Ballooning Nest Eggs Hatches!
Rally your family and friends: it takes a "flock" to build your youngsters' nest eggs
- Explore "out of the nest" ways to spur meaningful gifts to
your kids and other youngsters
- Gifts with purpose ... gifts that make a difference
The Future of the Present
The explosion of social gifting is changing the way we celebrate special occasions, big and small. The good news: Your kids are less likely to return gifts or toss them aside with a roll of the eyes. The bad news: Adults have to ensure that kids are “gifting” responsibly. Here’s a primer on all sorts of social gifting options. I’ve been coasting on iTunes cards for a while now. With a crew of 16 nieces and nephews and zero time to cruise the mall, it’s become my go-to gift for the litany of birthdays, graduations, holiday parties and special events that involve presents. It’s tired, lazy, and, well, lame. ‘Here kid, go get yourself an app,’ doesn’t really convey the love and affection I have for these wonderful children in my life. I had to do better. After some research, I discovered that thoughtful, meaningful gifting can be about apps—you just have to find the right ones. Today’s slew of social gifting sites and apps offer help matching people with presents without complex spreadsheets or hours of shopping. So I broke out my newfound e-skills at my family’s St. Patrick’s Day dinner. I owed my 15-year-old niece a birthday gift, and after I overheard her say she’d been pining for this way-expensive lash enhancer, I opened the social gifting app I had downloaded, selected her from my array of Facebook friends, wrote a clever personalized message and posted a Sephora gift card to her Facebook wall. In seconds she was thanking me for the “epic” gift and bam, I went from ho-hum aunt to hip. Social gifting, with its ease of use, has become the latest big buzzword in e-commerce. Facebook Gifts upped the wattage on using social media as a convenient means of giving friends and loved ones a present when it launched just before the 2012 holiday season. Now most Facebook users are familiar with the birthday reminders and the nudge to gift your friend a Starbucks card for her special day. But an explosion of players in the space has opened a ton of social gifting options. By tapping into your connections on social networks (primarily Facebook at this point) and getting prompts to give gifts to friends and family for loads of occasions, social gifting is making it far easier to deliver gifts loved ones will actually like and enjoy. In short, we can tap into our social networks to celebrate moments, big (a wedding) and small (a promotion) through services that cull information such as what music a friend has “liked,” products they’ve put on online “wish lists” or have flat out told their social networks they want. Conveniences abound as companies offer deeply varied, personalized, sometimes free choices. Lots of financial analysts agree that this nascent business model might indeed transform the way we exchange gifts. “The unexploited potential of e-gifting will allow gift carding to reach deeper into day-to-day transactions and replace ways that we pay for casual transactions—everything ranging from gifts to family members to how we pay the babysitter or gardener,” says CEB TowerGroup analyst Brian Riley. “Social gifting has plenty of room to grow and you will be certain to see strong growth through the decade.” Last year, social gifting ballooned into a cool $1 billion business out of the $100 billion gift card industry. And Wrapp, one the larger players, revealed in February that it grew to 1+ million users in just 14 months. Retailers are also putting stock in social gifting. Starbucks, for instance, has reported that it expects social gifting to account for as much as 20 percent of its business in the near future. So what does all this mean for our kids? As gift recipients, they’ll be more likely to get gifts they actually want. And as gift givers, with your credit /debit card and of course your permission, they’ll be able to give gifts that are more meaningful and adored. But here’s the flipside: All the reminders and offers to send lots of gifts for lots of special occasions can confuse kids who are new to social media. We want our children to have big, generous hearts, but we can’t afford to send every kid in the class a $30, five-pound gummy bear for his or her birthday. “Teen's specifically are at a stage in their life where they lack impulse control,” says Josh Shipp, teen behavior expert. “Without guidelines, supervision and instruction [social gifting offers] are putting them up against something they can't defeat.” The key is education and supervision, he says. “There is a great service called Zabra that notifies you of what your teen is up to online (without spying) and educates you about how to help your teen use social media responsibly. You've seen what your teen can do with a cell phone and texting, the last thing you want is a bill for two hundred dollars for some virtual gifts.” To help you and your children navigate this new method of celebrating and giving, you’ll need a roadmap of the players, the offers, the pitfalls and the opportunities. The social gifting sites and apps primarily tap social data on Facebook—which means this applies to kids 13 and older (the minimum age for kids to “legitimately” have Facebook accounts). Here’s a snapshot of what’s available at the moment: Gift Matchmakers: These are the social gifting sites that primarily aim to help you match a person with a present. Amazon Friends and Family Gifting Link your Amazon and Facebook accounts and this service uses Facebook profile data to remind you of special occasions and suggest the perfect presents for your social network. Gift suggestions land on the recommendations pages of Amazon based on a friend’s Facebook profile—such as music and movie likes—and also their Amazon wish list. So when it’s your cousin’s birthday you’ll know he’s into biking and that he’s hoping for a new helmet. Etsy If you prefer to give homemade, vintage and one-of-a kind gifts, this is for you. Link your Facebook account to Etsy and get gift ideas based on your friends’ likes. One bonus: you can filter by price. Facebook Gifts For the moment, this is one of the social gifting options that deliver physical gifts to the recipient. You see that one of your “friends” has a birthday, anniversary, new baby and pick out a present from its growing list of partners. Your friend gets a notice, enters his own address and can tweak the present (different size or flavor) before it ships. Givvy This one doesn't recommend gifts by specific social media friend, but rather, the Facebook app narrows gift suggestions by type of person. What’s cool is how the apps’ gift curators make some fantastic suggestions. Wantful Unlike many of its competitors, Wantful has a foot in the both virtual and physical worlds. Hop on the site, answer a few questions such as where your friend would like to spend her free time and what kind of home she lives in; browse through eclectic offerings and create a collection of 12 choices based on the curated list Wantful assembles for you. Wantful then sends your friend a beautiful gift book featuring your choices and she selects the one she wants most. Giftivo A “recommendation engine,” Giftivo’s recommendation algorithm helps you pinpoint the right present based on the giftee’s “shopping activity” and info you provide on the friend, along with the usual Facebook data. GiveEmThis This site analyzes your friends’ social media habits to come up with gift suggestions. But it also takes into account that person's gender and age, and applies their Twitter handle. Voila, a selection of presents for you to choose from. PresentBee This app lets you ask mutual friends for their opinions on gifts for your friends, while also searching your Facebook friends' interests for gift suggestions. Does Lilly really want the Ped Egg for her birthday? Freebies: These gifting options entice you into giving friends a free gift card voucher worth, say $5, in the hope that you will add to the free offer; that they’ll acquire new customers; and/or that the recipient will spend more in the store when redeeming their free gift card. Wrapp This is the major player in the space at the moment. It lets friends give, receive and redeem digital gift cards using mobile devices, and allows friends to contribute to gifts given by mutual friends. So what starts out as a free $5 gift voucher to the Gap can add up to $50 when it makes the social media rounds via Facebook. Boomerang It too uses Facebook info to send reminders of important events. You can choose from free and paid gifts, personalize the message and send recipient a gift voucher. But, also check your inbox often for free offers just for you. Pass on the free offer and you can add to the gratis dollar amount of your own gift. In other words, here’s $5 to spend at this online jewelry store, but pass the offer on to three friends and you’ll grow it to a $10 voucher instead. Make it Personal: Add video, photos, personal messages and more to these eGift cards. GiftDish Send a friend an electronic gift card instantly or chose to send it on a date you specify. The site lets you schedule the delivery of Old Navy e-cards for all your nieces’ birthdays in one fell swoop and then sit back and relax for the rest of the year. Plus, recipients can redeem them online, print them, or present them right on their mobile device. DropGifts and YouGift Link to Facebook, get reminders of important dates, select a virtual gift and it gets posted to your friend’s wall with your personalized message, photo or video. Mutual friends can choose to chip in to increase the value of the gift card. Spontaneous Giving – Unlike other sites that prompt you to send a gift for a special occasion, these encourage you to send a present “just because.” Giftly Let your creative juices flow using this app. Send someone anything from a cupcake, to a sailboat lesson, to a day in Tuscany. You pick the place and the dollar amount, customize the gift with a photo and hit send. The freedom here is that when the recipients go to redeem their gifts, they pay themselves, but Giftly will reimburse them that amount through their credit card. See a friend “check into” a frozen yogurt spot you frequent and you can “buy” her a double. Because credit cards are involved, this is geared towards adults more than kids. Treater With this app, users can send and redeem gifts, share photos, access contact info from their address books and receive push notifications when they get a gift or a message related to a gift they have given. Gifts include a drink at a restaurant, tickets to a movie or a trip to the spa and can be redeemed from a link sent to the recipient via email, text or Facebook post. Plus, Treater gifts tend to be a little cheaper than gifts on other platforms. So if you know that your teen just sat through grueling SATs, you can send her an e-card for a burger to say “thank goodness it’s over.” GiftHit This app lets you send fun gifts like late night wings, mani-pedis, and concert tickets to your friends by Facebook wall post, email, or text. It’s a nice way to say, ‘thinking about you,’ ‘great job on that test today’ or ‘sorry that idiot dumped you.’ Crowdfunding Gifts: Looking to give a teen something totally “wow” that’s way beyond your budget? These sites are for you. They let friends and loved ones pool their dollars for more extravagant (or thoughtful) gift-giving. Aggregift Choose a friend from Facebook and a gift from the site’s hand-picked recommendations or other products on Amazon.com. Share the gift on Facebook and Twitter so friends can pitch in. People can contribute as much as they'd like—the site never tells how much anyone gave and much like Kickstarter you can see the progress of the goal dollar amount. New $500 golf clubs for Uncle Ari? You’re 85 percent of the way there. Sharagift and Let’s Gift It offer very similar approaches. From A Birdie Sometimes, what people want most are things that can’t be bought. This site lets you give them what you can’t put a price on by inviting people to write letters to a shared friend or family member. The group collectively uploads memories, well-wishes and photos, which are finally compiled into an "Album of Letters." Specify a day for delivery and your recipient gets the Web address to her very own website featuring all the love and memories one could possible want. Here’s What I Want A number of social gifting sites help take the guess work out of giving by allowing you to tell those you love exactly what it is you’re craving for your special occasion. It’s like registering—but for your birthday or graduation. It’s similar to crowd sourcing but you or your child tell everyone what you’d like. GiftSimple Register for the gift(s) you want and tap into your social network to pool contributions from friends. The money is yours to use on whatever you like, whenever you like, and wherever you like. Ziftit, Gift Drop and Lottay use similar approaches. eBay Group Gift You create wishlists and send them to your friends and family via email. Recipients can choose to contribute money toward your wishes using PayPal. DreamBank Rather than trafficking in eCards or gift recommendations, this site promotes experiences. Use it to post your dream vacation, a First Communion party or a down payment on a house. Then invite friends to make your dream a reality. Do you think social gifting is something you’d let your child use? Tell us why on our Facebook page.
Earth Day, Everyday
This Earth Day, kids will rally via social media to shine a light on the victims of climate change. Here’s a chance to show our young ones that the effects aren’t just environmental—they’re also economic. You say no to paper and plastic; up-cycle vintage furniture; insist on efficiency when heating and cooling your home—yeah, you’d say your family is pretty green. But the scope of what’s happening to our planet is much larger than what’s happening in our individual houses. On April 22, Earth Day will once again broaden our perspectives. You can start by calculating how green your family really is. Add it up with the Earth Day Network’s Footprint Calculator. “It provides perspective on your life versus someone living elsewhere around the world,” says Christine Robertson, director of education at Earth Day Network, the non-profit group that organizes Earth Day. “The Footprint Calculator helps kids understand why Earth Day, founded in 1970, even matters.” Then get your kids involved in this year’s initiative: The Face of Climate Change. “Kids are the intended audience,” says Robertson. The program is drawing on kids around the world via social media. Between now and April 22, Earth Day Network is collecting and displaying images of people, animals and places directly affected or threatened by climate change. The organization has mobilized its network of Earth Day partners to help collect the images. But, they’re also asking ordinary people—like your kids—to become “climate reporters” and send in their own pictures and stories that show The Face of Climate Change. “The goal is to personalize the massive challenge, unite kids through photos and social media, help people understand global climate change, and turn efforts into a call for action,” Robertson explains. By becoming a climate change reporter and submitting photos, kids can share what’s going on in their own backyards and better understand what’s happening in a town halfway across the globe. “Every photo kids submit will be seen in places all over the world,” says Robertson. “The more photos and more conversations kids have, the stronger their voice. Kids are next in line to deal with the effects of climate change. It’s important to get them engaged and involved.” On and around Earth Day, an interactive digital display of all the images will be shown at thousands of events around the world, including next to federal government buildings in countries that produce the most carbon pollution. The Face of Climate slideshow is available online, so anyone can view or show it on a laptop or smart phone at their own Earth Day celebration. Getting active on Earth Day is a great way to inspire your family to live green all year long. “Earth Day is never enough,” says Robertson. Every day is an opportunity to improve. Here are 10 easy tips for parents and kids to continue their Earth Day efforts throughout the year: 1. Small Steps Lead to Big Strides. What is climate change? Why does it matter? How can kids make an impact? These frequently asked questions are answered on the Environmental Protection Agency (EPA) website designed just for kids. It offers ideas for making small changes with huge impact. Review the site together. 2. Monetize It. Walk, bike, carpool, or take the bus to school to save gas costs and reduce emissions. Turn off lights, electronics and water faucets when you leave the room. Calculate how much money is saved and sock that stash of loot in an interest-bearing bank account. Kids aren’t just saving the planet; they’ll be building personal wealth. 3. Turn Trash Into Cash. Learn about Bottle Bills available in 10 American states. Kids earn about 5 cents per bottle, turning trash into cash. “Recycling bottles and cans is a great way for kids to do good and raise money for sports teams, a special charity or personal items, such as a new video game,” says Robertson. “Not every body takes advantage of this.” 4. Unplug Vampire Electronics. “Go around the house and identify ‘vampire’ electronics and appliances—products that draw energy even when they are not turned on. Unplug these idle devices, and use energy-saving power strips with an automated shutdown feature to prevent sneaky energy draws. 5. Eat Sustainable, Locally Grown Foods. This important action item helps support local farmers and ensures freshness and quality. And, it “lowers the carbon footprint of your food, especially since some things come from the other side of the country, or even worse, another country all together,” says Pam Denholm, owner of South Shore Organics, a family-run business in Duxbury, Mass., that brings farm-fresh, locally-grown organic produce right to your doorstep. 6. Shop at Farmer’s Markets. In 1995, there were about 1,500 farmer’s markets in the United States; last year that number jumped to 11,000, according to Todd Greenfield, founder of America’s Farmstand, Stonington, CT, which supports sustainable growing methods and networks family farms across America directly to consumers looking for farm to table foods. “This means there are farmers in your town and leads to a host of other discoveries, such as how temperature and soil affects what can be grown locally. Learning about soil and how foods grow teaches kids the importance of climate control beyond Earth Day.” Plus, food eaten from farms actually tastes better. “The taste of eating local is so much better,” says Greenfield. “There’s flavor and richness. We’ve become numb to how produce should taste because it loses flavor and nutrients after sitting in large warehouses for weeks at time.” 7. Visit a Neighborhood Farm. “The average farm is multi-generational and has deep, interesting history,” says Greenfield. “There’s a nostalgic feeling on a farm that reminds us of when times were a little simpler.” Instead of a weekend trip to the movies or doing other indoor, sensory over-load activities, roam around local farms, meet the farmers working the land, ask questions about a farm’s heritage, and buy fresh foods from their farm stand. Pause for a picnic, or bring home seasonal fruits for pies or vegetables for dips and dinner. “Visiting farms also helps kids see where food actually comes from,” says Greenfield. 8. Grow Your Own. “Growing your own food is the greenest thing you can do,” says Denholm. Not only do you reap delicious rewards and eliminate shipping footprints, but backyard gardening reduces packaging in landfills. “If you grow your own, the produce isn’t packaged at all—there’s no need for plastic clamshells, labels or glue.” 9. Compost. “Food scraps and yard waste currently make up 20 to 30 percent of what we throw away, and should be composted instead. Making compost keeps these materials out of landfills where they take up space and release methane, a potent greenhouse gas,” according to the EPA. Build a compost box in the backyard as a fun weekend project and encourage kids to discuss the science of composting, worms and soil turnover at school with their teachers and classmates. Ask schools to create a community compost bin and garden, if space and resources are limited. 10. Can and Preserve Foods. Teach kids about the benefits of root cellars and the science of canning and preserving foods that are packed with off the vine flavor during the winter doldrums. What are the environmental benefits of walking to the pantry for self-canned peaches instead of driving to the store? Add up the total carbon footprint savings and watch your planet and net worth bloom. How is your family celebrating Earth Day? Join our conversation on Facebook.
An Egg-sellent Opportunity
When her family’s finances were facing a crisis, 10-year-old Shelby Grebenc turned a bad situation into a business. Now she’s teaching other kids how to juggle money management with middle school. With all the angst about how kids’ post-school hours are so overscheduled—jamming everything from lacrosse to foreign languages into their day—it’s difficult to imagine a kid keeping up with homework, let alone a job. But, for Shelby Grebenc, a middle-school entrepreneur from Broomfield, Colorado, starting a business was a means of keeping her family afloat. And unlike other kids her age, when Grebenc says she’s hanging with her girls, she means she’s checking on her chickens. Yes, that’s chickens. Grebenc was just 10-years-old when her mom was diagnosed with multiple sclerosis and needed care in a nursing home. With medical bills mounting and her mom out of work, her family was struggling to make ends meet. That’s when Grebenc approached her grandmother for a $1,000 loan to build a chicken farm to produce and sell eggs. The end goal: make a profit to augment her family’s finances. Today, Grebenc’s business, Shelby’s Happy Chapped Chicken Butt Farm, grosses $15,000 per year. Thankfully, Grebenc’s mom is healthier and back home, but Grebenc, now 14-years old, still works her chicken farm. She saves most net profits in a bank account for college and draws a small salary for fun stuff. Talk about an inspiration to kids (and adults), who want to boost their personal wealth or turn a tough situation into a financial opportunity. Here are six tips from Grebenc’s story that might help your kids hatch their business: 1. Pick a Passion. Kids should find something that they are interested in and have a passion about, whether it’s chickens, art, music, skateboarding, or computers, says Daryl Bernstein, author of “Better Than a Lemonade Stand!: Small Business Ideas for Kids.” “These make the best businesses and your interest comes through when you are talking to potential customers.” 2. Think Through a Plan. “Get your business plan down, have enough money to get going, and do some advertising to get the word out there,” says Grebenc. Before she sold a single egg, Grebenc figured out what her costs would be—how much gain she’d have to buy to feed her first flock of chickens. With her dad’s help she also calculated what her revenue had to be to make a profit while adjusting for some loss to be cautious. Then she knew how to price her eggs. 3. Keep things basic. “Don’t over complicate it,” says Bernstein. “Kids have a whole lifetime ahead to improve and learn business. The important part is to pick something you love and go with it.” Grebenc didn’t have any business experience, just a lot of get up and go. With her dad’s help, she created that rough plan and budget. From there, the business took off. “Don’t be afraid to dive in head first, get your hands dirty and get started,” says Bernstein. 4. Find a Mentor. Older kids, adults or organizations can guide kids and even handle some of the leg work that kids might find daunting. In Grebenc’s case, she applied to Animal Welfare Approved, an influential North American non-profit that certifies farmers raising outdoor pasture or range animals with the highest welfare standards, for its prestigious stamp of approval. After visiting Grebenc in person, the auditor from Animal Welfare Approved wanted to certify the farm. There was one small glitch. Grebenc didn’t mention she was 10-years-old on the initial application and Animal Welfare Approved required its farmers to be 18 years or older. After a hasty board meeting to discuss Grebenc’s case, Animal Welfare Approved amended its minimum age requirement and awarded certification. Grebenc is the youngest Animal Welfare Approved farmer, a distinct honor. Animal Welfare Approved also helped Grebenc get newspaper coverage, augmenting her existing marketing efforts: standing on the side of the road with signs. “It was a big deal to get approved and it helped with sales,” says Grebenc. 5. Pick a Cool Name. Kids are only young once, and can get away with fun, funny or funky business names. Names also help tell the company’s story. For example, when Grebenc first started her business, people dropped off their unwanted, mangy chickens with chapped, sunburned butts. Grebenc found herself nurturing and healing these mistreated chickens, in addition to handling the daily duties of running the farm. “I had to put sunscreen and lotion on the chickens’ butts,” says Grebenc. “Now, it’s not an issue, but the feathers never grew back, so some of the chickens still have bare bottoms.” In honor of these bare bottom chickens, Grebenc aptly named her farm, Shelby’s Happy Chapped Chicken Butt Farm. That’s not a business name you see everyday. 6. Stay Positive and Trust Your Instincts. “Don’t stop trying,” says Grebenc. “It’s going to be hard, but keep going.” Such a tough lesson, but this attitude pays off. Kids learn to believe in their instincts and take risks with every step forward. “When you see what Shelby is doing, you are in awe that she is so poised and smart,” said Andrew Gunther, program director at Animal Welfare Approved. “There’s a trend going on to know where your food is coming from and Shelby captured that consumer interest.” Grebenc’s bold step to approach Animal Welfare Approved went beyond building her credibility. She’s also influenced and opened doors for other young farmers. 7. Have a Mission and End Game. Encourage your kids to make decisions about whether they’re raising money for a family member, special charity, college fund, or spending money for a new iPad. Re-evaluate your business every six months to adjust goals and set new ones when a milestone is achieved. Decide how long the business will last, so it remains fun and focused. Grebenc, an honors student, plans to keep working her farm until college. “I want to be a pharmacist, like my mom,” she says proudly. Have a young entrepreneur in your house with start-up tips to share? Let us know on our Facebook page.
Kids & Money Confessions
As parents and relatives, we say some pretty wacky things to our kids about personal finance and economics. In many families, when it comes to kids and money, the dissembling starts early on. We say: Stash a tooth under your pillow and a fairy will leave you cash. Go ahead and pick up a penny found on heads, but shun one that’s on tails. Behave, and Mommy will come back to the store to buy you that eight-foot stuffed giraffe, but for now, stop whining. If you’re guilty of similar untruths, you’re not alone. In fact, 84 percent of parents in the United States lie to their children, according to a study published in the International Journal of Psychology. The top three things parents lie to their kids about: food, misbehavior and, you guessed it, money. When adults stretch the truth, we land in some funny situations. “I’m constantly telling crazy stories to my kids about money,” says Terry Oller, a mom of four and a nurse in Wayne, NJ. “They have no concept of what it is, how you get it or why I’m not wiling to spend it on every little thing that catches their eyes at the mall. So I’ve said you can’t pay for things like ice cream, candy, Legos or Pokemon cards with a credit card—only cash. And, darn, Mom has no cash.” Which worked just fine until Grandpa took everybody to Dairy Queen and took out his Visa to pay the bill for a round of Sundaes. “My oldest, who was five at the time, starting crying and said, ‘Oh no, Pop-pop, you can’t pay with that. What are we going to do?’,” says Oller. “I was totally busted—by both my kids and my dad.” When talking to kids about personal finance, their nest eggs or other money matters gets tricky—or you simply get sick and tired of explaining the perpetual “Why?”—it might ease your mind to hear funny tales from others who haven’t exactly been upfront about money matters. So we asked staffers, family and friends to share. Here’s a roundup of their confessions: Airing the dirty laundry. Justin Lyons, founder of the blog Why Is Daddy Crying, has spent a fair amount of time instilling the value of saving in his son and daughter. “I guess like any good parent does,” says Lyons. But when he accidentally washed his son’s iPod Touch while doing the laundry, he used the you-should’ve-taken-better-care-of-it line. “You can imagine how this crushed the 10-year-old’s world,” he says. Regardless, Lyons told his son he wouldn’t buy him another. Fortunately, his son had money at the ready to replace it and he was savvy enough not to pay full-price; he bought a refurbished used iPod, saving more than half of what a new one costs. And Lyons is willing to own that fact. He takes full credit for his son’s impressive financial independence. Piggy bank; what piggy bank? When the 4- and 7-year-old sons of Sara Eberle, host of the weekly radio show MommaJam and Ballooning Nest Eggs contributing writer, receive cash gifts (whether $1 or $20 bills), she confesses, “I stash the bills in my top desk drawer and recycle the money to pay for their chores or for things like the vending machine at their sports activities. I've even been known to tip the pizza delivery guy with it.” The busy mom feels like she’s getting twice as much out of the money this way. The kids don’t ask where the cash goes, so I don’t tell.” At least for now. “Shhh,” she says, “don’t give my secret away!” It’s not on the list. Denise Davis, the mother of 4- and 1-year-old daughters, who blogs about living frugally at Go Cheap Or Go Home plans weekly menus for family meals by starting with what’s available in the pantry. Then she makes a grocery list and takes her kids to the store. She makes fast work of the shopping by whizzing through the shop with her prompting: “What’s next on our list?” Unlike other moms who spend more than planned on the extras that kids toss in the cart, Davis gets only what she set out to buy. Her secret? When the kids ask for whatever they crave, she just says to them “It’s not on our list, honey.” Now her eldest daugher doesn’t ask her to buy things; instead, she asks, “Mommy, can we put this on our list next time?” At least until they learn to write, her list is safe. It’s illegal to buy Play-Doh on Tuesdays. “When my son was a toddler, he was obsessed with Play-Doh,” says Teresa Palagano, editor of Ballooning Nest Eggs. “Which was great creatively, but not so great when I started finding magenta-colored mounds of it smashed into the carpet, matted into the dog’s fur or dried clumps of it on cloths pulled from the dryer. So when we were at a store and he spied some, I explained that we couldn’t buy it because it was against the law to purchase Play-Doh on Tuesdays. And today was Tuesday—every time he asked for more.” Several years later, the phase had passed, but his memory of the law hadn’t. Palagano and her son were shopping for a cousin’s birthday present. “I had totally forgotten about my little white lie,” she says. “‘Hey Mom,’ he reminded me, ‘We can’t buy Erica Play-Doh. It’s Tuesday.’” “Sure I could’ve come clean about the whole thing, but I just said, ‘Thanks for reminding me’ and bought a paint set instead. Mommy needs a manicure. When Mary O’Rourke, a nurse based in Wyckoff, NY, was raising six teenagers, she did all she could to teach them to be respectful and responsible. Any time one of her teens broke a house rule, he or she had to take money from their allowance and pay a “fine” by placing money in a large vase O’Rourke kept on the dinning room table. Once the vase was filled to the brim with their fine fees, she told the kids she donated the funds to a worthy charity that helped the needy. The anonymous charity? A session at the nail salon for O’Rourke and her friends. What are some your best money “confessions” when it comes to your kids? Don’t worry, we won’t tell! Join the conversation on our Facebook page
What’s a Fiscal Cliff?
With debt-crisis headlines everywhere, children have questions about how much trouble the country is in. Here’s a primer on what’s really going on and how you can make sense of these complex fiscal issues for kids. First, all the hullabaloo was about the “fiscal cliff,” starting with the fight to raise the debt ceiling in 2011. Then came the next fiscal cliff, just in time to ring in 2013. The hardest decisions were kicked down the road for two more months, and now we’re in the midst of the dreaded so-called “sequester." Since the financial crisis started in the United States almost five years ago, the country has come crashing into the intersection of excessive government debt, a deep recession, high unemployment, and painfully slow economic recovery. After months of political posturing, debates and rants on cable news, it’s all come down to a sequestration—or deep cost cutting—that took place on March 1st because Congress and the White House couldn't cut a deal. Plenty of people are worried. What will happen if after-school programs and vaccines for children are cut way back? What will happen to all the jobs if infrastructure projects like roads and defense are slashed to the bone? What about programs that Grandma and Grandpa count on? Your first instinct might be to shield kids from these complicated issues and angst. After all, how do you dissect something as complicated as economic theory? Is this even a crisis? Some would say all of this economic drama is the result of politicians who are trying to scare the public for their own political gain. Still, not using this time to sit down with children to explain what everyone is so concerned about would be a missed opportunity, say experts. It's critical for parents and kids to discuss topics like how much debt is OK; what debt is useful and what is not. "It's important that kids understand all of this because, for one, it's a part of their government. It will directly impact all of their lives," says Mike Vogel, a social studies teacher at Cleveland High School in Portland, Oregon. Discussing the political economy with kids makes for more informed citizens—and hopefully, more fiscally responsible young people. To get started, here’s a bit of background on how we got to this point and kid-friendly explanations on need-to-know terms. What you need to know about the recent government budget problems Today’s debate, at its heart, is over how much the government should be involved in the economy. And it centers around the age-old question of how much debt is too much. When President Bill Clinton left office in 2001, the U.S. had a surplus, or extra “cash,” left over after expenses were paid. During President George W. Bush’s administration, the cost of wars in Iraq and Afghanistan coupled with sizable middle- and upper-class tax breaks increased government expenses and reduced revenue over the next five years. Enter the “Great Recession” of 2007 and a colossal $787 billion economic stimulus package in 2009. The result was a massive and growing federal debt. Following the 2010 election, Republicans became the majority in the House of Representatives riding on the promise that they would reduce “entitlements,” public programs such as Medicare, and other spending on public projects, while opposing tax increases for wealthier Americans. At the same time, many Democrats were pushing to increase spending for government programs and “shovel ready” projects to help stimulate the economy, along with select budget cuts. While Congress and the White House averted the last “fiscal cliff” by agreeing to raise income taxes on the wealthy, the two sides never resolved the spending side of the equation. Fast forward to today . . . President Obama and Congress are deadlocked over what to do about all that government debt - an astounding $16 trillion. (That’s enough money to buy an iPad for every one of our planet’s 2.2 billion children.) All this talk about the “fiscal cliff” started during these debates in 2011. Since closing down the federal government would be an unpalatable political option, Congress and the White house came up with a last minute compromise: the “sequestration.” This option contained so many painful cuts to both Democratic- and Republican-favored programs that neither side thought they’d ever take place. What’s federal debt and the deficit? Definition: Federal debt the amount of money our government owes our creditors (e.g., individuals, other governments, businesses). It’s the cumulative effect of federal government shortfalls, or budget deficits (when annual expenses exceed revenues). Think of it as your kids’ savings accounts, but with a line of credit. If your child has a $500 balance, and each year withdraws $200 more than he puts in, in the third year he’ll be dipping into his line of credit. In government parlance, he’d be running a “budget deficit” each year. And in year three, he’d create the equivalent of $100 in “federal debt.” So what is the debt ceiling? Definition: A legal limit on how much debt the government can have. This limit includes the money the government owes investors for bonds (certificates issued by the government that promises to repay borrowed money at a fixed rate of interest at a specified time), other negotiable loans, and the money the government owes itself, which includes programs such as Social Security and Medicare. Background: When Americans pay taxes to the federal government, the government can decide to save the money (put it in a “piggy bank”) or spend it on bills, with an I.O.U. that must be paid back by a certain time. To pay for services that people expect from the government—such as new roads, a strong military defense, helping kids got to college, making sure low-income families have food—the government sells bonds to investors around the world. Historically, the U.S. has spent more money than it receives in taxes. Congress says what the budget should be and how much the country should spend, but the U.S. Treasury oversees the actual “pocketbook” and takes care of financial transactions. Until 1917, Congress had to vote to allow the U.S. Treasury to borrow more money. To give the Treasury more flexibility, Congress set the debt ceiling. But each time the government hit the ceiling, Congress always voted to raise the limit—especially as tax revenues were lowered and spending increased. So what’s the problem: On December 31, 2012, the government hit its $16.4 trillion ceiling. Congress voted to suspend the debt ceiling until May 19th, 2013 and President Obama signed the plan into law. Without “suspending” the debt ceiling, the government probably wouldn’t be able to borrow money to pay off its debt, or afford its day-to-day expenses like utility bills. Some political economic experts say, because the government’s wallet is different than a person’s wallet, the effects of hitting the ceiling might not be as dire as it seems. Authorizing an increase in the debt ceiling basically means the government is authorizing to pay (in this case borrow) money to pay for things Congress has already voted for or purchased. It’s similar to a scenario in which your parents purchased a slew of Christmas gifts for their grandkids, and exceeded their credit line on the credit card. When the credit card company tells your parents they must increase their credit line or risk default, your parents refuse to budge. The rest of us, of course, don’t have this kind of leverage to negotiate like our federal government. But in both cases, if we don’t pay our bills, our credit rating tanks. And our future borrowing costs soar. What’s a fiscal cliff? Definition: Not an actual cliff, the term “fiscal cliff” describes the first debt ceiling crisis from 2011 and later the $500 billion of worth of tax increases and budget cuts that would’ve fallen into place on January 1, 2013, if President Obama and Congress hadn’t agreed to an alternative plan in the “nick of time.” Background: This phrase was popularized in 2012 by the Chairman of the Federal Reserve, Ben Bernanke, who wanted to describe potential pitfalls of U.S. fiscal policies. But the term began gaining currency in the media in 2011 around discussions of deficit reduction. Increasingly, the media throws around the term for any major budget-related “climax” or deadline. So what? Many have argued that going over the “fiscal cliff” would slow the economy’s recovery. The Congressional Budget Office, a nonpartisan organization that researches budget and economic issues for Congress so representatives have impartial information, reported that the fiscal cliff would’ve pushed the country into a recession. The “cliff” included expiration of tax cuts for some Americans, tax increases for most, and budget cuts for federal programs. What’s sequestration? Definition: It's a series of automatic, across-the-board cuts to government agencies, totaling $1.2 trillion over 10 years, starting with approximately $85 billion in budget cuts on March 1. The cuts will be split 50-50 between defense and domestic spending. The sequester could affect many different programs, including air traffic control operations at airports, the military, pre-school Head Start, classroom sizes, nutrition and housing assistance for low income Americans, food inspections, and national parks. It could cut an estimated 700,000 jobs from the economy. Background: Although this word first meant that a court took valuable things into its control for safekeeping, this so-called sequester was triggered last year by an agreement in a Congressional committee. The members of the committee couldn’t agree on a way to reduce the deficit. Now what? Even though the sequestration is now a reality, Congress and President Obama continue to debate the federal budget. While Republicans continue to push for spending cuts on many domestic programs, Democrats favor both revenue increases and budget cuts to sustain economic growth. The economy is slowly improving and some believe that if public spending is cut too much, unemployment will increase. The threat of recession is more damaging, they think, than the debt. They believe that during a time of recession, the government should spend more money to increase demand and put more money into the economy. Others say that the debt should be taken care of now. They believe that if the government has too much debt, businesses won’t have a stable environment in which to invest, or hire more people. Which side do you think is right? Many conservatives say that government should handle its finances like a family. Others argue that the government is different than a family. “Economics is not an exact science,” writes David Balaam, professor of international political economy, University of Washington and University of Puget Sound. “The economy is constantly changing—just like the relationship of family members to one another.” The problem is knowing when the amount of debt scares investors. Credit, he points out, is not inherently bad because it helps the economy grow. For example, many families borrow money to pay for a house, car or education. But Bill Fay at Debt.org’s says the country’s fiscal challenges can be boiled down to politicians not wanting to solve a budgeting problem. “It’s the irresponsible behavior of elected officials in pursuit of being reelected,” he says. “It’s a responsibility issue from my standpoint.” A father of three teenage sons, Fay emphasizes responsibility when talking to his children about finances. He says when giving out their allowances he explains, “Here’s how much you have and when you’re out, you’re out. Don’t ask me for more.” What surprising questions have your kids asked about what’s going on with the fiscal cliff? What do you kids think about all these high-powered adults not being able to compromise? Join the discussion on Ballooning Nest Eggs Facebook page.