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My point was that parents don’t have to be financial experts to prepare their kids to be financially responsible as adults. After listening to my short comments you’ll hear a great example of how to teach your kids about money written by Joe, a dad. The game he’s playing with his kids is called “Government.” Love it!

So what does this mean when you’re teaching your kids about money? The lesson is that there are three buckets of money: personal (or individual), family, and government.

Personal money.  A child’s first money experience is “all about me.”  While we are young, without financial responsibilities, we spend money only on what we want and that’s that. This works quite well until we become adults and have to pay for essentials like food, shelter, et al.

To prepare your children for the future, your job as a parent is to create a child-size version of real-life money management and responsibility. By using a system like The No-Cash Allowance you place control of cash and non-cash money in the hands of your child while requiring them to meet their responsibilities, e.g. pay their bills.

Family money. Children do not have spouses or partners, so there is no need for agreement on how to spend money. Deciding how to manage money in a relationship with more than one person requires communication and compromise.

You can help your children learn the art of compromise and negotiating spending decisions by building these opportunities into their allowance and earning system. By requiring your kids to “pay their bills” you help instill the self-discipline necessary to make reasoned spending decisions.

Government money. The government gets its money from the people who elect it. Everyone who owns or earns money (or other items of value) has to give some to the government. Decisions about how to use your money are made by local, state and national officials elected by voters.

Kids need to know that money is a limited resource and there are responsibilities to be met. Only parents can provide the resource (money) and the guidelines (responsibility.) By doing so parents can help their children understand that one has to live within one’s means, whether that be as a child, adult, or elected government official.

Your children are learning spending habits that will stay with them as they grow up to be the leaders of tomorrow. By recognizing the different buckets of money, you can help your child prepare for the future. Perhaps your children will be the ones making  “government spending decisions” that are truly wise and timely.

-Lynne Finch, author, The No-Cash Allowance

Of course, parents are surprised and angry when they get their credit card bill detailing purchases they didn’t even know about. While parents, Apple and Amazon point fingers at each other, most people continue to ignore the reality that it is very easy to spend, spend and spend without seeing or touching any money at all.

Money is becoming invisible. Money is a number. Parents, kids, everyone are discovering (sometimes painfully) the new reality of cashless spending. Companies make it easy to spend; that’s their job. As consumers we need to know when a click is ringing up a purchase and adding to our bill.

What is probably most infuriating to parents is that they weren’t aware that this could even happen. There’s a learning curve for parents, as well as kids.

The question for parents used to be: “Do you know where your kids are?”

Now the question is: “Do you know if your kids are spending money?”

How, as parents, do you get a grip on the reality of non-cash spending? A little background reading might help.

Where did the cash go? Understanding virtual money.

Every day millions of children go to school tired, dehydrated, and many times also hungry. Back Pack Free Friday focuses public awareness on the very real burdens lack of appreciation for children’s foundational health places on children and schools. Back Pack Free Friday is sponsored by an international consciousness movement called Parenting 2.0 (P20), the top ranked parenting group on LinkedIn with nearly 1700 members in more than 40 countries, P20 advocates a more proactive educational process for non-academic Life Skills.

P20 defines Life Skills as all the non-academic, foundational skills children learn to thrive and commune optimally with others. Life Skills include but are not limited to: personal care, safety, finance, organizational, interpersonal communication and social skills.

As stated in their group description on LinkedIn, “Parenting 2.0 supports parents, professionals, and other primary caregivers in their role as Life Skills Educators. Our goal is that, one day, children’s LSA (Life Skills Average) will receive the same appreciation as children’s GPA (Grade Point Average.)

P20 invites everyone to support Back Pack Free Friday and Stand Up for the welfare of children everywhere by doing the following on Friday May 4th, 2012.
1.    Leave back packs at home this day.
2.    Prioritize sleep, hydration, nutrition, and exercise.
3.    Find creative ways to underscore the importance of water, sleep, nutrition and exercise, for all aspects of children’s performance.
4.    Shine light upon professionals who can speak to the importance of prioritizing personal care.
5.    Share the concept of the Life Skills Report Card.
Additional info available at the Parenting 2.0

AWTR Show 364: No-Cash Allowance

Personal money. In general, kids get money from their family. They don’t have to have a job, report their income to the government or pay taxes. Children have a lot of freedom with their money with few, if any, obligations. A child’s first money experience is “all about me.”  When children have money they usually spend it on what they want and that’s that.

Family money. Reality sets in with being an adult earning a living. The “spend for me” theory doesn’t work quite as well when families have to pay for essentials like food, shelter, et al. Keeping track of income and expenses becomes important, especially around tax filing time.

Government money. The government doesn’t have to have a job; it simply takes money from everyone who has taxable property, earnings, or investments. Decisions about how to use your money are made by the local, state and national officials you elect. Unfortunately, our government is not very good at managing money.

However, as parents you can help your kids learn about money management not. Knowing how to manage money gives individuals the ability to control what they do with it. We often talk about, “living within one’s means”, “making every dollar count,” and “spend less than you take in.” These maxims are the essence of money management, defined as having the ability to use one’s financial resources wisely.

To prepare your children for the future, you can create a child-size version of real-life money management and responsibility. By using a system like The No-Cash Allowance you place control of cash and non-cash money in the hands of your child while requiring them to meet their responsibilities, e.g. pay their bills.

You can help your children learn the art of compromise and negotiating spending decisions by building these opportunities into their allowance and earning system. By requiring your kids to “pay their bills” you help instill the self-discipline necessary to make reasoned spending decisions

Kids need to know that money is a limited resource and there are responsibilities to be met. Only parents can provide the resource (money) and the guidelines (responsibility.) By doing so parents can help their children understand that one has to live within one’s means, whether that be as a child, adult, or elected government official.

Your children are learning spending habits that will stay with them as they grow up to be the leaders of tomorrow. Perhaps your children will be the ones making  “government spending decisions” that are truly wise and timely.

In my award-winning book, The No-Cash Allowance,  I offer parents a guideline to setting up a similar financial education in their home. Requires no financial expertise on the part of the parents, only a willingness to get started and see what happens when you let your child have real hands-on experience managing money.

Here’s an example from our experience with the no-cash allowance. One daughter adds her weekly allowance and records the new balance. She announces that there’s enough to buy a new sweater. Her sister updates her own balance and asks me if we could stop at the bookstore. I take the girls shopping and pay for their purchases using my credit card. When we get home they subtract their shopping expenses and update the balances in their accounts.

Throughout this experience no cash has exchanged hands yet everyone knows exactly what happened. Deposits were made, account balances got bigger, purchases were made and account balances got smaller. Also, neither child asked me for more money or asked me to buy something for them. They took responsibility for their own spending decisions and the resulting change in their account balance

Learning to manage money as a number is the world that your kids will live in as adults. You can help them develop the money management skill to help they prepare for the future. Your children can start learning now.

You can do this by setting up a system like the no-cash allowance and providing the resources they need (money), giving them control (while you bite your tongue), and assigning responsibility for appropriate child-related expenses. “Yes, Johnny, you must pay for your school supplies with your own money.”

Typical comments of a no-cash allowance kid.

 “This is my money. I can write in my own allowance every week.”

“I have to pay my phone bill this week and remember that my school activity fees are due next week.”

 “If I don’t buy that CD today I will have enough next week to buy that jacket I want.”

Parents discover they can have realistic money discussions with their kids.

 “You recorded your allowance. If you want more before next week, consider doing some of the chores for pay.”

“Yes, Suzy, you did get paid for mowing the lawn. It’s in your account.”

“It’s your money. If you spend that much on the movie you may not have enough for the field trip.”

These situations offer a great opportunity to discuss real-life costs and choices. Parents can help children understand that each money decision affects their total money resource.

Kids can understand that there is a bottom line. By setting up a system as explained in The No-Cash Allowance your kids will develop money management skills by making decisions and learning from the results. This is one of the best lessons that your children can learn before they leave home

Every teen knows that before you can get a driver’s license one has to take the classroom course. This is where potential drivers learn the rules of driving; they develop a knowledge base about driving rules and regulations. Memorizing the motorist’s manual does not make one in to a skilled automobile driver.

Teens can’t wait to get out of the classroom and get their hands on the steering wheel. For a teen the learner’s permit is literally where the rubber meets the road. All states require some prescribed amount of supervised hands-on practice to provide the opportunity for a teen to develop the skill of driving a car.

As with learning to drive a car there are two parts to financial education, knowledge and skill development. I think we can all agree that financial literacy at its core is knowledge.

With financial education, schools can provide knowledge, but cannot provide hands-on money management training. This is because schools are not in a position to provide real money for practice, just as schools no longer provide automobiles for driving practice.

Whatever a kid might learn about credit, interest, loans and investing is, in his eyes, not relevant to his own money. School learning often stays in school. Financial literacy classes do not provide hands-on practice in the classroom. It’s like learning to play soccer without ever kicking the ball.

So what’s missing in financial literacy curriculum? Hands-on practice. But here’s where parents have to step up. To give kids hands-on practice managing money parents need to provide three equally important elements: money, responsibility and control.

Money The main ingredient in allowance is money. Through as system like “The No-Cash Allowance” you can provide a reliable, consistent process for your kids to receive, spend, allocate, and transfer money. Your kids will be in charge of keeping track of their money in an account, initially kept at home with you as the banker.

Spending money is easy and is not the same as managing money that exists as a number in a financial account. This is the future reality for your children. You can give your kids hands-on practice now.

Responsibility Giving kids responsibility for certain expenses sets the stage for managing expenses as an adult. Parents and children agree on expenses that are relevant to the child, such as school supplies, some clothing, entertainment, and cell phone. This approach offers a child practice managing money for both fun and necessary expenses.

Control As difficult as it may be for parents to accept, it is essential for kids to have full control of their money so they have the opportunity to make both good and bad decisions, learn from them, and go forward. A $10 spending mistake by a kid will be a big learning experience. A $1000 spending mistake by an 18-year-old can be a financial disaster with lingering consequences.

By providing all three elements a child has their own version of real-world experience, where money is part of a stream of funds that has both a past and a future. When parents provide funds in a consistent way, much like they provide resources for a child to learn other skills such as sports or music, kids have a reliable system to work with

This financial education can begin even before a child starts school and can provide ten or more years of actual hands-on practice with money management. It is the combination of using money, along with having total control and responsibility for required expenses that gives kids practice developing money management skill.

Knowledge alone is not enough when it comes to money management. Kids learn through practice making decisions using their own money. This is what behind-the-wheel practice does for young drivers.

For all parents the day will come when they give their kid the car keys for that first solo drive. Likewise, parents can give their kids control of money and let them manage it by themselves so they can learn to steer their way through the money management maze that is in their future.

Years of research show that when adults read to children, discussing story content, asking open-ended questions about story events, explaining the meaning of words, and pointing out features of print, they promote increased language development, comprehension of story content, knowledge of story structure, and a better understanding of language– all of which lead to literacy success. The Science of Early Childhood Development: Closing the Gap Between What We Know and What We Do. Cambridge, MA.

Today, BRAG features children’s book authors who not only write great books, but share a fundamental commitment to children’s reading and literacy.

Here’s introducing. . . “Children’s Book Authors — Writing for Reading.”

In today’s world, where much of our money exists as a number, are we taking good care of it? As we casually toss credit, debit, money, and gift cards, in our pocket or purse, do we know what happens if we lose any of them? Do we know what to do if someone makes fraudulent charges?

Those convenient cards we swipe so easily can also create financial havoc when lost or used fraudulently. Each card has a different set of rules. The information is there in the fine print. Consumers are responsible for knowing the rules and procedures.

Let’s review the various ways we can spend money and what happens when something goes awry. Think about how you will talk about these with your kids.

Cash, gift cards and preloaded cards

We know that helpless feeling when we lose cash. When the money is gone there is no one you can call to help you get it back. The only good news is that once the cash is lost, there are no lingering effects or extra cost to you.

Gift cards and preloaded cards are, in practice, the same as cash. There is no recourse for getting them back. There is no electronic security like a pin number. Whoever takes or finds these cards can spend them the same as cash.

Your kids may have already lost some cash, but have you explained that gift cards are just like cash?

Debit and money cards
In many ways, we treat debit cards as cash. Depending on the type of card we may or may not be required to enter a pin number. In any case, money is subtracted at the time of purchase.

More importantly, with these cards you are liable for fraudulent charges within certain time frames. Many cards provide a $50 limit if the charge is reported within two days. Within 60 days you may be liable for up to $500 in fraudulent charges. After that time there may be no limit at all on your liability for the charges.

Do you know what your limits are for your debit and money cards? Can you explain it to your kids?

Credit cards
In many ways, we treat debit I can relay from experience what happens if someone uses a credit card fraudulently. Because I keep all receipts and regularly download transactions to my Quicken account, I can quickly see any irregularities. When I spotted a suspicious charge, I immediately called the credit card company.

When I was transferred to the fraud department they found several more fraudulent charges in the process of being posted. After reassuring me that I’m not liable for any of these charges, they closed the account, and will issue new cards promptly.

In the meantime I called the companies that charge automatic payments to my account. With a few phone calls a crisis is averted. My only inconvenience is being without that card until a new one arrives in the next week or so.

This has happened to us more than once, each time through no apparent action or inaction on our part. Even though we’ve had to close accounts several times we continue to use our credit cards and monitor them regularly because the credit card companies promptly resolve the problem.

In our situation the fraud department could not pinpoint why the charges occurred. They suspect some type of suspicious online activity, which is why they immediately close the account in question.  In each instance the credit card personnel were most helpful, courteous and handled the situation professionally.

We’ve also followed their advice to call our credit card companies before we travel. This serves two purposes. One is to let them know that we’ll be making charges outside our normal geographic area. The other reason is to alert them to watch for possible fraudulent charges during our travels.

It’s reassuring to know that our credit card accounts are being monitored for fraud. One company did call us during a trip to report a questionable charge, a situation easily resolved over the phone.

In the grand scheme of using cards for purchases, in my experience, credit cards offer the most protection. In each case I was not liable for the fraudulent purchases. Also, most credit card companies allow several months to dispute charges, another protection against fraudulent, inaccurate charges or undelivered merchandise. Many also offer extended warranty and replacement for lost or damaged items.

Do you know the procedures for your credit cards? Can you explain to kids how to report problems?

Today’s kids will be using these non-cash spending methods, often on mobile devices. Just as managing money as a number requires different monitoring on our part, we also need to start teaching our kids early. We need to say to them, “Take care of your money.”

In today’s cashless world taking care of money takes more effort than it used to. Now is the time to start the conversation with your kids about how to monitor invisible money that electronically zips around the world.

Worldwide at least 793 million people remain illiterate.

World Read Aloud Day is about taking action to show the world that the right to read and write belongs to all people. World Read Aloud Day motivates children, teens, and adults worldwide to celebrate the power of words, especially those words that are shared from one person to another, and creates a community of readers advocating for every child’s right to a safe education and access to books and technology.

By raising our voices together on this day we show the world’s children that we support their future: that they have the right to read, to write, and to share their words to change the world.

It’s time to join the Global Literacy Movement.

Accomplished so far:
• Reached 35 countries and 40,000 participants on March 3, 2010
• Reached 60 countries and all 50 states and 200,000 participants on March 9, 2011
• Preparing for March 7, 2012: Let’s make it a million participants or more!