The Thrift Shop – Where your kids can learn about money

Personal finance is a subject many parents want to avoid, even if not consciously. Sometimes it’s something parents don’t speak about too much even between themselves, but it surely is a subject most parents avoid discussing with their children. This is a mistake.

Survey after survey reveals how parents avoid discussing money with their children.

According to the 11th annual (2019) T. RowePrice Parents, Kids & Money survey, when asked how often do you discuss money or financial topics with your child, 8% of the parents surveyed said never; 28% said once a month or less; and 30% said a few times a month.

Perhaps even more worrying is the fact that most of us simply do not have sufficient knowledge to deal with personal finance issues. For example, the 2016 National Financial Capability Study done by FINRA’s Investor Education Foundation found that just 37 percent of respondents are considered to have “high financial literacy,” meaning they could answer four or more questions on a five-question financial literacy quiz.  This is down from 39 percent in 2012 and 42 percent in 2009.

Recently, I was in a used furniture/thrift shop that had a whole array of things for sale, from small, used toys to comic books and paperbacks and furniture big enough that you needed a truck to take it home. What I saw in the store was absolutely wonderful. The toys, some from yesteryear, cast off knickknacks and a rolltop desk that looked like it came from an old movie were all very interesting, but what was truly wonderful was the interaction I watched between a mother and her young daughter and son (we’ll call them Emma and Billy). They were about six and eight years old.

“Now, you each have 10 cents to buy something with,” she told them.  They began looking about a corner of the store that was full of little push toys, stuffed animals, storybooks and a seemingly endless cornucopia of everything a little kid could want.

Billy picked up a truck almost immediately. It was a beauty, but mom reminded him, “That’s 50 cents. You can’t buy that.” Disappointed, he put the truck down and continued to look. Meanwhile, sister was fascinated by a set of colorful stickers you could do almost anything with. The price, 10 cents. Perfect!

By now, Billy had found a package of baseball cards and a little pinball machine, each 10 cents. The price was right, but the dilemma was frustrating. I could see it on his face, but in a few moments the package of baseball cards was back on the shelf and he was running to mom with his purchase.

If you’re reading this, your children are likely older than Emma and Billy but however old they are, it’s never too early to start teaching them (and yourself, if necessary) about personal finance. Financial literacy enables you to make wise decisions about what to buy and what the consequences of your purchases are going forward. I suspect that when it comes time for mom to speak with Emma and Billy about post-secondary education, whether it’s college or some other choice, they’ll be able to speak to each other freely, acknowledging that the financial decisions they are considering mustn’t become a burden in the years ahead.

We will speak a great deal more about financial literacy in coming blogs, but to get you and your children started, you might want to take a look at Jump Start! Financial Smarts for Students (https://www.jumpstart.org) and Schwab MoneyWise – the Teaching Kids section (https://www.schwabmoneywise.com). These are sources of good information, but don’t stop here. There are other quality sources to consider.

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Bigger news than the college admissions scandal

As those indicted in the college admissions scandal continue to come into court in Boston to enter their pleas, the story continues to be front page news. But for all of the headlines and talk on television and in social media, the BIG college news had actually been made one week before the United States Attorney spoke in Boston and continues to go largely unreported.

Though unreported, that story will have very real consequences for the college landscape going forward and, therefore, for parents and students preparing for college.  The story was the statement by the president of the American Council on Education, Ted Mitchell, when he said higher education must recognize that it no longer is the sole arbiter of what the content of higher education will be.

To understand the deep meaning of this statement is to understand that colleges and what they teach will no longer be decided alone by college presidents and college faculties gathered behind the ivied walls of academe. Instead, going forward, others, outside the walls, will change what is taught and how it is taught.  Think of online courses, certifications instead of degrees, students who study at various times while they pursue careers and a host of new possibilities.  And think of the cost of earning a degree or certification, or both, going down even as the cost of books, rented or obtained in digital formats, also become more affordable.

The future of college like the future of work is full of excitement, accessibility and opportunity.  But while its coming is inexorable it will not be without objection, false starts and the need for persistence on the part of all the players.  For more of this and of coming changes in how we will pay for college, return for more blog posts here.

The College Admissions Scandal the Media Covered . . . and the Ongoing One They Missed

By this time, everyone knows the facts of the college admissions and testing scam engineered by William “Rick” Singer’s Edge College & Career Network and his “side door” to elite colleges which he promised the Key to for parents who paid from $75,000 to more than $1 million for his services.

The college admissions and test taking scam revealed nearly a month ago in Boston was shocking, no doubt about it. Columnists could talk of nothing else for days. But the story’s allure to the media and the rest of us, I guess, was the unfairness of it all, the brazen immorality, and, let’s face it, the voyeuristic glimpse into the lifestyles of the rich and famous.

It doesn’t excuse anything, but relatively few people were involved. After all, how many of your friends are conniving to the tune of half a million dollars to get their kids into college? None of them.

Yet self-appointed experts deemed the scandal “a staggering indictment of higher education and American education policy generally.”  No, it was a staggering indictment of some 50 parents, coaches and at least one college official.  (More indictments are anticipated.)

Do you want to know what the ­real indictment of higher education is? The scandal that may very well in some way affect you and your child and everyone who’s working so hard to give their kids the best chance at life?

Consider this:

— one-third of entering college freshman transfer after one year (typically, just 43% of their credits go with them)

— only 60 percent of first time, full time freshmen graduate and too many of them take six years to graduate

— far too many college freshmen, ill-prepared by their high schools yet admitted to their colleges, are then left with too little support and drop out.

— thousands of students each year carry more than $30,000 of student loan debt due, at least in part, to the financial aid policies of the federal government and colleges and to the failure of school districts to educate their taxpaying parents about the complexities and financial dangers inherent in the college financial aid system.

— According to a report just released by the Urban Institute, a Washington, DC, think tank, 62% of parents of college students today borrow more than what the federal financial aid formula determined they could afford. Nearly 800,000 parents borrowed an average of $16,452 during the 2017-18 academic year through the federal government’s Parent PLUS loan program.

These are some of the scandalous facts we should really be concerned about.

But there is reason for hope.  A glimpse at that is the subject of the next post.

THE IMMORALITY OF IT ALL

The college admissions scandal was, well, scandalous, and we’ve all read the continuing headlines about the scheme, its criminal leader and his cabal of test “proctors,” college coaches and at least one college administrator.

But for me, the most disturbing headline appeared in the New York Law Journal and read, “Not Worried About the Moral Issue.’ The Law Journal reported the allegation that the co-chairman of one of the most prominent law firms in America had paid ringleader Rick Singer $75,000 to have wrong answers on his daughter’s ACT test “corrected” by a test proctor in Singer’s control in order to assure an exceptionally high score on the test.

According to a wiretap transcript cited by federal prosecutors in Boston, this lawyer, Gordon Caplan, stated in a phone call to Rick Singer, who by then was cooperating with prosecutors, “I’m not worried about the moral issue here. I’m worried about the—if she’s caught doing that, you know, she’s finished.”

As a lawyer, as a certified college admissions advisor, as a former high school English teacher and as a former proctor for the College Board’s SAT examination, my reaction to this headline was multifaceted disgust.  There is a lawyer’s personal moral code and the Code of Ethics for lawyers.  Mr. Caplan’s law firm removed him as co-chair of the firm and suspended him, apparently thinking that if he wasn’t “worried about the moral issue here” he might also occasionally not be worried about the ethical issues either.

Morality matters in all that we do, and whether as parents helping our children with their college applications and essays or as guidance counselors and college admissions advisors, we constantly are aware that help cannot become something else, something that makes the college essay (or, for that matter, the homework assignment) our work rather that our child’s or our student’s.

The media chose not to make morality a key element in this story.  The New York Law Journal implicitly did.  And so must we.  Parents are their children’s first teachers.  Teachers and counselors stand in loco parentis.  Go. Teach.