1,820,000

That's how many hits I had when I typed in "Kid's allowance" in Google this morning.

Kid's investing returned 19,600,000.

That's a problem.

Why?  Because it points to a fundamental lack of understanding about how to effectively manage your finances.  In the words of Stephen Covey - "Put first things first".  In this case, how about we teach the kids to manage the checkbook before we have them set up with an etrade account (Unless you happen to be the parent of a baby from their commercials, and they can really talk and manage portfolios like that!)?

My guess is that it is simply a reflection of the adults out there who are doing the exact same thing - jumping the gun on aggressive investment positions despite having credit card debt, no cash reserves for emergencies, and a maybe even a bounced check or two. 

Even if you don't agree with the strategy outlined above, I'll make another argument for focusing on the basics.  Let's take the example of hiring a CPA to do your taxes.  Aside from the convenience, why would you do that?  To pay less taxes of course.  The money saved in tax should out weigh the money spent on the accountant.  If it doesn't, time to re-think your accountant, or your taxes may be simple enough to do it yourself. 

The same concept applies to managing money and cash flow.  The rate of return on avoiding bounced check fees at the bank and avoiding interest payments on your credit cards is fantastic, guaranteed and non-taxable.  Then, you can put that money to work in an investment portfolio.  First things first!

Have a good weekend.

So How Did I Do?

Well, lets call it 50/50 for today.  Emails out to potential board members, but the number I have for the attorney turns out to not be so effective unless I want to send a fax.  Working on sourcing the right number as we speak, but its 5:12 on a Friday afternoon, and its time to call it a day.

Talk to you next week!

Today's the day!

Time to get back to work on this.  I'm calling the attorney today to start the vetting process of the agreement I need to sign with CD Programs.  The budget is done.  Time to think about the Advisory Board as well, and maybe even set up a web meeting with the potential candidates.  In fact, I'll send out that invitation today as well.  I mean, what the heck am I waiting for anyway?

Let's see if I can pull all of this off by the end of the day?!

Why are parents the best source of financial education?

Admittedly, there are a huge number of web sites, books and other programs available to help kids learn about money.  Some schools spend a quarter or semester on it, Junior Achievement has programs.  These are all great first steps.  There are, however, some issues:

• Time - These lessons are complicated, and there is simply not enough time to do a thorough job on such a short time line.
• These are purely theoretical lessons involving play money rather than the real thing.
• Too much emphasis is placed on the investing portion, probably because it is more fun or interesting to the kids.
• Too little emphasis is placed on the foundational elements like emergency funds and the proper use of credit.
• There is no way for your values as parents to be included in the conversation.

So, when it comes right down to it, the parent is the only one who can effectively educate the next generation about these issues.  Here is a story about a great way to teach one aspect of this - how to involve your kids in the "Giving" aspect of money management.

One of my colleagues and I were discussing financial literacy, and he mentioned that his family had found a way to deal with all of the charitable solicitations that hit the mail box around the holidays each year.  Starting in November, he would set them aside.  In early December, the family would get together and come to a consensus about which organizations to support and on what level (subject to an overall budget, of course!).  At the time, his kids did not see this as an important lesson.  As they have grown up, however, they have all mentioned to their Father that they did remember those sessions, and that it gave them a basis for managing their charitable donations as they became young adults.

That is a huge win for everyone, and it drives home the point about time and values that I made above.  Doing this one year in school would not have made this impact.  Having their input matter in a financial decision from a young age was almost certainly a source of pride or accomplishment.  The process was a clear reflection of the family values that the parents were trying to teach, and it stuck with them in to adulthood.  A HUGE success from my perspective.

And just maybe a story like this will make it in to the book......Do you have a story like this?  Something that made an impact on your financial life?  Feel free to share!

Why is teaching money managment skills important?

This is why:

College students and credit cards

I don't think I really need to say too much beyond what is in the article, but for those who did not click the link, here is the hidden message - As much as the government attempts to protect us from ourselves (a topic of much debate that I will not address here!), the most effective tool for managing this issue is personal responsibility.

If we want our kids to handle this stuff well, we need to lead by example first and foremost, and also actively teach these skills over their entire lifetime.  Start early, finish strong!

Banking Day Extraveganza

Extravaganza may be a bit much, considering it took all of 20 minutes start to finish for both kids.  On the positive side, one of them displayed how much they have learned and how seriously they take this by having their deposit slip in good order and the correct amounts in each account.

The other....not so much.  The counting was perfect, but there was a bit of carelessness in the distribution to each account.  Again.  So, he gets a month off to think about it, and another opportunity to take it seriously.  If I follow my own rules, the third time is an indicator that he is simply not ready to take this on.  I sure hope we don't get there.

Why do I have broken pine boards in my garage?

That is a very good question.  The short answer is that my daughter broke her first board with an awesome slide side kick a couple weeks ago.  The longer answer (as most of mine are!) is that we found another great way to give back to our community.  Turns out one of the kids at the dojo had heart surgery at a very young age.  Even more unique, his parents found that one of their neighbors had a similar experience.

Clearly, they were meant to find each other.  The question became why?  The answer is now called Max and Jake's Big Race.  The dojo held a "Break-a-thon" to benefit this fantastic cause and we all had a great time busting up some boards for charity.  Want to know more?  Here's the link - Max and Jake's Big Race.

Of course, Miranda used her own money, set aside from her allowance, to pay for her board.  $10 for Max and Jake's Big Race.  Way to go Miranda!

What to do with those pennies?

Conventional wisdom is to save them up and add them to your savings or investing accounts, but Logan (age 8) has a better idea - random acts of giving!  On a trip to the zoo this weekend he packed up his pennies and dropped them in the collection box at the Panda exhibit.  What a great way to give a little to a worthy cause and off load an admittedly annoying bunch of change!  Sure beats pitching them into a fountain.