Posted: 02 Nov 2010 03:26 PM PDT

Parenting doesn't stop at potty training and teaching the kids how to tie their shoes. As your kids grow up, what is the best way to teach them about personal finance?

At least 15 states require public high schools to offer personal finance courses, but that still leaves plenty of places for lessons on money management to fall through the cracks.

Watching mom and dad pay the bills or balance a checkbook might click for some kids, but even in elementary school students can learn how to handle money through a parent's favorite way to teach: reading with their child. Either way, personal finance lessons are too often left to someone else to figure out.

"I think schools are counting on the families to do that job and the families are counting on the schools to do that job, and it just doesn't get done," said John Daugherty, a CPA in Texas who helped start a sort of children's book club on personal finance in Texas schools.

Figuring that elementary school children are "just on the cusp" to figure out money matters, as Daugherty put it, the Texas Society of CPAs started a financial literacy program in 2008. CPAs are available to read to students in the classroom, and they provide a recommended reading list for preschoolers through 12-year-olds, along with other materials.

It's never too early to start, as Seira Wilson, an editor at Amazon.com books, told WalletPop in an e-mail: "When young children start engaging in imaginary shopping or putting coins in a piggy bank, it's a great opportunity to start talking about money. Currency identification and basic concepts of earning and spending (and the fact that money doesn't grow on trees!) are good starting points for younger children, and for older children, teaching the longer-term benefits of saving, planning, and interest can guide them toward smart financial decision making. Regardless of the age, a key is selecting books that will capture a child's interest and invite further discussion."

There are only so many Arthur books a parent can read on how the aardvark earns an allowance and saves money, before they lose their mind and can quote D.W.'s lines by heart. Here are some good other alternatives that WalletPop found:

Junior's Adventures
It's a six-book boxed set for $40 from personal finance guru Dave Ramsey. Recommended for ages 3-10. I've been reading these to my daughter, who is in first grade, for about a week and she's enjoyed them so much that she has drawn a crayon picture of the main character. That's high praise from a 6-year-old.

Other than a few too many grammatical errors, the books follow a boy named Junior as he learns how to work, save, spend and give. My daughter's favorite is where junior learns to save his allowance for a long-term goal, such as a car or college -- a goal I keep trying to teach her with her weekly allowance and gift money from grandparents.

The Sisters 8
In this series for young readers age 6-10, octuplets must learn to run their own household when their parents disappear. In book 1 "Annie's Adventures," there's a lot on paying bills and writing checks. In book 4 "Jackie's Jokes," the plot revolves around needing to pay income taxes. The softcover books are $4.50.

One Hen: How One Small Loan Made a Big Difference
This picture book by Katie Smith Milway is for grades 2-4, and was recommended to WalletPop by Jeanette Larson, a librarian who teaches children's literature. The book is $12.89 at Amazon.

Bunny Money
If your children are familiar with Max and Ruby, they'll want this picture book, by Rosemary Wells. $6.99 on Amazon. Larson also recommends this book, which includes some "bunny money" for kids to spend. The book is for kids in preschool through second grade. In the book, in-charge Ruby and intrepid Max search for a birthday gift for Grandma and learn that we can't always afford the things we want to buy, and money spent in one place can't be spent somewhere else.

This book was also recommended by Amazon's Wilson. "Children at this age are already learning about choices, so it's a natural progression to look at making choices with money," she wrote in an e-mail to WalletPop.

The Money Tree
This book by Dave Hunt, aimed at children up to age 10, examines a topic about which I've always personally wondered: What if everyone had so much money, nobody had to actually work? Recommended by personal finance writer and accountant Angie Mohr, the book talks about a boy inventor who invents a money tree and then starts selling them in his town. People plant their own and eventually, everyone has unlimited amounts of money and buy up all of the things there are to buy. No one makes new things because they already have all the money they need. Soon, there is no food and everyone realizes you can't eat money. A great lesson on basic economics and the value of a buck. It was last published in 1989, but can be found used online for less than $7.

The Zela Wela Kids Build a Bank
This book by Nancy Phillips, also recommended by Mohr, is for children up to age 8 on how to save money and divide it among spending, savings, giving and investing. The $16 book is the first of a series and starts with a piggy bank that kids can make themselves at home.

Federal Reserve comics
You might not think of the Federal Reserve as a place to go for comics, but the federal agency offers free comic books to teach kids, and adults, about money. They look like they should be ordered by a teacher, since up to 34 copies of a book are available to order online. I ordered a copy of "The Story of Foreign Trade and Exchange," although I avoided the anticipation of waiting for the mailman and read a few pages online with a PDF reader. As Naked Retirement author Robert Laura pointed out, they may not be Mad Magazine or a superhero comic, but they're a fun resource for kids and parents. And best of all, they're free.

Alexander, Who Used to Be Rich Last Sunday
This $7 book by Judith Viorst was recommended by Paul Aherns, who runs a literacy education company. It's a great starting point for a discussion about money and tells how a boy gets $1 from his grandparents and thinks he's rich, until he starts spending it on gum and other things a boy loves, like renting a snake.

Joe the Monkey Saves for a Goal
This picture book is another great book about how to save money for a goal, even if it is a short-term goal such as a toy. The book helps distinguish between needs and wants, and making choices.

A Dollar for Penny
A lemonade stand brings in nickels, dimes, even quarters, and they start to add up for young Penny in this $4 book for beginning readers recommended by Wilson, a book editor at Amazon. A Dollar for Penny uses rhyming text and bright illustrations to teach children various denominations and simple money math. An added bonus is that Penny's money is coming from her lemonade stand, which is a good jumping off point to discuss receiving an allowance for chores or other ways of earning money.

Growing Money
Also recommended by Wilson, this $9 book is for grades 4-8. It teaches kids about balancing an account, reading the financial page of a newspaper, and various forms of interest and investments, using accessible language and examples. Sample forms help kids practice recording deposits and withdrawals and learning more complex concepts like risk tolerance. Parents can build on this by taking time to read the financial pages with their child and inviting them to participate in balancing the family checkbook.

A Kid's Guide to Giving
Written by a young adult, this $10 book for grades 7 and up that Wilson recommends demonstrates charitable giving. Kids learn how various charitable organizations function financially, as well as advice for deciding whether to give money, goods, or time. Best of all, this guide highlights the joys of giving and the difference even small amounts can make.

The Millionaire Kids Club
This series of $13 books by WalletPop writer Lynnette Khalfani-Cox teaches kids about the choices they have with money, and how they can do much more with it than spend it.

Not Your Parents' Money Book
Another book by a WalletPop writer -- Jean Chatzky -- is for grade 5 and up. The book is $9.35 at Amazon and is for middle school students and even older teens. It's a good introduction to the world of money for teens about to get a job.

Finance Whiz Kids
Although not yet published, author Darrah Brustein, 27, told WalletPop in a phone interview that she expects to have the series of six storybooks self published and available for sale in January. Meant for second-through fourth-graders, the books use woodland creatures to tell stories about the value of money.

As a child, Brustein was given a plan for her allowance by her parents. She had to save half of it, and if she saved more, it was matched by her parents as a way of teaching her how compound interest works. She also learned about stocks and mutual funds at home, picking funds that the family would buy and track together. She didn't read about personal finance as a child, she learned it first-hand.

"As a kid, I don't remember reading any books about money," she said.

Brustein admits that not every child is so lucky to learn money management skills at home, and says her books are targeted to parents "savvy enough to realize that this is something that will change their child's life."

That's more than enough to ask from a book. Now go out and buy some before Santa Claus gets all of them.

Aaron Crowe is a freelance journalist in the San Francisco Bay Area.

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Teaching Your Children About Personal Finance - Associated Content

Posted: 02 Nov 2010 03:05 PM PDT

In this day and age, I think many of use have realized the importance of a personal finance education. With job openings at a premium,

real estate values still greatly diminished, debt balances running high, and retirement accounts having been sucked dry, many are beginning to understand the failure of our personal finance knowledge.

There may be many parents kicking themselves for not better educating their children about finances and how to manage money when they find these same children returning home to live due to lost jobs, lost homes, or lost savings (if they ever had any to begin with). To ensure future generations don't encounter the same fate as many of their modern day predecessors, I feel we have an obligation to teach our children as much as we can about personal finance early in their lives.

Starting Early

In my personal opinion, it's never too early to start teaching your children to be responsible with their money. Children can be incredibly money savvy, even at a young age. Starting with simple aspects of saving such as a piggy bank or savings account may be easy ways to familiarize them with good money management habits. But more than this, communication regarding money and the spending of that money may be even more important. Remember, children are amazing receptors of information, and much of that information is passed along by watching what parents and adults do. Therefore, it is important that a proper example be set by adults, and when money is spent or saved that these same adults explain where the money is going and why. This might also be a good way to question your own saving and spending habits and whether they are actually as good as you think they might be.

Teaching Time

So you know the kiddies are watching and wondering about your money management techniques. Now it's time to teach! But where to begin?

At what point or on which aspect of personal finance you begin the financial aspect of your child's education may largely depend upon his or her personal interests as well as yours. It will probably also revolve around your personal saving and spending habits.

Personal Finance: Daring to turn back to stocks - Philadelphia Daily News

Posted: 30 Oct 2010 11:58 PM PDT

Posted on Sun, Oct. 31, 2010

People have had it with the stock market.

Collectively, they have pulled about $18 billion out of stock funds this year and poured more than $200 billion into bond funds, which can be safer. Market watchers are shocked, having figured investors would get braver once stocks began to look friendly again. And though some have stuck a toe back into the market, lured by the best September for stocks in 71 years, investors largely remain unconvinced.

Many continue to mourn what they have lost and coddle what is left from one of the worst bear markets in history. The full stock market, the Dow Jones Wilshire 5000 index, remains down about $4.8 trillion from its October 2007 peak, even after having climbed $6.4 trillion from its March 2009 low. But your investments probably have not been as cruel as you think. With help from Ibbotson Associates Inc., I ran various scenarios. And the results show that while people close to or in retirement might still be hurting if they panicked and ran in the downturn, most people who held on have at least regained what they lost.

Of course, that is little comfort for those counting on having more for retirement by now, but it is not the disaster they might have imagined. Take a look:

Euphoria-induced excesses

Step back to 2007, when you probably felt pretty good about your money. That is typical just before a nasty downturn. Major collapses generally are fed by people feeling cozy about their money and often putting more into stocks or real estate than is wise - even borrowing to up the ante.

It is those euphoria-induced excesses that position a market to topple. Just before the most recent downturn, for example, one in four people within 10 years of retiring had put 90 percent of their money in mutual funds invested exclusively in stocks. It was misplaced confidence, and it backfired.

Yet, even that oversize bet on the stock market did not turn out as badly as imagined amid the excruciating slide. Let's say you put life savings of $10,000 in the stock market or a Standard & Poor's 500 index fund in 2007. That $10,000 would have turned into about $4,980 close to the low point in the market in March 2009. But by the end of last quarter, Sept. 30, you would have roughly $8,000.

Of course, having $8,000 to show for your retirement when you started with $10,000 is still not pretty. But let's look at how you would be sitting if you followed the nagging that goes with good investment principles.

Going forward

If you had put 70 percent of your money in a stock-market-index mutual fund and 30 percent in bonds, you would have been following the precept of diversification. At the market's low point, you would have had less than $7,000 of your $10,000 - not as protected as you thought but in much better shape than the all-stock investor. Now, because stocks have climbed, you would have roughly $10,090.

If, however, you put half your money in the stock fund and half in a long-term U.S. Treasury bond fund, you would have had about $7,700 at the scariest time and about $11,300 now.

That is a lot better than the person who got scared and pulled out money after it plunged to $7,700. Parked in a savings account, the $7,700 would have climbed to only about $7,800.

What now?

If the stock market continues to rally into the end of the year - as some forecast - more people might feel daring and give stocks a try once again.

In fact, financial advisers have been pushing this. But they are not telling investors to try to catch up by putting oversize portions of money into stocks. Rather, they are suggesting that people afraid of losing money again consider the balanced approach, combining stocks and bonds in maybe a 50-50 mixture. They suggest using the past as a guide: Different proportions of stocks and bonds behave differently, and people who do not go overboard do regain what is lost.

Gail MarksJarvis is a personal-finance columnist for the Chicago Tribune. E-mail her at gmarksjarvis@tribune.com.

Personal Finance

Friday, November 5, 2010

“WalletPop's best books on personal finance for your kids - Walletpop.com” plus 2 more

“WalletPop's best books on personal finance for your kids - Walletpop.com” plus 2 more

Euphoria-induced excesses

Going forward

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