Teaching Kids – Matt About Money https://mattaboutmoney.com Simple. Meaningful. Success. Fri, 08 Nov 2019 12:01:24 -0500 en-US hourly 1 9092505 Profitable Ideas: When Enough is Enough, Products That Last a Lifetime, and More https://mattaboutmoney.com/2019/11/08/profitable-ideas-when-enough-is-enough-products-that-last-a-lifetime-and-more/ https://mattaboutmoney.com/2019/11/08/profitable-ideas-when-enough-is-enough-products-that-last-a-lifetime-and-more/#respond Fri, 08 Nov 2019 14:30:47 +0000 https://mattaboutmoney.com/?p=7824

Weekly roundup of some of the best personal finance articles from around the web.

The enough curve: Consider the ongoing costs of your purchases (My Money Blog). When buying more only brings more problems. 

It’s okay to be happy with a quiet life (Becoming Minimalist). Tagging off the last article… And when buying less brings you more of what you really want.

This is the most essential trait you need to land any job (Fast Company). It’s a trait you probably haven’t thought of.

Overcoming 7 hard things about hard money things (Advance Capital Management). How to win the battle between logic and emotion.

The spectrum of wealth (Collaborative Fund). A very insightful scale — where would you place yourself?

Don’t make things more complicated than necessary (The Simple Dollar). Financial decisions run the gamut — from super clear to super complex. For starters, make sure you get the clear ones right.

Your shoes are made of plastic. Here’s why (National Geographic). The problem? Plastic shoes are really hard to recycle. People who really love shoes may not like the solution.

10 brands with a free lifetime warranty (Clark Howard). Spending more for a product that lasts is often the most cost-effective decision.

Thinking about giving money to adult children? Think again (NY Times). It’s what the authors of “The Millionaire Next Door” called “economic outpatient care,” and it can do more harm than good.

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Profitable Ideas: Reaching Maximum Frugality, Five Things to Never Buy New, and More https://mattaboutmoney.com/2019/10/18/profitable-ideas-reaching-maximum-frugality-five-things-to-never-buy-new-and-more/ Fri, 18 Oct 2019 13:30:12 +0000 https://mattaboutmoney.com/?p=7734

Weekly roundup of some of the best personal finance articles from around the web.

When frugality bottoms out (The Simple Dollar). What to do when you’ve maximized savings in all areas.

How to teach your kids about money and help them be financially responsible adults (Money). Solid advice, especially for younger kids—and especially “Let them learn by doing.”

Buying less is better than buying green — for the planet and your happiness (phys.org). After all, if you’re buying environmentally friendly stuff, you’re still buying.

The asymptote of joy and woe (The Aleph Blog). A fancy way of saying, “You need some money in reserve!”

If personal finance feels like punishment, you’re doing it wrong (She Picks Up Pennies). There’s a difference between spending wisely and living a life of deprivation.

Five things you never need to buy new (CNBC). What types of things do you refuse to buy new?

Is customer loyalty costing you money? (The Evidence-Based Investor). If it’s been a while since you’ve shopped your insurance, you might be spending too much.

Dragging out a college degree is a drag on finances (Real $martica). If you have college-bound kids, the more you can prep them for what they really want to study (and what they really want to do for a living), the better. I know, easier said than done, but still..

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Profitable Ideas: The Master Life Skill, Inside the Credit Card Industry, and More https://mattaboutmoney.com/2019/10/11/profitable-ideas-the-master-life-skill-inside-the-credit-card-industry-and-more/ Fri, 11 Oct 2019 13:30:45 +0000 https://mattaboutmoney.com/?p=7718

Weekly roundup of some of the best personal finance articles from around the web.

True long-term career success depends on this most underrated aspect of talent (Fast Company). The ability to wait for a greater reward is considered the master life skill, impacting our careers, our investing success, and so much more.

I worked at Capital One for five years. This is how we justified piling debt on poor customers (New Republic). A disturbing inside look at the credit card industry.

America’s middle class can’t afford its cars (Wall Street Journal). Loans are getting longer, making them more like mortgages.

How to buy clothes that are built to last (NY Times). Tips for slow fashion, which is good for our wallets and the environment.

Don’t make major decisions on an empty stomach (Science Daily). You know you shouldn’t shop for groceries when you’re hungry, but that advice applies to many other situations as well.

When filling out FAFSA, the waiting is the hardest part (A Teachable Moment). A lot of people don’t bother filling out the form, thinking they won’t qualify for any aid. That’s a mistake.

How do we balance what Scripture says about saving with the biblical commands to give generously (Eternal Perspective Ministries). Ideally, this isn’t an either/or decision. It’s all about priorities.

14 wildly different allowance strategies (Budgets Are Sexy). Lots of interesting ideas here. 

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Profitable Ideas: Learning From Your Financial Mistakes, Cutting the Financial Umbilical Cord, and More https://mattaboutmoney.com/2019/10/04/profitable-ideas-learning-from-your-financial-mistakes-cutting-the-financial-umbilical-cord-and-more/ Fri, 04 Oct 2019 13:30:30 +0000 https://mattaboutmoney.com/?p=7693

Weekly roundup of some of the best personal finance articles from around the web.

Biggest financial regrets (The Big Picture). Another way to look at this: 10 years from now, what financial moves are you likely to regret doing or not doing?

The curious economics of being ripped off on holiday (Tim Harford). Don’t let the relaxed mode of being on vacation cause you to let your guard down. Always push back (politely) on crazy fees.

College health insurance costs vary widely. But there are plenty of options (LA Times). How do you plan to insure your college-bound kid?

Face it, we are all expendable: Financial viability countermeasures that matter (Leisure Freak). We shouldn’t live in fear, but neither should we take things for granted. Ideas on playing a good game of defense.

Match your spending with your values (The Evidence-Based Investor). Our unique design drives much of our financial behavior, but that doesn’t mean we have to live at the effect of our not-so-helpful tendencies.

10 reasons people regret buying whole life insurance (The White Coat Investor). There’s a place for whole life, but there are also lots of strikes against it.

How much economic outpatient care is too much? (ESI Money). How to cut the financial umbilical cord.

Why we should stop celebrating consumerism (Forbes). Authentic success is admirable. Owning stuff? Not so much.

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Tough Money Conversations With Kids https://mattaboutmoney.com/2019/10/01/tough-money-conversations-with-kids/ Tue, 01 Oct 2019 13:30:12 +0000 https://mattaboutmoney.com/?p=7688

If you’re going to help your kids learn about money, getting them started is one thing; keeping them going is another. Motivation can wane.

That’s what seemed to be happening the other night with our 15-year-old when he opened up a conversation about investing. Don’t get me wrong. It’s not like the wheels have come off, with him wanting to cash out in favor of buying some stuff right now. But I can tell that some hard realities are setting in. Like the Long time he may have to wait for the payoff.

As I’ve written before (see What If Your Kids Had Their Retirement Funded Before They Finish High School?), we helped each of our three kids open investment accounts last fall and encouraged them to follow the most aggressive strategy offered by Sound Mind Investing, where I work. While we encourage older investors to devote no more than 20% of the equity portion of their optimal asset allocation to the Sector Rotation strategy, I explained to our kids that they have time on their side. As long as they can handle the volatility they’ll likely experience, their long time horizon should give them a great chance of generating impressive long-term average annual returns. (The strategy has averaged over 17% per year since it was launched in 2003.)

Last fall turned out to be a tough time to start investing since the market—and therefore, our kids’ investments—tanked in the fourth quarter of 2018. But I’d far rather have them experience their first steep market decline while they’re still living at home, where we can easily talk about it. And they handled it just fine.  

This year, things have gone better so far. But the other night, our oldest asked me some questions about his account. He wanted to know how long he’d have to wait before he could use some of the money. And then he asked how certain it was that the strategy would generate great returns long term.

The questions caught me a little off guard, and honestly, I was worried that he was rethinking this whole investment thing. It surprised me because he’s been so diligent about adding to his account. On a recent weekend, he earned $70 and asked me to add all of it to his investment account.

I told him he could take his money out right now if he wanted to. It’s his money. And it’s not in an IRA, so there would be no penalty. (Eventually, I’d like them to convert their accounts to Roth IRAs.) I also explained, as I have before, that the returns are not guaranteed. The 17% figure we’ve talked about is an average of how the strategy has performed over the past 16 years. It could perform better than that, and it could perform worse. Either way, there will likely be some very good years and some very bad years.

I then tried to remind him of some of the long-term benefits of starting this investment account at such a young age. If he could build the account to $3,000 by the time he’s 18 and then never added another penny, and if it continued generating a 17% average annual return, by the time he’s 70, it would be worth more than $14 million! Even accounting for inflation, it would be worth about $3.7 million—far more than the average person retires with.

I also told him that when he’s working a full-time job, having this account set up would take away a lot of pressure to set aside so much for his later years. If his company offered a match on a 401(k) plan, which I explained, he should absolutely invest enough to get the full match. But beyond that, he’d be free to save and invest for other things, such as a house or maybe his own business. It would give him options that a lot of other people don’t have.

He took it all in and seemed satisfied with the conversation. Not excited, but perhaps at least content to stay the course.

It’s tough. I get it. It’s a long time to wait for the payoff. But all of this—the questions, the disappointment, the grappling with the patience required—is why it’s so important to get kids in the conversation about money, and in the game with actual money, early. I want them to wrestle with this stuff while they’re still living at home.

I’ve heard that the reason so much of the financial literacy efforts taking place in schools hasn’t been effective is that it’s too theoretical, too abstract. Kids need to have real money involved if lessons are going to stick.

Yes, we need to teach. And we need to do our best to be good role models, which is why we talk about things we’re saving and investing for—things we’re waiting for. But the regular conversations—the opportunities for kids to ask questions and wrestle out loud with some of the things they’re sorting out—may be the most important part of the process. 

What are some steps you’re taking to teach your kids about money? How are you helping them cultivate a long-term perspective? 

Profitable Ideas: Secrets of Superstar Savers, A Richer Level of Happiness, and More https://mattaboutmoney.com/2019/09/27/profitable-ideas-secrets-of-superstar-savers-a-richer-level-of-happiness-and-more/ Fri, 27 Sep 2019 13:30:06 +0000 https://mattaboutmoney.com/?p=7672

Weekly roundup of some of the best personal finance articles from around the web.

The No. 1 thing people with fat savings accounts scrimp on that you likely don’t (MarketWatch). The importance of getting the big things right.

Parents, don’t sacrifice yourselves on the altar of your children’s education (Tim Mauer). Sacrificing to save is wise. Sacrificing by taking on debt? Not so much.

The cost of selling your home (A Wealth of Common Sense). Before buying, make sure you plan to be there a while.

Young people are starving for classes on finance, tips on taxes (MSN). Whether kids grow up learning about wise money management depends heavily on whether their parents are willing and able to teach them.

Marrying money (Humble Dollar). If you know anyone who’s engaged or newly married, may I also recommend the book, Money & Marriage?

We have to let go (Liberty Wealth). The comparison game — it’s hard to avoid, and impossible to win.

Millennials are bullish on Roth IRAs. Many wish they started earlier (CNBC). Is there a young person in your life that you should introduce to a Roth IRA?

Choosing a richer, fuller level of happiness (Becoming Minimalist). A good reminder about where happiness is found.

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Living a Better Financial Story https://mattaboutmoney.com/2019/09/17/living-a-better-financial-story/ https://mattaboutmoney.com/2019/09/17/living-a-better-financial-story/#comments Tue, 17 Sep 2019 13:30:00 +0000 https://www.mattaboutmoney.com/?p=2769

In his book, A Million Miles in a Thousand Years, Donald Miller tells a powerful story he calls, “How Jason Saved His Family.” After returning from Los Angeles, where he took part in a storytelling workshop, Don got together with his friend, Jason, and learned of some trouble Jason and his wife were having with their 13-year-old daughter.

She was dating a guy who was bad news; she was even experimenting with drugs.

With the workshop fresh on his mind, Don made an offhand comment that Jason’s daughter “wasn’t living a very good story.” Jason was intrigued and asked Don to tell him more about the elements of a good story.

You Can Rewrite Your Story

A few months later, Don saw Jason again and things had changed. Jason said his family was living a better story. Now it was Don’s turn to be intrigued.

Jason explained that during their previous conversation he realized that his daughter wasn’t, in fact, living a very good story. And it dawned on him that he hadn’t mapped out a story for his family, so his daughter had chosen her own story, one in which she was wanted, even if she was only being used.

Jason decided to create a better story to invite her into.

Remembering that every good story involves someone who wants something and overcomes conflict to get it, one night he heard about an organization that builds orphanages. He found out that it costs $25,000 to build an orphanage and on the spot decided that his family would fund one even though they didn’t have the money.

It sounded like a story worth living.

It Won’t Be Easy

When Jason told his wife and daughter about it, they were so mad they both refused to talk to him. He realized, of course, that it was a mistake not to have included his wife in the decision. However, after explaining that they weren’t taking any risks – they weren’t helping anyone – and how their daughter was losing interest, his wife got on board.

Soon enough, his daughter got interested. So much so that she wanted to visit the country where the orphanage would be built, take pictures of the kids, post them on her web site, and see if others would help.

Then she broke up with her boyfriend.

As Jason explained it, “No girl who plays the role of a hero dates a guy who uses her. She knows who she is. She just forgot for a little while.”

I love that.

Living for Something Larger

As I read that story, I remembered the words of one of the leading researchers on human happiness, Martin Seligman. He said a meaningful life is one that attaches itself to something larger than we are, and the larger that something is, the more meaning in our lives.

Donald Miller puts it this way: “People can’t live without a story, without a role to play.”

Recently over dinner with my family, Aziz came up in conversation. He’s a boy in Burkina Faso we sponsor through Compassion International. When we’ve sent him extra money in the past, he has sent back pictures of what he did with the money. One shows him with soap he bought for his family. Another time he bought extra rice.

My wife, Jude, mentioned that Aziz has a birthday coming up and one of our kids was quick to suggest that we all chip in to send him some extra money. They were all genuinely excited about contributing to the cause.

We’re not funding an orphanage (at least, not this year!). We’re just sending some money to one young boy who has so much less than we have. But it’s a good step, a very tangible way we can work as a family to invest in something larger than ourselves.

Is Your Story Big Enough?

If you listen to the chatter of our culture, it’s easy to think that our lives are mostly about cars and clothes and where we’re going on vacation this year. It isn’t that such things are unimportant or that we should feel guilty for pursing them. But I think deep down we all know who we are. We know we were made for a bigger story.

We just forget sometimes.

What is it for you?  What’s the bigger financial story you’re pursuing? And what story of making a difference in other people’s lives are you inviting your kids into?

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Profitable Ideas: Whether to Give Your Teen a Credit Card, Pricing Strategies That Make You Overspend, and More https://mattaboutmoney.com/2019/08/23/profitable-ideas-whether-to-give-your-teen-a-credit-card-pricing-strategies-that-make-you-overspend-and-more/ Fri, 23 Aug 2019 13:30:20 +0000 https://mattaboutmoney.com/?p=7541

Weekly roundup of some of the best personal finance articles from around the web.

Give your teenager a credit card? Some financial experts say yes (NY Times). Better for them to learn while they’re still under your roof than to figure it out when they’re on their own.

Don’t wait for a life-changing event to change jobs (Fast Company). Changing jobs can be difficult and disruptive, which is why many people put off even thinking about it—often to their detriment.  

5 simple steps to stop overspending today (Money Ning). Simple, effective ideas for taking more control of your spending.

Four way to cut college textbook costs (Reuters). It isn’t just college textbooks that have gotten super expensive. One of the required books for our high schooler was $50!

To successfully pass down your wealth, first share your intent (Kiplinger). Estate planning is about more than just having the proper paperwork in place.

The trick that makes you overspend (BBC). The pricing behind many companies’ products or services is highly scientific, highly psychological. 

Four essential documents that could save your financial life (CNBC). Do you have these documents in place?

Does your job title really matter? 6 career experts weigh in (Go Banking Rates). In short, yes. Here’s why.

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Profitable Ideas: Millionaire Regrets, Avoiding a Guaranteed Way to Overspend, and More https://mattaboutmoney.com/2019/08/09/profitable-ideas-millionaire-regrets-avoiding-a-guaranteed-way-to-overspend-and-more/ Fri, 09 Aug 2019 13:30:38 +0000 https://mattaboutmoney.com/?p=7516

Weekly roundup of some of the best personal finance articles from around the web.

The five biggest millionaire regrets (ESI Money). When people look back on a long life or the accomplishment of a goal, their insights can help those who are still on the journey.

4 reasons parents don’t discuss money (and why they should) (NY Times). Families that had preserved their wealth past the third generation “talked early and often about it with their children.”

Doing this one thing almost guarantees you’ll spend more money than you want to (CNBC). Parents profit when screen time is reduced — their own screen time, that is.

Are you taking the false first step (Break the Twitch). You can’t buy the accomplishment of your goals.

Why you need a home fix-it fund (Clark Howard). I recommend allocating even more for home maintenance and repairs—at least $200 per month. 

Feeling the burn rate (The Simple Dollar). …and the importance of keeping your burn rate low.

Unexpected benefits of downsizing your home to save money (Educator FI). It’s a big, expensive, inconvenient step, but it sure can pay off.

Don’t assume the default 401(k) contribution is enough (Life Hacker). Automation can be helpful, but this article highlights one of its more important dangers.

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Profitable Ideas: How to Tame Impulse Spending, Solomon’s Money Lessons for Today, and More https://mattaboutmoney.com/2019/07/19/profitable-ideas-how-to-tame-impulse-spending-solomons-money-lessons-for-today-and-more/ Fri, 19 Jul 2019 13:30:18 +0000 https://mattaboutmoney.com/?p=7428

Weekly roundup of some of the best personal finance articles from around the web.

Men spend more on impulse buys than women. Here are 6 ways to break the habit (CNBC). Good ideas for resisting the urge to splurge.

Good information alone won’t drive financial well-being (UCLA). When it comes to managing money well, logic will only get you so far. Here are some psychological nudges that can help.

Wealth doesn’t happen overnight—here’s how to get rich slowly (Gen Y Planning). Doing the work of wise money management.

What your spending habits say about who you are (CBS Money Watch). Marketers are interested in using insights like these for their own purposes, but understanding how our personality or temperament impacts our financial choices can be helpful to us as well. 

Solomon on money (Humble Dollar). Timeless wisdom that’s as applicable today as ever.

The grim reality of millennials who rely on their parents for money (MarketWatch). Ah, no. Just no.

It’s hard to talk about money with your kids. Here’s how to discuss college costs (USA TODAY). The importance of setting expectations early.

What I teach my kids about money (Cameron Huddleston). How one personal finance writer is instructing her kids.

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