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Michelle Singletary
Michelle Singletary

Color of Money Book Club Video Special
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Column: The Color of Money
Personal Finance Section
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The Color of Money Book Club:
Kids & Money

with Michelle Singletary, Post Business Columnist
Thursday, April 10, 2003; 1 p.m. ET

Trying to figure out some effective ways to teach your children to be financially responsible?

Join personal finance columnist Michelle Singletary and her guest, Betsy Taylor author of the "What Kids Really Want that Money Can't Buy", Thursday, April 10 at 1 p.m. ET to discuss teaching children about money.

Betsy Taylor is the Founder and President of the Center for a New American Dream. She previously served as Executive Director of the Merck Family Fund and Vice-Chair of the Environmental Grantmakers Association. She sits on several charitable foundation and non-profit boards and was a member of the Population and Consumption Taskforce of the President's Council for Sustainable Development. She is the author of "What Kids Really Want that Money Can't Buy" and co-editor of "Sustainable Planet: Solutions for the 21st Century".

Below is the transcript.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.



Michelle Singletary: Good afternoon. Welcome. I really love this topic because it's so important to teach your child not just how to handle money but that money can't buy all the things they really need. So on that thought let's get started.


Michelle Singletary: Why did you decide to write "What Kids Really Want that Money Can't Buy?"

Betsy Taylor: I run a non-profit group, the Center for a New American Dream. We had conducted several polls that demonstrated that kids today are very materialistic. We wanted to better understand the non-material aspirations of children so we ran a contest through family magazines and website and asked kids, "What do you really want that money can't buy?" Over 1,700 kids responded with art and essays. Their answers so moved me that I felt they warranted a book!


Michelle Singletary: In my column I talked about the importance of talking to your kids about the differences between wants and needs. Can you explain just how parents can do that especially when their children are nagging them for so much stuff.

Betsy Taylor: Parents can take several steps. First, talk to your kids about advertising, how it works, and how to analyze it. This is a crucial first step in helping kids understand that there is a huge industry geared to selling them things. Spend a month helping your five or six year old examine TV ads, billboards, magazine ads and radio ads. Ask them to tell you what is being sold and how it's being sold. This is a great way to give a child a sense of power over and detachment from marketing.


Michelle Singletary: Did any of the pictures or comments by the children surprise you? Do you think the kids were just saying what they think adults wanted to hear or do they really know what things are important that money can't buy?

Betsy Taylor: I was surprised by the number of kids who drew pictures of clocks or wrote about their hunger for time. We all know American adults are working longer hours than ever before but kids too are feeling an incredible time squeeze. They have more homework, longer school days, and longer school years and there is a certain "more is always better" approach to advanced classes and testing. Kids want time. This was a surprise.


Michelle Singletary: Can you do all the right things and still have a child that is materialistic and not mindful of their money? How important is the family values about money when the kids have so many influences outside the home?

Betsy Taylor: For better or worse, we live in a commercial world. It's crucial to instill your core values about money, stuff, and what really matters. The best way to do this is through our actions. Let your child see you and participate in your family savings plan. Let your child see you opting to take a walk in the woods, rather than a trip to the mall. Children learn more from what we do than what we say!


Michelle Singletary: I love the idea of sitting down with your child and talking about advertising. In my house we have a rule that the kids can't get anything they see in a TV commercial. What other things can you suggest to help your children combat the marketing machine?

Betsy Taylor: The first thing we can all do is set limits. This is a bit of a no brainer but it's amazing how many of us don't do it! Set clear limits, especially on time with commercial television. Over 1/4 of the nation's children under the age of six have a tv in their bedroom. Yikes! Set clear limits on time with TV and with the Internet. Second, do spend 1-3 months with your child on deconstructing advertising - helping a child look at advertising with a critical eye. Try turning it into a game. Finally, when you say no to commercial venues, say yes to non-material fun.


Rockville: I loved the bit in the Kid's Post about your daughter's allowance. I especially liked how you don't tie her allowance to chores -- chores have to be done regardless.

Is it appropriate to allow a child to sell his or her belongings at a yard sale in order to finance new purchases? There are toys all over the house yet we're always being asked to buy more -- I want my son to sell some things he no longer enjoys in order to buy some new ones.

Michelle Singletary: If you are worried about your child selling his things to buy more stuff why not encourage him to donate some of his nice toys to needy kids. So he could sell some and give some way? What do you think Betsy?

Betsy Taylor: I like Michelle's idea - have a yard sale with other kids and consider donating the proceeds to Children's Hospital or another favorite charity. Obviously, they can also keep a bit of the money, ideally to go into the bank!


Bethesda, Md.: My sister has 5 year old who she spoils. Every weekend she buys her some sort of useless toy. We all went shopping together a few weekends ago and my niece kept asking for all sorts of things. Of course my sister gave in. How can I explain to my sister that what she's doing isn't the best thing for her daughter without putting her on the defensive?

Betsy Taylor: Sometimes this is challenging. You might try modeling another way. Invite your sister and her child to go for a trip down to the mall to fly a kite one weekend, or to make a craft project at your home, or to do something that does not involve shopping, just to remind her that kids have find great pleasure without having to buy stuff.


Long Island, NY: Do you think these kid-targeted allowance/credit cards are a good idea? They seem awfully expensive for the privilege of spending pre-paid money, and I think that they are harmful because it takes the quantity aspect out of the money. Its not a jar of coins or a stack of bills, it's a single card. $5 is no different than $50 or $500 in that form.

Michelle Singletary: Personally, I hate those cards. I think the debit-like cards are good for college students in lieu of a CREDIT CARD but younger than that I totally agree with you. Why teach them the mechanics of how to be a debtor sooner than they have to be.

Betsy Taylor: These cards are really a problem. Over 1/4 of college kids now have problems with credit cards. Handing over pre-paid credit cards to adolescents is a disaster.


Arlington, Va.: I am an accountant, so budgeting and finance is very important to me. I also think it's important to learn about these things at a young age. I have a 6 yr old niece who loves to go shopping. Her grandmother gives her whatever she wants at whatever cost. This causes problems when I take her out, because my budget is tight and I can't afford to buy her everything she sees. I also don't think it's healthy to do that. The day usually ends with a fit over not getting something that she wanted. I want to teach her the value of money, how to save up for things, and how to be a wise shopper. I want her to earn these special trips to the store and to value what she does have. How can I teach her this, especially when she doesn't learn these lessons elsewhere?

Betsy Taylor: It's interesting that our number one form of recreation in the U.S. is commercial television and number two is shopping. One thing you might do is invite your niece over for a "savings" day. You have expertise. Share it with her. How to save, put money away, and so forth. Alternatively, again, you could work to reorient her focus away from weekend shopping and onto non-material sources of fun. How about taking the grandmother and niece to the zoo or for an afternoon of cookie baking, perhaps doing something the grandmother particularly loves.


Michelle Singletary: What do you say to parents on insist their (driving) teen or college student needs a credit card (pre-paid or otherwise) for emergencies?

Betsy Taylor: Back to credit cards. No question that a credit card is useful in an emergency. As a college student I had one, but I knew I could never use it EXCEPT for an emergency. This has to do with parents communicating their expectations and standing by them firmly. I think it makes sense to give a young adult a credit card strictly for this purpose. Never pay for non-emergency items and your child will get the message.


Alexandria, Va.: My children are toddlers (2 & 3 yrs old). What can we be doing now to provide a good foundation with regard to money matters? How can we teach them to differentiate between needs and wants (at Christmas, my children "wanted" everything)? Also, how do you feel about allowances? At what age is it appropriate to start with allowances?

Thanks.

Betsy Taylor: Good question. First, protect them from advertising and the creation of artificial wants. Do not have them watch commercial television - substitute educational videos or television. Second, for Christmas, don't ask "What do you want from Santa?" but rather "This Christmas, what can we do together to really have a great time". Focus on making Christmas a time of fun, renewal,and family reunion - not shopping. We have a free online section on our website about how to simplify holidays. Go to www.newdream.org


Washington, D.C.: "What do you want that money can't buy?" is a nice question to ask kids, but I would think children of that age are a little naive about what money brings. They have the luxury of saying, "Gee, I'd like more time with mom" because they have health care, safe homes in good school districts, college funds, lessons, etc. -- all things that money DOES buy and that their parents are busy working to provide.

Michelle Singletary: Good question. What about parents who are working like a dog just to make ends meet? We do all have to have money.

Betsy Taylor: Excellent question. No question money is important and Michelle does a super job of helping us manage it wisely. Parents who are working hard to make ends meet need to talk to their kids about the value of saving money to pay for those necessities. But even in these families, there is enormous pressure on kids to buy things for status or to "fit in" or just because advertisers are telling them they must have a cell phone, designer jeans, and the perfect DVD player to be "okay". In this context, parents really need to help their kids be connected to life's non-material sources of meaning - family, friends, nature.


Michelle Singletary: I'm often asked by folks how they can stop a relative from spoiling their kids with lots of stuff. I've even had my bouts with relatives who insist on buying my children lots of gifts when I've specifically ask them not to. How should a parent handle this situation. After all it's the other's person's money so can you dictate what they do with it?

Betsy Taylor: This can be challenging but again, it's important to remember, YOU ARE THE PARENT. First, talk to the relative and acknowledge that you appreciate that they love your child and that you are grateful for their generosity. Then, seek to build empathy around these issues of commercialism, that you're worried that the child is just getting bombarded with advertising and stuff and that they are not learning important life skills, like delayed gratification. Bring the relative into your circle as another concerned, loving adult and then politely but firmly ask that they cut back on how much they're giving. If this approach fails, you can always just refuse to let a child keep or use a toy or gift that you think is inappropriate.


Washington, D.C.: What is a appropriate allowance for children of various age groups (5-6, 7-8, 9-11, etc.)
Assume a middle class family with a household income of $60,000 per year.

washingtonpost.com: The Wisdom to Give Them Your Presence (Post, April 6)

Betsy Taylor: I don't have a strong sense of this. It depends on the family's income level and expectations. I think in general, we tend to give too much for allowance. In my home, my 12 and 14 year old each get $5/weekly. They are expected to save part of this and often they save all of it.


Washington, D.C.: What about teens? I know that my niece
and nephew were not taught anything
about money but now that they are teens
what can be done? They really don't want
a job and don't care about having their
own money. I do not think their parents
spoil them because of their huge financial
issues. Is it too late?

washingtonpost.com: Basics of Finance Begin With An Understanding of Bonds (Post, April 10)

Betsy Taylor: Remember, it's never too late. It can just be hard to break bad habits or practices. Even adults learn new money management and consumer skills. You might suggest to your nephew and niece that you want to help them set up a savings account. For every $50 they save, you'll add $5. You should not underestimate the power of communication. Talk to them about your feelings that saving money is important for life planning. You should obviously consult with the parents first to make sure they would approve of this.


Michelle Singletary: I'm so glad you said that about allowances. I recently agreed with my husband to start giving my soon to be 8 year old an allowance but the amount will be small. She doesn't want for much and I don't want to turn her into a consumer because she has this stash of money. She will be required to tithe at church, set some aside for other charities and I'm thinking about taking out taxes so she can feel our pain :) Do you think allowances end up just being a source of money for kids to just consumer more stuff?

Betsy Taylor: No, I think allowances can be used in important ways, precisely as you have described. My children also sit down to help us examine charities. They too give to our Quaker meeting. This has been an empowering experience for them and it builds empathy with others. They are also very proud of their savings and realize that this money is for either very special future purchases or for unexpected needs.


Silver Spring, Md.: What does the Center for a New American Dream do?

Betsy Taylor: Glad you asked :*)

The Center is a non-profit group that helps Americans consume wisely, to protect the environment, improve quality of life, and enhance social justice. We provide lots of free info on our website and through our membership services on how to have more fun, with less stuff.


Vienna, Va.: Hi Betsy, I have a young adult who refuses to understand to open her bills and pay them. She just cannot take care of her finances. How do I make her understand this?

Betsy Taylor: Who pays the bills if she doesn't? If you're paying them, you might cease doing so and simply let her face facts. Alternatively, you can withdraw the credit card. Or if plastic is not involved, you might just try sharing with her the cold facts. Last year 1.4 million Americans had to declare bankruptcy because they got in over their financial heads. Millions of college students are facing financial problems due to financial mismanagement. You might ask her if she's like to attend a one-day workshop on savings, investments and money management.


Michelle Singletary: What is it with this using the mall as a form of family entertainment? Is there any good reason to allow teens to hang out at the mall?

Betsy Taylor: Families today often worry about safety for their teens and many feel malls are safer than streets. But kids face a different kind of assault at the mall - the barrage of stuff, of messages and ads telling them they must have designer watches, high-cost sneakers, and the latest video games. I would avoid malls as neighborhood social settings if at all possible. Team up with other families to have kids to go to local homes. Organize outings, camping trips, evening dance parties, softball games, bake-offs, or mural paintings instead of mall outings. For more ideas, check out the book. It's loaded with very specific tips for having more fun without hitting the stores.


Gaithersburg, Md.: Like, I suppose, most kids, until I was old enough to hold a real job, almost every substantial thing I owned had been given as either a birthday or Christmas present.

For kids too young to handle substantial amounts of money, are there other ways for them to receive things that make them seem earned?

Betsy Taylor: One way to handle this is just simple limits. Don't give too much. By loading young kids down with lots of things, you establish early expectations that are not necessarily good for the child in the long run. Michelle may have thoughts here.


Arlington, Va.: It seems that teaching kids good money skills involves these (seemingly) simple ingredients:

- educate about money
- allow child to make choices
- allow child to accept responsibility for choices
- model good money habits yourself.

Would you add anything else?

Betsy Taylor: Great observations and insights. I would add one additional dimension. Before children can manage money well, they must learn to manage their wants. In order to do this, parents have at least three key things they must focus on.
l. Limit your child's exposure to commercial messages - set limits on commercial TV, fight back against commercialism in schools, etc.
2. Teach your child that ads use music, celebrities, fun images, color, and other messages - most of which speak to our non-material wants for friendship, respect and love - to sell us stuff. Help your child take ads apart and by doing so, you give them a small vaccination against the 3,000 commercial messages that most Americans receive each and every day.
3. Be conscious about helping meet your child's non-material needs and wants. Kids want friends, connection to family, more time with Mom and Dad doing fun things, time in nature, and a sense that they are connected to something bigger than themselves. In our work and spend culture, we all lose touch with these fundamental sources of deeper meaning. Parents need to attend to these in the midst of the rush for if kids can know that love and security come through relationships rather than through tennis shoes, they will be well served through life and will be far less likely to collapse under mounds of credit card bills.


Michelle Singletary: I totally agree with Betsy about loading your kids up with stuff. I purposely (and to the disdain of many of my relatives) don't over give to my children. Listen, even my cheap little self gives too much. Remember when you were a kid and you had to make Barbie clothes out of your old clothes or rags. Now you can buy Barbie wardrobes that cost almost as much as real clothes. Kids have everything and still they want more because we haven't made them want for anything. Lately, I've decided to simplify as much as possible. All I bought for my son's recent birthday was a $4 ball. I rewrapped some gifts he had gotten during the year that I had held back. And you know what? He was a happy little fella. He didn't even know or miss anything. He just loved having his cake and family around.


Vienna, Va.: Let's say you have kids that get allowances and understand that they have to save money in order to buy something. How can you teach them to determine whether what they want is what they necessarily need? I don't think saving is the problem, it's just that kids save to buy things that they want which doesn't necessarily mean it's what they need.

Michelle Singletary: I'm so impressed with these very thoughtful questions. I'm so proud of you guys!!!!! That's a big part of the battle. Questioning what you and your children do with your money.

Betsy Taylor: Yea Vienna!!! That's the question! The book is loaded with simple things. When you have a birthday party, don't focus on "what do you want", focus on "what can we do to have fun>" Organize a huge capture the flag game in the park. Organize a big painting party where you get a donated truck and paint it for fun and then drive around town in it. Do the unexpected. Savor life. Organize a party with friends and go watch a meteor shower (one comes every summer) or organize an evening of board games. We are simply forgetting and losing out on this side of life. If kids can reconnect to this part of life, their material wants will lesson. I might add that connecting kids to those who are living on the economic edge is another strategy for building deep empathy and a desire to use part of their money for charity.


Michelle Singletary: What other observations did you find interesting as you reviewed the entries from the children?

Betsy Taylor: Let's face it. It takes a calm heart to face the future just now. The world seems a bit unstable. Kids want to feel safe. They want to make the world a better place. Many many kids talked about this. In our "let's do it all" definition of good living, it's important to note that kids have dreams, big dreams, about making a better future. One thing we can all do is pitch in in some small way and involve our children in solving the problems we all often want to just turn away from. Go to a homeless shelter. Write a letter to your Senator. Clean up a local stream. This may feel like a far cry from managing money but in truth, when we connect our kids, and ourselves, to the things in life that feel more real than the online shopping websites, it becomes easier to answer that core question, "how much is enough?"


Re: teaching kids about advertising: I remember in 4th grade that we had a special unit on advertising. Every one brought in old magazines, and for a week, we learned about different marketing strategies. Then we had to find examples in those magazines. I still remember that activity, and we had a lot of fun doing that.

Is this something that today's 5 or 6 year olds could do?

Betsy Taylor: Great comment. This is precisely the kind of thing we can all do with our kids. Any child 5 and up can do this.


Vienna, Va.: Thanks for your reply. I don't pay her bills. She has a job. All her plastic cards, phone calls, and bills are not being replied to. I am afraid of what might happen!!!! Is there is some book or something I can get her to learn from? As a parent, it seems like it has been impossible to teach these children who have made up their minds. -worried mom

Betsy Taylor: I hear you loud and clear. Michelle?


Michelle Singletary: What do you say to people that argue if we all stop consuming our economy would crash and nobody will have any money?

Betsy Taylor: That's a great question. There's something very peculiar about an economy that is dependent on people over-consuming, literally dependent on us going into debt! At this point there is no danger of people consuming so little that the economy will collapse. Studies at Harvard and elsewhere have shown that we could have reduced consumer spending, a reduced work week, shared work, and higher quality of life for everyone. Even President Nixon predicted this kind of lifestyle for the 21st century - everyone working less, spending less, having more free time to just enjoy life, and by sharing the work, having jobs for all. Instead, we've taken all our extraordinary productivity and used it to get bigger everything: houses, vehicles, food portions, TV screens, designer fridges and bathtubs, you name it. Why not trade in some of the stuff for some time and create more 4 day jobs for everyone in the process? Who wants to start a movement?


Michelle Singletary: To Vienna. Please go to the archives of my columns and you will find a ton of columns that will help your daughter. Also, check out the books I've recommended for The Color of Money Book Club. Buy her a copy of the "Richest Man in Babylon" and "Wealth Happens One Day at a Time" both book club selections


Northern Virginia: Is it a good idea to open a savings account for a newborn? Should both parents' name be on the account with the child's?

Michelle Singletary: If you can find a bank that has a kiddie account that doesn't charge any or low monthly fees by all ways open an account. And yes, I would put both parent's name on the account.

Betsy Taylor: I'm with Michelle.


Warrenton, VA: Dear Michelle, Regarding your book club contest, how many entries do you usually receive relative to the number of prizes? This is an important factor in deciding whether to enter.

Since the prize book costs 22.95 and a post card stamp is .23 (assuming I can recycle something and get the card for free) if there are more than 100 entries per prize this is a bad "investment" - I'd be better off just buying the book myself. In fact, if there are more than 200 entries per prize, I'd be better off buying a lottery ticket than entering this contest.

Since your column promotes smart money management (and does it very well, by the way), and since there are so many sweepstakes, lotteries, etc. out there that people waste money on thinking that it's just-a-stamp, just-a-dollar, without considering how much all those stamps and dollars add up to over a lifetime, I think this is an issue you should cover. Either explain that the odds in your contest are much better than most, or stop encouraging people to make bad money decisions like these.

Michelle Singletary: I'm not surprised that some of my penny pincher readers have asked this same question. There are no normal odds for the contest since each time I offer books for free I get very number of entries. Having said that I'll repeat what I've said to others. I decided that it would be nice to get the publishers of the books I select each month to donate some books. Now how would you suggest I give those books away? Should it go to readers who e-mail me? Send me a letter saying they love my column? To friends? I thought the best way was to ask people to send in a postcard (since the postage is less than a letter). With every financial decision you have to decide if it's worth it to you. Nobody is twisting your arm to enter. Having people mail in entries was the only fair way to give every reader who wanted a free book a chance to win. I didn't chose e-mail because many of my readers don't have a computer. So I didn't think it was fair that those who had access to e-mail would be able to send in a free entry when others could e-mail their entry. Listen, this is something the publishers are kind enough to do. They didn't have to give me a single book. If you sent in an entry every month it would cost you $2.76 a year for a chance to win a book. I don't consider any amount of money small so I would understand if you decide not to enter my contest. On the other hand, sometimes it's fun to just enter a contest (provided the cost is low) and take your chances. I've also started to give free books to people who have entered in previous months, which increases an entrant's chance of winning. So, enter if you like. Don't if you think it cost too much. But I will continue to give out free books. And if you have a better and fair way to select winners I would be glad to entertain the suggestion.

Betsy Taylor: Personally, I hope people feel it's worth risking 23 cents to win a copy of my book! If not, I've probably come off as a miserable failure in this online chat. I know we're running out of time. Thanks to Michelle for having me and to all of you for your lively and terrific questions. Feel free to contact the Center at newdream.org on the web or at 301-891-3683 for a free intro to our organization, the Center for a New American Dream. many thanks!


Michelle Singletary: Oh and get a copy of this month's selection "What Kids Want that Money Can't Buy" it's a book for all ages.


Michelle Singletary: As Betsy said great questions. I'm so glad that we had this time together. To have a laugh...oh sorry just love that song. Anyway really I just loved this chat today and I hope it inspires you to sit down with your children and have valued-filled conversations about money. One housekeeping matter: A list of this month's winners of Betsy Taylor's book will be posted by Monday. Her publisher was very generous so I have many books to give away. Thanks.


washingtonpost.com:

That wraps up today's show. Thanks to everyone who joined the discussion.

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