By Michael Kastler| Budgeting Money Tips

On a recent radio talk show I heard the statistic that 30% of adult “kids” are now living with their parents.  It was very interesting to hear both parents and kids calling in to explain their versions of what is going on.  Many of the parents are sacrificing retirement savings to fund their adult kids extra expenses upon their return.  Some of the living arrangements are short-term due to a divorce or job loss.  Yet many are due to the adult kids hanging around for years and years after college, hence becoming known as the boomerang generation.

I decided to do a little research of my own.  Here’s some interesting data that I came across:

• TWENTYSOMETHING Inc., a young adult marketing consultancy, estimates as many as 65 percent of college graduates move back home after finishing school.

• A recent study by the National Center for Education Statistics shows that about 50 percent of recent college graduate have student loans, with an average student loan debt of $10,000.

• Two-thirds of college students now graduate with debt, owing an average of $24,000.

• A May 2011 NEFE survey finds 59 percent of parents are providing, or have provided, financial support to their adult children when they’ve finished school.

• The average parent now contributes roughly $38,000 per child for food, housing, education and spending cash, or an average of $2,200 a year from the ages of 18 to 34, according to a 2004 University of Michigan study.

There’s a cost for to going to college and a cost after college!  How can parents and college students minimize these extra costs?  How can parents avoid from dipping into their retirement savings when a child returns home?  Here’s a few kids and money suggestions that may help prevent or minimize the financial impact of the boomerang…

Kids and Money:  Prevent the Boomerang Tip #1:

Set Boundaries Before Kids Move Back

Based on the statistics above, you almost have to anticipate that one or more of your adult kids will need to move in for one reason or another.  Recognizing that up front will help you set plans and agreement for their return.  Set boundaries for their time they will spend with you, including:

• An agreed-upon date they will leave
• Duties they will perform in the home while they’re in your home
• Money they will pay you for rent

Setting these boundaries up front will get everyone on the same page right up front, no surprises, and minimal hard feelings if you have to ask them to leave.

Kids and Money:  Prevent the Boomerang Tip #2:

Minimize Student Loans

A big reason kids return home is because of heavy debt incurred from student loans.  Be sure you are providing your sons and daughters financial education on debt.  Show them that borrowing $10,000 will cost them x amount per month when they finish school.  Show them how much it costs to rent an apartment, pay for utilities, food, etc.  Create a budget form for them so they can see how much income they will need to satisfy their living expenses AND pay off the student loans.

Having student loans will impact their ability to qualify for other loans.  Make sure they know that going in!

So how do you prevent or minimize student loans?  Consider a couple alternatives:

• Work more and go to school less
• Start off at a community college for the first 1-2 years

Starting off at a community college or extending the time to graduate isn’t the end of the world!

Kids and Money:  Prevent the Boomerang Tip #3:

Saving for Emergencies

If you have adequate financial means, consider setting up a separate budget category before the need arises.  Having an extra $10,000 or so can come in handy!  If you don’t need it for a returning son or daughter, you can roll it into your general emergency fund or do whatever you want with it.

Your normal emergency fund should have at least 6 months of expenses saved up.  Of course, if you don’t have an emergency fund, then now would be a good time to start!  Consider paying off your own debt, cutting discretionary spending, and sell stuff you don’t need.  Emergency funds are a way to buffer you financially when an emergency kicks in!

Kids and Money:  Prevent the Boomerang Tip #4:

Teach Good Spending Habits

When kids are away at school, it’s wise to have them on a spending plan.  Yes, that would mean the awful “B” word, or budget.  Make sure they have budgeted an adequate amount for living expenses including housing and food.  Everything else can be minimized.  If there’s a need for entertainment, there’s nothing wrong with them having a part time job to cover some of their own discretionary spending – and eating out expenses.

A good budgeting program will help your college student see the “big picture” financial costs of going to college is a lot more than just the college tuition.  Look for a budgeting program that is designed specifically for college students. Do some research, Google budgeting worksheet for college students.

Kids and Money:  Preventing the Boomerang Tip #5:

Begin Teaching Kids at an Early Age the Value of Money

The very best way to avoid any financial surprises for you or your children is to begin teaching them the value of money at a very early age.  As they become teenagers, working teens, and then college students, they will advance their early training of money to their current circumstances.  In other words, if they’ve always been trained to live within their means, they are likely to live within their means at all stages of their life.

There are many kids and money programs on the market that can help you train your kids at an early age.  We offer one of the most comprehensive, starting with a very early age Kids Reward Program and advancing through the Working Teen years and finally the College Student Program.

Keep in mind the phrase “Like Father, Like Son.” There’s some truth to what we do as parents, our kids will take into their adulthood.  So instill good habits now for lifelong benefits.  It could save you tens of thousands of dollars!

Your Next Step

Any time of the year is a great time to take inventory of your family’s current financial position.  Check out the Personal Finance books on the market.  If you want an inexpensive and cookbook-style approach that includes a Kid’s Reward Program, try our Personal Finance Book and corresponding Budgeting Worksheets.  At our blog, budgetingmoneytips.com, you’ll find a whole host of articles that will help you get started.   If you need one-on-one coaching, we can help you with that too with our Budgeting Coach Program.  It will be well worth the investment of your time.

Michael T Kastler is a Budgeting Coach, author of a personal finance book, “Get a GRASP on Your Budget and Your Cash” and multiple budgeting worksheets. His budgeting money tips blog that helps individuals become debt free meet financial goals can be found at http://www.budgetingmoneytips.com

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By Michael Kastler | Budgeting Money Tips

There are really good things happening in our communities. One needs to look no further than Main Street Bank in Bingham Farms, MI. As many customers complain about lack of customer service and look to internet shopping and banking services, perhaps we need to spend more time looking in our own backyard.

Main Street Bank is one example of a business that looks in their own backyard for community service projects, purchases, and financial services to local members of the community. With a long history in community support projects and services, none is more fulfilling that the recent match-up with a local entrepreneur. Using the internet as a tool, Main Street was able to find a local entrepreneur to fulfill its needs for office supplies.

What’s so unique about that? Well, it just so happened to be a 10-year old girl with a website selling thousands of fun kid collectible toys, with one being “squishies,” or pencil toppers, for pencils! Main Street was looking for a unique marketing message to put on their pencils and did a local Google search for supplies. Up came Hannah’s Cool World website http://www.hannahscoolworld.com/ and the match-up between an established bank and 10-year old President and CEO, Hannah Altman of West Bloomfield Michigan, had begun.

According to Main Street Bank’s Chief Marketing Officer, Bruce Rosenblat, “I always look for a local provider for our goods and services. Little did I know that a 10-year old would be the provider of these office supplies.” Added Rosenblat, “We felt very comfortable in doing business with Hannah and her website. It was very fitting to Main Street’s ‘buy local’ business values.”

How did this 10-year old girl get started in the harsh world of entrepreneurship? Hannah’s response is, “I was at a restaurant with my parents and I saw a pencil topper in a vending machine. After I got one, I told my mom and dad that I wanted to start a business selling these to kids. My mom and dad have an online business www.CoolZips.com that I help them with, but I wanted to have my own business.”

Not many kids Hannah’s age think about business or sales opportunities. With all the interactive stimulus available to kids in this electronic world, it’s refreshing to see technology put to productive use by a child. As a budgeting coach, my next thought was how would the money gained by a 10-year old be put to use and what “kids and money” tip could be learned? Hannah had a very grown-up answer, “In the beginning, my mom and dad would give me a few dollars a week to spend towards anything I wanted to buy – toys, candy, things like that. Now that the company has grown, they have put money away for me for college and special things. I did get to buy a new gaming system this year and that was great.“ Now that’s music to a budgeting coach’s ears – teaching a young child the value of money with both a saving plan and spending plan, key elements of a family budget!

By sticking to their core value of community focus, Main Street Bank has contributed nicely to the growth of this young entrepreneur. Says Mr. Jeffrey Kopelman, CEO of Main Street, “Most banks are too big to serve the average community members and small businesses. My vision was to create a banking experience that reaches deep into the community that big banks just can’t reach. We aim to help everyone in the community to achieve their financial goals.”

Mr. Rosenblat and Mr. Kopelman appear to be doing their job very well, promoting community projects, finding local business providers, and even supporting young entrepreneurship. Rosenblat and Kopelman take great pride in Michigan and the Detroit community of entrepreneurs. They are committed to providing the best financial services possible to local entrepreneurs. Check out Main Street Bank in Bingham Farms at http://mainstreetbankmi.com/

Kids and Money Tip:

Think outside the box, use the technology you’re so good at, and partner up with your elders to help pull you along!

Michael T Kastler is a Budgeting Coach, author of a personal finance book, “Get a GRASP on Your Budget and Your Cash” and multiple budgeting worksheets. His budgeting money tips blog that helps individuals become debt free meet financial goals can be found at http://www.budgetingmoneytips.com

Copyright 2011  Kastler Consulting Group, LLC  |  All rights reserved

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As parents do, kids will do.  Taken as an extrapolation from the popular saying, “Like Father, Like Son,” there’s some truth to what we do as parents, our kids will take into their adulthood.  So if we want our kids to grow up to be financially prudent, and not come for visits with hat in hand, guess who they need to be learning from?

In general, most K-12 schools do not offer education in personal finance, budgeting, balancing checkbooks, or any other aspect of how to become a good financial steward.  It is up to us as parents to instill good habits, so that when our adult kids come to visit, we can enjoy their company and not feel like the “Bank of Dad.”

Get your youngsters into some good habits starting as early as 5-years old.  Look for a good kids and moneyor Kid’s Reward Program that will teach them the value of money and budgeting worksheets designed for kids.  Keep expanding the program as they grow older and start to earn their own paycheck.

Earnings (for jobs well done), Saving, Tithing/Charity, Spending, and Investing are all key components of instilling good financial habits for kids of any age.  For now, let’s start with some key tips to teach our kids the fundamentals:

Kids and Money Tip #1:  Earnings vs. Allowance

Most kids get a weekly allowance without any accountability and are free to spend as they wish.  I submit that kids should earn money for doing some simple chores (yes, even at 5 years old).  You can further entice your kids to earn even more than their weekly chores by doing additional jobs that fall outside their normal responsibilities.  Once they see their earnings adding up, you’ll be surprised how hard they can work!

As the money starts to accumulate, now is the time to further the learning process by defining how kids should manage their money…

Kids and Money Tip #2:  Tithing/Charity

Every youngster should be encouraged to designate a percentage for charity.  Teaching them to ‘give back’ is a reward in disguise as they learn how to help other people, causes and organizations.  Show them videos of some really poor parts of the world.  They’ll be glad to give!  Ten percent is a typical amount and recommended by most church organizations.

There are plenty of churches and organizations in any local community that would be glad to receive the blessing.  Also check out Kiva.org, a website for providing microfinance loans to low-income individuals around the globe that don’t have access to banking services.

Kids and Money Tip #3:  Saving

Encourage your youngsters to save at least 10% (a good benchmark through adulthood) of every dime they receive.  The money can be put in a local bank or credit union for saving for special items, Christmas presents, or some other goal the child sets.

Kids and Money Tip #4:  Spending

Now for the fun part!  Encourage your kids to spend their money wisely.  Teach them how to shop for bargains and what value the toy or item might provide long term.

When my kids were growing up, I strongly encouraged them to spend wisely on a hobby or a collection and learn as much as they can about the history behind the collection.  My son at ages 5-9 years old, collected toy tractors and had every type, design, style, manufacturer, and specifications memorized.  He knew more about tractors than most farmers!  When he got older he repeated the passion with his train collection, later still, with WWII memorabilia.

Kids and Money Tip #5:  Investing

I’m not a proponent of young kids investing in the stock market. But as they get older you can encourage them to think about saving for their future and retirement.  Show the older kids stock charts from the past 50-60 years and note the strong upward trend over long periods of time.  With 50+ years before they retire, and by starting to save a little bit now, the Compound Interest will kick in big time!

Once my son started working a real job and had taxable income, I made him a deal that if he started an IRA with $500 and $50/month, I would match for the first year.  After a couple education sessions, he jumped on it!  It’s a great way to jump-start their retirement savings AND further teach the greatest wonder of the personal finance world:  compound interest.

Kids and money: Your Next Step

Get our budgeting worksheets with our “Kids and Money” Kid’s Reward Program and enter the iPad 2 Giveaway!

Any time of the year is a great time to take inventory of your current financial position. Check out the Personal Finance books on the market. If you want an inexpensive and cookbook-style approach, try our personal finance book and corresponding budgeting worksheets. Order the new Version 2 budgeting worksheets and you’ll receive the workbook for free and be entered into our iPad 2 Giveaway sweepstakes!

Michael T Kastler is a Budgeting Coach and author of a personal finance book, “Get a GRASP on Your Budget and Your Cash” and multiple budgeting worksheets. His budgeting money tips blog helps individuals become debt free and can be found at Budgeting Money Tips.

Copyright 2011  Kastler Consulting Group, LLC  |  All rights reserved

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I read a great post by Anya Bennett on the topic of students and debt.  It fits right in with our philosophy on eliminating debt and living a fiscally responsible life, no matter what stage you are in.  Anya has kindly agreed to post here and if you like her writing, let me know and we’ll get more of her guest blogs on here…

Debt Management Tips Prevents Students from Incurring Debts

by Anya Bennett

William Shakespeare in his great Play “Hamlet” said: “Neither a borrower nor a lender be,” . Shakespeare lived in a golden age when there was no recession and no fiscal turmoil. However in this era of extreme economic imbalance, people are sometimes bound to borrow money to support their requirements. Funding higher studies is one of these essential parts of life. Students often take up huge loans to finance their graduate studies, but the cost of high school education is on a constant rise. Hence, students borrow a huge amount from banks which eventually leads them to huge debt encumbrance. However if students gain some skills on debt management plan now, they can prevent themselves from considering debt settlement and the impinging credit scores later.

Here are some of the effective tips that would help students to keep away from accumulating debts:

1. Learn to curb your expenses: The first step to manage your debts should be to check the outflow of money. You must keep a record of your income and expenses and ensure that your income exceeds your expense. Most of the time students are found in the reverse situation owing to the escalating cost of education and low salaried job. Yet, it is very essential that you manage to earn more than you spend. This is possible if you identify the differences between the significant and insignificant things and spend accordingly. The student loans normally fund the essentials relating to your education. However, if it doesn’t, you must search for a part time job. This will also help you to spend a little on the non-necessity things.

2. Desist debt on credit cards: A credit card proves to be very effective to students in case of emergencies and helps to construct a credit history as well. Hence many credit card companies step down to various colleges to interact with students in order to provoke them. They often misinform the students about the interest rates and expect the students to know nothing about debt management. Although it is good to have credit card, but you must have some knowledge about it and be careful while using it. If you buy much on credit, then it can lead you to debt afflictions. Instead, it is rational avoid credit cards when you can avail some cash to make purchases. If you cannot buy on cash, you can drop the idea of buying the commodity now. However, you must not always keep yourself away from fun, because it is an essential part of college life, but ensure that you have fun according to your budget.

3. Carefully handle your Student Loan: Often students after the completion of their graduate studies realize that they have taken up gigantic loans and face difficulties in repaying them. Hence it is very important to borrow the exact amount to meet your necessities. This is because the more you borrow now, the more you have to repay it later.

Hence, you can enjoy your student life enormously and at the same time take these debt management tips into account so as to prevent yourself form debt encumbrances a lead a life free of financial woos.

Michael T Kastler is a Budgeting Coach and author of a personal finance book, “Get a GRASP on Your Budget and Your Cash” and multiple budgeting worksheets. His budgeting money tips blog helps individuals become debt free and can be found at Budgeting Money Tips.

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For those of you that know my history with my kids, or if you’ve read my book, you KNOW how BIG I am on getting kids started early with Personal Budgeting and the basics of handling money. I dedicate a good part of my budgeting spreadsheet to what I call the Kid’s Reward Program.  http://personaleconomiccoachinglive.com

There are other good programs out there for kids. Today I have a guest blogger, Jason Holmes, giving his perspective on how to teach kids about Personal Finance. Enjoy…

7 Smart and easy tips to teach kids about personal finance  (by Jason Holmes)

It is imperative to teach kids about personal finance management for it takes a huge time to develop healthy saving habits. You can teach your child about the value of money in several ways. Go through this article to know about some effective tips that can help you teach children about the value of dollar.

Tips to teach kids about personal finance

The 7 smart and easy tips to teach kids about personal finance are given below:

1. Explain the concept of money: Teach your child about the value of coins. Explain them why is it necessary to save money. You can cite some simple but practical examples. You should also explain the purpose of writing a check and using ATM cards. Children are perceptive and they are likely to learn a lot about money by observing your actions.

2. Credit and debit cards: Explain the difference between credit and debit cards. Also, teach your kid both the right and wrong ways to use plastic cards. You should tell them that a debit card is linked to your checking account; therefore you can spend only a limited amount of money.

3. Let them buy their own things: One of the easiest ways to teach kids about the value of money will be to make them purchase their own things. Let them buy their favorite things with their pocket money. When they purchase their favorite ice creams with their own money, then they’ll know the value of money.

4. Teach them about savings account: You can explain to your children about the concept of savings account in simple terms. Once they learn to solve mathematical problems, show them how compound interest works. You should also elucidate how money compounds in a savings account. Once they understand the concept of savings account, explicate the concept of checking account.

5. Money management: When kids get a pocket money, they ought to learn about budgeting. As they handle their pocket money, they are likely to learn about money management techniques. Tell them in clear terms that if they utilize their pocket money to purchase candy and ice creams, then they won’t have it for the latest video game. That’s how they learn to budget. They’ll cut down unnecessary expenses and use their birthday or pocket money for buying important things.

6. Teach them about investments: When your kid has grasped the concept of banking, teach him about stock market. You can explain to him about the various types of investments and its benefits. If you invest in stocks, then you should explain him the concepts of blue chip companies and dividends.

7. Explain to them about the concept of taxes: You can explain the concept of taxes to your children. Most of us have to file income-tax return every year. While filing income-tax return, show them your income-tax amount. Also, explain to your children why one needs to pay tax.

Finally, once your kid becomes 14 or 15 years, encourage them to earn their own money. When they do a part-time job, they’ll understand how tough it is to earn money. They’ll also become more financially responsible.

Jason Holmes a regular writer with Debt Consolidation Care and is also a contributory writer with other financial sites. His expertise is woven around various aspects of the debt industry and with his e-books he tries to impart to people the different situations and simple solutions to get out of debt.  Some of his works include e-books like Credit Score The Quintessential Therapy for a Happy Pocket, Take Creditors and Collection Agencies to Small Claims Court and My Story- From Depression To a Smile.

Michael T Kastler is a Budgeting Coach and author of a personal finance book, “Get a GRASP on Your Budget and Your Cash” and multiple budgeting worksheets. His budgeting money tips blog helps individuals become debt free and can be found at Budgeting Money Tips.

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About 11 years ago, I started teaching my kids the value of money.  When my son was about 9, I started him on a cash reward system.  Instead of just buying him toys and treats whenever he wanted it, I created a task list with some money attached if he completed the task on time.

Over time, our little system evolved into a documented weekly  program.  Each day he was expected to do certain things like clean up, homework, and respect me – no financial reward for those expectations.  In addition, he had a task or two for each day that had a financial reward.  At the end of the week we added up his ‘commissions’, subtracted any penalties, if any, for disrespect, not completing homework, etc.  He could easily see his earning accumulate and he used that to spend on something that HE wanted.  If he wanted something big, he quickly learned that he needed to carry over week to week. We also set aside 10% that he could give to church or charity.

As he got older and started working part time, we evolved into the cash envelope system so he could save for his car, car insurance, gas, and going out expenses.  Oh…by the way, he created his tithing envelop all by himself.

He’s almost 20 now.  A few weeks ago there was a charity request for helping children in Africa.  My son came up with $150 instantly.  I asked him where that came from.  He said, “Well,  I just took the cash out of my tithing envelope.”

This stuff WORKS!!!

When I created “Get a GRASP…” I had to make sure the Kid’s Reward Program was included, and it is.  As you develop your own personal financial budget, it’s equally important to pass the knowledge on to your children.  Some child half way across the globe will be very thankful!  And you will all be blessed!

Michael T Kastler is a Budgeting Coach and author of a personal finance book, “Get a GRASP on Your Budget and Your Cash” and multiple budgeting worksheets. His budgeting money tips blog helps individuals become debt free and can be found at Budgeting Money Tips.

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