The Financial Life Skills Blog for Families by Nancy Phillips

Financial Literacy Rocks for Students

Posted by Nancy Phillips on Tue, Feb 24, 2015

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Wow, I’m inspired and feeling electrified. I just saw the rock and roll band GOODING perform this morning. They’re currently touring high schools in North America to spread the word on financial literacy through rock and roll, and sharing their own life lessons. This band is full on, incredible professional artists - and pure heart when it comes to sharing their passion for helping our youth get off to a great financial start.

“Financial literacy has to do with freedom”

After a fabulous set of songs, lead singer Gooding shared shocking facts and thought provoking examples on the importance of starting financial education young, and why teens must take control of their financial lives. “This is about managing your life,” the lead singer told almost 300 students. Gooding then asked the students if they dreamed of having a car one day or a home, of going to college or getting married. “This all has to do with managing your money, you have to control your money or money will control you,” he emphasized.

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The topics in the presentation included:

  • Trusting your heart and following your passion
  • The importance of self-reliance
  • The impact of education and finding mentors in your community
  • Financial Literacy— saving, compound interest, pitfalls, warnings against predatory lending and pay day loans
  • Slow and steady wins the race— not believing the hype of overnight success  - current examples of athletes, actors, actresses and music stars who have made millions and lost it all
  • Expenses rising to meet income (the façade of inheritance, lottery, record deals, pro-sports deals etc. solving one’s long term problems)
  • Lessons learned from a life in the music business and how these experiences extend to any field.

As our society witnesses increased consumerism and personal debt, along with a rise in divorces due to money issues, this information couldn’t be more urgent for our children. How can our youth invest for the future if they spend more than they earn? We see professional athletes and movie stars go bankrupt after earning tens of millions of dollars. Why? Because young people aren’t learning how to manage their money and their emotions in a way that will create good habits and self-control. Spending is based more on emotion than logic, and we have to step up and help our youth learn the skills and actions necessary for good decision-making and long-term financial success. The information that needs to be shared isn't complex, our society just needs to commit to allowing financial education to be taught. The situation is only exacerbated by technology and the use of plastic. Cash makes you think about what you’re spending, it literally fires the pain center in your brain, plastic doesn’t. GOODING understands the urgency.

Congratulations to Raymond James for sponsoring this tour, and to the Gooding band, and their Funding the Future Foundation. Thank you for the time and personal commitment you’re giving to help our youth lead successful and inspired futures. You are changing lives. 

 

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Teen Finance App Announcement

Posted by Nancy Phillips on Thu, Jan 08, 2015

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Today I'm very excited to let you know about this new development for our teens! Stay tuned for more information in the coming months.

FOR IMMEDIATE RELEASE

January 88h, 2015 – DollarSmartKids Enterprises, Inc. and Apprenty Online Corporation today announced their partnership to develop an educational finance app that will help teens prepare for the financial decisions they will ultimately have to make on a daily basis.

The application will take teens through real-life financial situations and help them learn the concepts needed to make more conscious financial decisions. “Apprenty Online has extensive experience in eLearning and helping students acquire important knowledge in an interactive way,” said Nancy Phillips, Founder of DollarSmartKids and the mother of two children, ages nine and twelve. “The design and interactivity of this app will help teens walk through, and become familiar with, the financial thought processes they will need to use thousands of times per year as adults. Whether looking at the cost of things, how to understand the true sale price of an item or interest fees, the app will give them the opportunity to think through, and learn about, many of the circumstances and implications of their decisions - before the risks are high. We are really excited to announce this partnership and develop this app to help our youth get off to a strong financial start in life.”

Financial literacy has been talked about a great deal since the 2008 recession, but neither the United States nor Canada have made financial education mandatory at the elementary or high school level. While there are numerous children’s games, financial calculators and financial management tools online, these don’t offer the same type of cognitive learning outcomes this app is designed to create.

"With technology making spending easier and faster, it is also a lot easier for our youth to get into significant financial problems more quickly than ever before. Financial literacy is an essential life skill that most teens aren’t learning at school, and many aren’t learning at home either,” commented Phillips.

DollarSmartKids recently launched the Teen Steps to Success Guide, 25 Financial and Life Lessons to Help You Achieve Your Dreams. The activity guide, approved by the Financial Industry Regulatory Authority, is designed to be part of a teenager’s preparation for a successful independent financial life. The teen app will compliment the activities in the guide.

“DollarSmartKids has already proven its financial programs for youth make a difference," said Davinder Jawanda, Managing Director, Apprenty eLearning. The Memorial University Enactus team is using the Zela Wela Kids program in a financial literacy pilot for grade three primary school children. Over 1,900 children have completed the program resulting in a knowledge increase of 30% in key topics such as saving, needs versus wants and entrepreneurial concepts. "By focusing on gamification, our teen app is designed to have a similar measurable impact on the financial literacy of secondary school children." 

The app provides an opportunity for teens to improve financial literacy while on the go, anytime and in any circumstance. “Together with DollarSmartKids, Apprenty is committed to helping teens get the most out of life, not only in the short-term but as they move into independent adult life,” commented Jawanda. “We believe the best way to do that is by making learning fun, relevant and always on, hence the focus on mobility.”

Kids and Money: Online Tools Can Teach Your Kids Real World Money Skills

Posted by Nancy Phillips on Fri, Jan 02, 2015


400_pxls_np_0559_whitecropx2#2efa3a8Numerous studies prove that people are more frugal when paying with cash than when using other forms of payment - especially credit cards and electronic transactions. Why? Cash is tangible. You literally feel pain as you hand over each hard earned bill. That’s why so many parents feel strongly about using bills and coins to teach their kids about money. The less abstract and the more tangible the better, right?

Well the challenge for us parents is that our financial world is moving more and more away from cash. The “convenience” of plastic and technology encourages spending, and that’s a good thing for many big companies who want us and our kids to spend more.

That’s why I’m here with Bill Dwight today. He’s the founder of FamZoo, an online money management system for parents to help their kids learn to manage money effectively.

 Electronic_money_intlNancy: Hi Bill, I’m looking forward to learning more about FamZoo. Tell us a bit about the challenges of teaching kids money skills in today’s world.

Bill: Thanks Nancy. The challenge is, your kids aren’t going to be using much (if any) cash when they get older. The world is getting more cash­less every day, and there’s really nothing parents can do to arrest that accelerating trend. So, how are we preparing our kids for that undeniable reality?

FamZoo offers an effective solution by teaching kids that the account balance they see on a computer screen or a mobile phone represents real money. The FamZoo system helps kids make an explicit, visceral connection between making a purchase (regardless of payment method) and seeing that abstract number ­- the account balance -­ go down. It also teaches them to manage that critical number responsibly. If you introduce your kids to online and mobile banking concepts early, they’ll be better prepared for the real world later.

Nancy: Are you worried that children can’t grasp managing money as an abstract number?

Bill: Parents are surprised how quickly even the youngest catch on. You’ve probably seen them master far more complicated concepts in video games already.

Nancy: Learning things at a young age can definitely be easier and less intimidating than when you’re a teen.

Bill: Yes.  Unfortunately, most banks require kids to be in their teens before they can have a checking account, and traditional banking products really aren’t designed for kids anyway. FamZoo is a solution that let’s the family create its own private online banking experience. You create accounts for each of your kids and teach them that the current balance represents how much money the bank (you!) owes them. Add to the balance when your child earns money. Subtract from the balance when your child withdraws money from the bank (you!) or when you spend money on your child’s behalf. Teach your kids to carefully monitor their account balances. Require your kids to consult their balances before they ask you to make purchases for them. Don’t have enough? Wait and save. After purchases are made, show your kids how the account balance has gone down accordingly. Condition your kids to feel purchases even though no physical cash changes hands.

Nancy: So how do you set about running your own bank?

Bill: You have a choice. You can just use paper and pencil or a spreadsheet to record the transactions in each account manually, but that ends up being quite a bit of work. And neither approach is particularly accessible or engaging for the kids. Fortunately, there are now several virtual family bank services like FamZoo that automate most of the work for parents and provide convenient, friendly online and mobile access to the kids. In just a few minutes, you can register your family online, set up your kids’ accounts, set up income sources (allowance, chores, odd-­jobs, interest, etc.), and have your online virtual family bank up and running.

An added bonus of ditching the cash and going the virtual family bank route is that you can easily split your kids’ deposits between accounts without needing to keep just the right mixture of coins and dollar bills on hand. So, if someone is using your Give, Invest, Save and Spend (GISS) Method with their kids, you can just define the percentage splits once up front (see below), and have them apply automatically to the weekly deposits going forward.

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That’s just the tip of the iceberg of what you can teach your kids with FamZoo’s virtual family bank. Your readers can check out our FAQ to learn about making savings goals, defining parent ­paid interest, sharing family expenses, tracking loans and much more.



Thank you for your time Bill. I’ll be trying out FamZoo with my kids, so I’m excited to be taking this step with many other families.

Parents, if you’re ready to start preparing your kids for the reality of a cashless society, you can start your own online family bank today at FamZoo.com.



 

Tags: financial education for kids, financial literacy, kids and money, GISS Method for managing money, saving, Online virtual banking

Teens and Credit: 5 Ways to Prepare for Financial Success

Posted by Nancy Phillips on Mon, Dec 29, 2014


400_pxls_np_0559_whitecropx22efa3a8Managing credit cards is considered by many to be the most important lesson young adults need to learn about managing their money. While there are a number of essential financial skills teens need to learn for their financial well-being (see the Steps to Success Teen Guide), I agree credit card knowledge and management is a vital part of the overall education required in today's financial world. Our youth can't manage their money effectively if they are in severe credit card debt.

Today we have a guest post from Consolidated Credit's Seth Turner. Seth is a Financial Consultant in the beautiful city of Boise, Idaho. He is happily married and has two children, ages ten and fourteen. Thank you for your contribution Seth:

In today’s hectic financial climate there are a lot of potential pitfalls for those who decide to use credit, especially teens. Let’s face it, the possibility of falling into debt and paying interest on top of interest is far too real. It’s easy to ask the question, “Why on earth would I ever let my teen have a credit card?!” Well, the fact is, in 2014 33% of people in America owned at least one credit card. If your teen grows up to belong in that group—and there’s a pretty good chance they will—it’s best to teach them at a young age how to handle their credit. That way, once they’ve matured and are independent and out of the house, you can rest assured they will know how to swim, so to speak, in the deep end of the financial pool that is credit card ownership.

Before I launch into the discussion of teens and credit cards, let me first give you a little background information about what brought me here. I used to work with disadvantaged, troubled families as something of a life-coach. The job title was Community-Based Rehabilitation Specialist. I would go into the home and help parents teach their children skills. For example, a child struggled with controlling his temper when he was triggered by how slow the desktop PC was; he would kick the computer, he would yell profanities, he would throw things. My job—together with the input and cooperation of his guardians—was to help this child find ways to cope with that anger by doing things like deep-breathing, progressive muscle relaxation, etc.

On occasion I would work with a family that needed help teaching their child about finances. The parents already have so much on their plate and are having enough trouble with their own finances; it just makes sense to help them educate their child about how to manage money. In the course of my time doing this unique and challenging work, I discovered five tips any parent can apply in the effort to educate their teen on the tricky subject of managing finances. And, in a world that is increasingly digital, increasingly plastic, it won’t hurt to educate your teen on how to manage finances when and if they’re making transactions with a credit card.

Let Them Know What to Expect

Oftentimes teens don’t know the reality of what it would be like to charge a purchase to a card and then pay it off, with interest. That’s why you should show the teen with dollar signs in his or her eyes what it would look like were they to amass credit card debt. Information we consume is becoming more-and-more visual. The advent of movies and television, and now the internet—where there are typically multiple images on every page—can be thanked for this. Showing your teen an infographic can help her or him focus on the issue at hand. As you can see, the amount of cash you end up coughing up on interest alone—especially if you have a high-interest card—is staggering. We want to teach our kids to avoid racking up this type of debt, and there are resources out there to help us. Most importantly, we need to get on their level, and using visuals to help them know what to expect is a great way to do so.

Make Them Earn Itcredit_cards_image

We know there’s no easy way to get around paying off debt. But once again our teens may not be fully aware of the reality. One way to prepare them is to create a mock credit card ownership situation. It’s a form of role-play, an intervention I often used with my clients. Present them with a pre-paid card. Let them know they can spend up to a certain amount on the card. After they have maxed it out, present them with a statement detailing how much they owe and give them options on household chores to pay it off. Make sure they’re aware that if they don’t pay it off by a certain date, interest will accrue. Sit back and watch as your teen works to negotiate this realistic credit card scenario, where, instead of a big faceless corporation, you are the creditor. 

Keep Your Initial Conversation Short

A lot of us can remember what it was like for mom and dad to sit us down and try to talk to us about the realities of the big, bad world. There’s not a lot worse than being nagged. With that in mind, try to keep your discussion about credit card debt short and to-the-point. Studies are finding that the average attention span is now only eight seconds! What’s more, your teen is increasingly inundated with information—they’re texting, watching You Tube, scrolling and commenting on Facebook. A good amount of time to designate for the conversation is about three minutes, and if you can make it shorter than that, do it!

Connect the Discussion Directly to Your Teen’s Everyday Life 

I had to learn this the hard way as a Community Based Rehabilitation Specialist. Kids simply will not learn if you present them with a lecture replete with abstractions. If your child likes to play basketball, trying making analogy about the game. For example, “Paying off credit card debt is like playing a pick-up game against Michael Jordan (or Lebron James). True, it’s fun to watch these guys play ball but actually trying to beat them at their own game? Good luck!” And, as a good parent you’ll want to encourage them. With enough practice and hard work they can do it, and you’re willing to give them the benefit of the doubt by doing something like the mock credit card trial described above.

Play the Shopping Game

Finally, a great way to prepare your teen for owning a credit card is to play the shopping game. During my days with clients we used this exercise about once a week. I would take the client to the store and give them a dollar figure as to how much they could spend (usually seven dollars—don’t break your bank!). However, they only had a certain amount of time to find items, and they had to make sure they weren’t going over the spending limit. This is very similar to the type of situation presented by credit cards. We can get whatever we want, but we have to be on top of it with the numbers, both in terms of staying within the dollar limit and paying attention to how much time we have left until the payment deadline hits.

Throughout this process, make sure you’re giving your teen options, to help cultivate independence and decision-making skills. Have fun with this! I hope it helps you educate your teen on how to negotiate the path to credit-management and success!    

 



 I hope you found this information useful. What ideas you've seen work for managing credit cards effectively with your friends and family?

If you are looking for a resource that covers fundamental finanancial life skills for the young adults in your family, the Steps to Success Teen Guide is now available in print and downloadable formats. It is approved by the Financial Industry Regulatory Industry and begins by helping your teen identify their personal values and goals, and then goes into the critical financial lessons most of us never learn in school. Receive 10% off the downloadable version until January 10th with the code STG2015. That's just $13.45.

What's your child's financial future worth?

Tags: financial education, credit card debt, teen financial education,

Teen Success: Proven Light Technology Optimizes Mental Performance

Posted by Nancy Phillips on Thu, Nov 20, 2014

 

Nancy Phillips, Youth Financial AuthorToday I'm really excited to share with you information about a light technology that can help increase the performance and well-being of the teens in your life (and perhaps your own!)

I met Terry Cook, the CEO of The Litebook Company, on a flight recently. We talked the entire time, and I was fascinated to learn about this technology. I hope you find it as valuable as I have, we use the Litebook Edge each morning in my house. It's small and portable, the size of an iPhone, and is especially helpful during this dark time of year.

Nancy: What effect does the use of this special light technology have on a teen?

Terry: When children go through adolescence many suffer from Delayed Phase Sleep Disorder DPSD.  This means simply that their melatonin that helps them sleep does not come out until well after mid-night and it does not shut down until mid-morning. When they have to get up early for sports, school, dance, etc. their melatonin is still coming out so they are often very tired. Sunlight shuts down melatonin naturally but with the absence of light they remain tired. Using a Litebook Edge which delivers a specific wave length of light for a period of 15 to 30 minutes. This will shut down their melatonin and make them more alert, and help them to focus and concentrate on activities at hand.

Nancy: How does it work on the brain and body to make you feel better and more alert?

Terry: There is a long technical, physiological answer to the question, but very simply light in the blue range is recognized as sunlight or equivalent by the melanopsin receptors in the retina, and light in this range naturally suppresses melatonin and allows the brain to become more focused and alert.Litebook Edge

Nancy: Can it help with studying? How about sports?

Terry: Absolutely. Early morning practises can prove very difficult for many athletes to focus and improve and the results are often shown in their performances. Similarly studying late at night when melatonin is secreting can also make it most difficult to concentrate and absorb information being reviewed. Thirty minutes of light therapy  in the early morning before practise can help an athlete shut down their melatonin and increase their serotonin level causing them to be more alert and focused. Similarly, light in the early evening can have the same results.     

Nancy: Who has used this technology successfully for performance? Who is using it to help with their studies? Could it help for entrance exam preparation?

Terry: Many individuals and teams have and are presently using the Litebook light therapy products to help with performance issues, and to adjust their body clocks to manage jet lag and sleep issues. The USA Olympic men’s hockey team used Litebook at the Sochi winter Olympics, members of Canada’s junior international hockey teams, members of the University of Michigan swim team and Cornell University women’s Hockey team, professional hockey players with the Ottawa Senators and Philadelphia Flyers, and numerous others. Many students use Litebook products to help them stay alert, improve their concentration and achieve better results in school, and when preparing for university entrance exams.     

Nancy: So this light technology would be really useful for students in countries all over the world, and especially those like China and Korea where there is such a major focus on academic performance. 

Terry: Yes, the light will literally help them focus and study more effectively."

Nancy: How about uses for the rest of the family?

Terry: The great thing about a Litebook Edge is that even though it is considered to be a ‘personal use device’ it is completely non-invasive and can easily be used by every member of the family. It can successfully help to manage numerous circadian rhythm disruptions and many mild forms of depression, adjust disruptive sleep patterns, whether in teens, adults or seniors, or help adjust the body clock between shift changes for shift workers. It can help international travellers manage and eliminate jet lag and make the long dark days of winter just a little more bearable for everyone.      

Nancy: That sounds fantastic, and I know you've also mentioned many users have found morning "crankiness" to subside in family members - which is pretty important to the entire family.      

Is there a guarantee on its effectiveness?

Terry: Just as each of us has a totally unique body clock, so too does light therapy have a different effect on every individual. If used according to the manufacturers instructions, most everyone will feel some benefit from the Litebook Edge, some more than others. But if within 60 days of purchase an individual wants to return the light, for whatever reason, Litebook will refund their money completely. (This may vary internationally depending on local laws)  

Nancy: Wonderful, where can people get it? 

Terry: The Litebook Edge is available at numerous retail and on line resellers, however if you purchase directly from http://www.litebook.com and enter the code ZW001, you will receive a 20% discount off the posted retail price.

This one and a half minute video gives you a short review of why this light technology can have such important benefits to our overall mental well-being and personal success.

Nancy: Thank you so much Terry for all the research and work you are doing to bring out such a useful resource, and for giving Zela Wela readers a generous discount. I'm so glad I found out about the Edge!

Nancy Phillips, Financial author and speaker

 

Tags: exam preparation success, jet lag therapy, mood disorder, SAD, teen fatigue, teen success, China, light therapy, student success, study skills, mental alertness

Teen Success: New Steps to Success Personal Finance Guide

Posted by Nancy Phillips on Sun, Nov 16, 2014

Nancy Phillips, Teen Financial AuthorMany of you have asked me when I would write a resource for teenagers. Well, I'm thrilled to let you know the Steps to Success Teen Guide, 25 Financial and Life Success Lessons to Help You Achieve Your Dreams is now available!

If you have a teen in your life, you will want them to experience this personal and concise lesson based actvitity guide. The first step of the guide helps them identify and clarify their personal values. This will help them make their financial decisions based on what's truly important to them, instead of following what they hear from the media or their peers.

The 40-page resource allows the teen to create their own personalized guide through short lessons and related activities - they walk away with a plan for their future, and steps on to make it happen.

Packed with helpful tips and suggestions on everything from setting goals to managing money, the “Steps to Success Teen Guide” also outlines key concepts teens need to be aware of to persevere towards their goals, including:

 

 

*How Needs and Wants Affect Your Life

*The Difference Between Debit and Credit

*The Give, Invest, Save and Spend (GISS) Method of Managing Money and Building Wealth

* Creating a Spending Plan (aka Budget) to Achieve Your Goals

*The Different Types of Debt

*The Benefits of Entrepreneurial Thinking

*The Impact of Gratitude on Success and Happiness

Steps to Success Teen Guide by Nancy Phillips

The guide is available until December 1st for the launch price of $16.95, then it will return to it's regular price of $22.95.

Financial life skills are one of the most important skills a teen will need to live a happy and successful life in today's world. They will make over ten financial decisions a day by the time the finish high school, and they deserve to have guidance to help them make good decisions.


 Thank you all for your support and encouragement to research and create this guide. My hope is that it helps teens all over the world better prepare to live successful, happy and independent lives.

Nancy Phillips, Youth Financial Author

Tags: Steve Jobs, gratitude, teens and money, kids and money, teen success, teen finance, teen finance activity book, teens and finance, teen finance book, new teen finance book, entrepreneurial teen finance book, young entrepreneurs, teen entrepreneurs, Brian Tracy, Sir Richard Branson, Hellen Keller, the importance of gratitude, the difference between debit and credit, credit card information for teens

Mint.com Interview: The Real Impact of Youth and Financial Responsibility

Posted by Nancy Phillips on Tue, Nov 04, 2014

Nancy Phillips, Founder of DollarSmartKids Enterprises Inc. Recently I had the wonderful opportunity to talk to the group at mint.com. They do fantastic work helping people manage their money effectively. If you haven't looked at their online service before, it is definitely worth your time, over ten million people think so.

We talked about youth and money (of course!) and some of the key questions we discussed were:

*How important is early financial literacy for children and teens? 

*How does a lack of financial responsibility in children now affect our future economy?

*How do you feel our society today is skimping on this responsibility?

*What are a few basic things parents should be doing with their kids now to instill this concept?

Check out the full article hereAs always, comments are very welcome. 

Nancy Phillips, Founder of DollarSmartKids Enterprises Inc.

 

 

 

 

 

 

 

Tags: financial responsibility, financial literacy, kids and money, needs and wants, children's financial education, money books for kids, Zela Wela Kids, mint.com, Steps to Success Teen Guide

Teen Success: Motivation Manifesto with Brendon Burchard

Posted by Nancy Phillips on Tue, Oct 14, 2014

Nancy Phillips, Zela Wela Kids author Teens, if you haven't heard of Brendon Burchard, this is your introduction. If you have huge dreams (which I hope you all do), this brilliant guy can help you learn the skills and mindset you need to make them come true.

I first began learning from Brendon when I spent two days at his Expert Academy in San Jose two years ago, and I can tell you he is a world class speaker and educator. I have seen some amazing speakers during my career, and Brendon is exceptional. He really connects with young people, University students is where it all began for him.

Brendon is just launching his new book, along with a $297 online personal development course. The book is called The Motivation Manifesto: 9 Declarations to Claim Your Personal Power.

He's a mentor of mine, so Brendon bought a bunch of hardcover copies to give away to my community.

Get yours free here: The Motivation Manifesto

Brendon Burchard

This book is a thoughtful call to arms to create the life we deserve. It's about overcoming self-limitations and social pressures in order to achieve what Brendon calls "Personal Freedom - the full expression of our true selves, the unabashed and courageous pursuit of our dreams.

Here's a review from Paulo Coelho, author of The Alchemist and the most followed living writer in the world:

"The Motivation Manifesto is a poetic and powerful call to reclaim our lives and find our own personal freedom. It’s a triumphant work that transcends the title, lifting the reader from mere motivation into a soaringly purposeful and meaningful life. I love this book.”

Brendon is also the host of the most watched personal development show on YouTube, and he's followed by over 1.9 million fans on Facebook. 

Get your free copy now, you have to take action to move forward on your journey.

Cheers to your success,

Nancy Phillips, Zela Wela Way author

Tags: teen success, Brendon Burchard, Motivation Manifesto

Kids and Money: One Dad’s Experience with the GISS Method

Posted by Nancy Phillips on Sun, Oct 12, 2014

 

Nancy Phillips, financial authorToday I'm speaking with David Vogelsang, you may know him from his popular blog, Spreading Financial Confidence. He has been using the GISS Method of money management with his children Connor and Caroline for over two years now. Here are his thoughts on the impact of their experience as a family.

How and why did you get started using the GISS method with your children? What was your experience getting started? 

D: I initially started paying my son an allowance in an amount that equaled his age starting at age 4 in an attempt to teach him good money lessons.  The deal was that he could spend half of the money but he had to save the other half. I paid him once a week and pay day was on Tuesdays.  This worked well for a while, until one week, I didn’t have enough money in my wallet to pay him on payday. I still remember him insisting that I visit an ATM machine immediately. It was that moment that I realized that I wasn’t teaching him good financial habits; instead, I was teaching him entitlement and the expectation of receiving payment for nothing. That is when my quest for finding a better way started.

Zela Wela Kids


I did a lot of research and read many books on how to help kids start a business and how to document any money that they made, how to invest that money as well as how to shelter a portion of it from taxes. While doing my research, I came across the Zela Wela Kids blog and found the GISS method to be brilliant.  Not only does it teach good money habits to kids, but also very important life skills that are necessary as they grow older:

  • Giving teaches an abundance mentality, a sense of community and the habit of compassion and generosity

  • Investing teaches the habit of putting a percentage of your money away now, so that it may compound and grow over time, so that you are less likely to run out of money in the future

  • Saving teaches the habits of goal-setting, patience and delayed gratification

  • Spending teaches the habit of budgeting and allows them to enjoy the fruits of their labor with greater appreciation, since they are using their own money

And, of course, the earlier we teach our kids these important lessons, the more likely it will become second nature to them.

What did the children enjoy most about dividing their money into give, invest, save and spend?

D: The act of building the GISS bank together was a wonderful experience for both me and the kids.  It was a great way for us to bond and have fun, while also discussing very serious and important topics. Allowing the kids to participate and decorate their own banks gave them that extra sense of pride and ownership.

The same way that building the bank was fun, I wanted to make each of the four categories to be fun as well: 

  • For the Giving portion, I encourage my kids to give to charities that they would enjoy giving to. Also, to reinforce the habit we hand-deliver the money so they not only get to see the recipient’s appreciation, but to experience the “feel-good” you get from giving.

  • For the Investing portion, I showed my kids, using different rates of return, how investing even small amounts of money over a long period of time can grow into substantial, life-changing amounts.  As an added incentive, while the amounts are small, I agreed to match all of the money they earn, so they can invest the full amount and really watch their money compound and grow over time.

  • For the Saving portion, I like to sit with each of my kids and help them list their goals as well as what they would like to save up for. You can imagine how proud I was very when my son met his goal of saving up for a laptop computer and when my daughter was able to save up enough to buy her own iPad mini.

  • For the Spending portion, I let my kids , for the most part, do as they wish and I like to interview them to see if they think they made a wise decision with the money they spent. I figure, if they are going to make money mistakes, I would prefer them to be now, when the amounts are low. (Included is a picture of my son after purchasing the Xbox 360 console with his spending money. My daughter purchased an extra controller with her spending money, so that she would be able to play too.)

Also, I like to make payday a really big deal and the kids look forward to getting out the calculator to divide up their money and check to see how close they are getting to their goals.

Zela Wela Kids What has been the impact on the children as individuals and your family as a whole?

D: The GISS method has inspired the way we run our family economy. Now, instead of giving the kids an allowance, they help around the house or do odd jobs around the neighborhood to earn their money – like little entrepreneurs.  They are very generous with their money and easily part with it for causes that interest them. Also, I can see their self-confidence and appreciation grow as they meet their savings goals, make purchases with their own money and watch their money grow. I am certain that continuing these habits will, not only make my children wealthy, but also positively contributing members of society.

Tags: GISS Method, financial literacy, kids and money, teen success, spreading financial confidence, kids finance books, kids financial education books, preventing entitlement

Teens and Investing: A Basic Guide to Understanding Asset Classes

Posted by Nancy Phillips on Sun, Sep 07, 2014

 

Nancy Phillips, financial authorThis guest post is brought to you by the team at DealMarket. As you learn about investing, be prepared to ask questions, both of the people explaining the investment to you, and also to other experienced investors who have learned through experience what works and what doesn't. Also be sure to understand all the fees you will be paying, as they may negate the return on the investment if you aren't fully aware. Enjoy the article!

Whether you’re just starting to learn about investing or you are thinking about a career in the finance industry, there is much to consider in terms of where to focus.  A good place to start is to understand the different asset classes available, as some investment careers might focus on a very specific sector while others might take a more general approach.

Understanding Asset Classes

Investopedia defines an asset class as “A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations.”

When starting out in the investment sector, it is better to stick to the narrow definition of asset classes.  This is because many investors and investment firms might consider other things as asset classes.  Commodities and real estate are the two types of investments typically considered to be asset classes in addition, but others may be added depending on the outlook of the investor and the firm.

For now, let us focus on the three primary asset classes.

Equities

Equities are also known as stocks.  In terms of asset classes, equities typically means the owning shares in businesses that are publicly held and traded.  Such businesses would be those trading on the NASDAQ in New York, or the FTSE in London, for example.

This asset class can also refer to private equity, or private stocks.  The difference is simple; this refers to holding shares in privately held companies, i.e. any that aren’t traded on a public stock exchange.

Equities, both public and privately held, have proven over time to be the best performing asset class.  While equities can be volatile in the short term, history has shown that investors that hold their nerve and stick with these investments in the long term usually get their rewards.  The nature of equities means that an investor or firm may see a return lower than the capital invested in the first place.

Owing to the nature of equities, this is a good sector of the industry for analytically skilled individuals, and those that can interpret often complex data to make decisive decisions.

Fixed Income

Fixed income assets, which are also commonly known as bond investments, offer more stability than equities markets.  While they are less risky, lower risk in the finance world always means lower rates of return.  The value of bond investments are closely tied to interest and inflation rates, so in periods when these are low investors will typically need to make several investments in order to generate an attractive return.

The easiest way to view and understand fixed income assets is to think of it like a fixed term bank account, where savers commit a sum of money for a fixed term at a certain rate of interest.

Working with fixed income assets is ideal for anyone looking for a finance career without taking huge amounts of risk with people’s money, but it is also rewarding investigating and discovering the best fixed income deals on the market and providing additional value to clients this way.

Money Market

Money market investments, or cash equivalents as they are typically known, are short-term investments.  These offer less risk than equities and fixed income, but their short-term nature means growth opportunities are usually severely limited.

Where Should You Focus?

The majority of investors and investment firms will look to have a diverse portfolio of asset classes at their disposal.  This is often a strategy aimed at minimising risk.  For example, losses on equities can often be balanced by money market and fixed income gains.  However, most finance professionals will look at this technique as a means of maximising gains, and it is recommended that anyone looking to enter the finance sector do the same.

Those looking to enter the financial industry will have options in terms of working in businesses that focus on specific asset classes, but for a better rounded appreciation of the sector, it is worth building knowledge of them all, as well as the other areas where firms may invest, such as in commodities and real estate.

Tags: teens and money, investment classes, asset classes, dealmarket.com, teens and investing