Welcome to today's live chat! Our expert on teaching kids about money -- and the editor of Kiplinger's Personal Finance Magazine -- is Janet Bodnar. She's here today to help you with Thanks for joining us, Janet.
My pleasure. Happy "Teach Children to Save Day."
Janet, my 7-year-old daughter has been asking how much money we have and I'm not sure how to respond. Usually I just say, "We have enough to pay for what we need." What do you suggest?
Apologies -- that was a question from Margaret in Fla. But please, go ahead, Janet.
Actually, that's not a bad idea. You don't have to give kids all the details of your personal finances, Margaret. You could tell your daughter that you have enough to pay for your needs and some left over to save or share.
I would certainly wait until they're old enough to understand--certainly not yet. If you plan to use the money to pay for their college, you could tell them then. Or you could simply wait till they're 21. The important thing is to give them a good basis in managing money so that they don't squander it when they get it.
I think you should do the same thing you'd do if you were looking for a low-cost account for yourself--start with credit unions and community banks, which tend to have lower fees or be more friendly toward kids and/or small accounts. Also, you might try Young Americans Bank in Denver, which is geared exclusively to kids and handles accounts nationwide.
Good for your son! You know, he can't do it totally without mom and dad because you'll need to set up a custodial brokerage account for him. One good account for kids is ING Direct's Sharebuilder program, with no minimum deposit and no maintenance fees. I'm not aware of a good kid-friendly source of investment advice, but my Kiplinger colleagues can suggest a source that might help. Also, try the bibilography of finance books for kids at econkids.rutgers.edu, sp
onsored by Rutgers University.
Now that I think of it, Bob, you could also try my book, "Raising Money-Smart Kids." It's written for parents, but it's definitely kid-friendly for children your son's age, and there's a whole chapter on investing.
What your son might enjoy most is finding like-minded peers through this organization.
I've heard of it, but I haven't actually tested it out so I can't offer an opinion. I do know that there are a number of Web sites and apps that offer this kind of service. Sounds like a future
topic for one of my "Money-Smart KIds" columns on kiplinger.com.
One good teaching tool for kids that age is a reality-based online game that gives them an occupation and an income, and then has them make real-world decisions on things like buying a house, getting a mortgage, buying a car, saving for the kids' college and all the other decisions families have to make on a budget. You could certainly find such a game through teacher resources or through the JumpStart Coalition for Personal Financial Literacy. Other teaching tools I like for kids this age are the Stock Market Game, and Visa offers a couple of good video games--Financial Soccer and Financial Football--that deal with a wide range of financial info.
No, not specifically for chidlren. But I do know that Kiplinger publishes personal finance materials for
military families, so that might be helpful.
Your question is a little confusing, Tina. If you co-sign for your kid's credit card, he can start compiling a credit record on that account if he's younger than 21. But I don't generally recommend that a parent co-sign because your credit record is also on the line if he screws up (my Kip colleagues can refer to a good Ask Kim column on this). If your son learns how to balance a checking account and is a good money manager, he can apply for a card on his own when he's 21 and he will be fine. That's what my three kids did.
Good question, Mindy. Has your daughter ever actually raised the subject with you? If she does, you could tell her a variation of what you just said in your question--that you have more money than some but not as much as others, or that you have enough to live comfortably but that you still have to parcel out your money to lots of different things--living expenses, college savings, etc. Just keep your cool if the subject comes up, answer matter-of-factly and give her a little more i
nfo beyond the "rich" word.
Here's a question we got emailed to us: "like to hear Janet's thoughts on giving kids debit cards linked to PayPal that you can add to when chores are done, etc."
I know that debit or prepaid cards like this one have been getting a lot of publicity lately, but I just can't warm to them. There are often a lot of fees involved, and when you automatically put money onto a card it isn't real to kids--they just assume that when the money runs out, mom and dad will top up the card. I think kids should start out on a cash basis and move on to a bank account with a real debit card when they get older--late teens or before they go to college.