4 Ways to Be a Good Financial Role Model for Your Children

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Your children may not always look like they’re listening, but they’re certainly watching. That’s why it’s important to make sure your actions line up with what you say, especially when it comes to managing your money. Robin Taub, chartered accountant and author of A Parent’s Guide to Raising Money-Smart Kids, said the key to raising financially aware children is to lead by example. “The first step to teaching kids to be money smart is to be a good financial model. We want to be able to lead by example. Our kids are watching and learning from us and they are aware of both our positive and negative behavior around money,” said Taub. Are your actions lining up with your words? Here’s how to be a good financial role model for your children.

1. Shop responsibly.
Show your child how to shop responsibly. Both of you can start by taking stock of what you already have so that unnecessary purchases aren’t made. Once you’re ready to shop, work together on creating a shopping list. Demonstrate how to search for sales and find coupons. Refrain from purchasing items that are not on the shopping list (unless it’s truly necessary) so that your child can understand the importance of exercising self-control at a store. Impulse spending is not only bad for your budget but also sets a bad example.

2. Take your child to work.
Let your child see that you have to work for money. Demonstrate the importance of a strong work ethic and the value of contributing your talents in exchange for a paycheck. Take Our Daughters and Sons to Work Day is a great opportunity to show your child what you do at work. Take Our Daughters and Sons to Work Day is typically held in April each year.

3. Budget together.
Budgeting doesn’t have to be a solitary act. Instead of balancing your monthly budget alone, invite your child to watch you go through the process. Explain how to take stock of how much money is coming in and going out of the household for that month, and how you plan your spending so you don’t run out of money. This will help your child see that your pockets are not an endless source of cash. It takes careful planning and discipline to make sure you’re living at or below your means. If your child receives an allowance, this is an additional opportunity to show him or her how to budget and spend responsibly.

4. Pay bills together.
Even something as mundane as paying bills can be a teachable moment. Show your child how to write a check and balance a check register. There are plenty of downloadable and printable check registers. If you prefer, you can also keep track of your banking activity on an Excel spreadsheet. Also explain the importance of paying bills on time and in full and how late payments can impact your credit score.

*Original article source courtesy of Sheiresa Ngo at Money and Career Cheat Sheet.

Financial Words Parents Should Teach Their Children

Cute little girl is playing with paper money - dollars, isolated over white

Savings: Age 4+
Saving is one of the best topics to introduce at a young age. It’s easy for kids to grasp and can have a huge impact on those who embrace it early. There are plenty of examples parents can use to illustrate, here’s one: Start by giving your child two small pieces of candy during the day. Let them eat one right away and save the other until after dinner. Then each day for a week, give them two pieces but have them save one in a special place. When the week is over, they’ll be excited to have a bag full of candy. Explain that saving money works the same way — when you regularly put a little bit aside, in time it will add up to something big.

Budget: Age 8
A budget is plan that you make to keep track of your money and where it is going. One great way that a lot of parents teach kids how to budget is with “give, save, spend jars.” Whenever the child earns money they divide it between the jars. The “save” jar is money that’s intended for a longer-term goal; money in the “spend” jar can be used any time for smaller purchases; the “give” jar is money that will go to a charity of their choosing. The give jar, in particular, is great for getting kids to think about helping others while allowing them the freedom to choose where to donate their money.

Loan: Age 8
A loan is something that is borrowed, often money, which has to be paid back with interest. Most kids get the basic concept of a loan because chances are, at one time or another, they’ve lent something to a friend or sibling and expected to get it back.

Start by explaining some of the reasons people take out loans. For instance, because it costs a lot of money to buy a house most people borrow money (take out a mortgage) to pay for it. Even kids know that $300,000 is a lot of money, so when they hear that’s the average price of a house they can understand why most people borrow money to cover it. Car loans and student loans are also good ones to discuss.

While taking out a loan isn’t a bad thing, parents need to stress that when you do take on a loan, it’s your responsibility to pay it back.

Debt: Age 8
Loans and debt can be explained together. Like a loan, a debt is money that you owe someone that needs to be paid back. Once again, a mortgage can be a good way to illustrate how debt works.

Interest: Age 8-10
Interest has two sides: it’s either something you pay when someone lends you money or something that you earn when you lend money to someone else. You could explain interest to your child by telling them they could earn interest if, for example, “your sister runs out of her allowance but needs money this weekend. You could lend her $20 but charge her $2 in interest, which she will have to pay you back next week.”  You can also make it into a game to illustrate how it works: Ask to borrow a few dollars from your child’s piggy bank and then set up a schedule to pay it back over the next month with interest.

Explain to older kids how you pay a financial institution interest on a car loan or mortgage each month. Also point out that the financial institution pays interest on deposits you keep in your accounts there.

When kids are older and can calculate simple percentages, have them do some math to see how interest adds up. Show them a credit card agreement that charges 15% interest and have them figure out how much extra money you would have to pay to carry a balance of $5,000 or $10,000 on your credit card, versus if you paid it off right away.

Credit Card: Age 8-10
Credit lets you buy something without having to pay for it right away. For example, if you use a credit card to buy a new bike that costs $200, the money doesn’t come out of your bank account. Instead the credit card company pays for the bike. Then they send you a bill and you have to pay them back the $200. If you don’t pay them back right away, they will charge you extra money (interest).  The longer it takes you to pay back, the more money you will owe in the end. While credit cards are necessary to have — kids need to understand that they should only be used to buy things that they can afford to pay off right away.

Parents should also explain how a debit card is different as it takes money directly from your checking account. When you’re at the store and you slide the debit card, explain that the card is taking the money right out of your account at that very moment.

Taxes: Age 10-12
Chances are most kids know the word but few understand what taxes are. Here’s the explanation: Taxes are payments that go to the government for the work that it does, such as improving schools and fixing roads. They’re taken right from your paycheck and the amount you pay depends on how much money you make.

You can also explain to older kids that doing certain things, which have a positive impact such as donating money to charity or installing solar panels on your house, can lower your taxes.

Investment: Age 10-12
An investment is something that you spend money on, which you believe will earn you even more money (a profit) down the line. Kids should know, however, that although people invest in things that they hope will make them more money, it doesn’t always happen that way. That’s why it’s never a good idea to put all of your money in a risky investment, because if you do and the investment fails, you could loose it all.

Stock: Age 12+
A stock is a piece of a company. When you own stock in a company, you own a small piece of its business. Every stock has a price and that price can go up or down, depending on what’s happening at the company.

Stock movements are best illustrated to kids with an example of a company they know. For instance, say you bought one share of Apple AAPL -0.16% stock for $5 . If the company sold a ton of iPhones, which is good for the company, it could make the stock price go up to $8, meaning you would have earned $3 on your investment. On the other hand, if Apple didn’t sell a lot of iPhones and the stock fell to $2, you would have lost $3. Most people don’t own a single piece of a stock (a share) – but tens, hundreds or thousands of shares. And most people also own stock in several different companies. The “stock market” is where people buy and sell (trade) their stocks. There is an actual place where stocks are traded but it can also be done over the Internet.

Learning about stocks can be particularly fun as kids get older. There are a lot of online games and apps they can use to create virtual stock portfolios, which can show them how stock prices move and how much money they would have made or lost if they been dealing with real money.

401(K): 14+
As kids enter the teenage years, it’s a good time to begin preparing them for some of the things they will likely encounter once they enter the workforce, one of which is a 401(k) plan. A 401(k) is a savings account for retirement offered by your employer. The money that you put into a 401(k) is taken out directly from your paycheck, and is intended solely for retirement. You can’t withdraw it until age 59½.

The money that’s put into a 401(k) gets put into different investments. The ideas is that the investments will increase over time, so the money in the 401(k) will grow as well.

Credit Score: Age 15+
Once you plan to give your child use of a credit card, you must explain what a credit score is. Here’s how to explain it: There are three credit bureaus, which calculate your “credit score” or how you use your money. The goal is to have a high credit score. The way to receive a high score  is to have a long history of paying your bills on time. When you don’t pay your bills on time or you have too much debt, your score gets lowered.

It’s important to emphasize that a good credit score will help in the future if you want to borrow money to buy a house or a car. Meanwhile a bad credit score can make it difficult for you to borrow money.

Article Source: Jennifer Ryan Woods for http://www.cuinsight.com/11-financial-words-all-parents-should-teach-their-kids.html 

4 Fun Ways to Teach Your Kids About Money

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Have you ever wished that someone taught you more about money as a child? The sad reality is that many students graduate from college with a degree but are unable to manage their money. Here are some tips to educate your children about money so they can better handle their finances in the future:

1. Talk isn’t cheap when it comes to money.

Dianne Caliman, creative director of The Centsables, an award-winning animated TV series on the Fox Business network, believes talking is key when it comes to money matters with children. She suggests including your children in the family’s money management activities such as looking through circulars and clipping coupons.

She points out that these types of activities are great jumping off points for discussions. Caliman explains that showing real life examples to children fosters understanding and meaningful connections to money management. “Show the kids your bills, and explain how purchases made earlier must be paid for now,” she says.

Caliman also reminds parents to be role models and to ask themselves the following: What messages do you send your children? Are you living beyond your means? Do you pull out the plastic for every purchase? Do you and your spouse worry or argue about money? She advises taking a look at your own money habits, and make any changes where you think necessary. “When you exercise good financial judgment, you are automatically teaching your children by example. That’s a win-win situation for all,” she adds.

2. Make a budget-based allowance.

Bill Dwight, founder of FamZoo.com, suggests giving children an allowance that is based on a very simple budget. “Make a list of the typical things you would expect your kids to buy for themselves over a period of time, plus how much you would expect them to save and give, and calculate an allowance amount to match those clear expectations,” he says. Dwight adds that as your kids mature, you can extend the budget to cover more areas of spending like clothing. This approach helps insure that an allowance is a personal finance teaching tool rather than an entitlement.

3. Practice paying back loans before college.

One way to get practice at paying back a loan is to lend your kids money. Dwight suggests teaching your kids how to manage loan payments by arranging a parent-financed loan for a big ticket item like a laptop or a smartphone. “Direct a portion of their allowance, chore or job payments to paying off the loan each period. By making regular payments over an extended period of time, not only will your kids appreciate the cost of expensive items more, but they’ll take better care of them.”

4. Take on the tough lessons, too.

No one said teaching kids about money was easy. It may take work to get kids on board with the idea. Rod Griffin, director of public education for Experian knows this firsthand by getting a little pushback from his own granddaughter when it came to the topic. In her elementary school class, she has to “pay” for her school books and “rent” the desk she sits in with pretend money she earns through various activities, academic performance and good behavior. What she saves after expenses can be used to “buy” rewards.

Griffin points out that many parents feel ill-equipped to teach their kids money concepts, especially more advanced ones and don’t know what to do. He explains how there are many sources on the web that can help. Griffin recommends checking out Moonjar.com for younger children, because it explains the basics of saving, spending and giving. LifeSmarts.org is geared toward older kids and provides free lessons online via videos and other tools.

Griffin also suggests showing high school and college-aged kids an actual credit report. A sample one is provided on the Experian website to understand the different parts and what they mean. They can see how their financial decisions impact how prospective creditors view their credit history. They get to see how their financial behavior, such as paying bills on time or being late, is tracked and recorded much like a permanent record.

At some point, everyone has to manage their own finances. The more exposure and practice a child gets, the better equipped they will be in the future when they have to make financial decisions on their own. Consider teaching them age-appropriate lessons as they grow to help them develop the skills they need to successfully handle their money.

Here at First Financial, we have a few products and services just for kids so they can start saving for their future while having fun doing it!

  • First Step Kids Savings Account: First Financial’s unique First Step Kids Savings Account is specifically designed for young people, with a focus on education and fun.*
  • Dollars for A’s Program: For every “A” your child earns on their report card, First Financial will deposit $1 into your child’s First Step Kids Account!* It’s a great way to reward your child for doing his or her best in school. It also teaches the life long practice of saving for the future. To earn your dollars, visit a branch location.**
  • Summer Reading Contest: Every summer we have a reading contest where First Financial kids up to age 18 can earn rewards for the books they read, along with a great grand prize!***
  • Student Checking Account: A complete Checking Account for students ages 14-23. It comes equipped with their own personalized Debit Card, has no minimum balance requirements, and more!****

*As of 12/12/2012, the First Step Kids Account has an annual percentage yield of 0.05% on balances of $100.00 and more. The dividend rate may change after the account is opened. Parent or guardian must bring both the child’s birth certificate and social security card when opening a First Step Kids Account at any branch location.  Parent or guardian will be a joint owner and must also bring their identification. A First Financial Membership is open to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties.

**Offer applies only to report cards for most recent school terms. Letter grade “A” or 90%+. No back rewards available for prior semesters or marking periods. Available for First Financial members between 1st and 12th grades. Qualifying report cards must be submitted within 45 days from the date of issue. Child must be present and a $5.00 deposit to a First Step Kids Account is required to receive the Dollars for A’s incentive.  Parent or guardian must bring both the child’s birth certificate and social security card when opening a First Step Kids Account at any branch location.  Parent or guardian will be a joint owner and must also bring their identification. A First Financial Membership is open to anyone who lives, works, worships or attends school in Monmouth or Ocean Counties. As of 12/12/2012, the First Step Kids Account has an annual percentage yield of 0.05% on balances of $100.00 and more. The dividend rate may change after the account is opened.

***Credit Union membership and Savings Account is required to participate. Members up to age 18 are eligible to participate and must complete an entry form. Reader rewards must be deposited to a child’s First Financial Savings Account. Winning reader and 4 runners up will be drawn after the contest ends (September), and will be contacted by the First Financial Marketing Department. Forms will not be posted on the website or located in any First Financial branch before the contest entry period.

****A $5 deposit in a base savings account is required for credit union membership prior to opening any other account. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the Bronze Tier. Click here to view full Rewards First program details, and here to view the Tier Level Comparison Chart. Accounts for children age 13 and under are excluded from this program.

*Original article courtesy by Karen Cordaway of US News.

How to Get Your Child Financially Prepared for College

college-students-awesomeAfter the high school class of 2014 dons their graduation gowns, they’ll be spending this summer gathering dorm necessities, picking classes and hunting for the cheapest textbooks.

One major point of focus should also be signing up for the right student financial accounts, specifically checking accounts and credit cards. With so many choices, it can be confusing for parents and students, but there are simple approaches to getting college-bound kids financially prepared.

Pick the Right Checking Account

When looking for a checking account, parents may be quick to sign their children up to their own banks or to a major bank close to home. However, that approach may not be the best for the college student.

Since college students may need cash for spontaneous occasions, it is important to have an in-network ATM at or near the college campus. Constant cash withdrawals at out-of-network ATMs can amount to plenty of fees. At the 10 largest U.S. banks, the average out-of-network ATM fee is $2.45. Furthermore, the operator of the out-of-network ATM has the right to impose a surcharge, which typically ranges from $2 to $3.

Besides location convenience, parents also have to consider their ability to fund their kid’s accounts. Parents and students should research which financial institutions are around campus and near home to find the one with a student checking account that would allow them to stay financially connected. Parents, you should also make sure that the financial institution you choose has instant transfers during the times you have to transfer money into your child’s account electronically – you don’t want a 1-2 day delay period.

First Financial’s has a great Student Checking Account available for 14 to 23 year old students, which includes:

  1. A free first box of checks, and an allowance of the first mistake being free+.
  2. Free phone transfers to the account by parents.
  3. No per-check charges – unlimited check writing without getting charged after writing a certain amount of checks.
  4. No minimum balance requirements.
  5. No monthly service charge for having the account.
  6. A personalized Debit Card issued instantly in one of our Monmouth or Ocean County branches.
  7. Free Online Banking with Bill Pay++.
  8. Unlimited in-branch transactions.

Sign Up for the Right Credit Card

Credit cards are less attainable by college students since the Credit Card Act of 2009 took effect, requiring anyone under age 21 to provide proof of reliable income to qualify for a card. If a student can qualify for a credit card on his or her own, it is crucial to evaluate spending and repayment habits to maximize any rewards and minimize interest paid.

For instance, a student who will be driving around campus may prefer to get a credit card that offers rewards on gas purchases. Or if a student doesn’t expect to be able to pay off their balances every month, he or she may opt for a card that doesn’t have rewards but carries a lower interest rate.

The more likely situation would involve parents adding their children as authorized users on an existing credit card account. Parents can limit how much their children can spend on their authorized cards, and when the occasion calls for it, they can raise or reduce the limits accordingly. As authorized card users, students can also start building their credit profiles, which can increase their chances of qualifying for credit cards and loans in the future.

Keep an Open Line of Communication

Do your children know what to do in the case of a financial emergency? College students may encounter dilemmas that cannot be solved with the financial means available to them.

Parents should keep an open line of communication that would allow their children to contact them in the event of financial distress, regardless of how bad the situation may be. It’s important for parents to continue providing financial and emotional support, so their kids can focus on the most important aspect of college: their education.

Students need to be financially prepared not only before college, but also post-graduation. Check out some of our graduate products and services that we offer here at First Financial – from a Checking Account to an Auto Loan offer exclusively for recent graduates! 

Click here to view the article source courtesy of Simon Zhen of US News.

*A $5 deposit in a base savings account is required for credit union membership prior to opening any other account. All personal memberships are part of the Rewards First program and a $5 per month non-participation fee is charged to the base savings account for memberships not meeting the minimum requirements of the Bronze Tier. Click here to view full Rewards First program details, and here to view the Tier Level Comparison Chart. Accounts for children age 13 and under are excluded from this program.  + Call or visit a branch to request refund of the first fee incurred. We must receive request within 90 days of date fee is charged in order to be eligible for refund. The eligible fees are NSF, Overdraft, and Courtesy Pay fees.  ++ Bill Pay is free as long as 3 bills are paid through Bill Pay each month, otherwise a $6 monthly fee applies.

Jackson Memorial Students Get Taste of Financial Reality

Tri-Town News article by Andrew Martins:

DSCN0228Financial independence can be a scary thing for young adults who are beginning to make their own way in life after graduating from high school or college. Unexpected costs arise, debt can become bloated, and temptations to spend frivolously crop up every day.

For a group of freshmen at Jackson Memorial High School, the sobering reality of money and adulthood was put on display during an event dubbed the Financial Reality Fair.

“The goal of the fair is to teach the kids the value of money and how to manage their money when they leave high school,” said Issa Stephan, First Financial Federal Credit Union president and CEO. “It is very crucial these days to be financially savvy, and there is a lot of temptation out there.”

Financial responsibility is a subject that Stephan believes should have a bigger focus in public schools. He cited the economic downturn that began in 2008 as a prime example for why such responsibility is imperative for the future.

“I think that since 2008, people are more conscious about money,” he said.

On Jan. 8, students tackled financial issues in a hands-on manner without potentially destroying their credit rating.

“These days, it is easy to get in trouble,” Stephan said. “Twenty years ago, you had to drive to the mall and take your cash to spend it. Now you can be sitting in your bed, clicking yourself away into financial trouble” on a computer.

The idea for the fair, according to First Financial Marketing Manager Jessica Revoir, was based on similar events held throughout the state by the New Jersey Credit Union League Foundation, which sponsored the Jackson Memorial High School event.

DSCN0230Students were initially instructed to choose a career. After each student selected a job, that career’s starting salary after taxes was used as the baseline for a monthly budget. The young adults were informed that some expenses were required, including food, clothes and rent; and some expenses were not required, including gym memberships and vacations.

Stephan said the point was to illustrate the importance of determining what is needed and what is not needed.

“If you move out [of your parents’ home], you have to pay rent and insurance, but people usually get in trouble with what I call ‘variable expenses,’ ” he said. “A lot of people see a smartphone as a fixed cost … but it is not. There are ways to make even a necessity much more affordable in the long run. If you shield the students from reality, they fall.”

Stephan said students were led astray on purpose as a means of letting them see the difference between what they want and what they need.

At the transportation booth, for example, a binder was purposely left open at a page featuring luxury cars and sports cars for purchase, rather than being left open at a page with less expensive vehicles or public transportation.

“We are trying to teach these kids that if they let themselves be manipulated financially when they get older, they can get into some serious trouble,” First Financial Investment and Retirement Center Coordinator Samantha Schertz said.

To Lisa Scott, who teaches honors economics and financial literacy, the fair provided an opportunity for her students to take a more tactile approach to learning the importance of finances.

“This really is experiential learning for our kids because, to them, the class is just the textbook and something they need to graduate, but then they come here and realize they need this to live and get through adulthood,” Scott said.

The fair was a sobering realization that made freshman Claudia Besse take a moment to consider her future.

“I learned that I am very grateful for my parents, for one,” Claudia said. “I never realized that your gross pay is not your takehome pay and that there are so many expenses. Cars are so expensive.”

Scott said those realizations are fueled not only because of the way that financial education is traditionally handled in school, but also because some parents provide everything for their children.

DSCN0223“What I am hearing as the kids go through the fair is they ask, ‘Does that cost that?’ A lot of kids don’t have to pay for the things they enjoy right now … so for some kids, this is a revelation,” Scott said.

Stephan said he and his staff hope the students will take what they learned at the event and apply it to their lives.

“I saw some kids calculating and trying to make smart decisions, and I saw others just not caring as much. And that, in a way, reflects society,” he said. “We need to try to catch people before they get into financial trouble.”

Click here to view the original article from Tri-Town News.

*First Financial is not responsible for any content listed on external websites.

Jackson Memorial High School Students Get Schooled in Money Management

Asbury Park Press Article by Amanda Ogelsby:

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How do you teach teens how much it really costs to live?

JACKSON, NJ — Fourteen-year-old Aylin Torenli of Jackson spent a recent Wednesday morning calculating whether the salary of a dental hygienist would be enough to afford her the finer things of life: a smart phone, upscale furniture, television.

“I didn’t realize how expensive it was,” Torenli said of life’s luxuries that quickly add up. The freshman joined more than 200 Jackson Memorial High School students at a Financial Reality Fair Wednesday that was designed to give teenagers the foundations for a lifetime of successful money management.

After picking a “career” and its related income, students visited various stations where they chose cellphone plans and car payments, looked at housing costs, and calculated quality-of-life expenses like dining out and spa treatments.

“You understand how hard it is to be in the financial world,” Torenli said after meeting with a financial adviser to review her budget. “I give a lot of credit to my parents now.”

Under New Jersey law, public school students must learn about money management, insurance, saving and investing, as well as credit and debt management, beginning by fourth grade.

Public high school students are required by state law to take 2.5 credits of financial literacy and economics to graduate, according to the state Department of Education. That law went into effect in the 2010-11 school year, beginning with then ninth-graders.

The 2008 recession — when financial markets around the world fell following a collapse of the U.S. housing market — triggered the need for such educational programs, said Issa E. Stephan, president of First Financial in Wall, which helped to organize the event along with the New Jersey Credit League Foundation.

“Our mission for the fair is to help the students understand the value of money and how to manage their money, so as they grow as an adult, they’ll be more financially responsible,” Stephan said.

In a country loaded with easy temptations to spend, financial literacy is crucial, he said.

At the spinning “Reality Wheel,” students took a risk at budget breakers like car repairs and accidents.

“We just want to give them a little wake-up call,” said Janice Anderson of First Financial, who talked to students about managing monthly food budgets.

Freshman Tom Del Monte, 15, said the Financial Fair helped him better understand the importance of securing a good job after high school. The Jackson freshman said he was shocked by the high prices of cellphones and food.

“I finally understand the reality of what we’re learning in class,” he said. “I didn’t realize what my parents pay.”

“We hope this (fair) leads to better consumers,” said Lisa Scott, a business, finance and economics teacher at Jackson Memorial High School.

She added: “They’re coming face-to-face with the reality of whether or not that (job) will buy them all the things that they think they’re going to have when they are young adults out on their own for the first time. It is a rude awakening for some of them.”

Click here to view the original article/video source from APP.com.

*First Financial is not responsible for any content listed on external websites.