It appears as though some of the hottest children toys this Christmas teach children about money and finances. As parents realize that understanding finances is an invaluable life skill they are beginning to teach their children - at a young age - about budgeting, saving, and investing. Inspired by this new trend I found the following practical strategies for teaching your children about money from the Texas Society of Certified Public Accountants. Even if Monopoly hasn’t made it onto your Christmas shopping list you can still begin to teach your children about money this holiday season. Here are hands-on activities you can use to make sure the children in your life are at the head of the class when it comes to handling their finances. And with any luck, our children will become better investors then we are.

Start out young
Toddlers and very young children can understand basic financial concepts like money recognition, spending, and saving. Parents can show their children various coins and explain the value of each currency. Toddlers can begin learning to save by regularly setting aside money in a piggy bank. Even a game of pretend grocery shopping can help small children understand that it takes money to purchase goods and services.

Allowances, savings accounts and ATM cards
Once children are in elementary school, parents can expose children to more complex financial concepts like budgeting, financial goal-setting, and borrowing money. If financial circumstances permit, parents can provide their children with a weekly allowance.

Receiving a weekly allowance will help children set financial goals, like saving up to buy a new toy, and give them the means to accomplish these goals. You can teach them the 80-10-10 rule and encourage children to save 10 percent of their allowance, give 10 percent to charity, and spend the other 80 percent.

This is also a good time to open a child�s first savings account. Many banks and credit unions offer child-friendly accounts with no minimum balance and low fees. Encourage them to save regularly, even if it�s only a few pennies. By doing so, you�re building the savings habit. It�s a habit that will serve them well as they become adults.

Elementary school children are the right age to begin a discussion of credit and ATM cards. Children see credit cards used regularly for transactions, and it�s important for them to understand how credit works and know that ATM cards withdraw cash directly from a checking or savings account.

Teaching about investing
Parents of middle school and junior high students can teach them basic investing concepts like compound interest. Consider giving your child a pre-paid credit card and explain to them how to use credit wisely. This is an opportunity to explain how compound interest works for you when your money is invested properly and how it works against you when you are charged interest on your credit card balances each month.

High school graduation is looming
By the time students enter high school, they should understand how to earn, save, and spend money responsibly. Students can open a checking account and learn how to balance a checkbook.

High school students also are capable of understanding how investing differs from savings. Use examples to show how you might �save� for a short-term goal, such as buying a video game, and �invest� for long-term objectives, like college tuition. Cover the basics, including the importance of diversification, liquidity, and the correlation between risk and reward.

Make sure that high school students, college-bound graduates in particular, understand the dangers of credit cards and know how to use credit cards responsibly.

Getting a first paycheck can be a puzzling experience for a student holding a part-time job. They are not accustomed to reading a paycheck and are often surprised about the amount of money withheld for taxes. Parents can take the opportunity to review the paycheck with the student and explain how the taxes collected are used to build roads, provide police and fire department services, and fund other government programs and services. This also may be a good time to talk with students about filing a tax return for the first time.

More information
Parents and children can visit the Texas Society of CPAs� consumer Web site, www.ValueYourMoney.org, and find additional money management information. Americans rightfully focus much of our attention on making sure children excel at core academic subjects like reading and math. But the financial world is only going to grow more complex, and adults can�t forget about teaching children the basic financial truths they need to know.

Thanks to Lindsay at dizzyisland I’ve created a small email form in order to accept topic suggestions from anyone visiting the site. I usually blog about things that I encounter during the day but the site was created for you - so if you want to know about a certain subject please feel free to suggest a topic and I’ll do my best to cover it.

Jeff Opdyke over at The Wall Street Journal brought up the idea today that children are spoiled during the holiday season with an over-abundance of gifts and money - so much in fact that most kids don’t even end up playing with that toy from Great Aunt Betty. Since the child won’t likely be able to tell that he/she only received 10 presents instead of 15, people who feel compelled to give gifts but don’t want to give too much can opt for long-term “financial gifts.” He proposed two gifts to give this holiday season:

First, ask the parents whether they’ve already established a college-savings account or a custodial account in their child’s name. If so, tell them you’d like to contribute. That’s a simple cash gift. You can still give the money to the kid, just include a note that says, “These holiday dollars are specifically for the college account Mom and Dad have established for you.”

If the parents don’t have such an account, there are two other options:

1) Buy a savings bond- The minimum purchase is just $25 for the paper version of a $50 Series EE bond. Series I bonds are inflation-protected, and available in paper version, too, but start at a minimum of $50.

If you’re really thinking ahead, put the bond in Mom and Dad’s name with the child as beneficiary; that way, parents might redeem the bonds tax-free for qualified education expenses at some point. If you do it this way, do not name the child as co-owner. You can buy the paper savings bonds from most banks and credit unions. If you want your gift to go further, some banks offer a “bond-a-month” program, in which your chosen recipient receives every month a savings bond in whatever denomination you establish.

2) Give a gift of stock- ShareBuilder.com, an online brokerage firm, offers gift certificates for as little as $25 that allow a child to buy stock in any public company. (Go to the “Retail Store” link under the “Products & Services” tab on the ShareBuilder home page.) Mom or Dad will have to establish a custodial account in the child’s name at ShareBuilder.com, but that’s easy, free and accomplished quickly online.

And just like that, you’ve cut down on the plastic clutter at Christmas, and given a kid a profoundly more meaningful financial gift than a card filled with cash.

However, I know there are more ideas than that. Please feel free to add your comments and ideas on other gifts that we can give to the child who has everything… literally.

Holiday, Gifts, Gift Ideas

I just wanted to proudly announce that this blog was accepted this week by 9Rules Network! I have been reading 9Rules for a while now and am always impressed with the high-caliber blogs that are featured on the network.

I submitted this blog during their 3rd round of submissions a few weeks ago and was very excited to hear that it was accepted. So be sure to check out 9Rules to check out this and other quality blogs on a variety of topics.

CheckFree Corporation (Nasdaq: CKFR) announced this week the most recent results of a survey conducted twice annually by CheckFree Analytic Research Services with The Marketing Workshop, Inc. and Harris Interactive. The study revealed that 56% of U.S. online households are paying at least one bill online, up from 52% in June 2004. Currently, 87% of users who pay their bills from a single “consolidated” website, such as a bank, brokerage, credit union or Internet portal, say they receive the service for free. These figures seem to suggest that online bill payment is becoming more important to consumers.

In fact, for the first time online banking and bill pay features surpassed the more traditional bank selection criteria of bank branch and ATM proximity to home. The availability of online banking and bill pay features ranked third among the top three factors in selecting a bank for personal accounts, following “availability of free checking” and “reasonable fees and service charges.”

“Today’s Internet user has several options when choosing to pay bills online. Consumers can pay individual bills at a ‘biller direct’ website, such as a utility, telecommunications or credit card company, or pay any bill from a single ‘consolidated’ website like their bank,” says Matt Lewis, executive vice president and general manager of CheckFree’s Electronic Commerce Division. “Paying bills online is in the mainstream, and for the first time online banking and bill pay has moved into the top three factors considered by consumers when choosing a bank.”

The study answered a few questions that might persuade you to use on online billing service. Personally, I have not switched to such a service - mainly because my bank charges me for such a service. However, most of my bills are automatically pulled from my bank account using ACH setup through each company. In fact, the only bill I have to think about paying is my credit card. Everything else is just done automatically for me. However, here are some of the questions the study answered:

Why do consumers choose an electronic billing and payment service?

• Convenience — 27 %of consumers stated the most important
  benefit was saving the paper, stamps and hassle of paying bills by
  check, while 17 %stated that paying online was the easiest way
  to pay bills.
• Speed — 13 %of consumers stated the most important benefit was
  that it is faster than paying by check.
• Control — 9 %of consumers stated the most important benefit was
  the ability to ensure bills are paid on time as specified by the
  consumer.

Why do E-bill users like both receiving and paying bills online via e-bill?

• E-bill makes sure the bill is paid on time (28 %)
• Convenience, just click and pay (24 %)
• Email reminders are available (18 %)
• Ensures I never misplace a bill (6 %)
• Makes budgeting easier (6 %)
• Helps the environment by minimizing paper (6 %)

Bills, Banking, Online Bill Pay