Money Night Talk

Rebuilding from our financial crisis, the importance of good financial education is becoming more widely embraced. I often wonder how we got to this dismal state of financial wherewithal in the first place. Logically, we shouldn’t struggle with money as much as we do. It would make sense that tried and true behaviors were taught and carried through the generations.

Unfortunately discussions regarding money are often taboo or only superficial at best. In my book Wealth Is a Choice, Principal 16 is titled appropriately - Share the Wealth of Experiences (good and bad). I believe, as probably most of us do, that we have much to share and learn from others in order to make better decisions with money. We just need to do it (share) effectively.

Jean Chatzky, financial journalist and JumpStart member, is hosting a National Money Night Talk for Thursday September 16th leading the way for parents and children to talk about money. She’s encouraging everyone to go to www.moneynighttalk.com for helpful videos, material and dialogue starters. The information is age specific, having a “Tips for the Talk” section with great resources for middle school, high school and college.

I spoke with Jean about the event and she is genuine in her effort to increase the financial education around the country. She personally wrote the material herself, and will be reviewing the welcomed feedback at www.moneynighttalk.com. Her latest book, Not Your Parents’ Money Book, was largely written through her discussions and experiences with students. She’ll be using and sharing the information learned tomorrow night to help improve future events. So please be sure to share your thoughts and ideas with her. Teachers can use the opportunity as an excellent homework assignment.

Financial security is important, and especially to Michigander’s as we have more to recover from than much of the rest of the country. Let’s show the country how much we value financial education by visiting the site on Thursday September 15th and committing to having more open financial discussions with our children or parents.

Thanks!

James Studinger
Vice Chair – www.mijumpstartcoalition.org
Author – Wealth Is a Choice
www.jpstudinger.com

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Many who make good decisions with their money were somehow influenced at a younger age. Parents can foster future millionaires, or miss the opportunity and run a greater risk of developing long term dependents.

I spoke to Lee Rogers, a fellow member in the Michigan JumpStart Coalition, a non-profit charged with bringing financial education to our youth. “Most kids aren’t learning what they need to in order to succeed financially in life, and parents are missing a perfect opportunity to help them learn”.

The summer break is an ideal time to help your children establish lifelong financial habits.

One of the best methods is to lead by example
Take your kids shopping and talk with them about why you stick to a budget. Compare prices, and demonstrate how to find bargains. Tell the importance of investing, and the power of starting early. Show them how you invest for retirement. Talk about college costs. If you are helping with their education and are investing into a 529 plan, show them how it works and what you might expect to get from it.

Use the Lemonade Stand and other entrepreneurial endeavors as a teaching moment
On my way home yesterday I saw a lemonade stand destined for losses. Yes, lemonade stands are born on the basis of profit. You take a very low cost ingredient, mix it into water, and fill it in a cup for a huge profit margin.

Rather than the typical folding card table with a scribbled picture taped to the front, this stand looked like a miniature street market vendor. Cute, but is it necessary? I went on-line when I got home, and that model cost upwards of $200. That takes a heck of a lot of glasses of lemonade to make a profit.

No matter how small the entrepreneurial endeavor your child might partake this summer, use it as a first rate lesson on making a profit. I’d even recommend going so far as to collect some of their earnings as cost of good sold, or even rent for equipment. It doesn’t have to be much, but it helps identify natural business processes.

Give children incentives to save their money
Steve uses an incentive similar to company 401k matching. “I match any portion of their earnings that they put into the bank account. Once in the bank, it’s deemed as long term money, to be used for college years. One child utilizes the match more than the other, but it gets them to save more than they would otherwise”. Some parents impose a mandatory savings rate between 20% and 40%.

Use allowance or chores to teach work ethics and financial reward
Some parents give an allowance as building a family unit, where they all share in the work and they all share in the bounty. I like to also offer opportunities for special jobs or home projects. You can pay children equally for a job well done, and other times pay them separately based on how much each child did. It shows them that there are different ways to get paid, demonstrating the advantage of a concerted team approach or individual commission.

Teach them the value of property, and the cost of replacing it
Joan told me a story about her son who ruined the flowers in her front garden. “I made him go to his piggy bank and take the money out to replace all the flowers. He hasn’t played in my flowers again.”

They are not too young to start investing
Jonathan explained how he gets his kids to appreciate investing. “I encourage them to invest their earnings into a Roth IRA, and then I give them some spending money in return. If investing in stocks, make it interesting or you’ll lose them. If they are into technology and games, look for stocks in that field. Compare a few different companies and decide which one makes the most sense.”

Instead of giving money as a gift for his kids or their friends, he gives stock. “I had my first brokerage account at age 13, you can’t start too early.”

James Studinger is the owner of JPStudinger Group, a Financial Advisor firm in Bloomfield Hills MI and author of Wealth Is a Choice and Vice Chair of the Michigan JumpStart Coalition. He offers securities and investment advisory services through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with JPStudinger Group. www.jpstudinger.com email to james@jpstudinger.com. 248-643-6550

Step In with the Current of Financial Education!

I’m from the U.P. and love to trout fish. As a young boy, I learned how to navigate my way through rivers where much larger men were pushed underwater. My dad taught me how to use the current as a key catalyst to help me get to where I was going, while others dismissed the current as important or even tried to fight it.

The current for financial literacy is definitely flowing, and gaining speed. We have Money Smart Week, National Financial Capability Challenge, Obama’s Declaration for April 2010 to be Financial Literacy Month, and now Michigan House Representatives have declared April to be Youth Financial Literacy Month (summarized below).

River currents alone won’t catch fish, but they can help to take you to the place where fish are. We can use the financial currents to bring awareness and real improvements in others lives, helping financial education become mainstream.

House Resolution No. 246 - Youth Financial Literacy Month - was sponsored by Michigan House Representatives Scripps, Bolger, Robert Jones, Kandrevas, LeBlanc, Liss, Lund, Mayes, Neumann, Rogers, Tlaib and Valentine.

To summarize from the bill, it encourages the informed use of credit and other financial products and services to beneift individuals and business for a better future. It recognizes that when these sklls are learned early, it will encourage personal responsibility and the ability for all income levels to achieve more in life. It recognizes the difficulties of the past decade financially for many people. Our youth are our greatest assets, and at the core to the solution is through increased financial education so that our youth are better prepared to succeed.

As stated in the resolution, it ...encourages all citizens to participate in the aims and goals of this effort by raising public awareness about the need for increased financial literacy in our schools and among our children.

Step in the water and use the currents in your job or organization to help further the cause of all your hard and important work.

I learned early on that it’s much easier to catch fish when your head is above water!

James Studinger
Vice Chair – Michigan JumpStart Coalition
Author of Wealth Is a Choice