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Getting Real About Allowances

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Roughly 7 out of 10 parents give their children an allowance, according to a recent survey. On average, children in America receive around $68.00 per month ($814 per year), increased from about $65 per month in ’12. About 1 in 4 children gets $100 or more every month.

More than 50% of parents do this to teach their children that money must be earned. Some parents pay their kids per chore.

Nonetheless, since parents give out the allowance, they should be aware of some of these typical mistakes.

You’re obsessed with how much you’re giving the kids

Parents usually get caught up on how much they pay their kids. However, the amount matters less than the fact that you’re using an allowance as an opportunity to talk about money and how to manage it.

The most basic tool for teaching your kids about money is by giving them an allowance. Use it to get them started on understanding the concept of handling and talking about money, particularly about spending and saving it.

You offer an allowance to your son but not your daughter

While around 2 in 3 men say they received an allowance when they were a kid, only about half of women says the same. Experts say they still see this trend today. All experts agreed that this is highly unfair. Sons and daughters should be treated the same when it comes to getting an allowance.

You give the money with no strings attached

When you give your children an allowance, you should make them save some of it. This teaches them to save over time for items that they want and postpone instant gratification. It will also aid them to develop saving as a practice. It is recommended that children save around 1/3 of their weekly allowance.

 

Benefits of Letting Your Child Have That Lemonade Stand

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We love inspiring children to be creative and passionate. When it’s warm outside, it’s the ideal time of the year for your child to open a lemonade stand! Lemonade stands are loads of fun and they teach children some important lessons.

Lemonade stands can be as simple or extravagant as you’d like. A common folding table and sign will work, or you can craft a custom shop. All you need do is set up in an area with a good amount of foot traffic and offer your goods to thirsty customers.

Here are the advantages children get out of having their own little business.

It exposes them to success

For many folks, the largest motivator is success. Once they have had a taste of achievement, they’ll want more. It doesn’t matter if they enjoy bringing in sales or creating an awesome product, they’ll increase their desire to succeed.

It puts their imagination to work

Designing and constructing a lemonade stand is a lot of work. Children will need to shop for ingredients, choose their recipe, make signs, and make the stand with plenty of appeal and flair. Then they get to use their ingenuity to come up with imaginative ways to draw in customers.

It helps them understand finance

Regardlss what we end up doing in our life, we have to have basic knowledge of finance. With a lemonade stand, they will learn about economics, such as how to calculate costs, how to figure out their losses or gains, and how to set a price. Moreover, they’ll get a true appreciation of the value of a dollar once they learn how hard it is to get one.

It builds independence and self-confidence

Help you can, let the children do all the work and only help by offering advice. You want them to feel a real sense of ownership with this project. They’ll learn how able they are and how hard work can get them where they want to be in life.

How to Open a Savings Account for an Infant

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As a grandparent, you can help reduce some of your infant grandchild’s expenses by opening a savings account for her/him. Health care and college are just 2 examples of expenses that you can provide assistance with by consistently adding to the savings account. In addition, when your grandchild is older, you can aid in teaching them the value of saving by letting them help manage the account. Many banks provide savings accounts that are purposely tailored for kids.

Contact your bank to find out if it has savings accounts especially for children. Make a note of all incentives and benefits that are available and the requirements and minimal balance necessary to open the account.

Call other banks and inquire about their incentives and benefits to open a child’s savings account. Compare your bank’s incentives with the other banks and pick the one that best fits your needs.

Gather the necessary information to open the account. For instance, you need your grandchild’s social security number. If your grandchild doesn’t have a social security number, ask their parents to apply for one as quickly as possible. There are a few financial institutions that let you open an account for your grandchild without it as long as you give it sometime down the line.

Fill out the application and include yourself and/or the parents/guardians if you want them to be on the account. Even though you can visit a bank branch to open the account, many banks let customers fill out the paperwork online. Moreover, you can pick the date that you want your grandchild to gain access to the account on the application. This is very important because if you set it up for college, you want to make sure he or she doesn’t bother the money until then.

The Best Investment Gift for a Grandchild

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Regardless if you have $1 to provide or $10,000, the finest investment gift for a grandchild is to start or give to a 529 savings plan.

“For grandparents who want to help their grandchildren pay for college, these make the most sense. You have a wide range of choices of where and how much you invest, and you can keep control if you want.

More relevantly, your investment increases without tax and qualified withdrawals, for expenses like fees, room/board and tuition aren’t subject to federal or state tax. Some states give a tax deduction if you go with your home-state plan.

In the meantime, saving money in a 529 plan will put little impact on the financial aid. By contrast, if you were to put money into a customary investment account in your grandchild’s name, those amounts would be factored into the expected contribution of the family.

If your grandchild gets a full college scholarship, don’t fret. You can just name another person as the beneficiary. The individual can be of any age and doesn’t have to be a relative.

If you have to cash out, you must pay a penalty, plus state and federal tax on any earnings. This shouldn’t be a deal breaker. The benefits of putting away money in a 529 plan overshadows the possibility that you won’t use the money for college.

There are a few ways to go about giving a contribution to a 529 account. The first is to start a 529 account in your name. You will be the custodian and you can designate your grandchild as the beneficiary. The benefit of doing it this way is control. You can regulate how the money is invested and you can modify the name of the beneficiary at any time.

Teaching Kids About Money and Saving

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Teaching Kids About Money and Saving

 

Your 5-year-old little girl has actually started requesting cash to purchase sweets and also playthings. She undoubtedly has a mutual understanding of the concept of trading cash for things she wants or searchings for, but just what are the essential lessons you ought to show kids about cash and saving. You intend to see to it that she doesn’t mature right into among those youngsters that are regularly plaguing mom and dad for cash, adding charge card debts as a teen, and also not having any concept how you can conserve.

There are 10 basic cash skills that every kid ought to learn prior to they go into the teen years. It’s never ever far too late to discover, however a lot of children are much more responsive to suggestions from their parents before they struck the age of thirteen, compared to after.

Cash doesn’t expand on trees! One of the best known as well as oldest quotes around. It is very important that kids understand from early on that money is a restricted resource, that mama & papa’s savings account will ultimately run completely dry if they keep making withdrawals from it.

People go to function to generate income. Cash is something that should be earned, you are never ever visiting come to be economically protected relaxing refraining from doing anything, as well as expecting handouts from individuals.

Spend less compared to you earn. Many people these days are spending 10 % to 20 % above what they earn, producing a vicious circle of high credit card rates of interest, lengthy hours at the office to pay the bank card & sometimes bankruptcy. The expertise of ways to spending plan your cash appears to have been shed, ensure your kid learns this vital lesson!