MONEY Kids and Money

The High School Class That Makes People Richer

Graduates with $$ on their caps
Mark Scott—Getty Images

Kids really do benefit from learning about money in school, new data show

Most experts believe students who study personal finance in school learn valuable money management concepts. Less clear is how much they retain into adulthood and whether studying things like budgets and saving changes behavior for the better.

But evidence that financial education works is beginning to surface. Researchers at the Center for Financial Security at the University of Wisconsin recently found a direct tie between personal finance classes in high school and higher credit scores as young adults. Now, national results from a high school “budget challenge” further build the case.

Researchers surveyed more than 25,000 high school students that participated in a nine-week Budget Challenge Simulation contest last fall and found the students made remarkable strides in financial awareness. After the contest:

  • 92% said learning about money management was very important and 80% wanted to learn more
  • 92% said they were more likely to check their account balance before writing a check
  • 89% said they were more confident and 91% said they were more aware of money pitfalls and mistakes
  • 87% said they were better able to avoid bank and credit card fees
  • 84% said they were better able to understand fine print and 79% said they were better able to compare financial products
  • 78% said they learned money management methods that worked best for them
  • 53% said they were rethinking their college major or career choice with an eye toward higher pay

These figures represent a vast improvement over attitudes about money before the contest, which H&R Block sponsored and individual teachers led in connection with a class. For example, among those surveyed before and after the contest, those who said learning about money was very important jumped to 92% from 81% and those who said having a budget was very important jumped to 84% from 71%. Those who said they should spend at least 45 minutes a month on their finances jumped to 44% from 31%.

The budget challenge simulates life decisions around insurance, retirement saving, household budgets, income, rent, cable packages, student loans, cell phones, and bank accounts. Teachers like it because it is experiential learning wrapped around a game with prizes. Every decision reshapes a student’s simulated financial picture and leads to more decision points, like when to a pay a bill in full or pay only the minimum to avoid fees while waiting for the next paycheck.

Block is giving away $3 million in scholarships and classroom grants to winners. The first round of awards totaling $1.4 million went out the door in January.

The new data fall short of proving that financial education leads to behavior improvement and smarter decisions as adults, and such proof is sorely needed if schools to are to hop on board with programs like this in a meaningful way. Yet the results clearly point to long-term benefits.

Once a student—no matter what age, including adults—learns that fine print is important and bank fees add up she is likely to be on the lookout the rest of her life. Once a student chooses to keep learning about money management he usually does. Added confidence only helps. Once students develop habits that work well for them and understand pitfalls and mistakes, they are likely to keep searching for what works and what protects them even as the world changes and their finances grow more complex. Slowly, skeptics about individuals’ ability to learn and sort out money issues for themselves are being discredited. But we have a long way to go.

 

MONEY Kids and Money

New Findings About Kids and Money That Your School Can’t Ignore

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For the first time, researchers have directly tied personal finance instruction in high school to better adult behavior. This could change everything.

A required personal finance course in high school leads to higher credit scores and fewer missed payments among young adults, new research shows. These are groundbreaking findings likely to alter educators’ thinking in 50 states.

Until now, researchers have been unable to show consistent evidence that mandatory financial education improved students’ money management skills. With no proof, states have moved slowly on this front—despite encouragement from the president and federal education officials who see financial education as a critical part of the strategy to avoid another financial crisis.

Only 22 states require students to take an economics course, and just 17 require instruction in personal finance, according to the Council for Economic Education’s most recent Survey of the States. While countries like Australia and England have adopted federal mandates for such coursework, the effort in the U.S. is at the state level and has been slow to gain traction.

Critics of financial education have long argued that kids may learn financial concepts but do not retain them long enough to change behavior as adults, and that the power of advertising overwhelms any lessons of frugality learned in high school. Some believe financial education is a waste, and that we are better off using resources to set up third-party point-of-decision counseling.

Now the whole conversation may change. “I hope many people will read this paper and that many more states will adopt financial education in high school,” says Annamaria Lusardi, academic director at the Global Financial Literacy Excellence Center and an economics professor at the George Washington University School of Business.

Looking at students in three states—Georgia, Idaho, and Texas—that recently adopted relatively thorough financial education requirements, researchers tied to the Center for Financial Security at the University of Wisconsin found that young adults 18-22 in those states had higher credit scores and fewer credit delinquencies than students in neighboring states without a financial education requirement.

Interestingly, the first class of students in each state required to take such a course showed little or no improvement in credit score or delinquencies. But each subsequent class made noticeable strides toward smarter money management. This suggests there is a learning curve for teachers and schools, and that they become far more effective with practice.

Specifically, the research showed that three years after high school, students required to take a financial education class had significantly improved credit scores—up 11 points in Georgia, 16 points in Idaho, and 32 points in Texas, outstripping the gains in comparable states. In the third year, all three states also had cut the rate of credit payments at least 90 days late in this age group by 10% in Georgia, 16% in Idaho, and 33% in Texas.

Young adults have been shown to have particularly low levels of financial acumen; they are most prone to expensive credit behaviors like payday loans and paying interest and late fees on credit card balances. This behavior, combined with soaring student debt, often puts them in a financial bind before they earn their first paycheck. A little financial education, the evidence now shows, may go long way.

Read more about kids and money:
4 Costly Money Mistakes You’re Making With Your Kids
3 Money Skills to Teach Your Teen
8 Ways to Teach Your Kids to Be Financially Independent

MONEY First-Time Dad

The One Benefit All Millennials Should Consider Before Accepting a Job

Father and son sharing a meal.

Whether or not kids are on your radar right now, you'd be wise to understand any potential employer's family leave policy, says first-time dad Taylor Tepper.

Just a few weeks after our son was born, my wife was already dreading the prospect of returning to work.

A teacher, Mrs. Tepper received around two months of paid leave from her employer. Her original plan had been to extend that leave for another four weeks unpaid, then return to the classroom for the last couple of months of the school year. But that was before Luke came along.

When he arrived, she couldn’t bear leaving him so soon. Thankfully, her school allowed her to stay a home those extra few months and held her position for the following year. Mrs. Tepper could then nurture our son without fearing for her job.

Most families don’t have this choice.

When Mrs. Tepper accepted her position, neither she nor I considered how much time she would be given if she became pregnant. We weren’t planning on starting a family (best laid plans), and so were more concerned with wages. While we were fortunate to land in companies that support families—I happened to receive two weeks of paid paternity leave—we could have just as easily ended up working for ones that didn’t.

Just 12% of businesses offer paid maternity or paternity leave, according to the Society for Human Resource Management. Another study found that the average maternity leave among U.S. companies that offer it is less than one month and pays the worker 31% of her original salary, as MONEY’s Kara Brandeisky recently noted. Comparatively, mothers in France are guaranteed 16 weeks of fully paid leave.

Millennials may not be overly concerned with President Obama’s recent announcement that he will extend six weeks of paid parental leave to federal workers, but they should be. Let me tell you why…

Why You Should Care

It’s understandable if those who graduated into the Great Recession with a ton of debt care more about salary than anything else, especially considering that this generation has generally been postponing bourgeois life events like marriage and procreation. But with the top end of Gen Y approaching 35 this year, more will likely start building families soon. And if you stay at your job a few years in this crucial span of settling-down time, who knows? You could be making babies.

Heck, some of them—ahem, Luke—arrive unexpectedly.

As Mrs. Tepper and I realized, the option of paid parental leave takes on a lot more importance when you are responsible for the care of an infant.

Without paid leave, you end up with two not-so-great options after giving birth. One: Squirrel up all your vacation time to use and then go back to work when your kid is a mere three or four weeks old. Or two: Add on unpaid time (most Americans, moms and dads alike, are guaranteed 12 weeks through the Family Medical Leave Act) and find other means (savings? credit cards? spouse’s income and living lean?) to replace the income lost that you need to pay the bills.

While taking unpaid time has some big financial implications for you, going back to work too soon has serious drawbacks too. “That initial time to bond with your child, you don’t get that back,” says St. Pete mayor Rick Kriseman, who recently expanded paid leave to city employees. Plus, he notes, “In those first few weeks, you are so sleep deprived. How do you function at work? Do your job normally? Give it your attention and not make mistakes? That’s asking a lot of new parents.”

Paid leave helps families avoid this kind of tough decision. It also has other benefits, illuminated here by the Center for American Progress. For instance, one study by two Cornell University professors demonstrates that paid maternity leave is an important factor in keeping women in the labor market “since it reduces the likelihood that women will quit their jobs in order to take time off from from work.”

Working parents also tend to be happier, more productive, and more loyal at companies that have paid leave policies. Also, paid leave is also associated with better health results for both mothers and newborns—reducing depressive symptoms in moms, increasing the odds that children are immunized, and making it more likely that moms are better able to breastfeed their child for an extended period of time.

What You Should Do

Figuring out a company’s leave policy isn’t always easy. Ask the hiring manager and you risk looking like you’re one foot out the door before you’re one foot in.

Lenny Sanicola, senior practice leader at HR association WorldatWork, says it’s not wrong to pose the question, “but wait until at least the second interview.”

Other options if you’re not comfortable with the straightforward route: Go to the careers section of the company’s website to see if its leave policy is detailed there, suggests Sara Sutton Fell, chief executive of FlexJobs. Check out the company’s review on sites like Glassdoor.com (but keep in mind that what people post there is not necessarily gospel). Better yet, try to find someone in your network on LinkedIn who already works at the company and can do some detective work for you.

As for what’s a generous leave policy, obviously the more paid time you can spend with your kid, the better. But the range varies.

“Because paid leave isn’t required by law in the U.S., any amount offered by an employer is generally a good thing because the bar is so low,” says Fell. “In general the most common range for paid maternity or paternity leave that I’ve heard is anywhere from one week to 16.” Sanicola says six to eight weeks is likely.

Google, the search behemoth with a market capitalization of $350 billion, offers expecting moms a European-like 22 weeks of paid leave; that’s pretty sweet.

Dads are lucky to get any paid time leave at all.

As much as Mrs. Tepper and I like our jobs, chances are we won’t be in them forever. And Luke likely won’t be an only child forever.

That means when it comes time to take on a new challenge, how our new bosses treat expecting and new parents will carry as much weight as the biweekly paycheck. While it might be hard for young childless professionals to appreciate that mindset, they’d be well advised to do so.

More From the First-Time Dad:

MONEY College

How to Balance Saving for Retirement With Saving for Your Kids’ College Education

Parents often find themselves between a rock and a hard place when it comes to doing what's best for themselves and their children. One financial adviser offers a formula to make it easier.

It’s a uniquely Gen X personal finance dilemma: Should those of us with young children be socking away our savings in 401(k)s and IRAs to make up for Social Security’s predicted shortfall, or in 529s to meet our children’s inevitably gigantic college tuition bills? Ideally, of course, we’d contribute to both—but that would require considerable discretionary income. If you have to chose one over the other, which should you pick?

There are two distinct schools of thought on the answer. The first advocates saving for retirement over college because it’s more important to ensure your own financial health. This is sort of an extension of the put-on-your-own-oxygen-mask-first maxim, and it certainly makes some sense: Your kids can always borrow for college, but you can’t really borrow for retirement, with the exception of a reverse home mortgage, which most advisers think is a terrible idea.

The flip side of this, however, is that while you can choose when to retire and delay it if necessary, you can’t really delay when your kid goes to college. Moreover, the cost of tuition has been rising at a much faster rate than inflation, another argument for making college savings a priority. Finally, many parents don’t want to saddle their young with an enormous amount of debt when they graduate.

According to a recent survey by Sallie Mae and Ipsos, out-of-pocket parental contributions for college, whether from current income or savings, increased in 2014, while borrowing by students and parents actually dropped to the lowest level in five years, perhaps the result of an improved economy and a bull market for stocks. But clearly, parents often find themselves between a rock and a hard place when it comes to doing what’s best for themselves and their children: While 21% of families did not rely on any financial aid or borrowing at all, 7% percent withdrew money from retirement accounts.

If you’re struggling with this decision, one approach that may help is to let time guide your choices, since starting early can make such a huge difference thanks to the power of compound interest. Ideally, this would mean participating in a 401(k) starting at age 25 and contributing anywhere from 10% to 15%, as is currently recommended. Do that for a decade, and even if your income is quite low, the early saving will put you way ahead of the game and give you more leeway for the next phase, which commences when you have children (or, for the sake of my model, when you’re 35).

As soon as your first child is born, open a 529 or similar college savings account. Put in as much money as possible, reducing your retirement contributions if you have to in order to again take advantage of the early start. Meanwhile, your retirement account can continue to grow on its own from reinvested dividends and, hopefully, positive returns. Throw anything you can into the 529s—from the smallest birthday check from grandma to your annual bonus—in the first five or so years of a child’s life, because pretty soon you will have to switch back to saving for retirement again.

By the time you’re 45, you will have two decades of saving and investing under your belt and two portfolios as a result, either of which you can continue to fund depending on its size and your cost calculations for both retirement and college. You probably also now have a substantially larger income and hopefully might be able to contribute to both simultanously moving forward, or make catch-up payments with one or the other if you see major shortfalls. At this point, however, retirement should once again be the central focus for the next decade—until your child heads off to college and you have start writing checks for living expenses, dorm fees, and textbooks. Don’t worry, you still have another 10 to 15 years to earn more money for retirement, although those contributions will have less long-term impact due to the shorter time horizon.

Of course, this strategy doesn’t guarantee that your kids won’t have to apply for scholarships or take out loans, or that you won’t have to put off retiring until 75. But at least you will know that you did everything in your power to try to plan in advance.

Konigsberg is the author of The Truth About Grief, a contributor to the anthology Money Changes Everything, and a director at Arden Asset Management. The views expressed are solely her own.

 

 

 

 

 

MONEY Estate Planning

Financially Independent Kids in the Age of Entitlement

spoiled rich kids
Getty Images—Getty Images

Some adult children never become financial grown-ups. That presents a danger to themselves and to their parents.

A few years ago, when I was meeting with a couple who were considering retirement, it became clear that the biggest hurdle that stood in their way was the continued dependency of their adult children. Even though the children were well into their forties, they were still consistently asking their parents for money. This was such a persistent issue that this couple had actually withdrawn money from their retirement plans to support their children.

Luckily, there was a pension to augment their retirement savings; otherwise they would have been forced to continue working. Both spouses were not in the best of health, and working well into their seventies did not sit well with them. I strongly encouraged them to delay retirement, wean their children off economic assistance, and save more while they could.

Looking back, they are in a much better position now, because they took these hard but necessary steps. As is often the case, we may risk losing business by giving advice that’s good but unpopular. However, the road less traveled is often better in the long run for our business and our clients.

Whether they are socialites or feel they are entitled to a never-ending string of handouts, some adult children never develop into “economic adults.” I have found over the years that those clients who consistently work to raise their children as independent, productive members of society often teach frugality, gratitude, and individual productivity. Many feel that one of the best ways to ruin their children is by giving them too much without letting them enjoy the fruits of their own labor.

Our clients want to protect their offspring from the dangers of inheriting too much, undisciplined spending, and today’s overly litigious society. Many financially independent adult children do not plan on inheriting any wealth from their parents. When and if they inherit a more substantial sum, they’re better prepared to handle it having been faithful with their own savings. I encourage our clients to take care of themselves, their church, and charities first. The most important things we can leave our children are values and skills that empower them to achieve independently. Paying for education, providing seed money to start a business, or anything encouraging financial responsibility can be beneficial.

Increasingly, we’re advising clients to utilize trusts and family foundations to ensure their wealth is spent most responsibly. These entities provide safeguards for adult children with protections from themselves and those who might be in a position to take advantage of them. My personal family trust and many of our client’s have provisions where children may withdraw funds for education, medical needs, and basic support. Additional funds are available to the extent they can provide for themselves.

How do we protect against future spouses, business partners, or litigious opportunists taking advantage of our adult children? Revocable trusts established today can become irrevocable trusts when one spouse passes away, protecting the survivor from financial vultures. Irrevocable asset protection trusts serve as another vehicle to protect client interests if threats are more immediate. For those donating significant amounts to church or favorite causes, charitable trusts can provide substantial tax savings.

The Spanish have a saying: “Father merchant, son gentleman, grandson beggar.” We in America express the same thought as, “Shirtsleeves to shirtsleeves in three generations.” Only by understanding the root cause of the problem can we work to develop a plan to thwart this common malady.

———-

Joe Franklin, CFP, is founder and president of Franklin Wealth Management, a registered investment advisory firm in Hixson, Tenn. A 20-year industry veteran, he also writes the Franklin Backstage Pass blog. Franklin Wealth Management provides innovative advice for business-minded professionals, with a focus on intergenerational planning.

MONEY Kids and Money

What Smart Parents Teach Their Kids About Debt

hands holding IOU magnet letters
Getty Image—Getty Images

Steer your kids in the right direction by teaching them these debt "secrets" and backing them up with practical experience.

Debt is a four-letter word, and your kids need to know it. The current public mood on debt ranges between loathing and fear. Nearly 20% of American adults expect to die with debts unpaid and a third of teens — perhaps because they’ve seen their elders saddled with lifelong debts — say taking on debt for college is “not worth it.”

Too much debt is a disaster, no doubt. But a carefully handled loan can help a young person get a degree, and a healthy credit score is crucial to finding a place to live and even getting a job. Steer your kids in the right direction by teaching them these debt “secrets” and backing them up with practical experience.

Credit costs money

You and I know that credit isn’t free, but kids need to understand that borrowing money is not like borrowing a classmate’s pen — unless that classmate charges a fee for lending out pens.

For younger kids and tweens, Northwestern Mutual’s financial literacy site, TheMint, has a simple debt calculator to make this point. Kids can purchase fictional concert tickets, a vacation, a car, or textbooks on credit and see how much they’ll really pay compared to the cash price.

Teenagers need a different spin on this lesson. They may know intellectually that credit costs money, but the allure of a shiny card is strong. I’ve found a quick way to cool off a credit-dazzled teen: Have him or her read a card application’s fine print out loud to you — especially the sections about interest rates, late fees, and rate hikes. Now it’s not just you saying that credit costs money. They’re getting it straight from the credit card issuer and hearing it in their own voice.

Debt can hang on after the thrill is gone

Brooklyn-based educational hip-hop video producer Flocabulary shares the sad tale of Melvin, who racks up credit card debt and wrecks his credit rating over Super Bowl tickets. Lana, meanwhile, does her credit card homework and spends carefully to avoid regret.

The clip shows kids they could be paying for a game, concert, or toy on credit long after they’re over it. For teens, the takeaway is that badly managed credit card debt can hinder their independence by keeping them from getting their own place or car.

Borrow what you need, not what you can get

Make sure your kids understand that if they have good credit, lenders may be willing to offer them a bigger loan than they need, because the more they borrow, the more the lender makes on interest. For young kids, a good analogy is birthday cake. One slice is great, but eating the whole thing will make them sick. As Warren Buffett tells the readers of the Secret Millionaires Club, “Credit cards can seem like an easy way to buy things, but it’s not a good idea to make a habit of using them. The chains of habit are too light to be felt until they’re too heavy to be broken.”

Teenagers can usually grasp the idea of keeping something back. For example, maybe you could get a loan to buy a high-end sports car. But if you take out a smaller loan for a compact car, you’ve got borrowing power in reserve for college loans or unforeseen emergencies down the road.

Real-life practice: Give your kid a loan

Whenever you hear, “Please! I swear I’ll pay you back!” you have an opening for a learning experience. It’s one thing to talk about debt. It’s another to experience the feelings that come with paying month after month on a purchase. If you feel your kids are ready and their request is worthwhile, offer to spot them a loan — with an interest rate, payment terms, and a penalty clause if they miss a payment.

Show them how much the loan will cost compared to the cash price. Put the payment schedule on your calendar so you don’t accidentally teach your kids that repayment is optional. And lend only as much as they need.

Lending your kids money is not without risks. They may decide to go on a chore strike or be stricken with borrower’s remorse. You may even have to temporarily repossess a computer, video game, or other item. But they’ll be smarter consumers and better money managers because of the experience, and they’ll see debt as a tool to be used carefully and not just as a four-letter word.

MONEY Kids and Money

All I Want for Christmas: Frugal Kids

Aesop Fables' The ant and the grasshopper.
British Library Board—Robana/Art Resource, NY Aesop Fables' The ant and the grasshopper. Designed and drawn on the wood by Charles H. Bennett, etc. Originally published/produced in W. Kent & Co.: London, 1857.

How to use the season's gift-giving frenzy to teach the difference between what we want and what we need.

A fable that’s frequently invoked when it comes to personal finance is Aesop’s “The Ant and the Grasshopper,” in which the ant busily spends his summer storing up supplies for the winter while the grasshopper frolics the warm days away, blissfully ignoring that times of need are around the corner. When the cold days arrive, the ant is warm and well-supplied while the grasshopper is ill-prepared and starving.

The analogy to retirement saving is clear. At a recent conference sponsored by Defined Contribution Institutional Investment Association (DCIIA,) Michael Finke of Texas Tech University pointed out that retirees with the highest wealth spend the lowest percentage of their income in retirement, suggesting that it was their innate ant-like frugality that in part helped them create such a large nest egg — not just their good fortune or career success. “The ants build up a habit of thrift, and when they reach retirement, they maintain their lifestyle of thrift,” Finke said. “It’s hard to turn an ant into a grasshopper, but you can turn a grasshopper into an ant.”

I was reminded of this recently when my six-year old daughter presented me a three-page-long Christmas list. The items on the list showed the habits of a budding grasshopper: giant teddy bears that had momentarily caught her eye on a recent shopping trip, “newer” versions of some toy that she already had and had long since abandoned. Very few of them were things that she really wanted—she was merely responding to the power of suggestion and, given a blank slate, had dutifully filled it and then some.

Not wanting to send her and her brother down the path of endless grasshopper-like consumption, I offered to instead get them both just one really big thing for Christmas—a trampoline—and nothing else. Even though this purchase would wind up costing me more, I thought it would teach them about trade-offs and spending on something that would hold its value for years. My daughter agreed in theory, but then found herself still wanting a few things from her list—a Christmas dress, the giant teddy bear. And I found myself caught between wanting to fulfill those desires while instilling in them a sense of ant-like restraint. Going through each and every item and debating whether they were really worth it seemed liked a giant buzz-kill on the holiday season.

That’s when a colleague gave me a brilliant suggestion to tell the kids that they can have four things: something they want, something they need, something to wear, and something to read. I was afraid that they might hate the idea, but they both embraced it, in part because it turned list-making into a categorical challenge, a game almost, and it also preserved their freedom to choose. I in turn was pleased because the framework forced them to prioritize desires, forego some things for others, and yes, distinguish wants from needs. (And also accept the fact that clothing and books are legitimate presents.) It wasn’t a completely ant-like solution, but it wasn’t all grasshopper either. I figure I can float the trampoline deal again next year.

Konigsberg is the author of The Truth About Grief, a contributor to the anthology Money Changes Everything, and a director at Arden Asset Management. The views expressed are solely her own.

MONEY College

How To Get Your (Or Your Kid’s) College Application to the Top of the Pile

Hand putting piece of paper on top of pile
PM Images—Getty Images

Fix this essay, don't answer that question, and don't think the college application process is over when you hit "submit."

Time is running out: As you no doubt know if you’re a college senior (or related to one), college application deadlines are fast approaching. And what you do in the next several weeks could still tip the scales in your favor.

Right now, you’re probably worried that your dream school won’t want you. So maybe it’ll make you feel better to know that schools will soon start worrying about whether you really want them. To tip this balance of power in your favor, you need to think carefully about how to present yourself to each school.

Happily, that’s not as hard as it sounds. Read on for seven application strategies that will make your applications rise to the top of the pile.

1) Find out what your favorite schools care about most.

You’ve heard the debates: The college essay is more important than ever before. No, it really doesn’t matter; it’s all about numbers. A low SAT score isn’t a deal-breaker. Except when it can be. The college admissions process is a total crapshoot. Actually, strategy does matter and isn’t that hard to execute.

The truth is, none of this conventional wisdom is true or false across the board because various institutions use a wide range of criteria and weigh them in different ways.

The good news: You can just look up how your favorite schools do it.

Lynn O’Shaughnessy, nationally-recognized college expert of The College Solution, recommends checking each school’s “common data set.” There, schools assemble a wealth of information about demographics, academic offerings, student life, tuition—and how they weigh different admissions criteria.

The answers may surprise you. For example, at the University of California Berkeley, the essay is “very important,” while class rank isn’t even considered.

Many schools post their common data set on their websites; search for it and then check section C7, “Relative Importance of Common Academic and Non-Academic Admission Criteria.” Or check collegedata.com to compare different schools, O’Shaughnessy says.

2) Narrow your personal essay topic.

“A lot of students do a miserable job of writing their college essay,” O’Shaughnessy says. “This is one of the ways to let a school know more about you, and students often do a very generic or very boring essay.”

The most common mistake? Trying to jam the essay with too much information. “The best essays are highly focused,” O’Shaughnessy says. For example, instead of writing about your love of music, O’Shaughnessy suggests focusing on just one event, like how you overcame stage fright at your senior recital.

Peter Van Buskirk, former dean of admission at Franklin and Marshall College and current president of Best College Fit, an advocacy group in support of students and parents in the college application process, agrees that it’s a mistake to just repeat what’s already in your resume.

“Take me to some part of your life experience I cannot find anywhere else in the application,” Van Buskirk says. “Get people to see the invisible you.”

3) Write shorter paragraphs—with more dashes.

You’ve got your winning topic. Now make sure the admissions officer will actually read your essay.

“The mistake that kids make is they don’t think creatively about their presentation,” Van Buskirk says. “This is a creative process. It’s not an academic process. If they have any level of creativity within them, they need to let it show.”

Start by forgetting what your English teacher may have taught you about writing. A lot of applicants submit personal essays with an ploddingly academic, five-paragraph format, Van Buskirk says. “It won’t hurt, but it doesn’t help,” he adds.

Instead, break up your paragraphs. Try using dashes, italics… even ellipses. Experiment with tone and style.

“What kids need to remember is their applications will be read by tired eyes,” Van Buskirk says. “When a set of tired eyes comes across an essay with three or four paragraphs, 150 words each, that’s dense stuff. Tired eyes wander away from it. It’s important to establish a flow.”

4) Rewrite your response to this question.

Many schools ask some version of the question, “Why do you want to go to this school?” If you could sub in the name of any other school and it would still make sense, throw out the essay and start over. Really.

“Kids tend to just do a boilerplate answer to all of them, like, ‘The academics are great, you’re located in a city, you have great faculty,'” O’Shaughnessy says. “That could describe any number of schools. [Admissions officers] will pick that up immediately.”

Van Buskirk says what the school is really asking with this question is “If we admit you to this institution, what do we get? What do you, the student, have to offer us that is different than the next guy?”

Be very specific and do some research. For example, don’t just say you want to major in neuroscience. Talk about how your volunteer work with disabled children has inspired you to pursue that field and how a particular academic program at the university could help you develop your expertise, Van Buskirk says.

The key is to demonstrate that you have thought about how this particular institution is uniquely able to help you achieve your goals.

5) Either skip this question, or double down.

Some schools, and some financial aid forms, will ask you to list other schools that you’re applying to. This question poses some risk, so tread carefully.

Most schools aim to maximize their “yield,” i.e. the percentage of students admitted who actually attend. So you could gain an edge if a school believes it’s one of your top choices. But if admissions officers have reason to think you’ll go elsewhere—if you reveal a preference for other comparably competitive schools, for example—they may turn you down even if you otherwise meet their criteria.

If your heart is absolutely set on a particular school, you may want to rank it at the top of these lists even at the risk of alienating other institutions. It also can help when it comes to aid because your second or third choices may try to lure you with money. Scott Bierman, president of Beloit College, recently told MONEY’s Kim Clark that his school’s best merit aid offers go to top students who have also ranked Beloit in their top three picks. (That’s why it’s helpful to check that “common data set” and see how much a school considers the “level of applicant’s interest.”)

On the other hand, some experts think ranking a school high on these lists can hurt you even when it comes to merit aid. “The No. 1 choice school will say, ‘They really want to go here, so we don’t have to give them money,'” O’Shaughnessy says.

The upshot? “There is no good that can come to the student in providing that information,” argues Van Buskirk. “My advice to the student, when the school asks, is to leave it blank.”

Sometimes, of course, you have no choice. The Free Application for Federal Student Aid (FAFSA) asks for a list of schools. In that case, you just have to realize that you might be showing your hand. You can try to maintain your poker face by putting the schools in alphabetical order. Just know that admissions officers may still draw inferences about your list.

6) Explain any weaknesses.

Maybe your grades dipped one semester. Maybe you didn’t do as well on the SAT as you had expected. Maybe you got into some trouble at school. Providing an explanation can make a big difference.

“Students need to understand admissions officers are cynics by nature,” Van Buskirk says. “In many applications, the student has an opportunity to complete an optional essay. I strongly recommend the students do that. They don’t want to put the reader in the position of having to piece it together themselves.”

The optional essay is an opportunity to disclose a learning disability, explain other medical or family issues that have impacted your performance, or talk about what you’ve done to make amends after a disciplinary issue, O’Shaughnessy says. Make the essay about “how you’ve overcome the challenges other kids don’t have,” O’Shaughnessy says. “Those are things that can help you get in.”

7) Don’t think you’re done when you hit “submit.”

At competitive schools, your make-or-break moment might not be the day you submit your application, or the day an admissions officer first reads your application, or the day you get moved to the admit list. It might be a moment during the last two weeks of March, called the “move down weeks,” Van Buskirk says.

That’s the moment when enrollment managers often realize they have too many applicants on their admit lists, and they risk overspending their financial aid budgets. Representatives for each geographical region might be instructed to move a certain number of students in their area from the admit list to the waitlist, and the college might reduce the amount of aid it had planned to offer certain students.

“It is at this point when the little things can make a difference,” Van Buskirk says.

Here’s how Van Buskirk says you can stay off the waitlist: First, keep your grades up. Second, keep in touch. If you receive email surveys and other communications that prompt a response, respond. If you have the option of interviewing with an alum, sign up. If you can visit, pack your bag. If you have a question about the school that you can’t answer with some Googling, send your regional recruiter an email.

“A big mistake is the students assume that once the application is submitted, they don’t have to manage it anymore,” Van Buskirk says. “The whole business of predicting who will enroll has become really big business. Kids need to make sure they continue to be alert.”

 

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MONEY Kids and Money

Teach Your Kids Financial Values…Via Cellphone

boy on smartphone in kitchen
Catherine Ledner—Getty Images

A child's first smartphone can be a tool for teaching about budgeting, the value of work, and other important concepts.

After I have helped clients prioritize their financial goals, they commonly ask me a followup question: How do we teach these values to the next generation?

Start early, I tell them. And use a smartphone.

Let me explain. For many children nowadays, a smartphone will be their first valuable possession. They start asking begging for one when they’re around 8 or 10 years old, depending upon how many of their friends already have one.

We don’t know what impact early adoption of technology will have on our children once they become adults. As a financial coach, I see that parents are overwhelmed. New technologies are available every year, making parents feel like Maggie Smith’s Dowager Countess character on Downton Abbey: “First electricity, now telephones. Sometimes I feel as if I were living in an H.G. Wells novel.”

The purchase of a child’s first smartphone is an ideal opportunity for parents to pass on their values to children. I encourage active discussions between parents and children about the family’s intent for the phone, many of which may be reflected in the values below.

Open communication: From the beginning, outline the consequences if a child dodges her parents’ calls or ignores their texts. Talk about how this cellphone is meant to keep the family connected, not just to fuel her social life.

Hierarchy: Parents can exercise their authority through a variety of smartphone parental controls.

  • Check-in at tuck-in: Parents enforce this by keeping the charger in their room or in the kitchen. The cellphone needs to be in that spot when the child goes to bed, thereby preventing distractions from the phone and friends during sleeping hours. One client who uses this system was surprised when her daughter handed her the phone before she left for a sleepover: “I guess I need to check this in,” she said. Success!
  • Geolocation: If a parent would like the security of knowing a child arrived at a destination safely, or technological proof that a kid is being truthful, they can track the phone’s location with an app such as Life360.
  • Setting limits on texting/minutes/data: Some carriers offer this feature with unlimited family plans. Or parents can take the more rudimentary route below.

Wise resource management: What messages do we communicate when we give a kid this unlimited resource without requiring any payment from them? How do we engender a strong work ethic? One way is to subscribe to a plan that charges by the minute or unit. You won’t save money, but your child will learn to budget her resources. You can buy a TracFone, give her a monthly allotment of minutes, and explain she has to buy her own if she surpasses the allowance.

Work orientation: Taking this line of thinking a bit farther, if a child uses up her monthly allotment on a pay-as-you-go plan, she now has a choice. Either she stops talking — which could backfire if she can’t check in with parents — or she finds a way to get more minutes. TracFone minutes can be purchased anywhere at increments as small as $10, so it’s easy for a child to get more minutes if she’s willing to earn the money. Or alternatively, she can ask for minutes as gifts for holidays and birthdays. Either way, the child will need to become resourceful, and it’s never too early to exercise that muscle.

Predictability: Americans love to control our environment. In the financial realm, that often takes the form predictable expenses. In the past, roaming charges could exponentially increase your bill if you weren’t careful. These days, data usage (used for streaming video, sharing photos, or downloading apps when a phone isn’t on a wi-fi connection) is the variable that can quickly escalate the monthly total. Take these variances into account to select a plan that works best for your family, and make sure everyone understands the plan’s overage policies to avoid nasty surprises when the bill arrives.

In sum, a smartphone is an opportunity to teach a child about what really matters. Technology is just like money: It is simply a tool to make us more effective in the important stuff. But children are especially likely to subvert that understanding, mistaking technology or money as the end goal in life. So it is worth the time to guide their consumer choices, and their values, while they are still at home.

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Candice McGarvey, CFP, is the Chief Story Changer of Her Dollars Financial Coaching. By working with women to increase their financial wellness, she brings clients through financial transitions. Via conversations that feel more like a coffee date than a meeting, her process improves a client’s financial strength and peace.

MONEY Kids and Money

Forget College, This Is the Expense New Parents Should Be Freaking Out About

childcare costs are as expensive as college
Eric Meola—Getty Images

Daycare can be just as expensive as higher ed—if not more so, a new Child Care Aware America report finds.

New parents may live in fear of what they’ll pay for their child to attend college—but a nearer-term expense may have an even bigger impact on their wallets, a new survey finds.

Child Care Aware of America’s 2014 report on child care costs found that, in 30 states plus Washington, D.C., the average annual cost of enrolling an infant in a center-based daycare program is more than a year’s worth of tuition and fees at a public college in that state.

If that’s not daunting enough, the report released Thursday also notes that infant center-based child care costs twice as much as the average amount families across the country spend on food, and exceeds transportation costs in almost every region in the United States. And for those with two kids, child care costs in 23 states and D.C. exceed the average housing costs for homeowners with a mortgage.

The report notes that the average cost for child care varies widely according to state. But if you live in the Northeast ($22,513), Midwest ($17,258) or South ($15,409), expect childcare to be the highest single household expense on your budget. Though still expensive in the West ($17,941), childcare there comes in second behind housing.

When the costs were compared to median income for a married couple, New York topped the list for least affordable center-based care across three different age groups: infant care (16% of income), four year olds (13%) and before/after school care for school-aged kids (12%).

Most parents aren’t prepared for these costs, a separate study from Care.com released this April found. Three quarters of families surveyed in that poll were surprised or overwhelmed by the costs of childcare, and 42% don’t budget for it.

So what can a parent or parent-to-be do to get ready for this overwhelming expense? We reached out to Donna Levin, co-founder of Care.com, and Carmen Rita Wong, financial contributor for Babycenter.com, for tips.

Start Budgeting Early

The moment you know you’re expecting is the time to start saving and budgeting, Levin said.

But before you can do that, you’ll need to determine the type of care that best suits your family’s needs and resources. Options range from family-based daycare in someone’s home on the cheapest end ($127 a week on average, according to Care.com) to nannies ($472 a week). Online resources can help you navigate the pros and cons.

Another option that parents-to-be often consider is having one person cut back his or her work hours or take time off. That may save on childcare expenses in the short term, but you need to consider the ramifications in the long-term, warns Wong. Working parents have to weigh the opportunity cost of leaving the workforce—e.g. how much knowledge will you lose? How much potential income growth will you lose? How tough will it be to break back in?

Take Advantage of Tax Breaks

Depending on your circumstances, you might qualify for the Child and Dependent Care Tax Credit. The total credit can be up to 35% of up to $3,000 in qualifying expenses paid to care for a child under 13 while you’re working (or $6,000 for two children), but the exact amount is based on adjusted gross income.

“Many folks land on the cusp of qualifying year after year,” Wong says. “It’s important to realize just how close you are as you may be able to find deductions that can get you under the limit and save you more.”

Also check in with your HR department to see if your company offers a dependent-care flexible spending account. This allows you to set aside up to $5,000 pretax toward qualifying expenses like daycare, preschool and some summer day camps.

(While you’re at it, see if they offer any other child care help, says Levin. “A lot of great employers are providing child care subsidies or discounts to childcare centers.”)

Share in Care

They say it takes a village to raise a child—and as a mom, Wong can attest to the money-saving benefits of establishing a strong social network in your local area. “Though you may save $1,000 a year with all the tax credits, you can save another $1,000 by utilizing neighborhood networks,” she says.

You might be able to find a parenting group in your area on platforms like The Big Tent Network and Meetup. Such sites allow moms and dads to find play dates or learning opportunities, and also let parents establish relationships that can become helpful when looking for child care resources.

Nanny shares are one good example. With this kind of arrangement, multiple families pay for one nanny, therefore reducing the cost of care. Often, nannies will watch the kids at the same time, but families can also establish schedules that are based around each family’s individual need.

Additionally, establishing a connection with parent group is a great resource if the nanny gets sick or is unavailable.

When parents can say, “If you watch my kids while I do errands, I’ll watch yours after school,” it can be really beneficial for all parties involved, Levin says. Kids also love it, because in the long run “they’re just one big play date.”

Read next: 4 Costly Money Mistakes You’re Making With Your Kids

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