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Habits to Teach Our Kids

Habits to Teach Our Kids

And for all adults to put into practice too


I was walking with a friend and his 6-year old daughter and we stopped by an ATM on the way to lunch. As my friend was getting some cash, I couldn’t help but notice the confused look on his 6-year old’s face. She was struggling to understand this machine on the side of a building that spits out cash after you put some kind of card in it. Then she blurted, “Daddy, when am I going to get my own cash card thingy?”

After I caught my breath from laughing, it dawned on me: gone are the times when you taught kids about money by giving them a piggy bank and allowance, followed by a savings account with a check book that they could learn to balance. Remember when we used to go into the bank to make a deposit or a withdrawal? Have you done that lately? And can we truly teach our children the value of money when no one is carrying actual cash around anymore? And while the concept of saving really has not changed much, what has changed is that if our kids – and adults alike – aren’t diligent about “balancing their checkbook,” then they can fritter money away too easily and get themselves in trouble. So here is what I remind my clients (ostensibly by telling them to teach their kids):

Review your bank account every month. Whether
you review it online or by printing statements, it’s imperative that you review the activity in your bank account. Here’s what you’ll find:

  • ATM transaction fees. Some “out-of-network” ATMs charge $4 for cash withdrawals. And if you are withdrawing $50, that’s a “guaranteed” return of 8% that you just gave away! And how much are you losing to ATM fees a month? $20? $35? Over a year’s time, that can be hundreds of dollars you pay just to access your own money. Seems pretty dumb.
  • Recurring charges. Establishing automatic debits from your bank account sure is convenient. But you can also lose track of what you signed up for in the first place. I found this out the hard way when I discovered that I had automatic debits from Amazon, Hulu and Netflix in addition to my monthly cable subscription. And I hardly watch TV!
  • Beware of the Overdraft Protection. Again,
    a real handy tool, but at what cost? So your savings is less than $0 because your paycheck gets deposited to your account in two days. Yet overdraft protection allows you to still get your daily Starbucks fix. So that $4 latte really costs you $16 because each transaction that is “protected” costs you $12. Would you really pay that for a venti latte? Remember when if you didn’t have money, you had to go without? By accessing overdraft protection, what you are really doing is asking the bank for a bunch of short-term loans. And why wouldn’t the bank lend you $4 so that they could make $12. That’s a great deal for them!

Besides reviewing your bank statements every month, there are some other things we need to teach our kids. And as I talk to people, I think adults need to do these things as well. For example, it’s important that you and your kids:

Check your own credit report

Whether or not you have credit cards, checking your credit report at least once a year is very important. Not only does your credit score impact you when you apply for a loan, but it also impacts your current and future job. Plus, it can protect your identity. But the best part? It’s free.

Most people don’t realize that under the Fair and Accurate Credit Transactions Act of 2003, you have the right to view your credit report from each of the three major credit bureaus for free once every 12 months. To get your free reports, request them from the federally authorized website, www.annualcreditreport.com. And despite what some people might suggest, accessing your own report will not impact your credit score at all. But it can save you a lot of money and headaches later on.

Keep a daily log of all
expenditures for a week

I try to do this a few times a year and I’m always astonished at how much money I seem to fritter away. Sometimes it’s the extra expense I incur after paying for rush services at the dry cleaners, that $32/week I spend on my afternoon coffee or the impulse-buys at the checkout lines. The point is, over a year, that adds up to a decent amount of money that I could be saving for retirement.