I’ve been watching The Parent Test on Hulu over the last couple of weeks. It’s pitched as a competition of parents with specific parenting styles to see which one comes out on top. This shouldn’t be a spoiler, but there’s a lot of “it depends.” My parenting style mixes almost all styles at one point or another. Most often, the parents praise the other parents’ style – the opposite of what you see in most “competition” shows.
The show puts parents and kids through tests to see how they do in certain stressful situations. In episode eight, there was one that caught my eye:
The $20 Hustle Challenge
The $20 hustle challenge is a test to see if your kid(s) could make $20 in an hour without their parent’s help. I KNOW my kids would fail. That is quite sobering, given that I have this website, and they’ve read a number of financial books. Most of the kids that passed this test ended up calling family, friends, or neighbors and asking if they could do something. In one case, it was baking them some cookies. In another case, it was washing an RV.
The successful kids had a mix of four or five kids of various ages working together. One only child was successful, but only because his father failed the test and guided him through the process of coming up with ideas.
I felt that much of the success depended on having a network to sell to. My kids sell popcorn for the Boy Scouts, which is similar, but not the same, as that’s a very controlled situation. We know a few neighbors well enough to try something like this, but I’m not sure my kids would know who best to go to. I imagine that they might try a Lemonade War style lemonade stand.
It’s an interesting challenge. Do you think your kids could pass? If they couldn’t do it in an hour, could they do it in a day?
Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence. He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.
If you’ve read a few basic personal finance articles, you’ll soon come across the power of compound interest. Often, an article will show that contributing a little money consistently from ages 25 to 35 and stopping yields a bigger retirement net egg than contributing from ages 35 to 65. It doesn’t sound like contributing ten years should be worth more than 30 years, but that’s often how the math works.
Whenever I see graphs like that, I think, “If starting ten years earlier makes such a big difference, imagine what starting 25 years earlier would do!”
That’s the rough idea behind baby bonds.
What are Baby Bonds?
Baby Bonds are government-sponsored savings accounts for newborns. The idea is that each newborn would receive a seed deposit from the government, which would grow over time thanks to compound interest. The funds in the account would be available for the child to use when they reach a certain age, typically 18 years old, for expenses such as education, buying a home, or starting a business.
The purpose of baby bonds is to promote financial stability and security for families, particularly those with lower incomes. The hope is that by providing a financial foundation for children, they will be better equipped to pursue their goals and overcome financial challenges later in life.
Baby bond programs are starting to be developed now. Each program has different specific details, such as the amount of the seed deposit, the interest rate, and the conditions for withdrawing funds.
Which States Offer Baby Bonds?
Starting July 1, 2023, Connecticut will be the first state to offer baby bonds. There are a lot of little details, so if you live in Connecticut, I recommend reading the official baby bond documentation. For everyone else just trying to understand how it works, the state will deposit $3,200 at birth into a baby bond trust invested by the Office of the Treasurer.
At age 18, a young adult can withdraw money to start or invest in a Connecticut business, buy a home, pay for higher education, or save for retirement.
The participating young adult must complete a financial literacy course to be eligible for the money. If you are reading this website right now, you will likely have no problem with that.
Typically the stock market returns 8% a year. Using the Rule of 72 (as explained here, the money should double every nine years. That means the $3,200 will likely double to $6,400 and then to $12,800 at age 18 – or $25,600 at age 27. In reality, it may turn less than that because I expect the Office of the Treasurer to invest in very low-risk investments. So I would put the target at between $10,000 and $20,000 depending on when they are withdrawn to be used.
What the Difference Between Baby Bonds and a 529 Plan?
Some states offer to give babies money for enrolling in a 529 Plan at birth. A 529 Plan helps save for college expenses. Typically states will provide a small incentive such as $50 or $100. Baby bonds are significantly more and can be used for much more than just college expenses.
How do Baby Bonds Help Fight Poverty?
Baby Bonds programs help fight poverty by giving young adults a head start. Having assets, such as savings accounts, can help families weather financial shocks and provide a safety net during times of need. Furthermore, by requiring financial literacy courses, young adults will have more tools to lead them to financial success.
It’s important to note that while baby bonds may be a valuable tool in addressing poverty, they are not a silver bullet solution. They must be combined with other initiatives and policies to reduce poverty.
Final Thoughts on Baby Bonds
People can’t depend on the government for baby bonds today. Even in the future, the money to fund the program will need to come from somewhere, which likely means higher taxes.
In the meantime, the only thing you can do is fund baby bonds yourself. Unfortunately, parents don’t typically have thousands of dollars to put aside when a baby is born. It’s often quite the opposite, with many baby expenses coming all at once. It should go without writing that it’s also useless to fight poverty if one has to have the wealth to save for them in the first place.
If you are fortunate enough to have the money, and your kid has some income (when they are older than babies), you may want to look into kid Roth IRAs as a way to do something similar to baby bonds.
Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence. He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.
Decades ago, Schoolhouse Rock famously taught millions of kids how a bill became a law and how parts of speech work. I’m Just a Bill and Conjunction Junction are in the Pop Culture Hall of Fame (if there was one). Don’t forget Three is a Magic Number because it rounds out the three most popular Schoolhouse Rock videos.
However, did you know that Schoolhouse Rock also taught kids about money? It was released in 1994, over two decades after the Multiplication Rock that started it all. It’s not very well-known. When ABC does it’s Schoolhouse Rock! 50th Anniversary Singalong on February 1st, there, sadly, will be no money songs.
I found the DVD of Schoolhouse Rock Money Rock in my library. If you are a Disney+ subscriber, it’s easier to stream it for free. Another option is to watch it on YouTube. The quality of the videos is poor, but better than nothing:
Each of the Money Rock shorts is three minutes long. In about the time that you’d watch a half-hour sitcom, you have a personal finance education. Well, it’s more complicated. The videos go quickly to fit it all in three minutes. The explanation of Dollar Cost Averaging in the investing video is good, but the concept can’t be addressed in only fifteen seconds.
The best thing to do is watch these with the kids and talk about them afterward. My kids had questions about each one. It’s a good hour spent and makes for an easy transition into other Schoolhouse Rock seasons.
Here’s a summary of each episode:
Dollars and Sense
Becky Sue realizes that her ukelele isn’t going to work if she wants to be a country western star. She needs a guitar, amps, speakers, microphones, etc.
The banker is there to help. He explains that if Becky deposits her money, the bank will pay her interest, and she’ll have enough for the equipment in a year.
Becky doesn’t want to wait a year, so the banker explains that she can take a loan and get the equipment immediately. The catch is that she now has to pay the interest.
Dollars and Sense is one of my favorite lessons. Kids learn that interest can either work for you or against you.
My 9-year-old didn’t understand why someone would have to pay the bank interest on the loan. I tried to explain that the bank has to make money. Giving money and just hoping to get paid back in the future isn’t helpful to the bank.
Tax Man Max
Tax Man Max explains taxes. It went quickly, and I had to pause and reply a few times to catch the different types it portrayed: Income, property, sales, utilities, and licenses for dogs and cats.
This does an excellent job of explaining that taxes fund the city, state, and federal governments so that we have schools, roads, train tracks, libraries, police, firefighters, and mail carriers.
There was a quick explanation that people get upset about paying taxes, so they rightfully want to know that the money is being used well.
Finally, there’s a quick explanation of how tax deductions work. While accurate, a one-liner on tax deductions does not provide much education for kids.
Where the Money Goes
Kids learn where the parents’ money goes: taxes, mortgage (house), groceries, car, etc.
This did an outstanding job of telling kids that they can help by saving money on the phone bill, electricity, and even the laundry by not making a mess.
One part I didn’t like is that it mentioned, “If you plan to inherit a million dollars, then there’s no reason to save.” Even in 1994, that may not have been retirement money. You never know what can go wrong with inheritance plans.
$7.50 Once a Week
How does a kid budget his allowance of $7.50 a week? At the beginning of the week, he feels rich.
He budgets an ice cream sandwich after school lunch at $0.50 a day or $2.50 per week. However, he spends the rest of money his money too quickly. He missed opportunities to compare prices and save money.
The kid decides he can do other jobs to make some more money from his parents.
Tyrannosaurus Debt
Why do kids need to learn about the National Debt? I’m not sure.
My kids had questions, and I explained that we borrowed money and should pay it back. However, I didn’t want them to be concerned that the United States owes 31 trillion dollars. Japan’s GDP to Debt is twice the United States. I also didn’t want them to think it was okay to borrow money and not pay it back. It’s probably best to avoid this topic with kids.
Despite the success of I’m Just a Bill, there are many adults who don’t know how a bill becomes a law. Nonetheless, it’s videos like this (and I’m Just a Bill) are useful tools to send to adults. As a bonus, Bill from I’m Just a Bill appears at the end.
This for That
This episode is about the history of how bartering worked with cavemen.
It’s hard to trade yaks for cows because they are big and bulky. Shiny shells are easier.
Mesopotamia invented metal coins. China invented paper money. Columbus bartered beads with Native Americans.
We still barter today. Sports teams barter players, and kids barter Pokemon cards.
Walkin’ on Wall Street
A pigeon teaches kids to buy low and sell high. Using your money to make more money is called an investment. Kids learn about what a stock is. There’s a very quick explanation of Dollar Cost Averaging.
One fun part of this video is that the pigeon gets stock quotes in fractions from a newspaper. Nowadays, stock prices are in decimals, and I don’t think papers publish the prices.
The Check’s in the Mail
Overall, this episode wasn’t very useful. We don’t use checks too much nowadays. We use electric transfers, debit cards, or credit cards.
There’s a little interesting part about how your bank transfer money through a central bank to the receiver’s bank.
Final Thoughts on Schoolhouse Rock Money Rock
To write this article, I sat down with my kids to watch it for the second time. I put it on for them around two years ago. My 10-year-old remembered it well, but my 9-year-old did not. I think it’s helpful for this age group because they asked questions, and we could discuss. The discussions were quick, though – they wanted to move on to the next one.
I don’t know if that’s a sign they were looking forward to the next one or if they just wanted to plow through them and get to another activity they enjoy more.
Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence. He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.
I love whenever anyone’s best tips for raising money-smart kids. However, Kiplinger’s Personal Finance Magazine holds a special place in my heart. I’ve been reading Kiplinger’s since I was a kid. My mother subscribed to it, and I was interested. She had explained compound interest to me a long time ago. In ancient times (around 1988), banks paid a real interest rate – about 7-8%, if my memory serves. I had some money saved from my paper route and first job at Papa Gino’s Pizzeria, so it seemed like a good idea to learn more about investing worked.
A lot of personal finance is now online (such as this site), but I’ve been a Kiplinger’s subscriber since college. You can get a couple of years of it for around $40, which is a great deal compared to the cover price of a whopping $6.99. I’m all for recognizing the value of financial advice, but that’s a lot of money for 72 ad-filled pages of often out-of-date information. It shows how challenging the print world is nowadays.
Today, I’d like to cover Kiplinger’s tips for raising money-smart kids, spread out over two issues last year. Specifically, I’m talking about Janet Bodnar, who runs the Money Smart Women column. Fortunately, the column covers some fathers with tips about raising money-smart kids. Personal finance should be something for the whole family. My family is a real-life example of it. It’s just that I have a crazy obsession.
Part 1: Kiplinger’s Tips for Raising Money Smart Kids
The article points out that high-net-worth women have jumped into estate planning due to COVID. These families with a lot of money want their kids to know how to handle it. We fit that profile too. However, I’m far from the stage of worrying about how my nine and 10-year-old boys will manage money years from now. I want to help them to build a foundation now rather than be disappointed later. Personal finance is what I know and what I’m passionate about, so I might pass that knowledge on.
The article continues that spending and saving are the two most important things to teach. I agree, especially for young kids. Older kids have more opportunities to focus on earning more and investing. However, schoolwork comes first, so making more has to be about “working smarter” rather than “working longer/harder.” At least investing can be very quick. An automatic investing plan can be set up in just a few minutes.
The next tip was to have younger kids use cash and let older kids use an ATM account attached to a bank – avoid credit cards. This tip is reasonable. Although, my kids have been authorized users on my Amazon card for a few years. They have yet to learn about it and wouldn’t know where or how to use it, but it will help them earn credit whenever needed.
The final tip was that young kids don’t need to know about family income. That’s obvious. Young children are still learning place value, and numbers like hundreds of thousands don’t make much sense.
Part 2: Kiplinger’s Tips for Raising Money Smart Kids
One reader shared a “parent matching” strategy. That’s where a parent will reward a child for saving with more money, similar to how a 401k match works at many companies. Another reader made it simple, “Live below your means.” Finally, one reader stressed the value of saving over earning because you pay taxes on money earned.
Some readers disagreed with the above tip about not giving kids credit cards. Like me, one reader wanted their children to establish excellent credit at a young age. Another reader required kids to pay it off in full every month. I love that last tip, as it builds a habit and establishes the importance of it before the kids are on their own in college.
I found all these reader tips (along with Bodnar’s book recommendation) better than the original article. Over both articles, there are plenty of good tips – definitely worth a few minutes of your time.
Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence. He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.
My kids are just getting old enough for sleepovers and I’m not 100% sure if I’m ready for it. With these cheap sleepover ideas, at least I don’t have to worry about spending a lot of money. There are so many fun things for tweens and teens to do that are cheap or even free. In the end, slumber parties are all about spending time with friends.
Get Prepared
Before we get to the sleepover ideas, let’s get prepared.
If your child is going to someone else’s house, they’ll need pajamas, pillows/pillowcases, blankets, sleeping bags… and some tips on how to win a pillow fight. My strategy is to block first, then swing while their pillow is down.
The Main Event
1. Movie night
Set up a movie marathon and invite friends over to watch some of their favorite films. Pair it with a popcorn bar. Everyone gets to flavor their own popcorn. This great popcorn popper is around $15. As a bonus, you’ve already got snacks covered.
2. Game night
Have a variety of board games, card games, and video games available for everyone to play. Everyone can bring their favorite and the group can vote. You’ll certainly have more than enough options.
I don’t have teen girls, but I’ve seen enough movies to know that makeovers are popular with them. (Err, everything in movies is true, right?) Don’t tell anyone but even my boys have experimented doing their nails. As a bonus nail polish can be used in a lot of other crafts. Don’t forget lipstick, blush, face masks, eye-liner, or whatever make-up things that girls wear that I know nothing about.
5. Craft night
Have a variety of craft materials available for friends to make their own jewelry, bracelets, or other crafts.
6. Murder mystery night
Everyone loves a good murder mystery! This one takes a little planning. I’m sure there are dozens of articles just a quick Google search away to help you.
7. Time capsule
Kids can putting small mementos in a box, write letters to future selves, and then seal it up with a plan to open it in the future.
8. Baking party
Bake a batch of cookies or cupcakes and decorate them with frosting and sprinkles. As a bonus, you can skip the next section: “Snack Time”
9. Snack Time!
Don’t forget to plan a snack time (unless you are doing the popcorn bar from above. You can choose from all the classic sleepover food groups: candy, cookies, chips, and chocolate.
Fun Sleepover Games
10. Scavenger/Treasure hunt
Create a scavenger/treasure hunt around the house. Teams of two teens can solve puzzles and find the next clue until they get to the final destination.
11. Dance Competition
Dancing with friends is always fun, right? If there’s a friend who doesn’t like to dance, they can be the judge!
Dinner Ideas
Every good sleepover involves dinner.
12. DIY pizza
Get together to make homemade pizzas with a variety of toppings.
13. Pot Luck
Each guest can bring a dish that they made before the sleepover party
Sleep Time
14. Indoor camping
Set up tents inside and have a camping-themed sleepover complete with roasting marshmallows. You can create a spooky theme starting with a horror movies for the main event and following up with ghost stories.
Summertime Ideas
If it’s summertime (or you live in a warm area) there are a number of ideas you can explore.
15. Outdoor movie night
(This one may not be so cheap. It’s only cheap if you have the equipment or a friend who does.) Set up a projector and screen in the backyard and have a movie night under the stars. (Projectors are getting cheaper and perhaps a cheap bed sheet can be used.)
16. Pool party
Step one: Buy an expensive pool.
Step two: Have a cheap pool party.
I’m joking with this one. It’s obviously cheating to use an expensive pool. However, if you already have one, might as well take advantage of it.
Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence. He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.
Happy New Year, 2023! Before we completely say goodbye to 2022, let’s look back at what I learned in 2022. It was the first year of Kid Wealth, and it was mostly a soft launch as I tried to figure out what worked and what didn’t. Hopefully, you learned a few things as well.
Moderation in Financial Literacy is Important
If you’ve heard a kid say, “I hate math”, you probably know the worst thing you can do is force more math on them. Financial literacy can work the same way. If a kid is interested in money, you’ve got the green light to go crazy and throw all the resources on this site at them.
My kids know that I write about personal finance. I can get a little “preachy” in my excitement to share what I know. I’ve learned to back off and instead use tools to teach kids about money. A board game or even a television show makes learning about money fun. If you meet resistance, adding one of these “fun financial literacy” activities once a week is a good way to go.
Allowances
When I started the year, I didn’t know much about how to give an allowance. It sounds like it should be simple, but there’s a lot of complexity about whether to tie it to chores and how to guide kids to budget their money. I found that it’s crucial to let kids make money mistakes.
I found that dealing with cash can be challenging regarding allowance. I didn’t often have four one-dollar bills hanging around. It’s much easier to use FamZoo to load a debit card for the kids. They get their allowance every week, even if I forget. I can also set things up to give them a great interest rate to encourage them to save.
There are great general-purpose kid financial literacy books like Grandpa’s Fortune Fables. I can’t get my kids to read that book, but I found one the kids did want to read…
… The Golden Quest caught their attention because it’s a graphic novel. They wanted to read it and got through it in about an hour. It covers many major financial topics at a high level. The bonus with this book is that it helps when I need to clean their room. What’s your awesome stuff, kids? Which stuff isn’t so awesome?
This website is very focused on kids and money. However, it is important to develop skills beyond financial literacy. You may want to read about teaching kids grit. Grit will come in handy if you want kids to become entrepreneurs.
Parents, you might want to look into a kid Roth IRA. The compound interest could be worth millions. Imagine how much more money you’d have today if you saved enough for retirement by age 20 or 25.
Kid Wealth Website Stuff
I learned that people don’t like courses as a giveaway, even if they usually sell for over $150. I tried to get people to sign up for my mailing list, and very few people did. I wonder if other parents are too overloaded with other stuff to make their kids a millionaire. If they are as busy as we are with our kids, then it makes complete sense.
I want to do much more with the main age categories you see on the front page. Stay tuned for that.
Overall, I just scratched the surface of what I want to do with this website. I have many ideas that extend beyond the concept of a simple blog.
Brian MacFarland has reached more than 10 million people on his personal finance journey to financial independence. He’s been featured in the Washington Post, U.S. News and World Report, and Lifehacker.
Decades ago, Schoolhouse Rock famously taught millions of kids how a bill became a law and how parts of speech work. I’m Just a Bill and Conjunction Junction are in the Pop Culture Hall of Fame (if there was one). Don’t forget Three is a Magic Number because it rounds out the three most popular Schoolhouse Rock videos.
