One of my favorite quotes from the book is

“Allowance is not an entitlement or a salary. It is a tool for teaching children how to manage money.”

For children aged 5 to 8, Godfrey emphasizes the importance of learning ten basic money skills, such as how to save, track money, talk about money, spend wisely, and use money to do good in the world.

Here is what I am adapting and implementing with my son Liam.

Start Early: Basic Money Concepts

Even young children can grasp basic money concepts. It’s crucial to start early with simple, tangible methods that make the idea of money relatable. One effective way is using a piggy bank for collecting spare change. This allows children to see the physical accumulation of money, reinforcing the idea that saving can lead to something bigger.

What I am doing:

1. Tooth Fairy Money: My son Liam, now 5 and a half, has lost three teeth this year. Each time, the Tooth Fairy leaves a little money, which he adds to his piggy bank.
2. Cash Register Play: Liam loves playing store with his various toy cash registers. This game helps him understand the concept of transactions and the exchange of money for goods.
3. Kids Wallets: Liam has several kids’ wallets that come with fake dollars, coins, plastic cards, and IDs. He takes them everywhere, which helps him get used to handling money and understanding its value.

Establishing Habits: Saving and Investing

Introduce saving habits early. When your child receives money, whether from allowances or gifts, encourage them to save a portion of it. This can be done through their piggy bank or a small savings account.

What I am doing:

3 Savings Jars: We use three jars labeled Save, Spend, and Give. This method helps Liam understand the different purposes money can have and the importance of saving a portion of his money for future needs. Liam has a smaller set of plastic Jars. This looks like it could hold a lot more.

Discussing Values: Family Views on Money

Talking about your family’s values regarding money is crucial. Explain how your family decides to spend, save, and donate. This helps children understand the purpose behind financial decisions.

What I am doing:

 We still need to establish this more formally with Liam. Yuri and I intuitively know our values, but we haven’t discussed them directly with him. We often talk about saving money for vacations and trips, emphasizing that we save to explore the world, meet new people, make friends, and learn new things. This helps Liam appreciate the value of saving for experiences.

Using Games: Fun with Money

Make learning about money fun through games. Playing store or board games that involve money can teach children about spending and saving in a playful context.

What I am doing:

1. Kids Monopoly Game: Liam loves playing the kids’ version of Monopoly, which teaches him about money management in a fun way.
2. Playing Store: Using his cash register and other store-related toys, we play Target store at home.
3. Lemonade Stand: We’ve set up a lemonade stand in our neighborhood, giving Liam a hands-on experience with earning and handling money. As we made a few dollars, I am looking to invest in something that has more visibility, like this stand.

Involving Them: Family Meetings

Include your kids in simple family meetings about budgeting and spending. This gives them a sense of responsibility and inclusion in financial decisions.

What I am doing:

We’re just starting with this. We talk about simple things like grocery shopping and discuss prices for items, helping Liam understand numbers and value. This practice will become more frequent as he gets older.

Setting Goals: Saving for Special Occasions

Help your child set savings goals for birthdays and holidays. Use a chart or an app to track their progress. This teaches them the value of delayed gratification.

What I am doing:

We use the phrase “Put it on your wish list” a lot and have started a list on my phone for Liam. This helps him understand that we don’t buy things on a whim but save for bigger events like birthdays or holidays. He keeps asking me to review with him what is on the list from time to time.

Allowance: Learning Through Chores

Introduce an allowance system tied to chores. This teaches children the concept of earning money. Discuss how they can use their allowance, emphasizing the difference between spending and saving.

What I am doing:

Liam is starting kindergarten next month, and we’ve decided this is the right time to introduce an allowance. We’re starting with $5 per week, allowing him to decide how to use it. He has three jars for saving, spending, and giving. We’ve been discussing the purpose of each category, using his Tooth Fairy money as a starting point.

Teaching children about money from a young age is an invaluable investment in their future. By incorporating simple activities and discussions, we can help them develop a strong foundation in financial literacy. As Joline Godfrey points out in Raising Financially Fit Kids, these early lessons can shape their financial habits and attitudes for life. Remember, the goal is not just to teach them how to manage money but to instill in them the confidence and knowledge to make smart financial decisions.

As I test out these strategies and tools, I’ll be sharing my own experiences as things unfold. With the right guidance and tools, like the strategies from Godfrey’s book, we can ensure our children grow up to be financially savvy adults!

The post Early Financial Education: Teaching Kids Money Skills from Ages 5-8 appeared first on MainStreet Financial Planning.

BOOKS FOR PARENTS

Ron Lieber’s book, The Opposite of Spoiled– offers a practical guide for parents to address children’s awareness and questions about money, covering essential financial topics and instilling virtues like modesty and generosity to raise financially wise and grounded young adults

Raising Financially Fit Kids by Joline Godfrey – This combination of parenting and personal finance books equips parents to teach their children essential money skills like saving, budgeting, and investing, through age-appropriate stages and activities.

BOOKS FOR CHILDREN

AGE: 4-7
Anthony C. Delauney created a series of books teaching children practical financial lessons. Here a few to start with:

• Michael and Hannah and the Magic Money Tree
• Lilly & May Learn Why Mom & Dad Go to Work

Larry the Bunny Saves His Money by Jim DeGaetano Jr.  – This has been one of Anna’s son Liam’s favorite books. It not only helps children learn how to count but also introduces basic concepts of spending, saving, paying taxes, and enjoying their money.

AGE 8-13
Money Skills for Kids by Fern Browne – Packed with practical advice, real-life examples, and interactive activities, this book makes understanding money fun and engaging for kids aged 8 to 13, guiding them to become savvy savers and wise spenders.

AGE 13 -18

Money Skills for Teens: These Are The Things About Money Management and Personal Finance You Must Know But They Didn’t Teach You in School by Emily Carter – A comprehensive guide to help your teen achieve financial mastery, covering everything from earning and saving to investing and budgeting.

ARTICLES WRITTEN BY THE MAINSTREET TEAM

1. Four Things I Want My Daughter to Know by High School Graduation
2. Money Habits to Teach Children
3. Money Tips for Young Adults
4. Becoming a Financial Grown-Up

PODCAST BY ANNA SERGUNINA, CFP®

Anna has curated a private playlist called “Kids & Coins” featuring her top episodes on a variety of financial topics for children. The collection covers everything from setting up the “Three Jars” (Save, Give, Spend) and deciding on allowances, choosing the best savings and investment accounts, and recommending books and other resources for teaching kids about money.

The post Back-to-School Money Skills- Essential Guidance for Parents and Children appeared first on MainStreet Financial Planning.

As a CFP® practitioner, I spend a few hours per month on continuing education.  Recently, I got an invitation for a webinar titled “Incorporating Property & Casualty into The Holistic Financial Plan.”  Maybe there would be some nuggets I could share with clients to help navigate the changing insurance landscape so I signed up!

The webinar was fantastic!  Meaghan Dowd was the presenter, and the best part is that I learned she wrote a book “Protect Your Lifestyle” that is a perfect resource for anyone looking to make empowered, educated and effective personal insurance decisions.

In “Protect Your Lifestyle” by Meaghan Dowd you learn how to select home, auto and liability insurance that are appropriate for your unique lifestyle.  The basics of each type of insurance are covered, but the true nuggets are in the hidden risk sections throughout the book.  Meaghan uses examples to illustrate how the right insurance can save you from having to use your savings and compromising your financial plan in the event something unexpected happens in life.

Here are my favorite takeaways from the book:

• Only file claims when necessary because your claims record is like your credit report. The fewer marks on your record the more options you will have.
• Homeowners Insurance: It is very important that if your home is owned by an LLC or trust that your homeowner’s policy lists the individual owners as well as the LLC, trust, etc. as additional named insured on the policy. Insurance coverage may be denied if your home is titled in your trust, but it is not listed as an insured party on your policy.  Go check your policy right now!
• Auto Insurance: Most people think that if they have an accident that health insurance will cover medical expenses. But the reality is when an injured person goes to a doctor or hospital, the first question is “How did you get injured?”  If the cause of the injury was an auto accident, the liability/responsibility of the medical bills shifts to the driver.  This is one of the most important reasons to have good coverage.
• Auto Insurance: The higher your deductible the lower your auto insurance premium. File only necessary auto claims to stay insurable and keep rates down.  I see policies all the time with low deductibles, but the policy holder would never file a small claim.   Don’t pay premiums for coverage you will not use.
• Personal Liability Insurance: If you are thinking “I live a simple life, I do not need too much liability insurance.” Did you know your wages can be garnished if you cause a bad car accident and your auto policy liability coverage is not enough to cover damages?  So even if you don’t have too much in savings, it makes sense to have appropriate liability protection.

This book is a guide to living the life you desire while protecting everything you love and have worked for.  Meaghan will show you where you definitely should not cut corners, but she also shares ways to reduce insurance premiums.

As insurance rates rise, now is a great time to get educated on how to make sure you are paying for the appropriate coverage. I am more energized than ever about protecting assets after reading this book.  I too have fallen prey to “cheap insurance” which equals minimal coverage.  The reality is paying premiums to protect my assets is a smart financial decision equal to saving for retirement, investing, etc.

If you decide to read “Protect Your Lifestyle” by Meaghan Dowd please let me know…I would really like to hear about your favorite takeaways!

The post Book Review: Protect Your Lifestyle by Meaghan Dowd appeared first on MainStreet Financial Planning.

I am in a book club, and for our next book, I suggested that we read a self-help book.  We chose to read “Atomic Habits” by James Clear.  I was telling my husband about the book choice and he mentioned that a woman he had worked with just published a book on habits, “How to Change” by Katy Milkman.   So, I doubled down on my self-help and bought both books!  Below is my book review for “How to Change” by Katy Milkman.

“How to Change” by Katy Milkman is a great book, filled with many takeaways that have been proven to work!  Katy is a researcher in behavioral science and knows a lot of other researchers at the top universities in the country.  In her book, she uses the results from actual studies done with real people to test theories of how to change behavior.  I found it so interesting to read about the studies and appreciated the honest account of what worked and what did not.  Katy’s storytelling about the studies also helps me to easily remember the takeaways so I can work them into my life.

Here are some of my favorite takeaways from the book:

Fresh Starts– Timing a behavioral change with a new beginning (new year, new season, birthday, anniversary…etc.) can increase your motivation to change.

Temptation Bundling– Engage in a guilty pleasure (example: binge watching TV) only while pursuing a valuable activity that you dread (example: exercising).

Cue-based Plans– Forgetting is a big reason we don’t follow through on our intentions.  Combat forgetting by linking a plan of action with a cue.  Example: Whenever I get a raise, I will increase my monthly retirement savings contribution.

Piggyback Habits– Piggybacking new habits with old ones can help you avoid laziness.  Example: Brush your teeth before bed (old habit), floss right after (new habit).

Katy points out in her book, that laziness, forgetfulness, temptation, and lack of confidence are like symptoms of a chronic disease.  Which means that changing behavior and forming good habits requires a lifelong commitment.  So, the key to behavior change is find what works for you and keep doing it permanently.  That is why I enjoyed this book so much, because it gave me a deeper understanding of human nature and gave me a bunch of tools to use to improve myself.

I am excited to use the techniques I learned in this book in my own life and with clients.  As a financial planner, I recognize that behavioral change is an important part of a successful financial plan.  At MainStreet Financial Planning, we help you identify what is holding you back from achieving your goals then work with you to develop the techniques that will keep you on track.

If you decide to read “How to Change” by Katy Milkman please reach out…I would love to hear what your favorite takeaways are!

The post Good Habits need Good Techniques! appeared first on MainStreet Financial Planning.

My class uses this book to understand the history of the markets and theories such as the efficient market hypothesis, capital assets market theory and fundamental and technical analysis. But while this is a must read for people in the financial industry, it is an excellent introduction for anyone who just wants to understand more about investing their own portfolio.

When Malkiel is describing “a random walk”, he is saying that the short-run changes in the market are unpredictable, so using chart patterns, earnings forecasts or using an investment advisor is useless. Analysis can’t help predict future stock prices. He states very simply that he believes that an investor would do much better buying and holding passive, low-cost, tax efficient, broad-based index funds instead of trying to beat the market trading individual stocks or actively managed funds.

If you’re just learning about investments, be sure to check out Part Four, A Practical Guide for Random Walkers and Other Investors. This is where it goes into real financial advice as well as explanations on asset allocation, diversification and risk tolerance.

There is a significant focus on the relationship between risk and reward, and the importance of deciding upon the degree of risk you’re willing to take. Malkiel uses the Sleeping Scale of Major Investments outlining which investments might be most suitable, requiring each investor to understand the trade off between eating well or sleeping well. This balance between high returns and peace of mind is a choice only you, the investor, can make.

This book does not have get-rich-quick investment strategies, but it is a great guide which can make you a wiser investor, and hopefully make good investment decisions.

The post Book Review: A Random Walk Down Wall Street by Burton G. Malkiel appeared first on MainStreet Financial Planning.

My favorite chapter in the book was Chapter 10: Save Money. The first idea—simple, but easy to overlook—is that building wealth has little to do with your income or investment returns, and lots to do with your savings rate. Morgan put people into three categories- those who save, those who don’t think they can save, and those who don’t think they need to save. This chapter is for the latter two. As a saver and someone who has dedicated her life to helping others financially, I don’t need to be convinced of this statement.

For individuals who don’t think they can save, Morgan had a few tips.

• Savings can be created by spending less
• You don’t need a specific reason to save, but if you do have goals, they can increase your likelihood of success

For individuals who think they don’t need to save, Morgan shares these tips.

• The value of wealth is relative to what you need. A high savings rate means you will have lower expenses; having lower expenses means your savings will go farther if needed.
• Past a certain income level, what you need is just what sits below your ego. Here he is talking of materialism and really looking into the lens of what you truly need.

In short, everyone’s ability to save is more in their control than they might think. If you are interested in learning more about your psychology with money, I invite you to check out this book.

The post Book Review: The Psychology of Money by Morgan Housel appeared first on MainStreet Financial Planning.

One of my favorite sections in the book is Part 3 which is called “Dealing with Debt”.  Paco De Leon provides historical, educational, and very useful information to the reader on all things related to debt.  You will enjoy this part of the book if you are:

• just getting started on your own (no matter how old you are)
• in credit card debt and want to get out of it
• thinking about financing something (home, renos, car, education, etc.)
• have student loans
• need to reframe your thinking about debt
• working on your credit score

Finance for the People encourages you to act, by providing a checklist at the end of each of the five parts of the book.  Use the checklists to evaluate how you are doing currently in your financial life and plan what you need to improve upon.  In addition, there is practical information about how to navigate certain situations.  For example, there are detailed steps and ideas on how to negotiate a lower rate on your credit card debt.

I recommend this book!  The author does a good job of explaining concepts in easy-to-understand language and the illustrations make it fun.

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