MONEY Kids and Money

How to Have the ‘Money Talk’ With Your Kids

Jack Hollingsworth—Getty Images

It's nearly as important -- and can be just as awkward -- as that other talk parents give their kids.

Many wealthy people struggle to talk to their children about how much money they have. What if they divulge too much and the kids blab about it on social media? What if they share too little and the children are overwhelmed by an inheritance?

A 2015 T. Rowe Price study of 1,000 parents found that 72% had at least some reluctance to talk to their kids about money. Most of those parents wished there were more resources to teach their children about personal finance.

This is a great time for families to initiate these conversations, since there may be more of a captive audience in the dog days of summer than during the school year.

Financial advisers can help create a years-long plan to teach children where their family’s wealth came from, how it supports the family’s values and how it will be sustained. Often, the key number – parents’ actual net worth – is not revealed.

When kids are as young as 6, parents and advisers can start by helping them identify bills and coins and understand the purpose of money, said Nathan Dungan, president of Minneapolis-based Share, Save, Spend LLC, which helps people link financial decisions to their values.

When kids are a few years older, parents should help them understand utility bills and set savings goals.

Parents can help kids understand where the family’s money comes from by researching genealogy and talking to older generations.

If there is a family business, get the kids involved.

Sandra McPeak, a Rolling Hills Estates, California-based wealth manager with Wells Fargo Advisors, said one of her clients took his teenagers to visit rental properties he wants to invest in and discussed cash flow and expenses. Another client who owned a factory had her daughter assemble textiles and do odd jobs there during the summer. That daughter now runs her own sports clothing line.

Parents can communicate their values during these outings, discussing how they treat employees. They can also take children on tours of their favorite charities.

Advisers should include their clients’ children in meetings, explaining to them: “Your parents have amassed a certain amount of wealth because they’re very thoughtful in the choices they make with their money,” Dungan said.

Advisers can help parents teach kids about personal finance basics, like stocks, bonds and mutual funds, and how compound interest and inflation affects returns.

The goal is for kids to explore what it means to be wealthy, instead of simply asking if the family is rich, Dungan said.

If parents do not control this conversation, kids will find out information about their wealth in haphazard ways.

Dungan said kids use to check out the value of their homes. Others set up Google alerts so they can use U.S. Securities and Exchange Commission filings to see what their parents make.

“You’d have to be a really super-naive parent,” Dungan said, “to think your kids aren’t at least somewhat aware.”

MONEY College

Why Bank Accounts Are Better Than Credit Cards for College Kids

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Teens with checking accounts are better prepared to handle their finances than ones with access to plastic.

If you want your college student to learn money management skills, get him or her a checkbook instead of a credit card.

In fact, a recent survey of 42,000 first-year college students found that the earlier teenagers had access to credit cards, the less prepared they felt for managing their own money in college.

Those who had checking accounts, by contrast, were “markedly more prepared” to handle their finances than those who were unbanked before college, according to the study conducted by education technology company EverFi and sponsored by financial services company Higher One.

The findings match up with the experience of Janet Bodnar. The editor of Kiplinger’s Personal Finance and mother of three college graduates sees credit cards for college students as dangerous and unnecessary.

Young people need to have finite amounts of money to learn essential skills such as budgeting and monitoring their accounts, said Bodnar, author of the book “Raising Money Smart Kids.”

Ideally, students would start with a checking account in high school to manage income from their first jobs. Children who are not spending their own money often have a flexible definition of what constitutes a financial crisis, Bodnar said.

“An emergency is needing a dress for the sorority dance, or picking up the check for everyone at the pizza place because nobody has any money,” she said. “You think of plastic … as a convenience. Kids think of it as a direct line to your wallet.”

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Plastic Cautions

Personal finance columnist Kathy Kristof, who also writes for Kiplinger’s and who has sent two children to college, is on the other side of the fence. She thinks a credit card can make sense for some families.

“For parents who know their kids and have taught them how to handle money, it can make your life easier,” Kristof said.

College students typically can qualify for their own credit cards, without a parent co-signing or any credit history, when they turn 21.

If parents want to help a child build a credit history before then, they can add him or her to one of their own credit cards as an “authorized user.” (Parents should call and ask the issuer if it will export their account history to the child’s credit report, since some will only do so for a spouse.)

Kristof gave cards to both children, one a college graduate and the other still a student, to book flights home and cover emergencies.

“I’m happy to have the kids as authorized users because I can see what they’re doing and rip the card out of their hot little hands if they abuse it,” Kristof said.

So far, her daughter has always checked in before using the card. Her son, however, will sometimes use it without asking but will tell Kristof and pay her back before the bill arrives.

Kristof said she would not let her progeny get a credit card if she could not see the bills. Even a responsible college student can get distracted and forget to check the balance or make an on-time payment.

Just one skipped payment can devastate credit scores.

“What you don’t want to do,” Kristof said, “is put your kid in a situation where they could get credit dings before life really has gotten started.”

Bodnar cautioned that students who run through all their money should have to make a case to their parents about why they need more, not an excuse for what they already spent using a credit card.

“If they really need money, there are plenty of ways to get it to them fast,” Bodnar said, such as bank transfers or a system like PayPal or Venmo.
Check out MONEY’s 2015-16 Best Colleges rankings

MONEY College

5 Pricey Ways Parents Pay to Get Their Kids Get Ahead

Chris Schmidt—Getty Images Private tutors can cost $25 to $50 an hour.

From private tutors to foreign language immersion programs, there are plenty of elite services for students.

There’s probably little you won’t do to help your kids succeed—short of running the bases for them at a Little League game, or writing their admissions essays.

Who doesn’t want to make sure the odds are in their favor when it comes to college and their subsequent careers?

But when you’re juggling one too many financial priorities, you can’t always afford Saturday math camps and private tutors—unless you go into debt helping junior keep up with the Joneses’ kids.

From preschool admissions coaches (you heard right!) to foreign language immersion classes, we’ve rounded up five popular ways parents pay big bucks to give their kids an educational advantage to see if these perks are really worth the money.

The Skinny on Preschool Admissions Coaches

Yes, some preschools have become so competitive that you need an outsider to help your toddler make the grade.

In some cases, parents are dishing out $200 to $400 an hour to have preschool admissions coaches help them demystify a vetting process that can rival those of Ivy League schools—think 13-page applications, personal essays, reference letters and screening tests.

So Is It Worth It? Only if you’re a big-city dweller who can’t make heads or tails of your Montessoris from your Waldorfs.

That’s because major metro areas—like Los Angeles, Chicago and New York—are struggling with the perfect educational storm of shrinking resources for public preschool programs, and private schools that work hard to restrict class size.

The result? Long wait lists—or outright rejections—for getting into your top pick preschool.

“[The need for a preschool admissions coach] shouldn’t exist. But once you are in a place like Manhattan, for a lot of people, it can be very helpful,” says Emily Shapiro, who was a nursery school director for 15 years before becoming an independent admissions consultant. “I don’t think everyone needs to hire one, but if you’re spending between $20,000 and $30,000 for preschool, it makes sense to be sure your children are in the right place.”

How to Get the Best Bang for Your Educational Buck: Not all parents need the full slate of a coach’s services—in many cases an initial consultation is enough to point you in the right direction.

To make the most of that session, Shapiro suggests bringing a comprehensive list of burning questions, such as what an “interview” with a one-year-old looks like, and whether you really need to start the process before your child is even born. (Short answer: no.)

“Some people hear all this buzz on the street, and suddenly there’s a lot of anxiety,” Shapiro says. “But all they need is a reality check and information to know what’s true and not true. For those people, one meeting may be enough.”

The Skinny on Foreign Language Immersion Programs

We’ve come a long way from waiting to intro kids to bilingualism with Spanish 101 in high school.

Over the past 20 years, language immersion programs—classes in which kids spend all or part of their time learning a second language—have skyrocketed.

In 1991 the Center for Applied Linguistics, a language-education nonprofit, recorded 119 public and private immersion programs in the U.S. By 2011 that number hit 448.

Today there are even immersion kiddie classes on the docket at day cares and nursery schools. So even if your child just started saying “Mommy,” they can also learn how to say Maman, Mutti or Mãe before enrolling in elementary school.

So Is It Worth It? Yes. Numerous studies have shown that bilingual children have an advantage when it comes to problem solving, abstract thinking, switching between tasks and sustained attention—not to mention the benefit of being exposed to different cultures and traditions.

“The research now is even more compelling about the importance of starting language early,” says Nancy Rhodes, a senior foreign language consultant at the Center for Applied Linguistics. “If children are exposed to the sound of other languages at a very young age, it will be easier for them to speak them later. Plus, we’re trying to get young children in the U.S. to compete globally.”

How to Get the Best Bang for Your Educational Buck: You don’t have to spring for full-on immersive preschools—which can run upwards of $20,000 annually—to get the second language benefits.

Depending on your location, lower key offerings can run less than $200 a month, like weekly parents-and-tots language classes at a franchise such as Language Stars.

The Skinny on After-school Tutoring

If you were the child of a Tiger Mom, chances are you may have spent your afternoons doing algebra in a tutoring center instead of running around the playground.

Many parents swear by programs like Kumon, in which children supplement their school learning with after-school sessions that drill them in math and reading—with classes costing between $100–$120 for a single subject, not including enrollment fees.

But how much good does all this added academic time really do?

So Is It Worth It? It depends on your child’s learning style, and whether your kid is struggling to grasp certain subjects. “If your kid needs more drilling, then that kind of support is a benefit,” says Stacy Zanine, a gifted-support educator for the Souderton Area School District in Pennsylvania.

But keep in mind that a program focused on teaching through repetition may not do much to improve critical thinking skills.

“The kids I know who have participated in Kumon haven’t done anything negative—but it hasn’t helped them with problem solving,” explains Zanine. “And I think colleges and companies are focused on problem-solving skills, not just calculating.”

How to Get the Best Bang for Your Educational Buck: To give kids more well-rounded academic enrichment, Zanine recommends focusing on a variety of educational experiences—such as exposing them to museums, food tours and other cultural events, in addition to flash cards and multiplication tables.

“Give them experiences. If they love reading, for example, have them join a book club,” Zanine says. “You’ll get so much more [out of] that.”

The Skinny on SAT/ACT Prep

That perfect 2,400 SAT score is hard to come by. Fact: According to the College Board, only .02% of students will likely achieve it.

But that doesn’t stop parents from paying a pretty penny to get as close to that plum score as possible, shelling out anywhere from $700 to $3,500 for courses at test-prep outlets like the Princeton Review, Kaplan and TestMasters.

So Is It Worth It? Yes—but it depends on your expectations, and your kid’s efforts.

No conclusive research has shown that test prep will guarantee a score boost in the hundreds of points—as is often claimed in ads—but a 20- to 30-point bump is realistic.

And that may be worth the money if it pushes your child into the threshold of qualifying for their school of choice, or enables your kid to receive more merit-based financial aid.

Another big factor? Your child’s motivation.

“When we put together a test-prep plan [for our clients], that may mean referring SAT tutors, but the students have to buy in,” says Betsy Morgan, owner of educational consulting firm College Matters, LLC. “If they are not motivated to do it, then you are absolutely wasting your money.”

How to Get the Best Bang for Your Educational Buck: There are plenty of free sites online that offer good test-prep resources, says Morgan, who and

The Khan Academy, in particular, has partnered with the College Board to create prep work for the redesigned SAT that goes live in March 2016.

The Skinny on College Admissions Consultants

Yes, the price of tuition keeps climbing, but colleges are also more competitive than ever. In 2015, schools like Stanford and Harvard saw their acceptance rates dip to new lows, with both hovering around the 5% mark.

And that leaves many worried parents scrambling to ensure their kids get into the right college by paying more than $4,000 to hire college admissions consultants.

For some parents, that’s an investment worth making, considering how overwhelmed most public school guidance counselors are: The average counselor manages an average of 471 students!

So Is It Worth It? Maybe—if you need help finding the right academic, social and financial match.

For instance, a college admissions consultant can not only help you find a school that fits your child’s personality, and walk you through financial aid options, but she may also be able to figure out which schools your child falls into the top 25% academically.

And that could bump up her chances of receiving merit-based scholarships, says Louise Evans, a Certified Financial Planner™ (CFP®) and associate at financial services firm The Vermont Agency.

Plus, finding a school where your student is happy from the get-go can save you money in the long run.

“The national transfer rate is over 50%, and very few of my kids have transferred,” Morgan says. “I like to think it’s because they’ve ended up at the right schools in the first place. Transferring can be very expensive.”

How to Get the Best Bang for Your Educational Buck: “A lot of consultants just do the admissions side and others just do the financial side, so I would find someone who knows how to do both,” suggests Evans. “That’s how you’ll get the best value.”

More From LearnVest:


MONEY Kids and Money

Is it Cheaper to Have a Baby When You’re 26 or 36?

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The age when you start a family can have a big impact on how much you spend.

“There’s never a good time to have kids—you just have to go for it.”

If you’re contemplating starting a family, chances are you’ve heard this well-intentioned advice by now.

While it’s true that little is predictable when it comes to having children, there’s no denying it’s as much a financial decision as an emotional one.

After all, the average lifetime cost of raising a child exceeds $245,000, according to the U.S. Department of Agriculture.

That’s a price tag that might leave you wondering: Does it make sense to have a baby in your twenties, so you can tackle child-related costs early—or when you’re in your thirties and, hopefully, more financially stable?

Of course, there’s no blanket answer.

But to help make some educated guesses, we took two hypothetical sets of wannabe parents a decade apart in age and tried to compare how their respective finances would be impacted in four major money areas—taxes, retirement, college costs and child care—by bringing home baby.

Meet the Parents-to-Be …

The younger couple, Emma and Tyler, are both 26—the average age at which women have their first baby, according to the Centers for Disease Control and Prevention.

Emma is an executive assistant. Tyler is a junior accountant. Combined, they make $73,000, and are still chipping away at student loans and credit card balances they accrued in college.

Although they spend nearly every penny of their paychecks, they feel emotionally ready to have a child. They’d rather be young parents—and are confident they can make their budget work with a child.

Holly and Brendan, meanwhile, are both 36 and doing well financially. Their income has grown steadily over the past few years—which isn’t surprising since women’s pay peaks at 39 and men’s at 48, based on data from Payscale.

Between Holly’s job as a project manager and Brendan’s as a human-resources manager, they make $120,000 combined. They’re only a few months shy of paying off their student loans, carry little credit card debt and contribute a portion of each paycheck toward retirement.

They purposely put off having children until they reached six figures—and now feel financially ready for parenthood.

Although Holly considers herself healthy, she knows they may have to contend with in vitro fertilization costs—22% of women aged 35 to 39 deal with infertility. In case this happens, the couple has saved up $15,000—enough to cover a round of IVF, which averages $12,400.

So which couple would fare better, financially speaking, if they had a child? We asked financial pros to weigh in.

Let’s Look at Baby’s Impact on Taxes …

When it comes to paying Uncle Sam, it’s not the couples’ ages that make the difference—it’s their income level, says Gail Rosen, a certified public accountant (CPA) and head of her own accounting firm in Martinsville, N.J.

While both parents can take dependent exemptions for their child, only Emma and Tyler’s income qualifies them to take the full child tax credit—up to $1,000 per child for married couples filing jointly.

Holly and Brendan make too much to take full advantage of the tax break.

The child tax credit starts to phase out at $110,000 for couples filing jointly, so “Holly and Brendan may only get a $500 tax credit,” Rosen says. They’ll also likely phase out of qualifying altogether in a few years as their income rises.

So Who Has the Advantage? Although Emma and Tyler make less, they have the advantage because “it’s all about the tax bracket,” Rosen says.

Since they fall into a lower tax bracket and can take full advantage of the child tax credit, they are potentially taking home a larger percentage of their paychecks than Holly and Brendan.

Let’s Look at Baby’s Impact on Retirement …

When it comes to your nest egg savings, the real key is to start socking away money as early as possible.

To that point, having Junior at 26 is more likely to cut into prime saving years because younger couples tend to have tighter budgets and don’t contribute as much to retirement, says Rebecca Kennedy, a Certified Financial Planner (CFP) and founder of Denver-based Kennedy Financial Planning.

Exacerbating the situation is the fact that most people in their twenties don’t think about retirement—baby or no baby. A Principal Financial Group study found that only 30% of Millennials save at least 10% of their income in an employer-sponsored plan.

By the time you hit your mid-thirties, however, “you’re more aware of all your financial obligations, and most of the folks who come to me [at this age] have a pretty good balance,” Kennedy says.

Indeed, an analysis of Employee Benefit Research Institute data that compared the nest egg savings of people in their early thirties versus their late thirties found that IRA balances jumped by more than 60% in this decade.

So Who Has the Advantage? Holly and Brendan. Being able to contribute aggressively to retirement before a baby comes along leaves them better able to take advantage of compound earnings, says Steve Erchul, a CPA with Smith, Schafer & Associates in Edina, Minn. “Their money could grow astronomically because they started early,” he adds.

Let’s assume Holly and Brendan have been able to save aggressively from age 26 to 36, with each of them putting $500 a month into their own retirement accounts, which return a hypothetical 7% a year. By 36, their combined savings are just shy of $174,000.

Even if they never contributed another penny after baby, compound growth would help them reach a total nest egg of $1.4 million by the time they retired at 67.

Meanwhile, if Emma and Tyler put off saving as aggressively until 48, when their kid heads to college—each contributing $1,000 per month to their individual accounts to catch up—they’d end up with less than $950,000 combined at 67.

That’s about $450,000 less than Holly and Brendan.

Let’s Look at Baby’s Impact on College Costs …

In theory, couples can start saving for college even before having a child, but it’s not usually on their radar until Junior arrives, says Kennedy.

So when it comes to the length of time to save, we’ll assume both couples have about 18 years. But one advantage Emma and Tyler have is their potential eligibility for tuition tax credits.

For example, the American Opportunity Tax Credit (AOTC)—which grants up to $2,500 per eligible student—doesn’t start to phase out for married couples until their modified adjusted gross income reaches $160,000, says Erchul.

So if this credit, or a similar one, still existed by the time Emma and Tyler’s child went to college, they could qualify for it—even if their income more than doubled by the time they reached 44.

But the terms of tax credits are hard to predict (the AOTC, for example, has been extended only through 2017 for now), so the real key here is who can contribute the most to a 529 or another type of college savings account.

“From what I’ve observed [of couples in their 20s], there’s not a lot of excess in their cash flow,” Kennedy says. “They’re more in survival mode.”

Holly and Brendan, meanwhile, may have more wiggle room in their budget to contribute monthly to a college savings account.

So Who Has the Advantage? Holly and Brendan. They’re likely to contribute more toward Junior’s college over the next 18 years.

Let’s assume Emma and Tyler put $50 a month into a 529, returning a hypothetical 7% a year. In 18 years, that would grow to a little more than $21,000.

As for Holly and Brendan, if they contributed $100 a month, their college investment could grow to more than $43,000.

Let’s Look at Baby’s Impact on Child Care Costs …

Child care is, without a doubt, one of the heftiest line items in every new parent’s budget.

According to ChildCare Aware of America, the average cost to send one infant to day care eats up anywhere from 7% to 16% of a couple’s income.

With that in mind, Holly and Brendan seem like they’d be better off—with more income to work with, they should be better able to fit this cost into their budget.

But Emma and Tyler may actually be in a better position when it comes to free child care in the form of family help—Grandma and Grandpa may still be spry enough to run after a toddler.

In fact, Child Care Aware found that grandparents were the second most popular form of child care: 32% of those polled take advantage of their own parents’ help. That can be “huge in helping offset some of the cost,” Kennedy says.

Of course, there’s always the option of having one parent stay home. In this scenario, Holly and Brendan have the advantage, since “they’re at a higher pay level, so if they drop down to one income, it’s [still] a good income,” Kennedy says.

The hitch?

Many successful women (yes, it’s still mostly women who off-ramp to raise kids) like Holly have a hard time re-entering the workforce.

The New York Times, for example, reported last year that only 40% of high-achieving professional women who off-ramped for a time were able to find a good full-time job in their desired industry once they returned to the workforce.

So Who Has the Advantage? It’s a draw. Yes, child care is a huge expense that Holly and Brendan may have more breathing room to cover—but factoring in family help and career opportunity costs could tilt the odds toward Emma and Tyler.

Plus, you shouldn’t count out the younger generation’s scrappiness when it comes to making room in a budget, says Michele Clark, a CFP® and owner of Clark Hourly Financial Planning in Chesterfield, Mo.

“I think because [the Millennial] generation saw their parents struggle with the stock market, they have more of that Great Depression mentality,” Clark says. “They shop at thrift stores, cook, and don’t eat at expensive restaurants.”

Holly and Brendan, meanwhile, are in a demographic that can be susceptible to lifestyle inflation because people their age are used to a comfortable life—and it may only get worse once toddler classes and day camps come into play.

“They’ll have to fight the spending creep of keeping up with the Joneses,” Clark says.

Ultimately, though, having a child isn’t all about pinpointing the opportune time. It’s also about knowing how to prepare yourself in heart, mind and wallet—no matter where you think you are financially.

“I’ve had people come to me because they have six-figure student loan debt from law school, but they want to have their second baby,” Clark says. “Because of that, they look at every penny … and identify for themselves costs to cut [to reach that goal].”

Read next: 37% of Parents Are Making This Financial Mistake

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MONEY Kids and Money

The Right Way to Give Kids an Allowance

illustration of stick figure drawing of family on back window of car with kid with paint roller
Chris Gash

Use the weekly dole to help your child build good financial habits -- not as pay for routine financial chores.

Jake Johnson’s approach to providing his son Liam with some money of his own is inventive. The Tempe, Ariz., dad encourages his 9-year-old to identify problems around the house, propose solutions, and then (my favorite part) negotiate his payment. Case in point: The boy recently raked leaves in their yard to make $10. Says Johnson, “I want him to see that earning money can be creative and fun, not something you do just because someone tells you to.”

The concept of an allowance is evolving. Today, 70% of kids get one, says T. Rowe Price, up from 47% in 2013. While many parents use this device to reward children for doing their everyday chores, many of the moms and dads I’ve spoken with say they prefer to use the weekly dole as a teaching tool—a way to help their offspring learn about budgeting, trade-offs, and critical thinking about money.

What’s the best way to accomplish that? Try these tactics.

Reward Extra Effort Only

Don’t tie regular chores to the allowance, says Beth Kobliner, author of the forthcoming book Make Your Kid a Money Genius (Even If You’re Not). You want your child to understand that being part of a family requires doing some tasks for which you will not be compensated—say, stacking the dishwasher and keeping your room clean.

You can, however, give a bonus for odd jobs above and beyond expectations, as Johnson has done. “This instills the critical linkage between work and money,” says Bill Dwight, founder and CEO of online family banking service FamZoo.

Make it a Budgeting Exercise

Some experts recommend giving $1 a week for each year of age, so a 10-year-old would get $10. Or, work out what you expect them to pay for—say, snacks at school or new videogames—and figure the right amount from there. Then, as your child gets older, have her start covering larger purchases you’d normally make, says Kobliner. You might, for example, let a teen manage the $300 you’ve budgeted for back-to-school clothes. If your kid spends his funds too fast, leaving himself no money for gas, he’ll be reminded each time he takes the bus to school the rest of the week. “Let them experience the consequences,” says Dwight. “No bailouts.”

Instill Lifelong Habits

Just 1% of parents surveyed by the American Institute of CPAs say their kids set aside any money. Encourage better behavior in a younger child by establishing separate piggy banks for spending, saving, and giving, then let her help choose a charity to donate to. Help tweens or teens set a specific savings goal, and consider a “Mom and Dad” match of, say, 25% up to the first $100 saved, Dwight suggests. Nothing will get a child (or adult) more excited about saving than the promise of more cash.

Financial correspondent Farnoosh Torabi is the author of When She Makes More and the host of So Money, a daily podcast.

MONEY Kids and Money

The Real Price of Having a Baby

Image Source—Getty Images

The hospital where you give birth plays a huge role in how much you'll pay out of pocket.

Which hospital parents pick to deliver their baby can have serious cost consequences, according to a new study.

Hospital costs for women who had no maternal or obstetric risk factors to complicate childbirth ranged from less than $2,000 to nearly $12,000, the analysis of discharge data found. The wide variation in cost means that for expectant parents, it can pay to shop around.

The variability was surprising, says study co-author Dr. Jessica Illuzzi, an associate professor of obstetrics, gynecology and reproductive sciences at the Yale School of Medicine.

“We limited our sample to low-risk women, a uniform group, so finding that variability” was unexpected, she says.

The study, published this month in Health Affairs, analyzed data from 267,120 births at 463 hospitals that were collected from the 2011 Nationwide Inpatient Sample, part of a project sponsored by the federal Agency for Healthcare Research and Quality. Estimated average hospital childbirth facility costs per maternity stay ranged from $1,189 to $11,986, with a median of $4,215. The figures did not include professional fees for obstetricians, midwives or anesthesiologists, who generally bill separately for their services.

Since consumers increasingly face high deductibles and increased cost sharing for medical care, giving birth at a high-cost hospital could add significantly to their out-of-pocket costs, Illuzzi says. Some government agencies and other organizations now report data related to childbirth, including cesarean delivery rates and details about delivery costs and charges by hospital.

The federal government’s Hospital Compare website reports the percentage of pregnant women who had elective deliveries one to three weeks early that weren’t medically necessary.

The study found that hospitals with higher rates of cesarean deliveries, among other factors, were more likely to have higher facility costs. Hospital rates of cesarean delivery for low-risk births varied widely, from 2% to 39%, the study found.

According to the study, pricier care didn’t necessarily lead to better outcomes. Hospitals with higher estimated costs were significantly more likely to have serious complications among low-risk childbirths.

The study notes that adding professional fees to the cost estimates and including newborn care in addition to maternal care might result in different cost patterns than those found in the study.

Nearly 4 million children are born each year, and childbirth is the No. 1 reason for hospital admissions.

“There’s so much attention being paid to the cost of care today, but little attention is paid to maternity costs, the leading cause of hospitalization,” Illuzzi says.

Read next: Is it Cheaper to Have a Baby When You’re 26 or 36?

Kaiser Health News (KHN) is a nonprofit national health policy news service.

MONEY Kids and Money

4 Basic Money Skills All Parents Should Teach Their Kids

Jamie Grill—Getty Images

From making change to keep a budget.

In a perfect world, parents and educators (not to mention society) work hard to make sure that children are financially literate and consider money skills just as important as reading, writing and arithmetic. Our world sure doesn’t work like that, and you need to help your young kids learn basic financial skills the old-fashioned way: Teach by doing.

Here are four of the most basic practical money skills for your children:

1. Making change. Several years ago, my lunch tab at a restaurant came to $12.65. I handed the cashier a $20 bill and then realized that I also probably had a couple of quarters, a dime and a nickel.

She had already entered the tendered amount in her register when I handed her the change. She looked from the twenty to the coins and then handed me back my 65 cents as she started putting together my $7.35 in change. “I just can’t do the math,” she said.

Calculators and cash registers doing the math for our kids, along with our society becoming more cashless, might create a generation who can’t make change. Inability to make change represents innumeracy, math’s equivalent of illiteracy. Individuals who cannot subtract 12 from 20 in their heads are vulnerable to scams as well as to their own mathematical mistakes (often inflicted on the rest of us).

Comfort when adding and subtracting money is the first skill for financial literacy.

Plenty of children’s games and toys help teach how to make change. You can practice with these to introduce denominations of money as well as ways to double-check mental math.

2. Balancing a checkbook. I once worked with a woman who did not keep a check register. Every day (long before online account records), she called her bank to check her balance. If told she had money in her account, she’d feel free to spend it even though she knew she had checks and other charges not yet cleared.

Not staying on top of your checking account is an excellent way to overdraw. It’s impossible to track and plan spending, much less balance your checkbook, if you never write down your credits and expenses.

Also, bank errors happen. If you never balance your checkbook, you will never catch your bank’s mistakes.

When your children learn multi-digit addition and subtraction, ask them to help you record your deposits and purchases. As your kids get older, they can help you balance your checkbook and look at your bank statements.

3. Paying bills. The problem with this skill is that you probably never learned it yourself until you are out on your own.

Bill-paying is mostly organization: You track the expenses as they come in, know exactly when you must pay to avoid late fees, and keep records of what you paid. Even a money-savvy kid might initially struggle with that level of organization.

As with balancing your checkbook, ask your children to help. Show children where you file paper bills until you pay, and include your kids when putting bill reminders on the calendar.

The biggest aspect of bills, of course, is having enough money to make the payment. Ask your kids to help you figure how much money remains in your account after the bills go out – also an excellent opportunity to discuss differences between needs and wants.

4. Creating a budget. This critical skill differs a little from the others on this list. Budgeting requires tracking your expenditures, setting goals, planning your finances and disciplining yourself – in no way a simple process, and even veteran budgeters may need to retool a strategy over and over again.

Budgeting is a very complex skill, partially because no two household budgets look exactly the same. The trick involves learning how to adapt to changing finances. If you show your children how you track expenses, plan for future outlays, keep needs clear from wants and roll with unexpected financial punches, they’ll develop a sense of what they’ll need to do in their own homes one day.

In addition, let your kids practice small-scale budgeting with allowance money. Nothing drives home a lesson quite like dealing with your own cash.

Managing money is as important a life skill as table manners or reading. No matter your own comfort with finances, best they learn these skills from you.

Jeff Rose, CFP, is the founder of Alliance Wealth Management in Carbondale, Ill., and also is the founder of the website Good Financial Cents and Life Insurance by Jeff.

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MONEY Small Business

What Running a Lemonade Stand Can Teach Budding Entrepreneurs About Business

Kids lemonade Stand
Mike Keelty—istock

The annual Lemonade Day event teaches kids to create a business plan for a lemonade stand and turn it into a real, money-making venture.

Tech entrepreneur Michael Holthouse is often surprised by how unfamiliar many adults are with the basics of business. “Many Americans believe revenue and profits are the same thing,” he says.

Holthouse aims to change that through Lemonade Day, a fast-growing program to educate kids about running a business long before they enter adult life. The annual Lemonade Day event, which takes place on different dates throughout the year in 56 cities in the U.S., Canada and South Africa, walks children through a 14-step, month-long process to create a business plan for a lemonade stand and turn it into a real, money-making venture, with a parent or mentor’s guidance. Typically the stands go up each year the first Sunday in May, but there are some exceptions. “Some of our cities are Aspen and Anchorage,” Holthouse says, “There are still 14 feet of snow in some of those cities.”

Holthouse dreamed up Lemonade Day in 2007, after seeing how excited his daughter Lissa got about starting her own lemonade stand when he said he wouldn’t just buy her a pet turtle she wanted and challenged her to raise the money herself. “It was one of the most amazing days we had,” he recalls. “I couldn’t get the whole thing out of my head.” The following year, participants put up 2,600 stands. Since then, the event has grown rapidly, with support from partners such as Google for Entrepreneurs.

While Lemonade Day is meant to help children, it holds powerful lessons for adults, too, says Holthouse, who sold his computer network services company Paranet, to Sprint in 1997 after building it to more than $100 million in revenue, and began devoting much of his time to philanthropy through The Holthouse Foundation for Kids, which focuses on helping at-risk young people.

“There are so many conversations that are straightforward when you think about a lemonade stand but they apply apples to apples to every other business on the planet,” Holthouse says. Often, parents who started out unfamiliar with entrepreneurship prior to participating in Lemonade Day come away with a brand new understanding. “Having a simple vocabulary about revenue, expenses and profit is really enlightening,” he says.

Money spoke with Holthouse recently about what entrepreneurs of all ages can learn from the event.

What are some of the lessons children learn from running lemonade stands?

Holthouse: What we’re teaching is how to start, own and operate their very own business using a lemonade stand. Yes, they are going to learn a whole bunch of business concepts and vocabulary and elements that make up a business, a business plan and a budget and all of those things, but more than anything what we’re trying to bring to life is a set of social and emotional skills that build self-confidence, motivation and grit–the kind of things that will really carry them through life.

We set three big goals up front: a spending goal, a savings goal and a sharing goal. Spending is, after all, why we become entrepreneurs. We all have wants and needs as human beings. We have to figure out how to meet them. [As organizers of Lemonade Day], we believe everyone needs to save some amount of their money. In the lemonade business, some days it rains. As for the sharing goal, the kids make a decision about how much they want to give and whom they want to give it to.

What is wild to me is some of our youth, when the start Lemonade Day, don’t have two nickels to rub together. By the end of the whole process, they are giving material amounts of money to someone they believe is less fortunate. It could be $20 or $50.

Have any of the stands struggled?

Absolutely. Does every business in the world make it? Heck, no. Some of the stands don’t make it, and you’ve got to put that under the category of some tough love. I’d much prefer a child learn early in their life that you don’t always get it right the first time. You may have to do it a second or third time to get it right. The amount of risk they’re taking is so low we say “Get up, dust yourself off and let’s make the next one twice as successful.”

Where do kids go wrong with their stands?

The place where kids go wrong is to set unrealistic goals. The child will say, “My goal is to get an iPad.” That’s a big goal. Perhaps it’s attainable, but when they figure out how many glasses of lemonade they need to sell, they’re going to learn there are ways this doesn’t work.

We spend a fair amount of time with these kids on their business plan–which is a culmination of the answers to the questions we ask them. They put it together in a budget: What are your line items for costs? What are you going to be able to borrow or get for free? What will you have to buy?

When planning a lemonade stand, a trip to the grocery store is a great experience. If they want to market fresh squeezed lemonade, it is labor intensive. We ask them, “Will your market and price be able to support doing this?”

Parents that participate in Lemonade Day with the kids often learn more than the kids do. You want to learn something in life? Try and teach somebody. It becomes very real.

What can adult entrepreneurs learn from the challenges the children encountered?

With the kids we are trying to help, they crawl before they walk and walk before they run. We are helping them start with a business that is sized so that they can be successful. When they are able to save $20 out of their business, they can turn around and be their own investor in the next business they do, whether they repeat the lemonade stand or branch out into whatever business they want to do.

In a lemonade stand, you want to create a great product, have great customer service, and have a way to get repeat customers. These early lessons focus them on thinking about what are the really important things vs. the unimportant things.

For would-be adult entrepreneurs who never had a lemonade stand, how can they get a similar crash course in running a business?

Experiential learning is the hardest kind to do–it’s the most time consuming–but the impact is exponential, compared to sitting in the classroom and just hearing about it. It may sound silly or even self-serving, but if adults who would like to run a business find some child in their life and go through Lemonade Day with them, they will see all the aspects of what it take to start a business. How much money can you lose on a lemonade stand? All you have to do is substitute whatever your business happens to be for lemonade. There are 10,000 books on entrepreneurship, but the way to start a business is to jump in there and make some mistakes.

MONEY Kids and Money

Why Virginia Teens Have a Big Edge Over Teens in Florida

high school students walking out of school
Getty Images

Florida's governor just sold the state's teenagers short.

Florida Gov. Rick Scott vetoed a pilot project at the end of June that would have taken a big step toward mandating personal finance as a standalone course in high schools throughout the state. Meanwhile, Virginia’s high school class of 2015 just became the state’s first to finish with a personal finance requirement.

The developments highlight the on-again, off-again nature of the effort to make financial instruction a part of every child’s education. “Virginia’s class of 2015 enters the real world with a comparative advantage,” says Nan Morrison, CEO of the Council for Economic Education, adding that she was “disappointed” Florida killed the Broward County project, which would have cost just $30,000.

Financial education is gaining traction globally. The U.K. and Australia have mandatory money management classes in schools. Last month, Canada announced a national strategy for financial literacy and is rolling out 50 programs as part of Count Me In, Canada. These will include websites with educational resources for students as well as seminars and workshops for seniors.

The U.S. has a formal national strategy for financial capability, approved in 2006 and updated in 2011. Yet a persistent barrier to progress, at least at the school level, is that individual states have domain over their school curricula. There can be no federal mandate for financial education, as in other countries. So organizations like Jumpstart Coalition and the CEE have been leading the effort to establish standards for personal finance coursework and convince states to sign on, one by one.

It’s been a long slog. Just 17 states currently require students to take a personal finance course, according to the most recent Survey of the States report; 22 require high school economics. Both numbers are trending upward.

Will There Be a Test on That?

But in education, unless students get tested on a subject it never really gets taken seriously. And in both economics and personal finance, the number of states with required testing in these areas is falling — to 16 from a peak of 27 in economics and to six from nine in personal finance.

Why does this matter? Advocates for financial education see it as a buttress against the next financial meltdown. If more people understand more about how their mortgage works and why an emergency fund equal to six months of living expenses is important, they may be less likely to take on debts they cannot afford or default at the first hiccup in their financial plan. The idea is that this could stop any downward spiral in the national economy.

Yet even if that seems far-fetched, it is hard to deny the individual benefits of a population that knows more about retirement saving, budgets and credit. Millennials and younger generations will grow old in an age of greatly diminished public and private pensions; the sooner they understand that — and many are getting the message — the more likely they will be to save more at an earlier age.

So bravo, Virginia class of 2015. You have blazed an important path. One recent study found that a required high school course in economics and personal finance resulted in higher credit scores and lower delinquency rates as adults.

“In Virginia, since our course is relatively new, we have only anecdotal evidence,” says Daniel Mortensen, executive director of the Virginia CEE. “One student recently wrote a letter to the editor, talking about the required course and the value it has brought to his life.”

As for the setback in Florida, it is somewhat surprising in that the state last summer became the first to adopt CEE K-12 national standards for financial literacy. This is not a backward-thinking group of legislators. In effect, all the governor did was shoot down an attempt to strengthen what’s already in place: a required one-semester economics course that is 25% personal finance.

By comparison, Virginia’s requirement is two semesters — about half of which is personal finance. So it’s not as though Florida is doing nothing about financial illiteracy; it just isn’t doing enough.

MONEY Kids and Money

This App Will Have the Kids ‘Beg’ for More Chores

sisters doing dishes
Marcelo Santos—Getty Images

Here's how to keep the kids busy this summer, and teach them a thing or two about money and responsibility.

Any website that promises “your kids will beg to do their chores” deserves a skeptical eye. What might they promise next? They’ll eat all their vegetables? Floss after every meal?

Yet while the designers at ChoreMonster may be given to hyperbole, they also just might have hit on an answer to getting the kiddos to make their bed and empty the dishwasher without being asked for the thousandth time—and learn something about money and responsibility in the process.

Online chore charts are nothing new. You might even say the space is getting overcrowded for websites and apps that let parents assign chores to youngsters, tweens and teens, monitor progress and bestow awards for a job well done. The family can get organized at MyJobChart, ChoreBuster and FamilyChores. Places that connect allowance to household duties include Famzoo, iAllowance, allowance manager, Tykoon, GetPiggyBank and Threejars. The idea is to get the kids to pitch in, without all the nagging. That means doing it online and offering an incentive.

What makes ChoreMonster different is its engaging platform, which has plenty to offer parents and kids alike—like a timely list of seasonal chores you may not have considered, and funny little sounds and animated monster rewards. This is especially welcome as the dog days of summer roll in, and the kids are home all day and there are so many extra things that need to get done around the house. You know: cut the grass and wash the car.

Through a tie-in with Disney, ChoreMonster parents were able to reward kids with exclusive pre-release clips of the Pixar movie Inside Out in May and June. The company says it was a popular reward, and that other partnerships and unusual tie-ins will follow. In the meantime, rewards like TV and other screen time as well as cold hard cash should work just fine.

For this summer, ChoreMonster suggests having the kids clean the barbecue grill and the wheels on the family car, in addition to things you are more likely to have considered, like watering the garden and sweeping out the garage. Cash rewards should come with a money discussion, according to the site, which suggests 25% be set aside for a new game or book, 25% for a trip or other outing, and 50% for a future car or college. This conversation may be the most important one you have with your kids this summer, as it should get them thinking about concepts like wants vs. needs, budgeting, and saving. You might also have them consider carving out 10% for chartable giving.

The average allowance comes to $65 a month, according to a study from the American Institute of CPAs. Six in 10 parents pay allowance, half start the kids at age 8, and 89% expect their kids to work around the house at least one hour a week. There is a big debate about whether allowance should be tied to chores. Most of the sites and apps make it easy to keep track of which chores have been done and how much has been earned—whether it’s for allowance or straight pay.

What are the most popular rewards? Half of parents grant screen time (typically one hour); 14% pay cash; 11% give ice cream or some other treat; 6% buy a toy; and 3% pay for an outing. The top chores assigned are brush your teeth, make the bed, feed the pets, organize your laundry, and clean your room.

Monday is the best day for chores being completed and Friday is the worst, according to ChoreMonster. More assigned chores get completed on the West Coast than any other region, the company found. So much for that laid back California culture. Their kids probably eat their vegetables, too.







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