Money and Your Children - Psych Centra Money and Your Children - Psych Centra

Monday, May 21, 2012

Money and Your Children - Psych Centra

Money and Your Children - Psych Centra

Money and Your ChildrenFrom small allowances for young children to bank accounts and credit cards for college students, parents have many questions and various beliefs about how to try to teach their children about money. Like most parenting issues, the key to success is to have a clear sense of purpose about what you are doing and to involve your children in the decision-making.

Let’s do this chronologically. With preschool children, don’t even bother. Just pay for things as you go along. The issues are too abstract for most very young children to grasp. In fact, I wouldn’t begin to address “paying” children until at least age 8.

Let me quickly discard a couple of popular methods for giving children money. I don’t believe in paying children to do routine chores or for earning good grades. Helping around the house should be seen as a family responsibility, not a way to earn money. In fact, I usually recommend that parents do chores with their young children. It’s much less hassle and allows for some bonding.


Back to money. The word “allowance” would seem to imply that the money given to the child will allow the child to make purchases. Is it in fact “free money”? Can the child really spend it on anything? Should the child have to save some of it or give some of it to charity, two things that parents often see as part of teaching children about money? Of course, all this gets tied into the big question: How much to give?

The answers to all of the above vary according to the age of the children. In the beginning, (whether you start at 8 years old or earlier), my suggestion is that a small amount of money should be given with no strings attached just to allow children to begin to experience the sense of having their own money. Don’t give it with lectures. Just say you are giving them a couple of dollars each week that they can spend on whatever they would like (exceptions to that should be clarified, e.g., if there are foods that cannot be eaten for health reasons or toys that are not acceptable). It’s interesting to observe this unfettered opportunity and note differences among children. Most will spend the whole amount on goodies of one sort or another. Some will actually hold onto some, even all of it.

Negotiate Some Financial Responsibility at Age 10

As the children get a little older, probably about 10, this is a good time to begin to negotiate financial responsibility. Have your child create a list of nonessential expenses. I think this is too young to have children manage clothing allowances and including lunch money in allowances makes no sense to me since you have to give them that money anyway. Ask them how much they think they need or should receive. Again, parents are often surprised when children don’t ask for unreasonable amounts of money. Then, again, some have no clue. How much you actually give will be influenced by a few factors, including family finances, your own spending pattern (parents often fail to recognize how much their “objective” decision about allowances is actually based on their personal attitude about money), and awareness of what your peers are doing. On this latter point, you generally want to try to come close to the median, i.e., about the midpoint of the most frequent amounts your child’s friends are getting, not too low, not over the top.

I don’t think you should require savings or charitable contributions. Hopefully both of those issues may come up naturally. It is much better than to simply take away from what you are giving. That teaches a child nothing except that you have negotiated a financial arrangement that isn’t really honest. What I mean is that to tell your child “Here’s $5, but I’m making you put $1 in the bank and give $1 to the church” really means you are simply giving the child a $3 allowance!

With so much media attention given to tragedies, children are more conscious than ever about the misfortune that befalls many in the world around them. There are lots of wonderful stories of children contributing to fundraising causes. It is so much more meaningful for your child to offer to donate part of his allowance out of his own desire to help someone than to simply be making an automatic donation that has no real connection to the child. For those parents whose child doesn’t offer to do this spontaneously (actually even with the children who do), parents should be discussing their own charitable giving, including who you give to and why and how it makes you feel. But don’t force giving. If you model it and explain the values embedded in it, most likely your child will be charitable at some point in his life.

Saving may also appear spontaneously. Your child may want to buy something that costs more than her weekly allowance. That provides a wonderful opportunity to explain how she can accumulate the money she needs to make the purchase. It also provides a chance to share some examples of how parents save for more expensive items that can’t be afforded from monthly income. Of course, parents have to actually do some saving to model it!!

Teach them to Live on a Budget

Around 12 or 13, I think there should be a substantive change in the concept of allowance. This should be the beginning of meaningful lessons about managing money. Now is the time to actually work on a budget with your child that includes essential items such as clothing and entertainment. Obviously this coincides with the age when most children become obsessed with clothing, music, and video games.

This is an opportunity to introduce checking accounts and the wonderful replacement for credit cards, debit cards. Never, ever give your child a credit card, even as a college student. It has always been a source of significant financial crises. Adults have enough trouble managing the concept that you will actually have to pay for what you just charged. Most teens and young adults will screw up here. But debit cards have clear limits. You need to have the money in the account (or become overdrawn and pay penalties). The potential risk is so much less and the management skills required provides a solid foundation for the future.

There are many challenges faced by parents at this stage. Are you really going to allow your child to make her own decisions? What are you going to do if she spends too much in one area and lacks money for a new winter coat she really needs?

Once again, these issues need to be addressed ahead of time. If you are going to retain some control over what video games are acceptable or how much skin can be exposed by the clothes that are bought, discuss this upfront and work out a process for giving approval. But don’t control too much. The expectation should be that your children will make mistakes (we do) and you want them to learn from their mistakes rather than try to prevent them. You may tell them that you will help them once (or twice) each year if they get messed up but that’s it. You should also take responsibility for an occasional big ticket item that would strain their budget but is something important (e.g., a suit or dress needed for confirmation). Of course, that can simply fall under the category of a gift.

When negotiating the amount of the allowance, take into account money the child does or can earn as well as the role of gift money for birthdays and holidays. You should also teach the child how to balance his checking account, an important skill that too many adults lack (or just fail to do).

Should Children Invest? Yes

As you can see, the process of teaching children financial responsibility often forces parents to address their own financial responsibility… or lack of! Which leads me to my favorite money issues and what I believe, in the long run, is the most important part of teaching children about money: Investing.

Yes, you should get your children into the stock market. The earlier the better. Preteens and teens can be enthralled with the idea of becoming a millionaire, which is relatively easy to achieve if you invest earlier in life. Since many 12-13 year olds come into some money for confirmations or bat or bar mitzvahs, try to convince them to buy some stock. There are ways to do this inexpensively. Let the children buy familiar companies. Some will do remarkably well. Of course, they will also learn to deal with the ups and downs of the market or of a specific company. But this is the cornerstone of creating true long-term financial security.

It is a shame most schools don’t teach this, although virtual investing competitions are growing rapidly. But there’s nothing like owning a stock such as Hot Topic, where your daughter may buy her favorite clothes, or Electronic Arts, a video game company. Of course, there’s always Disney and McDonalds as well as many companies your teens may know about that you might do well to invest in also! Before long your teen is grabbing the business section before you get to read it and you have started your child on the road to understanding how to use money to make more money.

We’ve just come a long way from giving a young child a few dollars a week to begin making simple decisions about spending. But you now can see how this becomes an initial step in a process that can truly prepare your child to understand all the complexities, good and bad, about managing money. It is so central to our security and quality of life. Yet few families lay the type of foundation that gives their children the knowledge and experiences that will increase the likelihood that they will be money managers rather than money mismanagers.

But there is another very crucial aspect to this entire issue. Most parents spend too much, save too little, and have too much debt. Less than half of all families own stock and of those that do, the median amount is only about $23,000. So it is my hope that parents who take the responsibility of teaching their children about money matters seriously will be forced to address their own money issues first. Remember, children will model what they see more than what they are told.

Scientifically Reviewed
    Last reviewed: By John M. Grohol, Psy.D. on 10 May 2012
    Published on All rights reserved.


Disabled vet Sherman Barton battles for military contracts for business - Philadelphia Daily News

They were 12 hairy years in Sherman Barton’s life. The Burlington County resident worked in military intelligence for the U.S. Army in Germany and Italy from 1972 to 1984, getting shot three separate times while hunting terrorists, he said.

The personal toll was vast, including the loss of two ribs, a portion of his lower intestines and some hearing, along with three broken neck vertebrae, ankle stiffness and instability, muscle weakness and depression.

Those injuries earned Barton an honorable discharge and classification by the Department of Veterans Affairs as having “a 100 percent permanent and total service-connected disability.”

It was a tough-to-take classification for the Edgewater Park resident whose military career was distinguished by his ability to hold up against many physical challenges.

Twenty-six years later — and after an 18-year second career as a disabled veterans counselor and special projects coordinator at the Department of Veterans Affairs in Philadelphia — Barton would see a silver lining in his disability designation: a leg up in competing for federal government contracts as a small-business owner. Or so he thought.

Even with laws and a presidential executive order in place to help steer government work to Service-Disabled Veteran-Owned Small Businesses, or SDVOSBs, Barton said he has found the opportunities maddeningly few and the process for securing such work too slow and unreliable on which to build a business.

He’s on a mission to change that. His primary target is one of the largest Department of Defense purchasing centers in the United States — Defense Logistics Agency Troop Support in Northeast Philadelphia. The center provides more than $14.5 billion annually in food, clothing, textiles, medicines, medical supplies, construction equipment and industrial hardware to troops around the world and others in need.

After two years of e-mails, calls and near-monthly visits to DLA Troop Support — including an unauthorized failed attempt in October to see the commander — Barton’s supply company, VE Source L.L.C. in Shrewsbury, Monmouth County, which currently is solely focused on getting government work, has secured just one SDVOSB contract. Awarded in March, it is worth $111,420 for 250 portable tents.

“How can you call this trying?” Barton said he has asked officials at DLA more than once.

According to the agency, DLA had 1,045 SDVOSB contracts totaling $62 million in 2010, and 3,780 valued at $48 million last year.

In all, DLA’s small business contracts totaled $2.4 billion in 2011, or 30.7 percent of the contract dollars eligible for small business. The remaining $5.4 billion in work eligible for small business awards went, instead, to larger domestic companies. DLA officials said they feel a responsibility to support bigger firms to ensure they will be around at times of heavy need, such as troop deployment.

Barton said he has been assured by DLA officials that more opportunities are coming for small businesses owned by disabled veterans. Those assurances have been accompanied by reminders that the agency must also answer to other mandates, including that it provide work when possible to programs that employ federal prison inmates, and the blind or severely disabled. DLA Troop Support’s contracts to two such primary programs, Federal Prison Industries and AbilityOne, totaled $422 million last year, said spokeswoman Stacey Hajdak. By law, those programs are given priority over service-disabled veterans and other small business subsets, such as women-owned and minority-owned firms.

“That’s kind of a delicate balancing act we have to go through,” Michael McCall, director of small business at DLA in Philadelphia, said in an interview earlier this month. “As the [federal] budget shrinks, that balancing act gets more and more difficult because everybody is trying to get their share of the pie.”

Barton, 59, VE Source’s president and majority owner, said he doesn’t begrudge set-asides for other groups. He just wants more action for himself and other disabled veterans trying to forge new careers. Those opportunities are imperative as troops return home from Iraq and Afghanistan to a stingy job market, said Barton, who plans to hire disabled veterans as soon as his company lands some substantial deals.

“With the downsizing of the military, there are going to be more and more veterans like myself trying to start companies because there is no employment for them in the civilian sector,” Barton said last week.

He formed VE Source with two partners in 2010 to take advantage of an executive order issued by President Bush in October 2004 to strengthen opportunities for SDVOSBs. That directive called on the heads of federal agencies to “more effectively implement” previously adopted SDVOSB initiatives.

They included the Veterans Entrepreneurship and Small Business Development Act of 1999, which established an annual governmentwide goal of awarding not less than 3 percent in total value of all prime contracts and subcontracts to SDVOSBs.

In December 2003, the Veterans Benefits Act was passed by Congress to build upon the 1999 measure. For instance, it allowed — but did not require — federal contracting officers to restrict competition to SDVOSBs and award a sole-source or set-aside contract under certain conditions, such as if it could be done at a fair market price.

In May 2004, the Small Business Administration (SBA) established a Service-Disabled Veteran-Owned Small Business Concern Program to implement the Veterans Benefits Act, establishing criteria and guidelines.

From Barton’s perspective, it was an encouraging string of initiatives — until he retired from his Veterans Administration job in December 2009 and ventured into the trying world of entrepreneurship and DLA Troop Support.

The military supply agency would represent little more than tantalizing but unrealized opportunities, Barton said. Take for example a $28 million contract for cold-weather jackets for which VE Source submitted a bid to provide in July 2010. Seventeen extensions later, the contract still has not been awarded, Barton said.

“It’s just bad bureaucracy,” he said, adding that few small businesses have the financial wherewithal to endure such a waiting game.

At a closed hearing in December held at Burlington County College in Mount Laurel, one of Barton’s partners, Christopher Neary, told the House Armed Services Committee’s Defense Business Panel that the DLA “is not doing right by the policy of the executive order for the SDVO small business program or the veterans themselves,” according to a copy of his remarks.

Long before that hearing, deficiencies with the SDVOSB procurement program had apparently registered at DLA headquarters in Fort Belvoir, Va., according to a July 2010 internal memo obtained by The Inquirer. In it, Nancy Heimbaugh, acquisition management director, and Peg Meehan, then-director of the office of small business programs, urged recipients to “reinvigorate your efforts to increase business opportunities for SDVOSB concerns.”

The memo concluded: “Our wounded warrior entrepreneurs deserve nothing less.”

Money set aside to study commuter rail - Opelousas Daily World

BATON ROUGE Planning groups in Baton Rouge and New Orleans have set aside money to study building passenger rail service linking the two major metropolitan areas.

The Advocate reports that the Baton Rouge Metropolitan Planning Organization last week approved spending $105,000 in federal money for a feasibility study of a commuter rail service to New Orleans.

The New Orleans Metropolitan Planning Organization is matching the expenditure with another $105,000, and the Baton Rouge Area Foundation provided about $90,000 for the study, said Huey Dugas, executive director of the Capital Region Planning Commission.

The proposed commuter rail shuttles between Baton Rouge and New Orleans would travel about 80 miles per hour, Dugas said.

The proposed rail line's future became unclear in 2009 after Gov. Bobby Jindal's administration said it would not apply for $300 million in federal stimulus money to undertake the project.

Jindal aides have said the administration was concerned about the rail line's ongoing costs, estimated at $18 million a year, once it would become operational.

The commuter rail service, as proposed, could use existing railroad tracks, Dugas said. He said the Kansas City Southern freight train tracks are being eyed as an option.

Rachel DiResto, executive vice president of the Center for Planning Excellence, said 50,000 people regularly commute between Baton Rouge and New Orleans to go to work and return home. DiResto said a commuter line would reduce traffic congestion and provide an evacuation alternative.

John Fregonese, who led the development of the FutureBR master plan for issues of long-term land use and transportation, said the Baton Rouge-New Orleans rail service would also benefit local tourism, allowing Baton Rouge and New Orleans residents to make day trips to eat at restaurants or attend sports events in their neighboring cities.

He also said the line would connect major medical facilities in the two cities and give Baton Rouge residents who fly out of New Orleans International Airport another way to get to the airport.

A 2009 study of rail service between the two cities envisioned passenger stations in downtown Baton Rouge, southeast East Baton Rouge Parish, Gonzales, LaPlace, Kenner and downtown New Orleans.

Fregonese said New Orleans and Baton Rouge, the two largest urban areas of Louisiana, need a stronger link so they can be considered sister cities such as Dallas and Fort Worth in Texas or Minneapolis and St. Paul in Minnesota.

"They have a lot more to offer together than New Orleans or Baton Rouge separately," Fregonese said.

In 2010, the Louisiana Legislature approved a bill creating the Louisiana Intrastate Rail Compact, which aims to create a five-member panel to see if local governments along the proposed route would be willing to levy taxes and take other steps to support the rail service.

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