November-December 2009 Selected Content

Managing Resources In the September-October issue of Home Education Magazine, (homeedmag.com/HEM/265.html) we discussed some of the issues facing parents teaching financial responsibility to younger children, such as whether to offer an allowance, and we discussed some resources to make that job a bit easier, like games. In this issue, we cover issues and resources of interest to parents and their older children and teens.

A trip to the library or through an Internet search engine will cough up tens if not hundreds of resources that purport to teach your teen about managing money. Books cover the gamut, from managing allowances, to investing, to smart credit practices, to starting and running businesses. Websites have nifty multimedia offerings, including interactive games. When you and your teen are ready, you can even take advantage of debit or prepaid cards and banking services designed just for them. I've grouped some of the better resources into categories I hope will help narrow your search for the best (and most economical) resources out there.

Online

FoolProof
FoolProofMe.com
If you're looking for an edgy site founded and developed by a twenty-something entrepreneur, you'll find it at FoolProofMe.com. Billed as "Real Consumer Education," FoolProof is a series of modules with dozens of videos featuring young people as the teachers. The no-nonsense videos run the gamut of financial topics of interest to high school and college age students.

FoolProof has three modes: a guided study designed for high school teachers to use in classroom settings, a series of modules for parents and their high school age students (including tests), and FoolProofSolo, for college students. Check out the introductory videos. I think you'll be impressed. More importantly, I think your teen will be impressed.

The site is free but requires registration. FoolProof has partnered with credit unions and is endorsed by the Consumer Federation of America and the National Association of Consumer Advocates.

Money&mart*Credit&mart
https://www.cccs.net/education/mscs.asp
Money&mart*Credit&mart is a free online and interactive financial literacy program developed by Consumer Credit Counseling Services of Greater Dallas, Inc. It encompasses issues including financial management, credit management and banking. Its user-friendly format requires only about 2.5 to 3 hours of time to negotiate. The High School Version, available in English, is designed for use in a high school classroom and includes a printable student workbook, teacher's guide, tests and activities. The Consumer Version, a self-paced interactive program in English and Spanish, is targeted at college age and above. It also includes a printable student workbook.

Studio 2b
studio2b.org/lounge/games/
Studio 2b, a program of the Girl Scouts of America, aimed at teens, teaches money and time sense through a game called "Making Cents of Her Life." Presented by "Visa's Practical Money Skills for Life," the player chooses one of four personas to assist. Each young woman is in a different stage of her education or financial life, from the high schooler who wants to buy a DVD to a new college graduate with her first job.

This program not only presents financial issues in an entertaining format, but also weaves in time management as well. The player adjusts the financial budget and figures out how the student or wage earner can get all her work completed or maintain a decent grade average, while paying the bills. All along the way, the game discusses a player's choices and how each will affect the game persona's bank account and grades, and even how her present day choices will affect her financial future. The program is available on the Studio 2b website, is free, and requires no log-in or personal information.

Give Me 20
Giveme20.com
This site is directed not at teens but at parents of teens. The site is offered by PSCU Financial Services (www.pscufs.com), an organization that provides financial services, like credit card processing to credit unions. Giveme20 has a number of resources available like savings calculators, a spending record spreadsheet and lots of tips for helping you help your children learn money management techniques. Check out the video on using prepaid/reloadable cards.

Books

The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of by David and Tom Gardner, with Selena Maranjian (2002 Simon & Schuster) $14.95.
What teen wouldn't want to outdistance his parents in the money department? In this lively book, the Motley Fools, David and Tom Gardner (have you heard them on the radio or read their newspaper columns?) rework their investment advice for a teen audience. Taking things a step beyond money management, they advise on how to turn a small amount of moolah into a nice nest egg.

Rich Dad Poor Dad for Teens: The Secrets About Money--That You Don't Learn in School! by Robert T. Kiyosaki and Sharon L. Lechter (Little, Brown Young Readers), $14.99.
"By giving kids an allowance, you teach that child to work for money rather than learn to create money," says author Robert Kiyosaki. Mr. Kiyosaki's philosophy reigns supreme in this book. Forget allowances, he suggests. Learn to rely on your own resources (investing, business building) to make money. That will serve you in the long run better than relying on a paycheck from someone else.

The Complete Idiot's Guide to Money for Teens by Susan Shelley (2001 Alpha Books) $12.95.
This fun and easy to comprehend book discusses everything from allowances and jobs, budgeting, investing, car buying, credit and even factors to consider in starting a business. Lots of cartoon illustrations and side bars highlight important points and make this an enjoyable read for even the most fickle teen.

The Teen Girl's Gotta-Have-It Guide to Money: Getting Smart About Making It, Saving It, and Spending It! by Jessica Blatt (Watson-Guptill 2007) $8.95.
Lots of financial advice here, including a great description of how the stock market works and how to handle difficult teen financial situations.

Teen Consumer Smarts: Shop, Save, and Steer Clear of Scams (Teen Issues) by Francha Roffe Menhard (Enslow Publishers 2002) $22.60.
This little volume, just 64 pages, is chock full of info teens need to make their way in the world. Case studies illustrate the major themes of the book, and include discussions on evaluating advertising, preparing for unexpected expenses and avoiding scams.

Curricula and Lesson Plans

Most every homeschool curriculum supplier, correspondence school or online high school offers some form of consumer math. If you prefer a more structured curriculum, or one that weaves seamlessly with your preferred curriculum, check with such a supplier to find out what the company has to offer and for what age group. For those of you who would like to incorporate free or low-cost options in your studies, here are some worthwhile choices.

MoneySmart
http://www.fdic.gov/consumers/consumer/moneysmart/young.html

The FDIC's MoneySmart course is free and comes in two versions, one for adults and one for young adults. The adult program is available in two media, one online and one CD-based. The young adult version is available on CD as a self-paced individual program, or on CD in a format appropriate for a classroom setting. Both the adult and young adult programs are available in English and Spanish.

Each of the ten interactive online modules generally takes between 20-30 minutes to complete. Students receive ongoing feedback and, upon successful completion of each module, can print out a personalized certificate of completion. Whether you intend to teach a class of 1 or 25, the program materials, including "train the trainer" materials, can be ordered free from the FDIC.

High School Financial Planning Program
http://hsfpp.nefe.org/home/
The National Endowment for Financial Education has developed the High School Financial Planning Program. The HSFPP seven-unit course covers basic financial planning, budgeting, investing, debt, insurance, income, and financial safety issues.

This free curriculum offers instructor's manual, an instructor's program CD, and student workbooks. I've taught this course in our homeschool co-op to both high school and middle school students with much success. The materials are relevant, up-to-date, well constructed and entertaining.

Dave Ramsey's Foundations in Personal Finance
http://www.daveramsey.com/school/
Dave Ramsey's Foundations in Personal Finance (formerly Financial Peace for the Next Generation) has a public/private school edition for use in the classroom, and a homeschool edition licensed only for home use. The homeschool edition includes four DVDs containing four units or three chapters each in segments of 15 minutes or shorter, a teacher's guide CD and a student workbook for $89.99, plus S&H. The Teacher's Pack, for use in a school setting, includes ten workbooks and retails for $299.99, plus S&H.

Money Instructor
www.moneyinstructor.com
Moneyinstructor is a subscription site covering a wide range of money and consumer issues. It provides worksheets, lesson plans, interactive materials and links to resources teaching basic money topics. It also has extensive information on issues of interest to older students, including career planning, resume writing, time management and public speaking, among others. A full subscription costs $29.95 per year.

Practical Money Skills for Life
www.PracticalMoneySkills.com
This site has a lot to offer. Don't be put off by the fact that it's a product of Visa, the credit card folks. Here you can find lesson plans, printable teacher guides and student activities and worksheets, most as downloadable PDFs. Many can also be ordered on CD-ROM or as printed material. Lesson plans for teens and up include downloadable PowerPoint slide presentations.

The site has several fun diversions, including Financial Football, an interactive online game that combines elements of a football game with a multiple choice quiz format. Also included are downloadable lesson plans with a football theme.

Credit Cards and Reloadable Pre-Paid Cards

In an earlier generation, our parents may have asked, "When is my child ready for a checking account?" Today the question has become, "When is my child ready for a credit card?" Some parents choose to provide access to their own accounts by setting up teens as "authorized users" on the parents' credit card or debit card. Most parents I know admonish their children to use the cards only in an "emergency." Unfortunately, many find that their child's definition of emergency is broad enough to encompass the closing hours of a "fabulous" 50% off sale at the mall or a "mental health" weekend at the ski resort.

Early in 2010, new federal regulations take effect that control how financial institutions market credit cards to those under 21. Under the new rules, young applicants will have to obtain an adult co-signer or will have to prove that the applicant has the ability to repay the debt. No one knows yet what the credit grantors will require to prove that an 18 year old college freshman can pay this credit card bill. But, parents can take some measure of satisfaction and relief knowing that the card issuers will likely call for a co-signer. Of course, if a parent acquiesces, the parent will be on the line for anything the child charges, along with any fees and interest.

Not all children take advantage in this way, but from an educational perspective, kids don't learn a lot by using mom's credit card when mom is going to pay the bill (or let the balance carry over) at the end of the month. Maybe there's another way to give kids the plastic experience while sending the proverbial message, "money doesn't grow on trees."

Visa and Mastercard both offer prepaid/reloadable cards designed for use by teen and college students. These cards, similar in concept to gift cards, offer more features and record keeping options than gift cards, secured credit cards or even debit cards, including ways to limit not only the amount the student can spend, but the types of purchases for which the card can be used.

These cards work differently than credit cards. Here are the basics:

• Parents transfer or deposit money to the card by phone, through an ATM or online from a checking or savings account.

• The user can only purchase up to the limit of the deposit on the card.

• Most teen prepaid cards allow the parent to limit the type or amount of purchases.

• The teen has access to information about the account so that he can monitor purchases, deposits and balance.

• No interest charges, late fees or overlimit charges because the user isn't borrowing money and no overdraft fees because there's no overdraft.

• No credit checks.

• The cards, which are issued by banks, are branded by Visa or MasterCard and accepted wherever the respective company's credit or debit cards are accepted.

• Most offer a no-liability option when the account holder promptly reports a lost or stolen card.

• Some even offer a service that allows employers direct deposit of paychecks to the card.

• Some include money-management information for teens.

• At least one program, the PayJr Visa Buxx Card (www.payjr.com), also offers an optional allowance card and chore record keeping system for the pre-teen crowd.

But all of this access and convenience comes at a price (are you surprised?). Here's what you need to look out for:

• Set up or activation fees of up to $25.00

• Access fees that can run from $.99 to $4.99 per month

• Fees for each purchase, deposit and/or ATM withdrawal range from 0 to $3.00

• Fees charged when the card is declined for insufficient funds

So, are these just a gimmick to get our teens accustomed to using plastic and to cause a disconnect between the use of actual cash and the purchase of goods and services? Perhaps, but statistics show that more and more teens are using credit cards and using them earlier than ever before.

Prepaid cards have three major drawbacks to obtaining a sound financial education. First: The fees can be high. Second: They don't teach children the cost of credit or the consequences of using credit unwisely. Third: Because they're not credit cards, they do not help young people establish or rebuild credit.

On the other hand, many see clear advantages to a system that allows parents to monitor a teen's spending habits with the peace of mind that the money is safe while avoiding pitfalls like excessive credit card debt.

Visit www.allowcard.com to learn more about MasterCard's product or usa.visa.com/personal/cards/prepaid/visa_buxx.html for information on Visa's teen card.

Banking Services

While the days of the old passbook savings accounts are long gone, many banks still offer services to young depositors as a convenience for their parents, such as savings and checking accounts. Many of those accounts have no or low monthly service fees. Some even offer debit cards or check cards. Check out your local bank, credit union or savings institution for more information.

One standout bank cannot be beaten for its service to its customer base and deserves special mention. Young Americans Bank in Denver, Colorado, www.yacenter.org, specializes in financial education and encouraging entrepreneurship. The bank has a brick and mortar office in Denver, complete with officers and tellers, but also offers online banking services to children across the country.

Young Americans, which exists solely to cater to the financial needs and education of those 21 and under, offers most of the same type of accounts as a full-service traditional bank: savings and checking accounts, CDs and credit cards. Most remarkably, the bank even makes loans for its young customers for starting a business, purchasing a new bike or even for college expenses.

Young Americans Bank services are available online in all 50 states.

A Final Word

Once you've kissed your children goodbye at the door to the dorm room, you can be assured that the financial education you've provided will continue to serve them the rest of their lives. But why stop at the dorm room door? A great going-to-college gift might be a subscription to Young Money magazine. This bi-monthly specializes in financial information for young adults, specifically, "money management, entrepreneurship, careers, investing, technology, travel, entertainment and automotive topics." Profiling young entrepreneurs is a favorite focus. Young Money can be found at many bookstores and retailers, or online at www.youngmoney.com.

© 2009, Carron Armstrong

Editor's Note: The first part of "Teaching Money Smarts and Financial Responsibility" concentrates on resources for younger children appeared in the Sept-Oct/09 issue of HEM.