MONEY Kids and Money

Trouble Talking to Kids About Money? Try This Book Instead

parents trying to talk to teenage daughter
Getty Images/Altrendo

A new book hopes to impart important money lessons in just a few words and pictures

Talking to your kids about money is never easy. We have so many financial taboos and insecurities that many parents would rather skip it—just like their parents likely did with them. If that sounds like you, maybe a new easy-to-digest money guide written for teens can be part of your answer.

As a parent, you have to do something. Kids today will come of age and ultimately retire in a vastly less secure financial world. Their keys to long-term success will have little to do with the traditional pensions and Social Security benefits that may be a big part of your own retirement calculus. For them, saving early and building their own safety net is the only sure solution.

Most parents get that. After all, adults have seen first-hand the long-running switch from defined benefit to defined contribution plans that took flight in the 1980s. Yet only in the last 15 years have we really begun to grasp how much this change has undermined retirement security. Now, more parents are having the money talk with their kids. Still, many say they find it easier to talk about sex or drugs than finances.

The big challenge of our day, as it relates to the financial security of young people, is getting them thinking about their financial future now while they have 40 or 50 years to let their savings compound. But saving is only one piece of the puzzle. Young people need to protect their identity and their credit score—two relatively recent considerations. Many of them are also committed to making a difference through giving, which is an uplifting trait of younger generations. Yet they are prone to scams and don’t know how to vet a charity.

In OMG: The Official Money Guide for Teenagers, authors Susan and Michael Beacham tackle these and other basics in a breezy, colorful, cleverly illustrated booklet meant to hold a teen’s attention. The whole thing can be read in an hour. I’m not convinced the YouTube generation will latch on to any written material on this subject. And while the authors do a nice job of keeping things simple, they just can’t avoid eye-glazing terms like “liquidity” and “principal.”

But they make a solid effort to hold a teen’s interest through a handful of “awkward money moments,” which illustrate how poor money management can lead to embarrassing outcomes like their debit card being declined in front of friends or having to wear last year’s team uniform because they spent all their money at the mall. “Kids are very social and money is a big part of that social experience,” says Susan Beacham. “No teen wants to feel awkward, which is why we chose this word. If they read nothing else but these segments they will be ahead of the game.”

The Beachams are co-founders of Money Savvy Generation, a youth financial education website. They have a long history in personal finance and created the Money Savvy Pig, a bank with separate compartments for saving, spending, donating, and investing. In OMG, they tackle budgets, saving, investing, plastic, identity theft, giving, and insurance.

A new money guide for young people seems to pop up every few years. So it’s not like this hasn’t been tried before. Earlier titles include Money Sense for Kids from Barron’s and The Everything Kids Money Book by Brette McWhorter Sember. But most often this subject is geared at parents, offering ways to teach their kids about money. Dave Ramsey’s Smart Money Smart Kids came out last spring and due out early next year is The Opposite of Spoiled: Raising Kids Who are Grounded, Generous and Smart About Money from New York Times personal finance columnist Ron Lieber.

In a nod to how tough it can be to get teens to read a book about money, Beacham suggests a parent or grandparent ask them to read OMG, and offer them an incentive like a gift card after completing the chapter on “ways to pay” or a cash bonus after reading the chapter on budgets and setting one up. “Make reading the book a bit like a treasure hunt,” she says. That just might make having the money talk easier too.

 

 

 

MONEY Odd Spending

There’s Probably No Cash in Your Wallet. Could That Cost You?

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Nikola Bilic—Alamy

If you walk around with little or no cash, you're in the majority. But choosing plastic over cash for everyday purchases could mean you'll spend more in the long run.

According to two recent surveys, the majority of consumers walk around with little or no cash. Most prefer plastic for the sake of convenience and safety. There could be an unfortunate side effect, however, based on the theory that people spend more when making purchases with credit or debit cards rather than cash.

Last week, VoucherCloud, a UK-based deals and coupon site, released the results of a survey of 2,341 Americans indicating that “over half of American citizens (57%) ‘never’ carry cash, instead relying solely on credit and debit cards to pay for their daily expenses.” Only 10% of survey participants said that they “always” carry cash, and another 33% said that they carried cash “rarely” or “sometimes.”

Could this be true? Do the majority of American adults you pass on the street really have empty wallets? There’s reason for skepticism. Let’s start with the question that prompted the responses: “How often do you carry cash with you on an everyday basis?” Many may read this question as essentially asking, Do you always carry cash? That’s different than asking if you usually keep a few greenbacks in your pocket.

What’s more, another recent survey, from Bankrate, focused on the same subject but ended up with very different results. In its survey, which asked, “How much cash do you usually carry on a daily basis?” Bankrate found that only 9% selected the option “Don’t carry cash/does not apply.”

There’s no denying that folks carry a lot less cash than they used to. According to Bankrate’s data, more than three-quarters of people generally walk around with $50 or less: 40% usually have less than $20 on hand, 29% say $20 to $50, and 9% typically go cashless (or “does not apply,” whatever that means).

In both surveys, participants said they felt safer that way. The top reasons given in the VoucherCloud survey were “concerns over safety and the risk of theft” (65%) and “risk of losing my wallet and/or its contents” (53%). Women tend to carry less cash than men—77% of female respondents said they keep $50 or less handy, versus 61% of men—perhaps owing to the fact that women “may prefer to carry less cash than men so as to reduce the risk of being a target for criminal activity,” according to Bankrate chief financial analyst Greg McBride.

As for whether it’s wise to carry little or no cash, the surveys come to very different conclusions. When asked, “Do you spend more or less when paying by card instead of cash?” 84% of VoucherCloud respondents said they do more damage when spending with plastic. “While using payment cards rather than cash is a widespread modern phenomenon, because it is so quick and convenient, it can become a dangerous trend for some of us!” VoucherCloud’s Matthew Wood warned. “It’s much harder to keep up with what you’re spending as you don’t see the money leave your hands and, because it’s just a little piece of plastic, it doesn’t feel like a real exchange. It’s easy to get carried away.”

There’s plenty of research out there to back up this theory. Generally speaking, the idea is accepted that handing over cash feels more tangible and “hurts” more compared to quickly swiping a card. Many budget and personal finance experts recommend going cash only and maybe even freezing credit and debit cards in a block of ice as a strategy to limit one’s spending.

The Bankrate study, on the other hand, makes the argument that people today think of any cash as “petty cash” that will inevitably be spent quickly and carelessly. So it stands to reason that people don’t want to carry around too much. “If you’re carrying more, maybe you feel you have more, and you feel you spend more easily,” Joydeep Srivastava, a professor of marketing at the University of Maryland, told Bankrate. To many consumers, cash on hand is as good as cash spent. “As soon as you draw it from the ATM, it’s like you’ve already spent it,” said Srivastava. “You don’t feel that pang of guilt of spending it anymore.”

So which theory is true? If you’re trying to avoid unnecessary spending, should your primary mode of paying be plastic or cash? And by extension, is it best to carry lots, some, or no cash? The truth is, the answers probably vary a lot from person to person.

If you’re the type who is constantly piling up credit card debt or getting hit with overdraft fees on a debit card, it may be time to put the plastic on ice and limit yourself to cash-only expenditures. And it’s probably best to try to plan out your daily expenses and limit how much cash you carry around. Because if you have more cash than you need, you know you’ll just spend it.

TIME paying with plastic

This Is Why Cash Will Never Be King Again

Jonathan Kitchen—Getty Images

Only 1 in 10 adults always carry cash. Where does this leave the rest in an emergency? Just fine, thank you.

I never leave home without some cash in my pocket. My young adult children rarely carry so much as a penny. What about emergencies? Have I failed as a parent?

You might say so. Yet walking about town cashless isn’t the crime it once might have been. Really. Forty years ago my kids would have been arrested as vagrants for being penniless in public—like Rambo or Adam Trask in Steinbeck’s East of Eden. Today, almost everyone does it.

That’s no exaggeration. Only 10% of adults say they always have cash on them, according to a survey from vouchercloud, a coupon website. A startling 73% say they never or rarely carry hard currency. They rely on plastic to pay for everything.

That strikes many as irresponsible. But the world has changed a great deal since an apparently destitute John Rambo strolled into the fictional town of Hope, Wash. after the Vietnam War. You’ll never again need a quarter for a phone call; someone nearby surely has a charged cell phone. Even cabs take a credit card, and if you really need cash the ATM isn’t far away.

Meanwhile, carrying cash can be a pain. Those who eschew it cite worries about theft, losing their wallet and coming into contact with germs, and the greater convenience of plastic. Often cited pitfalls of going cashless are that you are prone to spend more and lose track of your spending. But even those truisms have been turned at least partly on their head.

Yes, surveys still show that people using only plastic spend around 15% more than those who use cash. In the vouchercloud survey, 84% of plastic users said they often spend more and 76% said they lose track of where their money goes. But this is becoming less the case all the time.

For many, especially young people, the opposite is true. They are so unaccustomed to using cash that when they have hard currency it burns a hole in their pocket. They view it as extra and spend it quickly. Meanwhile, they don’t keep a bulging George Costanza billfold full of receipts; by relying on plastic they can more easily track all their spending through monthly statements or a service like Mint.com. Cash actually works against their budget and their ability to track what they spend.

These are considerations that folks past 35 vastly under appreciate. A well-managed debit or credit card (low fees, no revolving balance or overdrafts) may be preferable to cash for many people. That said carrying some cash remains a smart strategy even if you never use it.

A growing number of shops won’t accept plastic for purchases under $5; others offer a discount for cash. Some popular restaurants, bars and shops don’t take plastic of any kind. Vending machines and self-service car washes need quarters or bills. Cash makes it easier to split a bill with friends or chip in for a present at the office. Roadside towing often requires cash. How will you tip the bellhop? What about the tollbooth that doesn’t take EZ Pass? You get the idea. Cash is still king, but in far fewer places.

 

 

 

TIME E-Commerce

Don’t Want to Pay $99 for Amazon Prime? Here Are 5 Alternatives

Amazon.com Illustrations Ahead Of Earnings
Andrew Harrer—Getty Images

You could just suck it up and pay the freshly hiked rates for Amazon Prime. Or you could get a little creative, save some money, and still enjoy free shipping.

The idea that’s been floated for a few months has become a reality: On Thursday, Amazon announced that the price of its Prime service would rise to $99 annually, up from the $79 rate that’s been charged since the two-day shipping membership program was introduced nearly a decade ago. The Amazon Prime for Students rate—available to those with a .edu email address until graduation, including a six-month free trial—will rise to $49 annually, up from $39.

In Amazon’s note about the changes, Prime members are told that if the date you normally pay for the service before April 17, 2014, the old rate—$79, or $39 for students—will be charged. On the other hand, “If your membership renews on or after April 17, 2014, you’ll be charged at a membership rate of $99.” Or $49 for those in the Amazon Student program.

And if you’d rather not cough up the extra cash now involved in a Prime membership, consider the following alternatives to lower the costs, at least for a while:

Sign Up for Prime Now
New Prime members can lock in existing rates by signing up for the service no later than Wednesday, March 19. Students who sign up by then will get a free six-month trial, and when that period ends, they’ll be charged $39 for that first year of service (and $49 thereafter until graduation). Likewise, anyone signing up for a new regular Prime membership by March 19 would pay the $79 annual rate, after receiving a free one-month trial.

(MORE: Amazon Prime Loses $11 Annually Per Member … And It’s a Huge Success!)

Use a Workaround Hack
In a lively SlickDeals.net forum about the Prime price increase, several commenters suggest the tactic of buying an Amazon Prime Gift Membership for oneself. Purchasers are allowed to specify the starting date of Prime membership up to one year in advance of the date it’s bought. The idea is that you purchase a gift membership—for yourself—that starts the day after your current membership is set to expire. And of course, you make the gift purchase soon, to lock in the cheaper rate.

Get a Credit Card with Free Prime
Certain American Express cards come with an offer of free Prime membership for one year for new members. At least one of the cards (Blue Cash Everyday) has no annual fee itself.

Consider ShopRunner Instead
ShopRunner, the main shipping service competitor of Prime, is still available at the standard rate of $79 annually, after a free 30-day trial. Members get free two-day shipping from dozens of major retailers, including Toys R Us, PetSmart, FTD, eBags, Calvin Klein, and more. Even better, last November, ShopRunner launched a new partnership with American Express, in which members can get its two-day shipping service totally free so long as you register an AmEx card at ShopRunner checkout. By doing so, the annual membership fee is waived—and this is no one-year promotional deal, the fee is waived indefinitely. Of course, if you’re not a Prime member, you don’t get access to the streaming video services included with a subscription.

(MORE: Amazon Prime: Bigger, More Powerful, More Profitable Than Anyone Imagined)

Just Use Amazon’s Free Super Saver Shipping
Last fall, Amazon raised the minimum purchase from $25 to $35 in order for customers to be eligible for free shipping, without the requirement of a Prime membership. Many people grumbled about the change, but the $35 threshold is pretty easy to reach, considering that Amazon sells nearly everything under the sun. And it’s still much cheaper than the typical e-retailer’s minimum purchase requirement, of $75 or $99, in order to qualify for free shipping. Sure, Amazon’s free shipping for non-Prime members is slow—”your order will be delivered 5-8 business days after all of your items are available to ship,” Amazon explains—but hey, it’s free. And it’s truly free-free, not just “free” after you’ve paid $79, err $99, annually.

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