sooner you make a change the sooner you can start keeping more of your money. With that extra money you can you can start investing it in your retirement fund or other long-term savings program. Or you can pay more on your credit card balance or other loans.

By the time you get your refund on your 2013 taxes you’ve already handed over several hundred dollars  this tax year. Once again Uncle Sam will hold your money, interest free, until you ask him to give it back when you fill out the paperwork next year.

Money management is making the most of the money you have. Taxes are part of everyone’s financial situation. By taking control of your withholding now you will have more of your money working for you and your family.

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children that money is a number with kids as young as pre-school and continuing through high school.