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Clarinda Herald-Journal

Thursday, July 12, 2012

MONEYSOLUTIONS SIMPLE WAY TO TEACH KIDS ABOUT MONEY

It’s a simple phrase, money talks, but what is it saying to your child? By TESS GRUBER NELSON Staff Writer

Chances are your kids probably inadvertently learn money lessons daily, but it’s also important to teach your kids about money. Kelly Augustine, City National Bank retail banking officer, said she recommends parents start teaching their kids about money at the third grade level. “That’s when they are learning about money in school, so it can tie in to what you’re teaching them at home,” Augustine said. One simple way to teach children about money is to give them an allowance. Augustine said parents should start with an amount that is small, but large enough for kids to make purchases. In so doing, Augustine said kids will learn that things they want cost money and that properly managing their money will enable them to purchase the things they want. If they want to purchase a big-ticket item, the allowance needs to be saved, instead of spent immediately. It can also be rewarding for the child if they earn the money to purchase a particular item they want Augustine added. “Instead of just giving a child an allowance, assign different chores they can do around the house and assign a value to each chore, like cleaning out the cat litter pan for $1,” Augustine said. Another way to teach kids the value of a dollar is to explain to children that a $35 pair of cleats costs 35, $1

bills and show the child that amount so he/she can make the connection. Augustine said a toy cash register or fake money can reinforce the lesson of what things cost. Perhaps put price tags on some of your child’s toys and help him count out the correct amount of money that it took to make the purchase. Open a savings account in your child's name is another

way to teach money matters to children. Augustine said City National Bank offers free savings accounts to all students until they graduate from high school. “Have them put half of their allowance or birthday money in a savings account instead of spending it,” Augustine said. Although it might be difficult at the beginning to get kids into the savings habit, when it’s part of their routine and their balance starts to grow, they will likely grow more enthusiastic about their trips to the bank. Augustine also encourages kids to document their including deposits, withdrawals and expenditures. If the bank supplies savings books, make sure kids use them. However, parents can go one step further and give their child a financial journal where they can document all of their purchases in addition to their deposits and withdrawal, which will allow kids to see how they spend their money. Next, Augustine recommends parents helping their kids make larger purchases, such as a new bicycle or a video game console, as a way to teach them about money. “Bigger purchases teach kids the importance of saving and the reward for doing so,” said Augustine. Additional tips include giving your child a piggybank where they save money for something special; encourage philanthropy by having your child pick a charity and then have him/her put in an occasional quarter or dollar. Eventually, take the child to donate the money so he/she can see the result of their contribution and lastly, start a college savings fun or Roth IRA for your child.

Save money, time, energy while back to school shopping By KENT DINNEBIER Staff Writer

When summer starts to draw to a close, children throughout Southwest Iowa realize it will soon be time to head back to school. At that same time, parents are faced with the challenge of stretching their budget to purchase back to school clothes and supplies. “This is good opportunity to help children understand Mary Beth Kaufman how to determine their needs, make decisions, understand the value of money and a few budgeting basics,” Mary Beth Kaufman, Family Finance Program Specialist with Iowa State University Extension and Outreach, said. By following a few simple suggestions,

Kaufman said area families can not only save money, but time and energy while shopping for school supplies. Before heading to the store, Kaufman said families should take an inventory with their child of the clothing and supplies they currently have. This will identify the items a child already has and what they need most for the start of the school year. Whenever possible, Kaufman said parents should look at reusing items like clothing, backpacks, pencil boxes and notebooks that can last for more than a single year. Then, set a budget to spend on the remaining supplies that are needed. “Start saving money now or delay unnecessary purchases so you’ll have money for back to school expenses in August and September. You may even consider opening a school savings account,” Kaufman said. “Whenever possible you should also attempt to pay for your items with cash. Only use a credit card if you can pay the amount charged in full or set aside more than the minimum payment each month until the debt is paid.” When it comes time to start shopping, parents should consider visiting secondhand shops, consignment shops, church

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to school season could save $30 or more in sales tax by making its purchases on these designated days. The exemption applies to any article of wearing apparel and typical footwear intended to be worn on or about the human body, Kaufman said. However, the exemption does not include such items as watches, jewelry, umbrellas and sporting equipment like skis or roller blades. “The sales tax holiday is a good deal if you buy items that you would normally buy, and if you get them at a good price,” Kaufman said. “Also be sure to keep your receipts for all clothing purchases made during July and August. That’s always important, but especially so during these months. Any time you return an item, the store will need to know whether you paid sales tax on it.”

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clothing exchanges and hospital thrift shops. When buying school clothes, families should also keep in mind the dress code policies or restrictions schools may have. “Also check for sales by looking through sales flyers or going on-line before you start your shopping trip,” Kaufman said. “Make a plan of how you can shop for what you need in one day if possible. This will save you from using gas by running to the store multiple times for one or two items.” With a sound plan in place, families may also be able to take advantage of the Iowa sales tax holiday set for Friday and Saturday, Aug. 3-4. On these two days no state or local sales tax will be charged on clothing and footwear priced below $100. As a result, Kaufman said a family that spends $500 on clothing during the back

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MONEYSOLUTIONS Thursday, July 12, 2012

Clarinda Herald-Journal

SAVING FOR CHILDS COLLEGE EDUCATION

529 plan a win-win for college savings By JASON GLENN Staff Writer

When it comes to college savings plans there are the traditional options like savings bonds and CDs and some newer, potentially more fruitful instruments such as Roth and Educational IRAs, but for maximum flexibility and a range of benefits it’s tough to beat a 529 plan. The 529 is a state-sponsored plan that allow participants to invest money that can be withdrawn tax-free in the future for educational expenses, deduct up to almost $3,000 in annual contributions from their state taxes, and, when linked to a credit or debit card, benefit from participating retailers who contribute a percentage of the money a person spends back into the account. Brian Johnson, an Investment Advisor with Bank Iowa in Shenandoah, said for residents of Iowa considering the various options, the Iowa Advisor 529 plan can truly be a win-win situation. “You want to be able to save for college, the cost of college is just going up, there’s no doubt about it. And to be able to do that in a tax efficient way means a lot,” he said. Johnson reiterated the main features of the plan, that instead of the small return associated with bonds or the restrictions imposed by IRAs, a 529 offers a professionally managed portfolio of mutual funds and exchange traded funds based on a participant’s investment and timeline goals and preferred level of risk, a significant tax deduction in a state where the toptier rate is around nine percent, and the flexibility of being able to control where

the money goes and what it is spent for. “This sort of a plan offers the flexibility where you can be as conservative or as aggressive as you want with some really good, solid investment choices of mutual fund-type products in the plan,” Johnson said. A big part of the flexibility, Johnson said, is that anyone – parent, grandparent, friend of the family – can open an account on a child’s behalf and not only make regular direct deposit contributions, but that others can also be linked to the account to contribute. Furthermore, if, for instance,

the child decides not to go to college, the account beneficiary can be changed to another person or even the participant him or herself and the withdrawals will remain 100 percent tax-free if used on qualified educational expenses such as tuition, fees, room and board or books. Another level of flexibility, Johnson said, is that grandparents looking to reduce the size of their estate for tax or planning purposes, but retain control of their funds, can contribute up to $65,000 to a 529 account tax-free. And that, as well as the yearly state tax deduction (up to

$2,975 in 2012), is per person, per account so if each parent or grandparent sets up an account for more than one child, the benefits are multiplied. Perhaps one of the more novel features of a 529 plan is the ability to link to the Upromise program, in which participating retailers such as McDonalds and Hy-Vee and online stores like homedepot.com and target.com return in some cases up to eight percent of a person’s debit or credit card purchases back to the account. What’s more, anyone – again, grandpa, grandma, aunt, uncle, friend – can link their card to the program and, with no additional expense whatsoever, contribute to a child’s college education fund. “If somebody’s doing remodeling on their kitchen or something and they’re going to spend tens of thousands of dollars at Home Depot, why wouldn’t you get a couple percent back from the retailer. I call it frequent flyer miles for college education,” Johnson said. Perhaps one of the best things about a 529, though, Johnson said, is that no matter when it is opened, there is an immediate benefit in tax deduction for the participant. And, even if the beneficiary is farther along than one might have hoped, there is plenty of time left to realize even greater returns. “Even somebody who is six months away from starting college, you may want to still contribute to the plan because they’ve still got four years to get through it,” Johnson said. For more information on the Iowa Advisor 529 plan, visit iowaadvisor529.s.upromise.com.

Buy school supplies in bulk and save The back-to-school season is fast approaching. This is a time of school bus traffic on the roads, anxious parents snapping first-day-of-school photos, and children will meeting their new classmates and forging new friendships. This time of the year is also one when parents and students must shop for school supplies. Tradition dictates that families will flock to stores after dismissal and shop for folders, binders, pens and protractors. Caught up in the moment, many shoppers choose convenience over low prices on school supplies. Parents could

end up at the check-out line with a considerable bill to pay, particularly if they are shopping for multiple students. Buying items in bulk -- and sharing the cost -may be a more affordable option. Although it can be easy to procrastinate and wait until school starts to buy supplies, it might be prudent to shop before the new school year begins. Many teachers, in an attempt to help parents save money, publish school-supply lists online in advance of the school year. Most teachers do not vary their requirements from year to year, so if your son or daughter has

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plies and then donate some for underprivileged children. This time of year manufacturers or retailers could actually donate a portion of school-supply proceeds to some educational organizations. T Buying larger quantities of supplies could enable you to build up rewards points at certain retailers. This may entitle you to future coupons or dollar awards that can be put toward more expensive items, including tablets or graphing calculators. T Contact the teacher and see if you can volunteer to buy all of the supplies in bulk for the entire class, with each student then paying the required amount. This will save many families time and effort. T If you have a friend or family member who is a teacher, find out if he or she can purchase your school supplies. Often teachers are eligible for a discount on school supplies. T Purchase bulk quantities of certain supplies and find out if they can be sold as a fundraiser for the school. A portion of the sales will go to the PTA. Buying school supplies in bulk can save money and provide an opportunity to give something back to the school community. http://www.metrocreativegraphics.com

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been assigned a teacher, ask around among last year's students to see what that teacher requires. This way you can head to the store or comparison shop online at your convenience. Some supplies are standard regardless of class assignment. These include pens and/or pencils, folders, spiral notebooks, copy paper, looseleaf paper, erasers, crayons, markers, and highlighters. Purchased individually, the per-unit cost of each item may be higher than purchasing these items in bulk. This is when the advantage of buying in bulk shines through. Here are some helpful hints for parents about to shop for school supplies. T Shop for frequently used items in bulk, whether from online wholesalers or through a warehouse store for which you are a member. T Collaborate with a few different school parents to chip in for school supplies. Then one parent does the shopping and splits the supplies with the others. T Keep a stockpile of supplies at home. They do not expire, and next year you may not have to shop at all. T Having extra supplies on hand enables duplicate sets for at home and in school for consistency. T Some parents like to buy many sup-

Money Solutions, July 2012  

Money Solutions, July 2012

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