When do kids/grandkids understand money? Ask them 'what is money used for?' If children respond with ‘to buy things’ then they can begin to understand the use of money. Money is used for an exchange of goods. Children might first encounter this exchange when playing a video game. Virtual rewards can be used to buy pets, furniture, clothing, etc. Video games help explain earning and spending. It is important to explain the difference between virtual money and real money.
1. How to make money real for kids/grandkids?
Begin with actual dollars and coins. Real money is tangible and easier to show and explain before teaching digital currency. Start with the basics by including counting and sorting coins and dollars into your gameplay. Then advance to labeling toys, clothing, or food in your pantry with price tags and play ‘store’ by purchasing these items you own. Finally, practice making and counting out the correct amount of change. What a fun game and important life skill you will be teaching your children/grandchildren!
2. You can bank on it!
Field trip time to the bank, of course! Have your grandchild or child make a deposit of birthday money or an earned allowance into a joint account with you. Next, show them how their dollars and coins became digital money by logging into your online banking portal. Make sure to explain how banks hold physical and virtual money.
3. Field trip!
Once your kids/grandkids understand a savings account, show them how to spend some money from a checking account. While it might be disappearing, you can still teach your grandkids how to write a check. Further, another field trip to an ATM machine is also a real world experience demonstrating virtual vs. real money. This outing should also include a lesson on ATM fees, PIN number, and an explanation that this isn’t 'free' money.
4. Start with debit cards.
Are your children/grandchildren in their teenage years? This is a good time to start them with their own debit card. Before handing over the card, teach lessons on the difference between a credit card vs. debit card, how to check your expenses and account balance, and how to keep the debit card number and pin confidential.
5. Build smart online consumers.
In the world we live in of online and other media advertising, it is imperative to make your children/grandchildren savvy consumers. Teens should research their wants, shop sales, read reviews, and hold off on impulse buying. A 2 week ‘pause’ on spending money on an expensive item is an option to avoid impulse buying. At the end of the 2 weeks if the teen still really wants to buy the item with their hard-earned money, then that is their spending decision.
We live in an exciting new electronic world, but it's our job as parents and grandparents to prepare our next generation for how this new world influences them. It's also important to teach kids and teens to protect themselves from hackers and lurkers. Their private information can be stolen, and they need to learn ways to protect it. More questions? Contact us at Brien@traditionswealthadvisors.com or 979-694-9100.
In our October Newsletter, we featured an article to answer the most common Social Security questions. While fully understanding Social Security benefits can be complex, we hope this 2 part article series can help you understand the process better. In Part 1, we answered questions on who qualifies for social security, when to start taking social security benefits, and explained how marital status affects Social Security benefits. Let’s continue with our final 3 common Social Security questions:
4. What if I continue to work and receive Social Security?
You can work and receive Social Security retirement benefits. If you are getting benefits before full retirement age (FRA), there’s a limit to how much you can earn before your benefits are reduced. Once you have reached FRA, this “earnings penalty” goes away no matter how much you earn. Your benefit amount will also be recalculated to give you credit for the months that were reduced. After that, you can work all you want with no impact on your benefits. Keep in mind, however, that you may have to pay taxes on Social Security income if you have other substantial income.
5. How can I make the most of my benefits?
Spouses can increase their benefits based on the timing as to when they receive Social Security. For example, one spouse can receive his/her benefits and then in the future apply for spousal benefits in order to increase monthly income. Also, an ex-spouse is entitled to up to half of what his/her former spouse will receive at full retirement age. There are also survivor benefits that widows/widowers can take before or after receiving benefits as an individual.
6. Will Social Security be there when I retire?
The Old-Age and Survivors Insurance Trust Fund, which pays retirement and survivors benefits, will be able to pay current benefits only until 2033. After that, the fund’s reserves and continuing tax income may pay 76% of scheduled benefits. Clients who retire after that may expect to receive less, or there may be a change to the program before then.
Still confused as to how and when to claim your Social Security benefits? Contact us at Traditions Wealth Advisors, Brien@traditionswealthadvisors.com or 979-694-9100.
December 31st will be here soon! It is not too late to make tax-savvy moves before year end. Here are some tips when wrapping up your finances for 2021: