“Are we there yet?”

“Is it my turn now?”

“I’m bored!”

Waiting for anything is so hard for kids. Whether it’s for a swing in the park, a trip to the zoo, or saving for a new pack of Gogo’s (my son loves these plastic figurines—anyone else’s kid obsessed?), our children are learning a powerful life lesson: How to delay gratification.

It all began with a marshmallow. In the late 1960s, Stanford professor, Walter Mischel, gave little kids one marshmallow and told them they could eat it now, or wait and be rewarded with another one later. Then, he left them alone for 15 minutes. Some kids caved and ate it, while others waited, even though it was agonizing.

Mischel tracked these kids throughout their lives and his findings were remarkable: The kids who were able to delay gratification had fewer behavior problems, lower stress, stronger friendships, and even higher SAT scores!

In fact, a recent Wall Street Journal essay argues that French parents are superior because they teach their kids to wait. (First, French women don’t get fat and now they’re better moms? Mais non!)

So, how can you raise one of these marshmallow-waiting, money-saving, super-savvy kids? There are lots of tips on waiting and saving in Money as You Grow, a project I am working on as a member of the President’s Advisory Council on Financial Capability. Money as You Grow is a set of 20 age-appropriate financial lessons that kids need to know as they grow, written in simple, down-to-earth language.

Here are some teachable money moments to try, with options for kids of all ages:

For kids age 3 to 5…

You may have to wait before you can buy something you want.

-When your child is standing in line for a turn on the swings, or looking forward to her favorite holiday, point out that sometimes we have to wait for things we want.

-Find three jars (or cans) and label one for saving, one for spending, and one for sharing.

-Suggest that your child put some of the money she gets into the saving jar, so she can buy a toy or treat when she has saved enough.

For kids age 6 to 10…

It’s good to shop around and compare prices before you buy.

-With your child, compare prices for a particular toy at various online or brick-and-mortar stores.

-Use coupons and discount cards and show your child how much you are saving.

-Consider allowing her to keep part of the savings, but only if she helps clip or print out coupons.

For kids age 11 to 13…

You should always try to save at least a dime for every dollar you receive.

-Encourage your child to always save 10% of the money he gets.

-Have your child set a goal to buy something he wants and have him work toward that amount.

-To reinforce the savings habit, go to the bank two to three times a year with your child to deposit savings into his account and look at how much bigger the balance is on each visit.

-Consider a “matching plan” for your child’s savings: You put in 25 cents for every dollar he saves.

For kids age 14 to 18…

A great place to save and invest money you earn is in a Roth IRA.

-If your child has a job, encourage him to open a Roth IRA (Individual Retirement Account).

-Explain that a Roth IRA allows the interest you earn to grow tax-free for life.

-Experiment with different amounts of savings and interest rates. Use a compound interest calculator at investor.gov.

-Use the “Rule of 72” to estimate how many years it would take to double your money. If you invest in an account that earns 8% interest, you’ll double your money in nine years (72 divided by 8 is 9).

-Explain to your child that once he starts a job, he may be offered a similar account at work called a 401(k). Some employers even provide matching contributions.

For kids age 18+…

You should use a credit card only if you can pay off the money owed in full each month.

-Understand that when a parent cosigns, any late payments you make will also affect their credit history.

-Paying bills late can hurt your credit history and affect your chances of getting a job.

-Get free credit reports once a year at annualcreditreport.com.

-Look for a credit card with a low interest rate and no annual fee.

-There may be an emergency expense that you can’t pay off immediately and need to charge. That’s why it’s important not to charge everyday items.

-To learn more about the credit card rules, go to federalreserve.gov.

How have you encouraged your kids to wait or save money? Share your stories!



Moms have been asking me this age-old question for years.

The short answer: Start when your child is old enough to say, “Gimme!”

The long answer: Research shows that kids as young as three years old can learn about money. If it’s hard to imagine your finger painting, peanut-butter eating little one calculating compound interest, fear not. Karen Holden, a professor at the University of Wisconsin-Madison, found that kids don’t need math skills to build good financial habits. They just need to understand basic, but critical, concepts like waiting, making choices and developing values.

In fact, this idea was a starting point for Sesame Street’s “For Me, for You, for Later,” a financial education initiative entirely for preschool-age kids and for which Karen and I were advisors. I even got to star in the videos with Elmo!

Moms aren’t the only ones who ask me how early to start teaching kids about money. Recently, I was tasked to answer this question by a very important dad: President Obama. As a member of the President’s Advisory Council on Financial Capability, I’m developing an initiative for families called “Money as You Grow,” a set of 20 simple, age-appropriate key concepts for kids aged three to 23-plus.

Based on our draft, which is still in progress, here are the four milestones your 3 to 5-year-old should reach:

You need money to buy things.

To help your child achieve this milestone, try these activities:

- Identify coins and their value.
- Discuss how you may value something that is free, such as playing with a friend.
- Identify items that cost money, such as ice cream, gas for the car, or clothes.

You earn money by working.

To help your child achieve this milestone, try these activities:

-Describe your job to your child.
-Walk through your neighborhood or town and point out people working, like the bus driver or the police officer.
-Explain that some people start their own businesses, like clothing stores or restaurants, and those people are called entrepreneurs.
-Encourage your child to think about how he could earn money by setting up a lemonade or cookie stand.

You may have to wait before you can buy something you want.

To help your child achieve this milestone, try these activities:

-When your child is standing in line for a turn on the swings, or looking forward to her favorite holiday, point out that sometimes we have to wait for things we want.
-Find three jars (or cans) and label one for saving, one for spending and one for sharing.
-Suggest that your child put some of the money she gets into the saving jar, so she can buy a toy or treat when she has saved enough.

There’s a difference between things you want and things you need.

To help your child achieve this milestone, try these activities:-

- When you are out shopping, point out essentials, like food and clothing, and ask your child to describe items that he may want but are optional.
- Talk about how your family decides what to buy and what to pass up. Which is more important: Buying cookies or fresh fruit? Soda or milk?
- Draw a circle and divide it into sections for food, rent or house payments, clothing and “optional items” to show that there is a finite amount of money to spend.

Have you tried any of these activities with your kids? If you give it a try, report back!

 

This post was originally published on Mint.com.

I am honored to speak at today’s White House Urban Economic Forum for women entrepreneurs, on a panel about “second acts”—women who have embraced later-in-life entrepreneurial success.

In preparation, I called a few entrepreneur friends. One started a wildly successful clothing shop and had no retirement savings. Another served as CEO of a major fashion house, then opened her own thriving business, yet when asked about her retirement plan, she had to ask her husband. A third woman raided her 401(k) to fund a financial planning firm and her kids’ college tuition; now she’s 54, divorced, and has no retirement funds.

Their stories reminded me that although many women have second acts in work or love, most of us don’t get second acts in our financial lives until it’s too late. That’s especially important for entrepreneurs, who are ambitious risk-takers—which I love!—but have fewer safety nets than traditional employees.

Now is the time to get on track. Here’s my list of five things women entrepreneurs must do to take care of themselves financially.

1. You must have health insurance.

This is a non-negotiable: If you can’t afford health insurance, you can’t afford to go into business. Health insurance protects you in case you have a serious accident or illness. Without it, you could bankrupt yourself or your family. Self-employed folks (sans employees) can join a professional group, which lets folks purchase insurance at a group rate. Check with your local Chamber of Commerce, the Small Business Service Bureau, or the National Association for the Self-Employed. Or shop around for a low-premium, high-deductible policy that covers catastrophes at ehealthinsurance.com. Business owners who have employees can set up a small business group plan. For help, try the National Association of Insurance Commissioners. If you have a pre-existing condition that makes it hard to get traditional insurance, take advantage of affordable PCIPs (pre-existing condition insurance plans). Visit statehealthfacts.org to see the rules in your state. Lastly, look forward to 2014, when President Obama’s Affordable Care Act will let individuals and small businesses access affordable healthcare through a competitive marketplace called an Exchange.

2.  Save for retirement.

When starting your business, it may be tempting to dip into your biggest pool of cash, which is often your 401(k) from your last job. My advice: Don’t do it. You can borrow for your business, but you can’t borrow for retirement. On top of that, you must keep saving. To estimate how much you need to save, use Choose to Save’s Ballpark E$timate calculator. Don’t let the number freak you out—use it as motivation. Luckily, there are many retirement plans available to small business owners. Whether you’re fully self-employed or working a day job on the side with a 401(k), consider opening an IRA. Roth or traditional IRAs let you stash up to $5,000/year. But small business owners should consider a SEP-IRA, which lets you contribute up to $49,000/year and grows tax-deferred. The catch: a SEP-IRA can get costly if you have employees, since you have to contribute to their accounts, too. You can make an IRA contribution for the tax year 2011 by April 15, 2012, so look into all the options, consult a CPA, and figure out which plan is best for you. But whatever you do, save.        

3.  Borrow wisely.

There’s no shame in borrowing money to get your business off the ground, but do so in a way that protects your credit. Start by checking your credit score at myfico.com—this number will predict your eligibility and how much you’ll pay for a loan. When borrowing, shop around for the lowest interest rate. Avoid using your home as collateral or relying on high-interest credit cards. Instead, look to bank loans, which currently boast low interest rates (but can be hard to get). At the bank, ask about Small Business Administration (SBA) loans—a record $30 billion in SBA loans were issued last year. To get started, fill out a short survey to see which SBA loans are right for you. And keep an eye out for Startup America, a White House initiative with several programs to help entrepreneurs secure loans and find mentors. It certainly indicates energy and attention to the needs of small business owners.

4. Pay quarterly taxes.

The companies that pay you probably won’t withhold taxes, so checks will seem bigger than they are. To avoid writing an overwhelming check to the IRS once a year, pay estimated taxes quarterly. And make sure you pay enough self-employment tax, too. The good news is that self-employed folks have tax deductions galore. You can deduct half the Social Security and Medicare taxes you pay, all of your health insurance premiums, business travel expenses, office supplies and equipment, and (sometimes) home office expenses. If you're baffled, consider hiring a CPA. Which brings me to #5...

5.  Get a good CPA.

The most important choice in life: your spouse. Number two: your accountant. The right person can make the difference between success and drowning in paperwork, debt, and audit notices. A CPA (certified public accountant), EA (enrolled agent), or attorney will have the most experience. Call around to see which ones match your needs, and check out their qualifications, including credentials in accountancy and taxation. Recommendations from friends may not be a safe bet (hello, Bernie Madoff!). The National Society of Accountants and American Institute of CPAs are online directories to help you search, and the Accreditation Council for Accountancy and Taxation has a list of questions to ask when starting the selection process.

Best of luck on your business ventures! Feel free to ask me a question in the comments below. 



I found there are ways to spend less—if you're willing to invest a little time and money up front. The good news: small, feasible changes you make today can show up on your energy bill as soon as next month. Here are two to try now:

• Cool down: Install a programmable thermostat (you can get a good one for $50) and set it to drop a few degrees while no one’s home. Savings: Cut heating costs by up to 10 percent.

• Lighten up: Replace all the old-school incandescent light bulbs in your home with new compact fluorescent (CFL) bulbs. Savings: $50-$150 a year on electric bills.

For more DIY tips, check out the Alliance to Save Energy website, ase.org, and the joint website of the U.S. Department of Energy and the Environmental Protection Agency, energystar.gov.

And to see how a home energy audit could save you big bucks in the long-term, check out my column in the February issue of Redbook or on RedbookMag.com!



Hello from D.C.! The President’s Advisory Council on Financial Capability meets today, and I’m excited to really make things happen in 2012. Speaking of which…

As a member of the Council’s Youth Subcommittee, I’m helping develop a national initiative for families called Money Milestones: 20 things kids need to know to live financially smart lives.

My colleague Dan Kadlec just wrote a piece about it for TIME magazine’s website, and you can see the latest draft of the Money Milestones on the Treasury’s website.

The Money Milestones are a work-in-progress. We’re still getting feedback from experts, academics, and folks like you. Take a look and tell me what you think—post a comment below or email me.

Many thanks to my fellow Council members and everyone who’s helped—and will continue to help—push this forward!

Image courtesy of Carl Richards, BehaviorGap.com

As a financial journalist, one of my goals has always been to take confusing, tricky, overwhelming information and explain it in simple language that even my friends can understand!

No one does this better than Carl Richards, a Certified Financial Planner in Park City, Utah who's famous for his Sharpie drawings (like the one above). They illustrate what he’s coined as "the behavior gap"—the distance between what we should do with our money and what we actually do, thanks to our emotions.



So, naturally, I was psyched when Carl told me he was writing a book, aptly titled The Behavior Gap, which came out this week.

In the book, Carl explains how you might be sabotaging your finances without even knowing it. Some of the hidden dangers to your investments, for example, include falling prey to media overload, taking stock advice from unreliable sources (say, your pushy brother-in-law), and panicking every time the Dow dips. His major point is that once you ignore all that chaos, it's easy to see that financial planning is really about life planning. What do you need to be happy, and how can your money get you there? (Good questions to ponder as you plan for 2012!)

Carl regales readers with lessons from his own financial curveballs, and the mistakes of his clients, who sometimes cave to their emotions despite his best efforts to guide them. And, of course, the best parts of the book are Carl's famous sketches, which you may have seen before on The New York Times' Bucks blog and on Carl’s website, BehaviorGap.com. Here's another one of my favorites, illustrating how awkward and uncomfortable money conversations can be:

Image courtesy of Carl Richards, BehaviorGap.com 

Have you ever fallen into a ‘behavior gap,’ when emotions got in the way of smart money decisions? Share your stories.

If one of your New Year’s resolutions is to save money, here’s a fun fact: A University of Toronto study just out shows that if you stick to one goal, as opposed to many, you’ll increase your likelihood to save and you’ll increase the amount you save. So, instead of saving for that new car, a vacation, and an iPad… you might want to pick just one.

Here’s to a year of joy, good health, peace… and saving!

Call me a softy, but so many news stories this holiday season have had me in awe at Americans’ potential for kindness. Charitable donations are ticking back up despite the fact that many of the givers are still struggling themselves, and anonymous do-gooders are dropping by layaway counters to pay for the Christmas presents set aside by families worse-off than themselves. I’m absolutely loving the giving spirit! Here’s how to make sure any money you give really works for you.

Make sure the organization will use your money wisely. Check out free reports from the Better Business Bureau's Wise Giving Alliance (look for organizations designated with the blue and white “BBB Accredited Charity Seal”) and Charity Navigator (check for organizations that have at least three stars). You want to find charities that use a good percentage of money for the programs it runs—both the BBB and Charity Navigator can help you find this information. In fact, Charity Navigator broadened its rating system this year to reflect organizations’ level of transparency and tendencies toward unethical practices.

Get the tax deduction you deserve. If you give money to a qualified nonprofit (check by typing in “search for charities” at irs.gov), your donation reduces your taxable income for the year (if you’re in the 25% tax bracket and you donate $100, you save $25). If you plan to write it off on your next tax bill, make your donation by December 31, and save your receipts. Keep in mind that you have to itemize your tax deductions to take advantage of the break.

Remember, your gift doesn’t have to be cash. If you’ve maxed out your philanthropy budget for the year, help your cause by volunteering your time or donating household items you no longer need. Find opportunities at VolunteerMatch.com or Serve.gov, and keep track of any non-cash donations, which are also eligible for the tax break (get help adding up the value of the goods with the valuation guide at SalvationArmyUSA.org).

If you have a flexible spending account (FSA) and there’s still money left over, this is the time to file claims for all those precious health reimbursements. Why now? Some FSAs expire on December 31, and if you don’t use the money, you lose it. (Some companies offer a grace period through March 15, so check with your employer.)

Your goal: Don’t leave money on the table. According to the Employee Benefit Research Institute, on average, employees who put more than $1,100 into their FSAs end up losing $100 in leftover cash. This happens when people overestimate how much they’ll need, since FSAs require that you take one big guess in the beginning of the year and hope that you’re right. (If this makes you as mad as it makes me, go to SaveMyFlexPlan.org and tell Congress to fix the “use it or lose it” rule so you can cash out unused funds at the end of the year.) 

Until the rule changes, you may be wondering how to spend those funds fast. Or some of you may be considering signing up for an FSA for next year (if so, ask your company when open enrollment ends—it’s likely December 31, so hurry). Here’s the gist on FSAs and how to spend ‘em:

What is an FSA? It’s a pre-tax account offered by most large employers that allows you to set aside a portion of your income—typically anywhere from $60 to $5,000*—to pay for specific medical expenses that aren't covered by health insurance. *Heads up: As part of health care reform, FSAs will be capped at $2,500 as of 2013.

How does an FSA work? Once you enroll, choose how much money you want to put in your FSA. (To estimate, make a list of the medical expenses you're likely to pay in the coming year, and cross off any that aren't eligible.) Then, that money is deducted pre-tax (your salary appears lower, so you pay less in taxes) from each paycheck and put into your FSA. When you have appropriate expenses, you either pay out-of-pocket and submit a claim (which is then reimbursed with your FSA funds) or use a debit card (which draws from your FSA account).

What can you pay for using an FSA? Common expenses include eyeglasses, contact lenses, dental care, allergy shots, chiropractic sessions, and transportation to or from the hospital or doctor's office. It can be used for deductibles and copayments on doctor's appointments and prescriptions, and many FSAs will also cover daycare costs. You can also expense some over-the-counter meds, but you need a doctor’s prescription to do so (tips on that here). WageWorks has some good suggestions for 10 common over-the-counter items you can pay for with your FSA. Check out the FSA Store, an online shop with thousands of FSA-approved products.

What can't you expense? You can't use it for things like cosmetic surgery, electrolysis, or a health club membership. (Although if you need a weight loss program or some other activity to help with a medical condition, it may qualify, so check.) Always check the FSA provider’s list of qualified purchases and ask your plan administrator before you assume a health-related expense is not covered.

For those with an FSA, did you underestimate, overestimate, or get it just right?

One savings helper that I learned about after writing the column: SaveUp, a new website that sets up a rewards system—much like those offered by retailers—in which you earn points for saving rather than spending. You link your savings accounts and any debts you're trying to pay off (credit cards, student loans) to your SaveUp account, and each time you stash cash or make a payment, you get credits, which you can use to enter drawings for fun prizes like cameras, cars, or even a $2 million jackpot. You can also earn credits by watching personal finance videos on the site—music to my financial literacy-attuned ears.

Check out the January issue of Redbook for more cost-cutting tips!

What savings tips will you test out in 2012?