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Back-to-school spending tests your wallet and your patience

Remember when you could outfit a kid with roughly $20 in school supplies? Now there’s a lesson in ancient history, folks.

In present-day Chicago, the list of required items for two public school students can easily top $200. And the author of this article, a father of two, has a fresh receipt to prove it: The total at Office Depot last week to outfit a fourth-grade boy and a second-grade girl came to $196.13 before cashing in a $20 coupon.

All that spending on pencils, paper, wipes and markers, by the way, doesn’t include what many moms, dads and kids also consider fall necessities—items from new school clothes to smartphones for older kids. Parents are frustrated with school district supply lists that grow even as their income shrinks or stagnates. It’s no longer just a matter of pencils and notebooks, but tissues, hand sanitizer, wipes, paper towels, academic planners and much, much more. A student’s back-to-school arsenal can also include new footwear, clothing and computer equipment. And on the tech side, more kids demand smartphones (even if they’re not getting them) and e-readers.

What’s a parent to do, then? Experts say you can fight the back-to-school shopping blues in many ways, and offer powerful tips for doing so:

1. Comparison shopping apps. A smartphone app like RedLaser scans barcodes to find the lowest price on any item. “It uses product results from Google, eBay, Half.com and others and it’s free,” says Farnoosh Torabi, a personal finance expert and author of “Psych Yourself Rich.”

2. Rewards programs. We all dread junk email but getting on the mailing lists of retailers you frequent can yield sales alerts and money-saving coupons. Joining Office Depot’s Worklife Rewards allowed access to that $20 coupon mentioned earlier.

3. Online sales. About 30 percent of families plan to comparison shop online, says Arianna Georgi, vice president of marketing at Flank Digital LLC, the parent company of CheapSally.com. “Online coupon sites are only adding to this push, since many offer large discounts on items such as clothes, books, backpacks and electronics.”

Should you invest in your kid’s digital footprint?

Meet Lucy Boudreaux, the queen of social media. She has a personal website at Lucyboudreaux.com, is @lucyboudreaux on Twitter, and has her own Gmail address, as well as an active Facebook page. Lucy Boudreaux is eight months old.

At an age when most babies are clutching their binkies, or spitting out pureed squash, Lucy Boudreaux has a fully realized online presence. And her primary employee – dad H. Jude Boudreaux, founder of New Orleans’ Upperline Financial Planning – wouldn’t have it any other way.

“Domain names are like other forms of real estate,” says the elder Boudreaux. “They’re not going to be easier to come by, and I figure it’s easy enough for me to manage her accounts right now. I even use the Twitter account to send out updates and pictures to family members.”

In one sense, the online setup serves as a kind of endowment. Once Lucy is of age, she’ll be able to slip into the pre-formed digital identity to house her resume, run a blog or a business, or do pretty much anything else she can envision. And unlike a 529 college-savings plan, it doesn’t need to be constantly fed with tens of thousands of dollars.

“I think of it as her digital trust fund,” says Boudreaux. “And with the exception of the domain name, it’s all free.”

In a world where our online presences matter almost as much as our physical presences – indeed, maybe more – more and more parents are getting the same idea. Some Web-savvy parents are registering addresses almost as soon as children emerge in the delivery room.

“Get your kids’ names locked down,” advises Howard Lindzon, CEO of online investing community StockTwits, who’s done exactly that for his own children. “It’s one of the best lessons I ever learned. If someone’s squatting on the name, you should even pay to get it. Because you should always be able control the algorithms of yourself.”

Developing children charity champions

Developing our children into charity champions isn’t rocket science. What it takes is a decision, direction and discipline.

Decision The first step is to decide when to introduce the concept of charitable giving to your children. “A child of about four- or five-years-old can begin to understand the concept,” says Melissa Berman, president and CEO of Rockefeller Philanthropy Advisors, Inc. The exercise of cleaning out a child’s room and then taking them, with their old toys and clothes, to a shelter can be an educational experience. It shows that other kids need stuff that they take for granted.

Also understand why you’re trying to teach them to be charitable. “We want our kids to understand compassion and empathy,” says Kate Atwood, founder of Living By Giving blog. It is also about passing down values and commitment to public service. With that understanding, it will be much easier to explain why it is important.

Direction Perhaps the most important part of developing a strategy is to model the behavior for your kids. How can you ask your kids to become involved in charitable actions if you’re not doing it yourself?  Talk about the charities you donate to and why you contribute. Get your kids to talk about what interests and inspires them. The homeless? The environment? Food for the poor?

The charity strategy will change as your child ages. For elementary school-aged kids, let them raise money with a lemonade stand or bake sale. Then have them donate the money to an organization they care about. This is a good way to get them engaged. You can also make sure a portion of their allowance is donated to a charity of their choice. One strategy is to set up the 1/3 plan — your child is allowed to spend 1/3 but must save 1/3 and share (give to charity) 1/3, recommends John Graves, managing director of the Renaissance Group.

But charity isn’t just about donating money — it’s also about giving time. “Family volunteering is a big trend,” says Atwood. “If you build it into the family routine, it will be in their paradigm,” she says. Cleaning up a local park, collecting clothes for a tornado-struck community or walking to raise money for a cause are all good examples of family outings.

As your kids get older, you can encourage group activities with their friends. “I know a family where the older generation matches volunteer time with money,” says Berman. “So if the teenagers are volunteering time, then the parents will donate money,” she says. Another strategy might be to do matching — whatever the child contributes to an organization, the parent can match. Some helpful resources include kidscare.org, dosomething.org, and kidsareheroes.org.

When teaching kids about money, it’s not math — it’s values

Beth Kobliner is a personal finance commentator and journalist, and the author of the New York Times bestseller GET A FINANCIAL LIFE®: Personal Finance in Your Twenties and Thirties. She was appointed by President Obama to the President’s Advisory Council on Financial Capability, a bipartisan committee charged with tackling the problem of financial illiteracy in our country. The opinions expressed here are her own.

Kids are never too young to learn about money. (I’m sure I’m preaching to the choir, blogging on this site!) But even though I’ve been saying that for a while, I never had a trusted resource to share with parents.

So I was thrilled when Sesame Workshop asked me to be an adviser for their new financial education initiative. The finished product, “For Me, for You, for Later: First Steps to Spending, Sharing, and Saving,” includes several videos in which I teach Elmo about money, plus guides for kids and parents/caregivers. And it’s all free!

Best part: There’s no math required. This isn’t about teaching that five pennies equal a nickel. Instead, Sesame focuses on concepts that 3- to 5-year-olds can understand, and encourages parents to make use of everyday teachable moments. Here are a few ways to get started:

• Going grocery shopping? Talk about things you need (like apples or milk) and things you want (like cookies). It’s important for kids to know the difference!
• Having a playdate? Encourage your child to share his shovel in the sandbox, and you’re planting the seeds of charitable giving.
• At the toy store? If your daughter wants a scooter, but doesn’t have enough in her piggy bank, explain that she can save her allowance to buy it. Sometimes we have to wait for things we really want.

You can find more tips (and even a rap about saving!) at sesamestreet.org/save. Please share the videos and guides with all the little kiddies you know (kids, grandkids, nieces, nephews) and tell me their reactions or ask me a question. You can find me at bethkobliner.com, Twitter, or Facebook.

How to avoid boomerang kids

Attention blissful empty-nesters: there’s a good chance your college graduates will be moving back home.

That’s the not-so-pretty picture being painted by a handful of grim reports, including Monster.com’s “2010 State of the College Workplace,” which found that a whopping 52 percent of recent grads are living with their parents, up from 40 percent in 2009.

While the sluggish economy doesn’t help — nearly 40 percent of 18 to 29 year olds are jobless or out of the workforce, according to Pew Research Center — there are steps parents can take to prevent their children from “boomeranging,” experts say.

The key? Start early, says Janie Schiltz, director at Northwestern Mutual.

“Financial security isn’t something where you turn 25, snap your fingers and say, ‘I’ve got it!’ ” she says. “Good habits start very early on in life … and it helps when parents learn how to stop giving in to their children.”

In other words, stop being bulldozed by your kids. Schiltz warns of the “easy money” phenomenon highlighted in a recent poll by TheMint.org: it found that over 80 percent of parents are always or occasionally giving in when their kids ask for money. “It’s always easier to say ‘yes’ than ‘no’, but you’re really not teaching your child the financial discipline for building resources and handling money,” she says.

And unless you want to be doling out cash until you’re 80, start now by establishing rules around spending, saving and differentiating between wants and needs, Schiltz says.

Lights, Camera, Save! Money lessons for kids

It is never too early to start teaching kids about the importance of saving money. But sometimes that process can be dull. So what about creating a money lesson that is fun and still inspires kids to save money rather than spend it?

The American Bankers Association (ABA) Education Foundation set out to do just that. The ABA launched a new initiative called Lights, Camera, Save! — a national video contest aimed at getting kids to think about creative ways to save money.

“Traditionally, savings education can be pretty dry,” said Laura Fisher, executive director of the ABA Education Foundation. “So we wanted to bring a challenge in a form that kids were already interested in.”

Lights, Camera, Save! is an extension of the ABA Education Foundation’s Teach Children to Save program, a national initiative that allows banker’s to volunteer their time to connect with schools and teach kids about saving money in a classroom setting. The contest gives kids from ages 14 to 16 years the opportunity to use video as a means of teaching their peers the lifelong benefits of saving.

“We’re taking the lessons out of the classroom and asking kids to tell us in a creative way what they think the value of saving is,” said Fisher. “We wanted them to tell it in a way that can be shared with other kids and maybe inspire them to be lifelong savers.”

Saving equals freedom

Across 45 states, 170 banks held local competitions and, in turn, sent their local winner’s submission to the ABA. A national panel of judges awarded Mason Beiter the grand prize for video “Lego you spending and start saving.”

Teen checking accounts: Tools to help kids manage cash

As an Ameriprise financial adviser with three school-aged children and two pre-schoolers, Ginger Ewing knows a thing or two about kids and money. She instructs her wee ones on the principles of saving with a cash allowance. Her 8-year-old recently got a crash course on the family’s $700 December utility bill. But Ewing’s brood may be an anomaly.

Kids, especially teenagers, are more plugged in than ever. Online billing and mobile banking apps have replaced trips to the bank teller. The tangibility of money seems to be lost on today’s youth. “I was at church this week, and I heard a little guy asking about a pillow pal. He said, ‘you can just click online and get one of those. Click and it shows up,’ ” Ewing says.

Nearly a quarter of teens, 22 percent, say they don’t budget their money while a whopping 55 percent say their parents take care of all their expenses, according to a 2010 survey from the Junior Achievement/Allstate Foundation.

If your child is old enough to make money, they’re old enough to manage it. Financial institutions — like USAA and Wells Fargo — offer checking accounts aimed at the younger set.  But before you break out in a cold sweat over your child’s financial freedom, here are some tips to teach kids the value of a hard-earned buck.

Start with cash, graduate to bank accounts and bills Teaching your kids how to balance a checkbook will probably be as useful as teaching them how to record the latest episode of  “Glee” on VHS. Paper-based finances likely won’t be a reality for teens, but it doesn’t mean the fundamentals of budgeting and balancing don’t apply.

“It’s important to develop the steps so that kids understand the value of the actual money that’s underlying all of the transactions that we do these days. It’s much more difficult to teach kids about money now than it was 30 years ago,” Ewing says.

Start by giving your child a cash allowance and graduate to a checking account once they’ve established a habit of saving or become employed. Build a budget with your child to teach them how to map out monthly expenses and ensure your teen has some form of bill payment every month — cellphone bill, car insurance, clothing expenses, etc. Have your kids write a few checks for their monthly bills before graduating to online bill payment.

5 ways to get your budget ready for baby

Ideally, life-altering events and financial milestones don’t fall on the same day. Not the case for Laurie Belew, who closed on a house the same day she and her husband found out they were pregnant with their first child. Now, expecting their second, Belew is facing another round of twin financial hurdles.

“We’re not very good planners because my husband is quitting his job and going back to school in August. Whether we bought a house the first time or are starting school the second time, we like to do everything at once, apparently,” says Belew, a certified financial planner with Fox, Joss & Yankee, LLC.

Unexpected events will always arise, but the better prepared you are for your life goals, the better you’ll fare. If you’re longing for the pitter patter of little feet, some financial navel gazing is in order before you bring home that bundle of joy.

Annual child-rearing expense estimates range from $11,650 to $13,530 for a middle-income, married, two-child family, according to data from the U.S. Department of Agriculture (USDA).

Over 18 years, that equates to just under $250,000, not including inflation, to raise your wee one from birth to adulthood. Yup, that’s about the price you’d pay for a 2011 Porsche 911 GT2 RS or a three-bedroom, 2,250 square-foot home in Raleigh, NC.

Before you start popping folic acid and picking out baby names, it’s time to get smart about your baby budget.

Plan now for short and long-term goals Strategize your financial plan before you become pregnant or soon after. “Once you have kids, you’re whole life is re-prioritized and financially you have to provide for a family now rather than just two people. You’ve got considerations like college and other big expenditures that wouldn’t be on the table if you didn’t have children,” says Belew.

How many kids are too many?

Carl Friedrich and his wife were perfectly happy – and busy – running a wealth management practice with a bustling household of four daughters. Then a bouncing baby boy arrived.

“For us, that was the tipping point,” says Friedrich, the managing principal at Friedrich Wealth Management in Syosset, New York.  “Four kids was a do-able, and five kids…it’s a stretch.”

Anyone with kids knows that growing a family is an emotional decision fraught with financial considerations – and limitations.

With the average cost of raising a child estimated at more than $220,000, one family’s “tipping point” is another’s happy medium. So how do you know how many kids are too many?

Start by taking a cold, hard look at these five key costs, Friedrich suggests.

College Sending your kids to college may seem far off, but it’s one of the biggest expenses you’ll incur raising a child  – and the sooner you start planning, the better. “With college inflation outstripping consumer inflation by 3 percent to 4 percent annually, that’s no small fee,” Friedrich says.

Saving for college in a 529 plan is a good option, so long as you’re aware of some of risks involved. For example, Friedrich feels the age-based allocation plans often have too much exposure to equities and, as such, are risky for parents who are late to the college savings game.

Financing fertility: The high cost of bringing home baby

Bethe Halpern and her husband Ted tried to have a baby for nearly a year before turning to fertility treatments in hopes of conceiving.  Two doctors, five rounds of IVF and close to $50,000 later, they were exhausted – and still without a child. “We were held hostage for three years of treatments,” says Ted. “When do you find time to plan a vacation and live your life?”

The Halperns’ story ended happily – today they’re the parents of twins, Lauren and Jack – but it’s far from unique. More than 6 million women in the U.S. have difficulty getting or staying pregnant, the CDC reports, resulting in a tsunami of financial turmoil: with the average costs of IVF around $8,000 to $13,000 for a single cycle as well as doctor visits, fertility drugs and the price of related treatments and therapies – the cost of infertility is staggering.

Then there’s the undeniable emotional toll that comes with trying to conceive:  “The whole process is a crapshoot. You have absolutely no idea if you’re going to get a positive result and the stakes are so high – it’s the highest risk and highest reward,” says Karen McIntyre, director of financial planning at Vantage Point Advisors in the Philadelphia area.

The good news is, a financial plan can help on both fronts. Experts say removing unexpected surprises —like a whopping medical bill – is one of the few ways to build a sense of security in a situation in which little security exists.

“The more you plan for the financial aspects, the easier it is to eliminate surprises and cope with the emotional side of trying to have a baby,” says Halpern, an adviser at Halpern Financial in Maryland.

Here are some tips to map out a plan:

1. Develop a plan – and stick to it: Setting a $25,000 budget for infertility treatment is one thing; being able to walk away when you hit the budget is another, says Rob Dowling, a financial planner at Modera Wealth Management in New Jersey.