Smart Money Moves for Kids Dr. Judith Briles

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Chapter 1 - The Game Book for Parents Order from Dr. Briles When I was raising my kids, Dr. Benjamin Spock was my primary resource for my babies' (and mom's) medical needs. Today, I live in Colorado, the home of "Dr. Mom" and I often read columns and articles by guru pediatrician, Dr. T. Berry Brazelton. In the old days, Dr. Spock was an advocate of a more looser style of upbringing. Today, the professionals are advocates of setting limits. They believe that not only is it possible to set limits, it's necessary. For over forty years, I've been a reader of twin syndicated columnists Ann Landers and Abigail Van Buren. Each has written in her column that kids need discipline, shouldn't be given everything, and if they are, they will soon lose respect for money. As a parent, setting limits can be difficult, but absolutely necessary, especially when it comes to money and the things that money buys that kids want. Bad money habits start rearing their head in the pre-school years. It can be as simple as a "gimme" attack--your kid wants something NOW and expects you to instantly get it for him NOW. And, you do! Remember the old days (or your parent's old days)-when an ice cream cone was a dime, when you could go to the movies for fifty cents (and get a soda and a bag of popcorn included), when the tooth fairy rarely left more than a dime under your pillow and the latest copy of Mad magazine cost twenty-five cents? We all remember when things cost a lot less. What we as parents must learn is to bite our tongues at times because or memories don't fit into the realties of the present day. Last time I bought a one-scoop ice cream cone, the cost was almost two dollars, not ten cents. He bottom line is this, the dollar is worth far less than it was when you and I were growing up. When it comes to talking money with kids, we need to talk in today's use, not yesteryear's. If I asked you if there was enough time in the month to do and get done all the things that you would like to do, you would most likely say, "No," that there wasn't enough time in the day to complete all the things you have to do, much less what you would like to do. We are an over committed population. Most of us spend too little time with our kids on a daily basis; it's estimated that the average parent spends only 15 minutes each day - one on one- with each kid. The more kids, the less time. We have become a nation of fast food and fast meals. Few families sit down together for a meal at home. There's usually someone missing, the meal is set up in a quasi-buffet style or it's, "We'll stop at McDonald's on the way." The modern family has more lessons committed to, play-overs and stay-overs scheduled and time away from home then ever before. Home sometimes feels like a place we change our clothes and sleep at. When it comes to money talks, most parents know there should be something...but what? And when? And, how often? It's not unusual to get caught up in the Scarlett O'Hara syndrome--tomorrow is another day. Talking to your kids and teaching them the principles of money is almost as scary as having the "sex" talk. You know the topic/subject will come up...and you will stumble over it...and deep down, you hope they figure it all out and never ask you anything that might embarrass you. Right? I suspect so. During the summer, my niece Torri celebrated her marriage. All the family gathered from multiple states. I hadn't seen my father since the previous Christmas and immediately noted how frail he had become. My three brothers and I compared notes and knew once again, we needed to do the "talk." My father, at 88, still would not do a will nor do any other things around the topic of money that we all felt should be addressed. I guess the good news is that my father had minimal assets, estate taxes were not an issue, but it would be nice to know what he would like us to do when he died. In my family, at least from my parents generation, we didn't talk about money. It was a taboo topic, like sex. We were clueless about our family's money situation, how much or little was in our house. We always ate and had the appropriate clothes to wear when the new school year started. We did not know how much money my father made, how much was paid in taxes (heck, we didn't know you paid taxes) or how much we had in the bank (if anything). In our family, money was like the wind--we knew it was around, we just didn't know where it came from. More good news is that we weren't alone--most of my friends had no idea what their parents did to bring in their money or how it was spend. And, I suspect you were probably in the same boat as we all were. When I look at families today, I find them much more open. They talk about almost everything--sex, drugs and the perils of both, relationship problems, and yet they still hold back about money. After all, money can be a powerful tool. Some parents buy affection, others use it to cover guilt. It can be given generously or conditionally. Parents are usually the money role model. In my family's case, none of my brothers wanted to emulate our parents benign neglect approach to money. If a parent has trouble managing money, it's not uncommon that their kid's ability to live within their means and manage their own money mimics their parent. Let's face it--lots of us don't like to look in the mirror of life. We'd rather be more theatrical...like Scarlett O'Hara. $mart-Money Tip Family talks are important. Set aside one day each month to talk it. Kids spend money, mega money. The teen economy is in excess of 100 billion dollars a year--and that's just teen-agers. Don't forget the zillions of dollars the pre-teen places on store counters throughout America. With e-commerce, a whole new arena has opened for spending money in cyberspace. Traditionally, teens had bought stereos, radios, CDs and CD players, headphones and video games. In the early nineties, a small percentage of homes had computers. With the new Millennium, over half of all households have computers, probably on its way to a percentage that will match the number of homes that own televisions. The regular feature of a computer in a home means that kids access them. In fact, most kids are far more knowledgeable about them then their parents are. Kids have created their own personal libraries of computer and video games, something that we didn't even have an option to spend money on. The software available to computer owners is quite extensive. A recent program purchased for grandson Frank was a typing program designed for the at home user. Remember when we all went to Typing 101? Kid's and Money Kids spend a lot of money. Over $100 billion is spent by teens every year according to Teenage Research Unlimited. Girls and boys don't outspend each other, they are fairly equal in their spending habits. Kids are most likely to spend money on food, clothes, movie tickets, electronic equipment (videos, games, software) and for girls, cosmetics. Once a car arrives on the scene, it becomes the money pit. Younger kids (under 12) are more inclined to yield to parental influence in money matters. A greater percentage is saved, I think primarily because Mom and Dad are more included to cover everyday type purchases, even though allowances should be spent on some of them. Another $12 to $15 billion is added to the spending pie. Then, there's indirect spending--all those moneys that get spent that are influenced by your kids (or, as one of my friends said, manipulated by the kids). According to Consumer Reports, more that $180 billion of purchases each year are influenced by kids. So, what does all this mean? It means that several million dollars is spent everyday on candy, sodas, snacks, toys, games, movies, sports, live entertainment; video arcade games, CDs and telephones. A lot of money and a powerful segment to market to. There's no doubt about it, money brings incredible power to kids. Power that enables them to purchase items they think they need, and items they want. As a parent, you are in control of your children up to about the age of three. After that, most kids are given choices such as what type of ice cream cone they want or which toy they wish to play with. Or buy. Post age three, kids are recognized as a consumer force. Just look at the commercials on children's TV programming, and for that matter, at the ads designed for family viewing slots. By the time kids are eight, it's common for them to make unassisted purchases when they are out shopping with adults--you or another. One of the recognized experts on kids and their influencing/spending habits is James McNeal, a marketing professor at Texas AM University. For years he has studied them and estimates that kids between the ages of 4-12 influence adult purchases in over sixty product categories; everything from pasta to bicycles and athletic shoes. What's the bottom line? If you don't take an active, and early, interest in your kids' money training, there's a gaggle to folks who will. Their friends and peers and the media will top the list. Your parents probably told you that money didn't grow on trees. If you were a smarty, you might have responded that it did too--the paper that bills are printed on came from trees. Kids today have a different view or cliché. They believe that money grows out of an ATM or a plastic credit card. The reality that you initially put money into a bank account to seed future withdrawals never dawned on them. Most kids today believe that credit cards can satisfy every need and whim, which include but are not limited to: at least one VCR and video game two CD players--one portable, the other permanent in their bedroom the latest fashions in clothing (grandson Frank didn't think much of paying $42 for a pair of board shorts when he accompanied us to Hawaii for a vacation--he did pay with his own money that he brought along) the most recent fad item It's their perceived birthright, or so they think. The TV Ad Monster Frank is my twelve-year-old grandson. In school he struggled with math when he was eight. During the same, "I don't get it Grandma" times, I was fascinated at his ability to memorize all the infomercials and their corresponding (800) numbers that flash on the TV. During one month, he called to tell me about the benefits, costs and respective phone numbers for a variety of products. He especially thought I should immediately order a Smart Mop, Power Foam and Abflex unit. With the billions of dollars that kids spend annually, you can't ignore their buying power. You are literally zinged and zapped from multiple sides to buy this and buy that. Commercials are designed with one purpose--to motivate the viewer to buy. When your kids watch their favorite shows on TV, the commercials bombard them with the message to buy, buy, buy. If you tune into the Saturday offerings of cartoons, it's not unusual to find that the production of the show is actually less than the creation of the ads. Next time you are at the grocery store, shop it versus just buying. Note the type of items that are kept on the lower shelves (kid eye level), especially in the cereal, candy and snack aisles. Also note the amount and variety of frozen foods. When Swanson introduced it's first TV dinner in the fifties (it was turkey with mashed potatoes and peas), I suspect they had no idea how big the "already cooked/heat 'em up" industry would be one day. In our parent's time, it used to be a chicken in every pot and two cars in every garage, now it's at least one VCR and two TVs in every home. With the VCR, a whole new industry evolved around videos: from decades old movie (The Wizard of Oz played over 90 times for Frank before the tape broke and we bought a new one), to the latest Disney classic or movie that played in your local theater just six months ago. Reproduction of videos became a billion dollar business that create a new industry that in turn created the video giant in every city, Blockbuster! These videos are not viewed once, they are seen dozens and dozens of times just like The Wizard of Oz was in our house. The distributors of such have tuned into this savvy fact and preface the feature film with several commercials about upcoming or already distributed films. After all, they have a captive audience with popcorn and sodas set up and viewers settled in. It's frequent viewer time. Sexism Sells  Don't leave sexism out, it sells and it sells well. The Zandl Group is a New York City research company that specializes in studying the youth market. They found that, over the years, boys are far more likely to respond to commercials and ads that are sports oriented and aggressive; girls respond to commercials that are cute and sentimental. Nothing new--muscles and sweat versus kittens and cuddles. Shoes are a very hot item. Nike and Keds have learned that boys like Nike and girls buy Keds. When it comes to the huge soda market, girls preferred diet sodas and flavored filtered water and boys preferred root beer and Classic Coke. When it comes to reading, Seventeen and Sassy is still a favorite with girls and boys look for Sports Illustrated and car and motorcycle magazines. It's no secret that kids like TV and when Beverly Hills 90210 debuted, it quickly became #1 with teenage girls; boys preferred the camaraderie of sports bar Cheers. When Melrose Place and Friends entered the TV seen, they found the teen-age audience. Now that your kids are hooked, what's a parent to do? Starting by watching. Sit down and watch TV with your kids, no matter what their age may be. American kids watch two to three hours of TV each day. Within a 30 minute program, commercial time can ranges from eight to twelve minutes. A great majority of those commercials are specifically targeted toward your kids. Advertisers are not dummies, they know that kids have money of their own (billions!). With the use of the Internet, more commercials and ads are coming their way. Get on-line with your kids and check out what their favorite sites are. It's not uncommon to have commercial banners flow across the screen. Kids are masters. They know that they can influence, and manipulate, what their parents buy. And, you know that they know, they know that you know and the advertisers know it too! So, should we ban all advertising in children's programming as some would like to do? No, I don't think that's a realistic approach and you are now on the doorsteps of the First Amendment folks. I've watched plenty of commercials in my fifty plus years and have marveled at the cleverness of many. When we get together with friends for our annual Super Bowl viewing, there's always plenty of chatter about the uniqueness, humor, or stupidity of the program's many million-dollar spots. Viewing the shows your kids like with them offers you an opportunity to learn how the commercials and pitch to the viewer-your kid. It opens the door to a discussion about the product, how the commercial presents it, distorts the pitched benefits (if you think it does), the necessity of it, and if appropriate, how it ties in with your values. When Frank was younger, about eight, here's a game that we played with him. He loved cereal and had developed an expertise in getting me to buy every brand that he saw on TV. I confess that as a doting grandmother, I did it, but then I got smart. Try playing our TV Commercial Comparison Test in your home. Not only will it teach the strategy of being a $mart-Money consumer to your young one, but also it will introduce some refreshingly new and interesting dialogue between you and your child about truth in advertising and which product is the best deal. TV Commercial Comparison Test Your goal: To teach your kids to be a $mart-Money consumer. Tools you will need: Any kid show on TV, preferably an afternoon or Saturday morning program. A pad of paper and a pencil. A visit to the grocery store before and after viewing the show. For the test: Three "testers" work well -- friends or family members. All testers should be potential consumers of the product. Rules: Watch a TV program with your child with specific emphasis on commercials. During the show, there should be no interruptions. Ask the child if he or she can remember what kinds of products are on the rows in the grocery store. If he or she remembers, explain that, because there are so many different product choices, the people who design and make commercials try to convince you both that their product should be in your home. Ask your child to select one of the products shown in the commercials for a test. The Prize: The "winning" item from your test will be stocked in the cupboard. How to Proceed: I did this with the cereal. Fruit snacks, cookies and sodas are also ideal candidates. We went to the super market and Frank found the product he had selected for our test (it was Cocoa Pebbles). The grocery we go to has rows that are 6 shelves high. Our test product was found on the second shelf from the bottom. This is a good time to explain product placement on the shelves; i.e.: what can little eyes see at their level compared with the adult level? After all, whom are they trying to pitch? We purchased one box each of Cocoa Pebbles, Cocoa Puffs, and a similar store generic brand. When we got home we did a taste test. Three bowls of cereal were poured, milk was added and each of our three testers was blindfolded. The taste testers then picked the product that they liked the best. In your test, if it was the one that was promoted in the commercial, your child wins. You will buy the product for regular family consumption. If the product flunks the test (the majority of our testers didn't rank it #1), then you won't buy it. After you do this a few times, your child will learn that what is seen in the commercial is not necessarily as good as it appears and that getting what you ask for is not always satisfying. As an added note, you can ask: How did our product comparison go? (substitute your test product) Cocoa Pebbles cost ______, Cocoa Puffs cost ______, and the generic brand _______.  Our taste test put the generic brand in the lead, which allowed me to take the lesson one step further. Assuming that two boxes of cereal were eaten every month for twelve months: twenty-four boxes would cost _________. If Frank had insisted in staying with his preferred Cocoa Pebbles at _____, the yearly cost would total ______. The yearly difference in the cost between the Cocoa Pebbles and the generic brand totals ______. I told him that since we were going to buy the generic brand, we would put the cost savings into his bank account, his reward for being a $mart-Money consumer. At twelve, Frank does his comparisons with a pad of paper that he makes columns on and labels Item #1, #2, #3 etc. He has learned to look closely at labels, is very vocal about rip-offs and can tell you why he wants to get a certain product. Not bad for a twelve-year-old. Money Stores for Kids When I was a kid, we had bank days at my elementary school. Every Wednesday, I deposited 25 cents in my bank savings envelope. The school then delivered the deposits to the bank, which in turn posted the deposit to the bankbook. Granted, 25 cents was worth a lot more in 1952 than today. Yet that weekly deposit introduced a concept to me that my accumulated pennies, nickels, dimes and quarters could add up to a tidy sum by the end of the year. I could add more or withdraw my money whenever I wanted. School banking programs were everywhere in the 50's and then disappeared. Today, some schools have re-introduced them, a good idea. I didn't get an allowance when I was a kid, but I was able to earn my share of nickels for jobs around the house. I had a bonus too. My father said I could keep any pennies I found lying around and I collected bottles from all the neighbors. Back then, a soda bottle yielded a two-cent return deposit, the big quart bottles, five cents. So, sometimes my twenty-five cent deposit per week was all I had, at other times it was a fraction. I thought I was rich until I discovered these huge dill pickles that cost a nickel. Once a month I withdrew a nickel from my growing savings account and treated myself to a pickle (my reward for saving money). Encouraging kids to save is part of developing a $mart-Money strategy. In the nineties, The American Express Company and Consumer Federation of America sponsored a nationwide test of the consumer knowledge with high school seniors. The results were embarrassing. Only eighteen percent knew that the annual percentage rate (APR) is the best indicator of the true cost of a loan. Teens think they know plenty about cars. Well, they missed out on the insurance side. Only eighteen percent knew that rates for car insurance offered by different companies to consumers (them) in the same area and with comparable driving records could vary in different amounts in premiums charged. At the same time, the National Council for Economic Education did a survey that included the general public as well as high school and college students. Their results weren't so terrific either. Only thirty-six percent of those knew what a profit was. If only one-third of the general population has any $mart-Money awareness, the pass down of knowledge to the next generation is not promising. These statistics stress the importance of teaching your children all you can about money. Your $mart-Money Moves need to be as sharp as possible to meet the challenges you have ahead with your children. Kids are gullible, and are easily roped in by the TV commercials that bombard them on a regular basis. One way to turn their light bulbs is to subscribe to Zillions: Consumer Reports for Kids. Zillions appeals to the 10-14 year old crowd and routinely does comparison tests on items that kids spend their money on -- from hamburgers to sneakers. It follows the advice and reputation of its well-known parent, Consumers Report. My style in communicating with you will be on a common sense approach. You will find throughout this book a series of $mart-Money Tips that are meant to enhance the common sense approaches you already have in place. That, and being consistent with your children, will dramatically enhance the $mart-Money Moves you are developing. $mart-Money Tip Powerful $mart-Money Partners Zillions: Consumer Reports for Kids Encourage your kids to develop $mart-Money consumer habits by subscribing to Zillions -6 issues per year - $16 annually; Contact: The Subscription Dept., P.O. Box 5177, Boulder, CO, 80321 or Call (914) 378-2000 Young Americans Bank The ideal bank for young people, started in 1987, is Young Americans Bank, 311 Steele Street, Denver, CO, 80206, (303) 321-2265. Write or call for information. Repeated studies and dialog with parents shows that when kids are given information and the incentive to learn about money, they are quite astute. In my hometown of Denver, CO, the Young American Bank birthed several years ago. Customers come from every state in the country and range up to 22 years of age, with the average age being 9. The bank offers banking by mail, checking and savings accounts, credit cards and loans. It also offers a variety of newsletters and summer classes. Kids learn to work in the shops of Young AmeriTowne® and the Girls Can® programs at regularly scheduled times. The Young American Bank carries over 17,000 savings accounts with an average balance of $357. The most common reasons their customers give for saving are: to buy a car or computer games. The bank has over 300 certificate of deposit holders with an average balance in excess of $2200, the average CD holder age is 15. The most common reason for saving is for college funds. When it comes to checking accounts, the bank carries over 1000 individual accounts with an average balance of $390, average depositor age of 16 and the average check written for $35. The most common reason given for having a checking account was "experience." The experience comes when checks are written for pizza, shopping articles in local stores and mail orders. Peer pressure surfaces when kids hit twelve. You are no longer the key factor in their decision making, their pals and schoolmates are. That means the primary years are yours to create and make your kids smart with their money. One of the most important things for you, as a parent, to do is to develop a type of strategy that fits with your personal family values and lifestyle. Not your neighbors or your kids' friends. What works for them may not work for you. Think about your income level, your characteristics and traits, as well as spending and savings habits that you practice. Your next part is a big one-you must commit time to your kids in sharing and teaching your principles and values. Buy the Book -- $19.95 Order from Dr. Briles # # #   © 2002-2003 The Briles Group, Inc. All Rights Reserved. Dr. Judith Briles is an author, speaker, consultant and coach. For speaker availability or for information CONTACT US or call us now at 800-594-0800. 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