Tooth Fairy inflation, scholarship squeeze and a fall financial checkup

Okay, I’m going to confess something, and I don’t want you to think I’m a bad mother. I thought it was funny. And now, at age 12, so does my daughter.

One time – just once – I gave my little girl the same 50 cents for two lost teeth.

Like many parents have done, I crept into my little girl’s room in the wee hours of the night and left 50 cents under her pillow after she lost her first tooth. A few days later, she lost another one. That night I was too tired to look for any change, so I swiped the first 50 cents my daughter had left in a drawer in her room and used it for the Tooth Fairy’s second visit.

She never said anything about the missing 50 cents (probably because she forgot about the money), and I never said anything, either. After that the tooth fairy payment did increase. I started leaving a dollar for each tooth but never more than that.

A recent survey by Visa, however, found that kids are averaging about $3 per lost tooth, up 15 percent from last year. Some kids have received as much as $20 per tooth, reported Oliver St. John of USA Today.

Jason Alderman, Visa’s senior director of global financial education, said of the survey: “This is not only good news for kids, but an ideal teachable moment for parents to engage their children in thinking about how to budget their windfall by saving a portion.”

But hold up, wait a minute, say child psychologists. What are parents teaching kids in the first place by giving their children so much money for a tooth?

“I believe that it not only can be adverse to learning the values of things, but it can also be adverse to learning you earned things,” said Patricia Kirwin, a psychologist in Columbus, Ohio, the USA Today report said.

And it would appear some educators are also weighing in on the tooth inflation. Nobody wants to be the parent whose child is “the talk at recess,” because of a frugal Tooth Fairy, Amy Moncarz, a second-grade teacher at Lucy V. Barnsley Elementary School in Rockville, Md., told USA Today.

So, how much should you pay for a tooth?

Visa has created a free mobile app and online calculator that recommends what it considers an appropriate amount to leave for each lost tooth. The app and calculator use survey data and factors such as gender, age, home state, income and education level to show parents how much money comparable households are giving. The app is available on iTunes. You can find the calculator here.

While playing around with the calculator, I found some interesting payment suggestions. I plugged in information about a 40-year-old male living in Louisiana with a high school education and annual income of less than $25,000. Given that data, the tooth fairy calculator said this guy’s kid should get $4 per tooth. When I changed the subject’s education to graduate school and his income to $50,000 to $75,000 a year, the suggested amount was $1 per tooth.

So, I wouldn’t recommend the calculator -- I think it sends the wrong message to low-income parents. Just give what you can afford.

The Cost of Cool

I received a lot of feedback to last week’s Color of Money question. I asked, “Should we blame retailers for pushing expensive products?”

Nike recently announced the launch of the LeBron X Nike Plus, a sneaker named after basketball player LeBron James that comes with its own technology and a price tag of $315.

News about the costly sneakers caused controversy, with some critics urging parents not to buy the expensive shoe.

Deron Snyder, a contributor to The Washington Post’s The Root, had a different opinion. He wrote: “Some folks who regularly buy expensive clothes, make expensive hair-care appointments and drink expensive cups of coffee can barely make ends meet. Is that the fault of the automakers, builders, designers, stylists and baristas? Of course not. Likewise, no one should blame Nike and LeBron James if their exorbitantly priced sneakers land on the feet of people who really can’t afford them.”

Here’s what some of you thought about the issue:

“I don’t think we should blame retailers for marketing the high-priced items,” said Sara Hughes of New Virginia, Idaho. “They are trying to run their business, too. However, I think that many children ‘expect’ to get such things without realizing the value of it or impact of it on their family.”

Sara McLaurin of Sykesville, Md., agreed. “Please don’t blame foolish spending on anyone except those that make the choice to spend,” she said. “No one else is responsible for a stupid purchase. And I don’t even think ‘marketers are in the business of tricking consumers!’ People aren’t tricked beyond their wills. Advertising is advertising.”

“It’s a shame that kids feel like they need to wear expensive designer clothing and footwear to be accepted by their peers,” wrote James M. Snyder Jr. of Fairfax Station, Va. “To me, it all comes from family values and what you are taught. If these kids don’t have adult role models to learn what’s ‘real cool,’ like scholastic achievement, respect for all humans, giving to charity or houses of worship, ethics/integrity, then of course they are going to go somewhere else for life’s lessons. We should not be blaming retailers. We can boycott their products, write letters to their CEOs, drum up negative press coverage, but don’t blame Nike or LeBron’s. We should be looking in the mirror for that.”

“Unless we’re protesting $200 iPods, $600 iPads, $1,000 Louis Vuitton bags, $500 high heels and $300 hair weaves, I see no logic in protesting Nike and LeBron. Nike’s obligation is to their shareholders, and my obligation is to make it a teachable moment for my kids,” stated Shaun M. from Bedstuy, N.Y.

But Fred McElhenie of Lawrence, Kan., said the company should be held accountable.

“One of the prerequisites of being a responsible business concern is the duty of being a responsible and participating citizen,” McElhenie wrote. “Nike needs to recognize the unintended consequences of their market and sales strategies, and present items to the public that best serve all tiers of our society.”

The Scholarship Squeeze

Findings from education lender Sallie Mae find that the percentage of students reporting winning scholarships dropped to 35 percent in the 2011-2012 school year from 45 percent the year before. Scholarship recipients are still getting almost exactly the same amount as the previous year, an average of $7,673, reports Chris Taylor of Reuters.

“Schools were stepping up their scholarships to help” cover rising educational costs, said Sarah Ducich, senior vice president for public policy at Sallie Mae, the nation’s largest student lender. “We wondered whether that was sustainable. This year we found out that it’s not.”

Summer’s End

You’ll probably soon be putting away your summer things and getting ready for fall and winter. So, why not do an end-of-summer checkup on your finances? Rachel Louise Ensign of the Wall Street Journal offers some financial tips.

Experts she interviewed said that now is a good time to:

-- Update your will. Start by taking a look at your beneficiary designations and making sure your life insurance and retirement accounts will go to the intended recipients.

-- Check your insurance policy. With the winter months approaching, now is the opportune time to check your policies to make sure you have the right coverage.

-- Review your investment accounts. If you’re fortunate enough to have received a raise, think about boosting your retirement contributions. If you turn 50 this year, you can start making catch-up contributions to your 401(k) or IRA. For a 401(k), that’s up to an additional $5,500 on top of the $17,000 contribution limit for this year. For an IRA or a Roth, it’s an additional $1,000 on top of the $5,000 limit.”

Tia Lewis contributed to this report.

You are welcome to e-mail comments and questions to colorofmoney@washpost.com. Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested.

Michelle Singletary writes the nationally syndicated personal finance column, “The Color of Money.”
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