Do your kids want to work this summer?

I was 16 when I got my first real job working as a floater at a department store. (Boring, minimum wage of $5 per hour, too easy to spend the little I did make because of the 30% employee discount, but I figured it was better than McDonald's. And mostly, I was an ignorant teen who didn't know a darn thing about saving.)

My friend's daughter, who is 13, has a much better first job. She'll be "working" as a camp counselor-in-training. Since she's too young to be employed under California law, she's officially a volunteer. But she gets a $500 cash "scholarship" at the end of the summer. Not bad for a 13-year-old.

If your child wants to work this summer, there are some legal rules you'll need to know, such as whether a permit is required and how many hours per day and week your child is allowed to work. The federal government's blog, Gov Gab, has a handy post with links to helpful sources.

The most important link is worth bookmarking. It's the U.S. Department of Labor's Youth Rules site, and is all about the federal and state rules for young workers. If you have kids who are old enough to work (or will soon), I highly recommend checking it out.

Roundup: A child's humor, Hannah Montana, Allowances & Chickpeas

I haven't done a roundup post in a while, so although I try to Stumble my favorite posts from other sites, I thought it would also be good to highlight the most recent ones in case you missed them:

• The Joy of Fooling your Kids at Thingamababy - Here's a four-year-old with a pretty sophisticated sense of humor (of course, how could she have turned out otherwise given her dad?)
• Hosting a Frugal Hannah Montana Birthday Party at Frugal Upstate - Jenn pulls off her daughter's sixth birthday party for less than $21!
• Do You Pay Your Kids an Allowance? at Frugal Dad - As Alex gets older, I find myself pondering the allowance question with increasing frequency. Should he have one? If so, how much? And under what, if any, conditions? Frugal Dad explains how allowances - er, I mean commissions - work in his family.
• Roasted Chickpeas: Wrong Way, Right Way at Cheap Healthy Good - Roasted chickpeas are a delicious, healthy and very inexpensive snack, and Kris shows you how to make 'em right!

Teaching our children value and to accept "no" as an answer

This post was inspired by Michelle at Scribbit, who wrote about her decision not to pay for her kids' college education and other alternatives to help prepare children for college financially. One of her suggestions is to teach children to "think cheap," since public universities are a fraction of the cost of expensive private colleges.

Her post got me thinking about my dentist, whose oldest will entering college in the fall. His daughter's first choice is Tufts. My dentist's first choice for her is UC Davis. The difference in annual expenses? Approximately $25,000.

My dentist doesn't want to say no to Tufts just because of money. And his daughter simply isn't used to her dad refusing her something, particularly when it comes to something as important as education and certainly not just because of money.

My conversation with my dentist reminded me of my own decision on where to go to college. Foolishly, I picked the most expensive private school that I had gotten into - one that hadn't offered me a scholarship. Even more foolishly, my parents didn't say no. (If you're reading this, Mom and Dad, sorry.) Or maybe it wasn't that foolish, at least from a non-financial perspective.

Here's the thing: If my parents had said no, there's no way I would have understood. I probably would have resented them for it - particularly my dad, since he was the family's financial manager. The problem is, I wasn't used to being told I couldn't have something simply because of money.

I grew up very privileged, particularly when it came to experiences and education. My parents spent a lot of money over the years to provide me with enriching experiences and a top-notch education. So by the time it was time for me to go to college, I fully expected that they would prioritize those two things more than, say, managing the expense. And they did.

In retrospect, I wish I'd been mature enough to understand the sacrifice they were making and that they had refused to make it. I'm sure the money could have been put to a much better use, which isn't to say that I didn't have a great experience and that part of who I am is surely due in part to that time in my life. And I'm certainly grateful for the sacrifices that my parents made. But 15 years after graduating, nothing about where I went to college matters. I realize now that all that really mattered after graduation was my GPA, my major, and how hard I worked.

So what I have learned to pass on to my kids?

I've learned to say no.

Not to everything, of course. But I do already explain to three-year-old Alex that we aren't buying a certain item that he wants because he has too many of the same type of toy at home, or it's not on sale or a good value (even a 99-cent toy is a waste of money if it breaks immediately). As the boys get older, I'll expand the concept to other things (e.g., why get an i-Phone when there are less expensive phones that do the same thing?). I know they won't always understand. But at least it won't be a surprise when Mom and Dad refuse to pay $200,000 per year for college (which is probably what private universities will cost!).

Here's a piggy bank I WON'T be getting

I've thought about getting the Money Savvy Pig for the boys when they're older:


Tricia at Blogging Away Debt has posted about some other piggy banks that I might consider too. But here's a piggy bank I won't be getting:


You can't really appreciate how disturbing it is until you see this:


According to PC World, waving a coin in front of the "eyes" causes the mouth to open wide so it can swallow the change. Creepy. Via Super Punch.

Today's Reading: February 27, 2008

• The man who unboiled an egg - Cooking and science actually do go hand in hand, so I'm going to look into unboiling an egg with vitamin C and add it to my list of kitchen experiments to do with the kids when they're a little older. Via Neatorama.
• 5 Steps to a DIY LifeLock at Master Your Card - This is a handy guide to protecting your identity (and saving yourself the $120 annual fee that LifeLock charges). Via Frugal for Life.
• 5 Basic Frugal Techniques To Help Control Your Spending at The Digerati Life - This is the first time I've seen a personal finance blogger voluntarily go from very comfortable lifestyle to must-watch-every-penny. SVB shares her strategies for minimizing expenditures as she and her family adjust to having no stable income.
• Great Allowance Idea at Free Money Finance - FMF is thinking about paying his kids to read books. I look forward to reading how it works out for his family.

Finally, there's a printable coupon for $5 off any toy purchase of $25 or more at Target. It's good through October 1, so I've put a permanent link to it in the left sidebar at CFO Reviews. We've already used it once, and I hope many of you will find it useful.

Today's Reading: February 22, 2008

I apologize for the lack of Today's Reading posts lately. I've been so busy that it just isn't possible to take the time to pick out the stellar posts from my Google Reader. Hopefully all of the business will ease up soon! In the meantime, here's the list for today:

• The Secret to Raising Smart Kids - Here's more proof that it's more important to praise your kids for their effort, not for their intelligence. Via DaddyTypes.
• Treat Your Emergency Fund Like an Insurance Policy at Money Crashers - I really like the question, "How am I going to treat my emergency fund?" In fact, I might have to post more about this issue myself soon because I think it's an interesting topic, but in the meantime, go read this post.
• Teach Your Kids About Money With Only 4 Quarters at Frugal Dad - I really like this easy, visual way of explaining how basic personal finance works.
• Baby Steps Series: The Art of Stockpiling at The Mother Load - Amy offers a great how-to that applies not just to grocery shopping, but anything that you have to buy regularly (like toiletries and paper goods).

Today's Reading: February 12, 2008

• Five Ways To Deal With the Diaper Price Hike at Baby Cheapskate - If you have kids in diapers, you should definitely read Angie's post.
• In Bronx School, Culture Shock, Then Revival - The title of the article is terrible, but the content is fascinating. It's all about how a Hasidic Jew is working to turn around a failing NY public school of mostly African American and Hispanic children. Via Neatorama.
• Preparing for tomorrow's work day at Unclutterer - Taking a few minutes to reduce a lot of stress is always time well spent.
• How The Game of Life Teaches Personal Finance at Free Money Finance - I was always more of a Monopoly kind of girl when I was growing up, but I might teach the boys to play Life after reading FMF's post.
• Advice for Fledgling Financial Professionals at Banker Girl - Heidi offers some sound, practical advice that new professionals often don't want to hear.

Today's Reading: January 30, 2008

• Lightened Seven-Layer Taco Dip: A Super Bowl of Flavor at Cheap Healthy Good - This recipe sounds perfect for Sunday. I just hope my boys give me enough time to make it!
• Less Debt = More Freedom at I've Paid For This Twice Already - I completely agree that being obsessive about paying off debt makes me feel freer and more in control.
• Activity #175: Swap your baby food cubes at Rookie Moms - This is a great idea if you have friends with babies at similar stages.
• Beat The Average Investor’s Returns With The Simplest Investment Portfolio at The Digerati Life - I think less is more too, which is why I’ve been considering switching my 401(k) investments to the target date fund.
• What’s Better Than A 20% Return? at All Financial Matters - I really enjoyed the “moral of the story.”
• I won't be leaving my children a penny, says Nigella Lawson - I always admire rich people who think their children need to be responsible, productive people. Via Parent Dish.

Today's Reading: January 15, 2008

• Question of the Day - Kids and Cellphones at All Financial Matters - JLP wants to know what age you think is appropriate for a first cell phone. I'm just glad I don't have to think about this one for quite a few years.
• Advice changes for preventing baby allergies: No good evidence for strategies other than breast-feeding - This is great news for moms who worry about whether what they ate or didn't eat while pregnant and/or breastfeeding caused harm to their children. Via Parent Dish.
• Why people believe weird things about money - This is an interesting LA Times article about choosing status over money. Via The Consumerist.
• Importance of Budgeting Relates to Financial Condition and Habits at Consumerism Commentary - Flexo advocates not having a stringent budget (at least for some people).
• Bought a Diamond in the Last 14 Years? Get Tons of Money From Class Action Settlement at Punny Money - "Tons" might be overstating it a smidge, but I am happy that my engagement ring will get us part of this settlement.
• German apple pancake at How about orange - This looks amazing and I think Marc will love it. (Incidentally, the pasta with cauliflower, raisins and pinenuts was a hit with everyone.)
• Top 12 Uses for Plastic Container Lids at Curbly - I especially like #5.

Today's Reading: January 7, 2008

• Make A List You Can’t Miss at Mapgirl's Fiscal Challenge - Mapgirl offers some wonderful ways to keep your 2008 resolutions front and center.
• How to Save Money for Children at Save to Quit - Some good tips on starting savings for your children, if that's a priority for you.
• How Can A Minor Get Their Credit Report? at The Consumerist - An important how-to if you want to monitor your kids' credit reports.

Around and About the Blogosphere - September 8, 2007

Here are a few recommended reads from my own weekly reading of blogs and beyond:

• How to Keep Your Kids From feeling Deprived in a Frugal Family. at Financing the Dream
• Fresh Baby: Cool School Lunches at Clever Parents
  
• Making Change a FOREVER thing. at Craig Harper.com - Good advice!
• Being a Great Mom to a Toddler at Parenting.com - These "7 surprising skills you need" are so true!
• Feed Flowers Sprite & Other Frugal Tips for Cut Flowers at The Frugal Duchess - I'll have to try Sprite to make my flowers last longer.
• Can You Solve This Math Problem? at The Dough Roller
• Why personal finance is like driving a car at Gather Little by Little
• 30 Happiness Tips: Program Your Life For Optimum Enjoyment at Dumb Little Man
• Kitchen Envy at Frugal Babe - I too would love to remodel my kitchen but it's simply not high on the list of financial priorities at the moment. I love the discussion of spending priorities!
• Spicy Fig Orange Microwave Jam Recipe at Simply Recipes - It's a recipe for jam made in the microwave - seriously. Via Yum Sugar.
• Help Your Kids Find a Healthy Identity at Parentwonder
• Back to School: What not to send at Slashfood
• What Do You Do If A Credit Card Employee Calls You? at Blogging Away Debt

Note: Next week, I'll start posting daily reads in order to keep the list a manageable size.

Around and About the Blogosphere - August 25, 2007

Here are some posts that I found interesting this past week:

• Savings Contract at Blunt Money - She agrees in writing to match her son's college and car savings.
• Getting Rid Of Clutter - Stopping The "But I Paid For This Already!" Syndrome. at My Two Dollars - David makes a wonderful point about de-cluttering: "Just because you paid for something does not mean it is bringing any value to your life"
• How to Make Brown Sugar at About.com:Frugal Living
• Unusual Uses for Ice Cube Trays & My Ice Coffee Recipe at The Frugal Duchess
• Sibling rivalry: "I want those pajamas" at Parent Wonder - We won't be doing the "bought something for one kid, must buy something for the other kid" thing either (probably).
• Activity #323: Alter your board books at Rookie Moms

Savings for Your Child

This post over at The Simple Dollar about starting a savings account for a new baby suggested putting away $5 or $10 a week for the child until adulthood. Trent did the math, coming up with numbers between $9,000 and $39,000, depending on the amount invested, the type of investment, and the age of the child when the account is given to him.

Since Alex and Tyler are still so young, I haven't quite thought through the system I want to use to teach them to manage their own money. I do plan on giving them an allowance, and teaching them to give, save for both short-term and long-term goals, and to spend wisely. But in the meantime, I'm not putting aside money for them to have when they're older. I'm taking any money that I'd give them and putting it in education funds.

But what I have done is open UTMA accounts for them, using money that was given to them or to us to spend on them. Marc and I agree that we can afford to buy the boys everything they need, and they have more than enough toys to play with. The best gift we can give them is to invest the money and let it grow into a much bigger gift than the original. Because the money is in a UTMA, each child will gain possession of his account when he turns 21. I hope that by then, wise money management practices will come naturally to them.

I like that what Marc and I are doing requires no extra investment on our part. We can continue to devote all of our savings for our children to their education; yet when they turn 21, they'll have access to a substantial sum of money that can help them buy a house or pay for grad school. Other ways to save "free money" for your kids are:

• Sell their gently worn clothing and used toys and books.
• Sell your own clothing and books if you're not wearing or reading them anymore.
• Take the money you would normally spend on holiday and birthday gifts for your kids and invest most of it - especially if they're too young to know the difference.

Teaching Your Child to Delay Gratification

Life is so hectic that delayed gratification is not as high on my list of priorities as I wish it could be. When I tell Alex that he needs to wait, I do it out of necessity rather than as a teaching tool. However, I do think that delayed gratification is extremely important and I really like the experiment mentioned in this letter at All Financial Matters from a mother to her daughter about saving for retirement:

When you were a little girl I did an experiment with you. You didn't know about it. I put a marshmallow on the table and told you that if you waited for 10 minutes until I got back and didn't eat the marshmallow while I was gone, I'd give you two marshmallows when I returned. But if when I came back you had eaten the marshmallow, I wouldn't give you a second one.

What did you do? You waited until I got back. And then I gave you two marshmallows which you promptly devoured with a big grin on your little face.

I'll probably wait until Alex is a little older to do this with him, but I think I'll do it repeatedly over time (varying the reward) to reinforce the point that good things are worth waiting for.

Note: The letter is long but worth reading and using as a model for your own letter to your children.

"We're on a Budget"

I'm not sure where I read this terrific idea - probably one of my wonderful weekly Dollar Stretcher newsletters. If you don't want to buy what your child is asking for but don't want to lie and say you can't afford it, instead say, "We're on a budget." Not only are you telling the truth, you're also teaching your child the important skill of money management. I already use the phrase with Alex even though he's too young to understand, and I'll be using it for many years to come.

Gerber Life Insurance: Is it Worth the Money?

Even before Alex was born, I'd see those ads for Gerber Life Insurance and think how absurd it was. After all, children don't need life insurance because no one's depending on them - especially not term insurance. But I recently received a solicitation for Gerber's Grow-Up Plan, which is a whole life policy. Since we'd recently increased our own life insurance policies to provide for Tyler, I was intrigued.

A whole life insurance policy covers you for your entire life, unlike term insurance, which only covers you for a specified period. A whole life policy also builds cash value - the insurance company takes a portion of your premium and invests it. A whole life policy is considerably more expensive than a term policy, which is why most finance experts don't recommend them.

The Gerber Grow-Up Plan got my attention because the premiums start low, due to the young age of the insured, and stay the same for the duration of the policy. But when I calculated the cost of a year's premium on the maximum $35,000 policy for two-year-old Alex, it came to $305.76 (the monthly premium is $25.48). The policy would increase to $70,000 at age 21 and $350,000 at age 28. $305.76 per year for $350,000 of whole life coverage is a pretty darn good rate. Estimated quotes for a comparable policy from this aggregator are all over $1200 per year. And at least one expert feels that Gerber's rates are generally competitive.

However, the bottom line seems to be that the amount you'd pay out over the years to get to a $350K policy for just over $300 per year makes this investment a poor choice. As this Smart Money article points out, $100,000 in today's dollars isn't going to have the same value in 30 years. Additionally, whole life policies are generally not a good investment vehicle - in other words, the money paid for the premiums could be invested in other vehicles with a much better return.

As an example, if I were to buy a $35,000 policy at $305.76 per year for Alex right now, I'll pay a total of $7949.76 over the next 26 years. Gerber doesn't say on their website how the cash value will be calculated or what the rate of return is, only that "The plan accumulates cash value and will continue to do so as long as premiums are paid. After 20 years, the cash value is equal to or greater than 100% of premiums paid." So that's a cash value of at least $8,000 after 20 years. I'm guessing this is a generous estimate, but I'll assume the money doubles in the next 6 years and that after 26 years, when Alex is 28 and the policy value increases to $350,000, the cash value would be $18,000.

But if I took the $305.76 and instead of buying the whole life policy, made monthly contributions of $25.48 to a mutual fund with a conservative annual growth rate of 8% , I'd have over $26,000. If the mutual fund grew at the S&P 500's historical growth rate of 12%, I'd have over $54,000. (And I'd definitely invest the money in an S&P 500 index fund.)

My conclusion: Gerber's Grow-Up Plan is not worth the money.

But don't forget to take the money you might have spent on a life insurance policy for your child and invest it in a tax-advantaged education account like a Coverdell ESA or 529 plan instead!