MONEY Kids and Money

Do You Give Your Kids an Allowance?

People on the streets of New York tell us how and why—or why not—they give their kids an allowance.

Do you give your kids an allowance? And if you do, how big is it? That’s the question we asked people in Times Square. Some parents do give their kids an allowance, but some don’t. The boiled-down version we got from those who do was that different ages get different amounts. One mom told us she’s teaching her kids the value of being a self-starter. “They have a chore list,” she said, “and if they go above and beyond and do those chores – without even being asked – we give them a little bit more.”

Some parents we talked to decided an allowance wasn’t the route they wanted to take with their kids.

Read next: Why You Need to Give Your Kid an Allowance

MONEY Kids and Money

How to Raise Your Kids to Be Personal Finance Losers

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JGI/Jamie Grill—Getty Images

... in 6 easy steps.

There are a handful of questions out there that simply defy explanation. For example, who built Stonehenge and what was it for? Why isn’t phonetic spelled the way that it sounds?

Here’s another perplexing question: Why do otherwise intelligent people with triple-digit IQs still manage to dig themselves so deeply into debt that they’re often forced into bankruptcy?

Actually, I have the answer to that one.

You see, personal finance is rarely, if ever, taught in high school. So, like it or not, that responsibility rests squarely on the shoulders of us parents.

Unfortunately, try as they might, many parents are lousy teachers — either consciously or subconsciously.

Of course, that answer begs the next question: What are those parents doing wrong?

Well, it’s really not much of a mystery, folks. In fact, if you want to ensure your kids will become utter failures as adults — at least when it comes to managing their personal finances — all you have to do is follow these six handy suggestions:

1. Give them everything they want in life. Most kids who grow up never wanting for anything will fail to understand the value of a dollar, so don’t bother teaching your little cherubs about the importance of saving money. Besides, what’s the rush? They’ll have their whole adult life to master that.

2. Foster an entitlement mentality. John F. Kennedy said, “Ask not what your country can do for you, ask what you can do for your country.” But what did he know? Teaching kids the importance of personal responsibility is cruel. In fact, it’s absurd to expect them to believe that the only way they are ever going to get ahead in life is through lots of hard work.

3. Badmouth budgets.You don’t want your kids to be able to decide for themselves as adults if a budget is a necessity for keeping their finances healthy. After all, I have more than a few friends who insist that budgets are a waste of time, so parrot that opinion to your impressionable children and never teach them about budgets.

4. Keep the miracle of compound growth under wraps. Time is an ally of the young, especially with respect to the power of compound growth. That’s why you probably should just forget to even bring this up. Why give your kids a golden opportunity to build a large nest egg that might allow them to retire early one day?

5. Don’t allow them to make money mistakes. Carefully control how your kids spend the money they get for special events like birthdays and Christmas. Shelter your kids from learning a valuable lesson about impulsive spending and the value of money by stopping them from buying cheap toys that you know will break within hours of being purchased.

6. Encourage the importance of showing outward displays of wealth. Why buy a Honda Civic when the neighbors own a BMW? Never mind that you can’t truly afford the latter. I mean, what better way to condition your kids to keep up with the Joneses and teach them that their self-worth is determined by their worldly possessions? Hey, it’s all about the bling, Dog — there ain’t no questions about that.

Read next: Here’s Your Excuse to Stop Buying More Stuff for Your Kid

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MONEY Kids and Money

Why You Need to Give Your Kid an Allowance

A study identifies the best ways to teach children the money basics.

Want to teach your kids some basic understanding of financial basics? It’s time to stop stalling and set up an allowance.

Children who receive an allowance are more likely than those who do not to say they are knowledge about managing personal finances (32% vs. 16%), understand the value of a dollar (90% vs. 81%), and feel smart about money (40% vs. 25%), according to a new study by T. Rowe Price.

And once you’ve handed out the cash, resist the urge to micromanage your kids’ spending: The study found that it’s important to allow your kids to make mistakes and mishandle those funds. Children who’d made money blunders reported feeling two to three times more knowledgeable about managing finances (36% vs. 16%) and investing (26% vs. 8%) than those who had not.

Yet the survey also noted that communication remains vital. Kids who have frequent conversations about money with their parents — in addition to real-life experience, like getting an allowance and making money mistakes — are far more likely to think they are smart about money (70% vs. 15%). They also feel more empowered and confident than those who do not.

“It’s intuitive that talking to kids about money gives them financial knowledge,” says Judith Ward, a senior financial planner at T. Rowe Price, who was quoted in the company’s press statement. “But we were surprised to see the extent to which letting kids experience money may have an impact.

“If parents talk about money but don’t let their kids experience it, it’s like telling them how to play the piano without letting them touch one and expecting that they’ll be able to play a sonata.”

To find out exactly how much you should be giving your kid and what to reward, see The Right Way to Give Kids An Allowance.

MONEY Financial Planning

5 Marriage Milestones That Will Forever Change How You Think About Money

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sturti—Getty Images

From buying your first house to planning for retirement.

First comes love, then comes marriage …

Then come all kinds of exciting-yet-stressful life events that can completely transform your finances.

Babies. Houses. Job changes. The list goes on and on.

And like any major shift, these events can stir up emotions that will not only affect your relationship, but also impact the financial decisions you make.

“Everyone tells you not to make big decisions from a place of worry or upheaval, but that’s exactly what big milestones create in our lives, making it impossible to feel like you’ve made choices from a place of peace,” says Megan Ford, LMFT, a licensed marriage therapist and president-elect of the Financial Therapy Association.

The solution?

You need to recognize (and prepare!) for the fact that these major life moments are likely to send you on an emotional roller-coaster—and spur a need for significant financial adjustments.

It’s precisely why Mary Beth Storjohann, a CFP and founder of Workable Wealth, tells all of her clients to set a monthly money “date” with a partner—a designated time to talk through the state of your finances and what emotions are coming up around them.

With regular financial check-ins, you’re more likely to discuss the big milestones before they come, Storjohann says, and be in a much better position to plan for them.

To help you navigate the ups and downs of life, we’ve asked marriage and money pros to offer their best advice for how to keep five common milestones from derailing your marriage—and finances.

Marriage Milestone #1: Buying Your First House

Purchasing a new pad is exciting—but once that first rush of adrenaline is over, the new day-to-day reality quickly kicks in, says Ford.

Aside from the increased money pressure, having to agree on every last paint color and fabric swatch can highlight your differences and drive home just how difficult compromise can be.

What You’re Both Likely to Feel … Excited, scared, proud, frustrated and overwhelmed. And while it may seem counterintuitive, buying a new home can also spark a sense of loss.

With such a big purchase comes big responsibility, and the number of unexpected expenses that often surface can lead to the realization that you’ve just lost a lot of your freedom.

“Your priorities around being able to do things—both financially and timewise—are going to shift once you’re a homeowner,” says Ford, adding that this can significantly impact the dynamic between you and your partner.

How to Keep Your Finances on Track … When a good chunk of your available funds go into your home, says Ford, you can end up house-rich and cash-poor—a recipe that’s likely to highlight financial friction between the two of you.

So before you even apply for that mortgage, have a frank conversation about how much home you can really afford—and how you’re going to finance it.

And if you find yourselves feeling maxed out once you’re in your new digs, you might want to look into refinancing your mortgage to reduce your monthly payment, says Storjohann, and even consider taking on a side gig.

And although it can be tempting to get your home pulled together quickly, you should also delay spending on other big-ticket items, like that fancy Viking range you’ve been coveting.

Read next: Buying a House Together Before Marriage? Read This First

Marriage Milestone #2: Bringing Home Your (Million Dollar) Baby

Few experiences in life can produce as much joy—as well as sleep deprivation, stress and money concerns—as a new addition to the family.

And when we say money concerns, we mean it: The average lifetime cost of raising a kid now exceeds $245,000, according to the U.S. Department of Agriculture.

What You’re Both Likely to Feel … Happy, exhausted, thrilled, depressed … and very, very stressed.

With your bills at record highs, and your savings goals more ambitious than ever (college costs how much?!), it’s no wonder many new parents tend to feel overwhelmed when they take a closer look at their finances.

It’s also understandable that you’d want to make sure your new center of the universe has the best of everything—no matter the cost.

“So many new parents feel pressured to buy the most expensive items for a baby,” Storjohann says. “That pressure to spend more than what’s really needed—or what you can actually afford—can be intense.”

How to Keep Your Finances on Track … Before your baby is born, look into exactly what you’re entitled to when it comes to your company’s maternity and paternity leave policies, says Storjohann, as well as what less obvious expenses are covered by your company benefits—such as a gym membership and even help with child care.

Bottom line: You don’t want to miss out on any paid time off or covered costs.

Also, once your baby arrives and you have a clearer picture of how much things really cost, redo your baby budget. Factor in every detail you can think of, including things like birthday gifts for other kids.

Then run the numbers and have an honest conversation with your partner about what you can afford to spend—and where you should cut back.

“These things can add up to thousands of dollars a year,” Storjohann says. “Figuring out how you’re going to adjust can feel empowering and reduce your stress.”

Marriage Milestone #3: Your Combined Income Dips

Whether one of you intentionally leaves a job—perhaps to take care of children or start a new business—or you’re dealing with unexpected job loss, making less money as a couple can create a lot of strain.

What You’re Both Likely to Feel … Anxiety, pressure, fear and maybe even resentment.

“When one partner has to pick up all of the financial slack, it can be really tough on a marriage,” Ford says. “Not only does the working partner feel extra stress and responsibility, but the partner who’s not making money can feel shame.”

How to Keep Your Finances on Track … If a job loss is unexpected, you should discuss together just how much you’re going to tap into your emergency fund, as well as where you can cut back expenses for the short-term.

And regardless of whether you can or can’t plan for a loss of income, says Storjohann, you should be prepared for it by having a retooled household budget at the ready.

Another crucial move, says Ford, is for both partners to continuously identify and discuss their feelings, so they don’t fester.

“When you keep emotions locked up, they end up taking on a life of their own—and have the potential to cause you to make rash financial decisions,” she says.

Marriage Milestone #4: You Have to Care for an Elderly Parent

When a parent or loved one reaches the point of needing your help—both physically and financially—the situation can shift how you spend your time and finances.

There’s even a term for those who find themselves having to juggle the competing demands of caring for young kids and elderly parents at the same time—the sandwich generation.

What You’re Both Likely to Feel … Sadness, worry, guilt, anger and frustration. And those are just some of the emotions you may be experiencing.

Not only are you worried about your aging parent, but you’re also feeling the ripple effect on your own finances and commitments. All of this rearranging of time and money can be stressful—especially if you’re also taking care of your children.

And you may feel angry and frustrated because you’re the one having to carry the burden for everyone—which can lead to guilt, says Ford. And that guilt can create even bigger money worries if it causes you spend more money than you can afford.

“It can be very scary to pull money from your retirement accounts if you don’t have a system in place, and having a plan ensures what you’re taking out of savings is sustainable.”

How to Keep Your Finances on Track … Ideally, this is something you and your partner will talk about—and plan for—well before your loved ones need elder care, says Storjohann.

“This is actually part of the discussion when my husband and I have our monthly money dates,” she says. “It’s crucial to talk about who might need our help one day, and what we, as a couple, are willing to do to support those people.”

Her advice if you’re feeling guilty about not being able to do enough?

“I recommend saying to family, ‘This is what I have to help support you, but that’s all I can do at this time,’ ” she says. “The more parameters you’re able to set, the less obligated you’ll feel to go above and beyond.”

Marriage Milestone #5: You’re Ready to Retire

After years of being knee-deep in deadlines and conference calls, your time hasfinally come to clock in for the last time.

But while you thought you’d be celebrating that much-deserved retirement on your first European cruise, you haven’t even booked your tickets yet.

What You’re Both Likely to Feel … Elation, fear, relief, stress and more. Ford says that, in her practice, she’s seeing a lot of retired couples who should be rejoicing—but who are worried and unhappy instead.

“People are living longer and saving less—and that can create a stress storm that impacts marriages,” she explains.

And for those who have carefully saved, says Ford, they face a big adjustment when it comes to actually tapping into those accounts.

How to Keep Your Finances on Track … First, Storjohann suggests coming up with a list of all the things you want to do in retirement.

“This will put you in the best position to come up with a spending plan for those retirement goals,” she says. “It can be very scary to pull money from your retirement accounts if you don’t have a system in place, and having a plan ensures that what you’re taking out of your savings is sustainable.”

Plus, if after doing that plan, you find your retirement spending isn’t going to allow you to live your current lifestyle, it gives you time to reassess.

For example, you might want to scale back on spending in your golden years in certain areas, or consider taking on a part-time job in retirement, so that you can withdraw less.

Feeling particularly anxious that you haven’t saved enough? You may want to consider easing into retirement part-time—often referred to as semi-retirement.

“I think a lot of new retirees benefit from getting used to the retirement lifestyle in stages,” Storjohann says. “It can help you figure out what it is you really want to do—and how, exactly, you’ll pay for that.”

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the individuals interviewed or quoted in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.

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MONEY Kids and Money

8 Ways to Get Your Finances Ready Before Having a Baby

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Peter Dazeley—Getty Images

Babyproof your money.

Newborns don’t just come with that adorable new-baby smell and impossibly tiny toes — they also carry a hefty price tag. One of the most overwhelming challenges of parenthood is managing the many new costs, which seem to grow exponentially as your child does. If you’replanning to start a family, don’t panic. Here are the eight financial moves to make before becoming a parent.

Decide Where to Rein in Spending

Knowing what your numbers look like is necessary to the planning-for-baby process. Leave out nothing: List all your assets, including your bank accounts, investments, and property. Get a clear picture of your debt, from car payments and credit cards to student loans and your mortgage. That way you have a starting point for your new financial plan.

Next, take a look at your budget (or set one up if you don’t have one) to cut back on unnecessary expenses. Now is the time to trim the fat in your spending, so reassess the costs you take for granted — like your cable or cell phone bills — to make sure you’re getting the best deals.

If you need to curb your spending, make realistic cuts that you can sustain. Otherwise, you’ll likely give up on your cost-saving measures.

Devise a Debt Action Plan

With a baby on the way, it’s more important than ever to get serious about paying down your debt. It will only get harder to do as the expenses of raising a family pile up. Try:

  • The avalanche method
    Kill your high-interest debt first — this is often credit card debt. Then continue down your list, tackling the highest interest rates first. This approach gives you the most bang for your buck financially.
  • The snowball method
    Pay off your smallest debts first. Having a “win” under your belt early on can help give you the motivation you need to keep going.

You can also do a mix of the two strategies: Start with the snowball method and once you’re motivated by a zero balance, switch over to the avalanche. If you’re unsure of the best approach, you can also use an online calculator to help you strategize.

Build an Emergency Fund

An emergency fund is crucial no matter where you are in life, but it’s even more vital when you become a parent. Conventional wisdom says your cash cushion should be around two to three months’ worth of expenses. Calculate what that means for you (rent/mortgage, food, bills, transportation, etc.), and then figure out what, and how long, it will take to get there. A savings calculator can help.

Padding your emergency fund generally should be secondary to paying off debt, because your debt’s interest can cost you over the long haul. But if you don’t have anything in the coffers, then you should work on both at the same time.

Budget for Baby

Your budget isn’t written in stone; it should change as your life — and family — grows. Start crunching the numbers and adjusting as soon as you find out you’re expecting, or ideally, even earlier. You’ll need to add, at minimum, these basic expenses (based on national averages, which vary by location) into your new monthly budget:

Note: If you want to save for college, you might consider a 529 college savings plan. For example, here is a hypothetical situation to help illustrate this point: To cover 25 percent of a public, four-year, in-state school, you’d need to save $109 a month starting when your child is born. (This assumes a 6 percent annual return and tuition rate of $201,386, which is what SavingforCollege.com predicts will be the average tuition in 18 years.)

Save for the Big-Ticket Baby Items

There’s often a big up-front investment for new parents — babies require endless gear. You’re going to need a solid savings plan for those costs alone.

Depending on what’s right for your family, your up-front costs should include the following (these are based on the national average costs, and may vary according to your location or brand):

  • Crib: $120-$850
  • Changing table: $80-$250
  • Car seat: $80-$300
  • Stroller: $70-$900
  • Diaper bag: $25-$200
  • Playpen: $59-$150
  • Swing: $85-$120
  • High chair: $60-$250
  • Bottles: $50-$100
  • Monitor: $40-$60

Remember that people love to give baby gifts, so you may be able to register for many of these items and take them out of your budget.

Pump HR for Information

If you’re expecting, or even just considering having kids soon, talk to HR as soon as possible. In order to fully understand what your leave will look like, find out:

  • The pay policy for parental leave
  • Whether you can combine your leave with paid time off
  • Your company’s long-term disability policy, and whether it can be applied to your leave
  • The benefits entitled to adoptive parents
  • How long your job is secure
  • What forms you need to fill out to take leave
  • Who is going to cover your duties while you are away
  • The options for transitioning back to work — can you work part-time or telecommute to on-ramp?

Finally, get a sense of the insurance changes that will come with parenthood. Find out when and how to add your baby to your health care plan, and see whether your insurance allows you to contribute to a Flexible Spending Account/Health Savings Account or a Dependent Care FSA.

Get Your Legal Ducks in a Row

No one likes to think about these sorts of things, but if you and your partner (if you have one) were to pass away, your estate would go to court for a lengthy process that can cost somewhere in the neighborhood of 5 percent of your assets.

To get your house in order, some of the documents you should consider having include a will, a power of attorney, and a health care proxy. This may save your heirs from having to make difficult decisions for you and help ensure that they’re taken care of: Wills clarify how you want to distribute your property after death, and they declare a legal guardian for your children. Power of attorney gives authority to another person to make decisions on your behalf about your property or finances. A health care proxy lays out who will make medical decisions for you if you can’t make them for yourself. Make sure you have both primary and contingent beneficiaries listed on all of these so that your wishes are as clear as possible.

You also should consider creating a living trust — a legal document that provides lifetime and after-death property management and lets you transfer assets easily. A living trust is a revocable trust, meaning it can be dissolved or changed at any time. Living trusts are especially helpful for parents of young children: You can include specific instructions within the trust, like how and when your assets will be transferred if you die before you children become legal adults (18 or 21, depending on the state).

Know Your Tax Breaks

Having a kid comes with tons of benefits — unending love and (hopefully) someone to take care of you in your golden years, to name a few. But don’t overlook the concrete tax benefits that you can get as well. These include:

Each deduction and credit has specific requirements, so be sure to double-check your eligibility. Fun fact: You can claim a full year’s worth of tax benefits even if your child is born on December 31.

Legal disclaimer: Any third-party resources or websites referenced above are not under our control. We cannot guarantee and are not responsible for the accuracy of the resources, websites, or any products or services available through such resources or websites. While we hope the information in this document is useful, it’s only intended to provide general education. It’s not legal, tax, or investment advice, and may not apply or be useful to your specific financial situation.

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MONEY College

Hillary Clinton Promises More Aid for College Students With Kids

Hillary Clinton Campaigns In New Hampshire
Darren McCollester—Getty Images Hillary Clinton hosts a grassroots organizing event at McIntyre Ski Area August 10, 2015 in Manchester, New Hampshire.

The Democratic presidential candidate promised to dramatically increase funding for an existing child care program and create a new scholarship for students with children.

Democratic presidential candidate Hillary Clinton said on Friday that if elected she would dramatically expand a program that provides child care for college students with children, and to create a scholarship program for student parents.

Clinton announced the plan at a town hall meeting in Dubuque, Iowa, as she continued to highlight her platform to make college more affordable.

The proposal would increase funding from $15 million to $250 million for a federal program that provides matching funds to states and institutions for on-campus child care. Her campaign estimates it would create 250,000 additional spaces for the children of students.

Check out the new MONEY College Planner

Clinton also said she would create a “SPARK College Scholarship” to help parents pay for their own higher education.

It would provide up to $1,500 per year to as many as one million student parents who achieve minimum grade levels and meet other requirements, the campaign said.

“Paying for college is driving more and more people farther from their dreams,” Clinton said in Dubuque.

Earlier this week, Clinton announced a plan to increase access to tuition grants, allow graduates to refinance existing loans at lower interest rates, streamline income-based repayment plans and police predatory lenders.

The program would cost an estimated $350 billion over 10 years and would be paid for by capping itemized tax deductions for the wealthy.

Clinton, the front-runner in the race to become the Democratic nominee for the November 2016 election, on Friday won the endorsement of the International Association of Machinists and Aerospace Workers. It was the second national union to give her the stamp of approval.

Check out MONEY’s 2015-16 Best Colleges rankings

MONEY Kids and Money

The Crazy Things Parents Do for Their Adult Kids

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Getty Images

What were they thinking?

You’re hanging out with other parents at the playground when you overhear someone discuss their kid’s recent birthday party.

You smile and nod, but you’re secretly wondering, “What are they thinking paying $1,500 for a bouncy house and a three-foot ‘Frozen’ cake … for a 4-year-old?”

Welcome to modern-day parenting—and indulging. And it doesn’t necessarily end when kids leave the nest, either.

Just read what these financial planners across the country have to share.

We asked money pros to share some of the most outrageous things—from plunking down serious dough to buy siblings his-and-hers convertibles to bankrolling a tanking business—they’ve heard parents do for their grown (and nearly grown) kids.

Read Next: When It’s Time to Cut Financial Support to Your Parents or Adult Kids

“I’m Buying Convertibles for Both of My Children.”

“I had a client who received $1 million in a divorce settlement some 10 years after the marriage had ended.

She only made $35,000 a year, so this windfall was all the money she would probably ever have in savings.

Shortly after she came into the money, she told me that she wanted to buy each of her kids a car—a new convertible Mustang for her daughter and a BMW convertible for her son—because she felt bad that they’d done without for so many years.

I told her I understood her desire to give her kids a treat, but she’d be better off buying them used Hondas for $10,000 each, getting a house in the $150K to $200K range and then putting away a significant chunk for her own retirement.

After telling me, ‘I really want to do this for them,’ she purchased the convertibles, anyway—and burned through about $240,000 instead of investing it.”

—Karen Lee, CFP, Karen Lee and Associates

Read Next: Millennial’s Guide to Moving Out of Your Parent’s House

“I’m Taking a Home Equity Loan and Doubling My Workload—So My Kid Doesn’t Have Student Loans.”

“I recently worked with parents who didn’t want their child to take out any loans for college. While the sentiment is understandable, they weren’t in a position to do it.

I tried to discuss with them why I thought they should take advantage of the financial aid package they were offered, which included subsidized student loans and a work-study award.

But they didn’t want to do either—or even let their child work part-time.

Instead, they decided that the mother would double her workload and they’d take out a home equity loan to help pay for the private school.

While the situation isn’t disastrous, letting the child shoulder some of the responsibility of college tuition would have given the kid a sense of ownership over costs—and served as a confidence builder for their post-college years.”

—Marguerita M. Cheng, CFP, Blue Ocean Global Wealth

Read Next: The Right Way to Borrow for Your Kid’s College

“I Want to Give My Daughter $250,000 to Save Her Restaurant.”

“A few years back, one of my retired clients came to me because her child was in a desperate situation: Her daughter and son-in-law owned a small seaside restaurant that was going bankrupt.

My client was living on Social Security, a small pension and the earnings from her savings, which were around $300,000 at the time. She wanted to lend them $250,000—and the interest they’d pay on the loan would fund her retirement.

I strongly cautioned her against the move, explaining that if the ‘investment’ didn’t work out, she would not have enough monthly income to live on.

“I had a situation in which the parents of a grown woman were helping her to cover most of her family’s six-figure lifestyle costs—including vacations.”

The bottom line is that you should never lend money to your children—unless you can afford to lose it, because you’re not always guaranteed to get paid back.

Unfortunately, she did it, anyway.

As it turned out, her daughter couldn’t make the interest payments—and my client ended up moving to Seattle to live with them, since she didn’t have enough income to pay her bills. She now also works at the restaurant to earn extra money.”

—Les Szarka, CFP and CEO, Szarka Financial Planning & Investments

“I Support My Grown Daughter … and Her Entire Family.”

“I had a situation in which the parents of a grown woman were helping her to cover most of her family’s six-figure lifestyle costs—including vacations and schooling costs for her two children.

Fortunately, right on the cusp of receiving yet another big infusion of cash, the daughter came to me and admitted that she knew she needed to make a change.

So I ran financial models that illustrated how her family’s cost of living was unsustainable. I also helped her see the toll the situation was taking on her self-image—and her relationship with her parents.

She had to make significant changes—and work to earn more money, rather than be subsidized by her parents—but she is well on her way to being on her feet.

For parents like hers, treating their children as though they are unable to earn their own living may end up creating exactly that result.”

—Colin Drake, CFP, Drake Wealth Management

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the individuals interviewed or quoted in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.

More From LearnVest:

MONEY Kids and Money

How to Have the ‘Money Talk’ With Your Kids

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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 Zillow.com 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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ShutterWorx—Getty Images

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.
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MONEY College

5 Pricey Ways Parents Pay to Get Their Kids Get Ahead

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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 recommendsnumber2.com and khanacademy.com.

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.”

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