Almost 3 million children in the United States have learning disability (LDs). Different types of LDs have different effects on a child’s ability to perceive, comprehend, and interpret information, and these effects can last into adulthood. For example, dyslexia and dysnumeria can make financial calculations difficult, and temporal problems can lead to a tendency to pay bills late.

Arlyn Roffman, Ph.D. is an active psychologist who specializes in young adults with LDs. She presents a number of suggestions for parents interacting with middle and high school-aged children to help overcome financial and consumer struggles due to learning disabilities.

1. Orient your child to a variety of types of stores. As you visit grocery stores, department stores, pharmacies, etc., discuss the layout of the stores with the child. Allow them to help find the products you intend to buy by looking for the posted signs and similar items.

2. Help your child learn the sizes of the shoes and clothing she wears. Dr. Roffman indicates that many parents continue choosing clothing for children with LDs beyond the point the parents would stop and allow the children to choose otherwise. As children grow up, they should be allowed to express their personalities and start defining their own “image” through clothing like their peers.

3. Discuss tipping with your teen. Charts and calculators are available to help determine the percentage of a bill for tipping. If a child is involved in the tipping process when dining out with his family, he will likely be more comfortable when placed in these situations without parents as he becomes more independent. Also discuss the “going rates” for other service providers, like bellhops.

4. Counsel her about credit cards. Some aspects of credit cards are difficult to understand even without a learning disability. Dr. Roffman suggests discussing credit cards with a child once they start receiving credit offers in the mail, but I would suggest starting sooner. Middle school or early high school is probably a more appropriate age. They will have already noticed their parents’ spending habits at this point or have friends who use their parents’ credit cards.

5. Teach your teen about basic contracts. Warn teens against high-pressure sales tactics. Explain how contracts work (cell phone contracts, for example) and pay attention to the details, like termination fees and other traps.

6. Establish a basic budget early in the teen years. If you provide an allowance to your child or if he earns money from working, help him create a spending and saving plan.

7. Encourage her to use a “budget envelopes” book. The “envelope” system of budgeting is a simple method to maintaining a budget. If taken literally by using real envelopes and real cash, the concrete and tactile nature of the activity can be beneficial for a child with LD.

8. Toward the end of high school, teens need to learn how to manage a checkbook and pay bills. Dr. Roffman offers a great suggestion. Children with LDs may find the choice of carbon copy (duplicate) checks more beneficial. Dysgraphia can be a strong obstacle in writing checks, so you can slip in a “cheat sheet” into the checkbook if necessary, including proper spellings of numbers.

9. Help your teen set up a home office at a desk table. This suggestion seems to acclimate children towards working at a desk job, like many people in the United States. It also provides a central location for all the tools of money management, including the checkbook, the computer with Quicken for tracking financial accounts, and a paper file for maintaining records and bills.

Most of the suggestions above work well for children without learning disabilities as well, but children with LDs will face some extra challenges as they grow into adult consumers.

National Dissemination Center for Children with Disabilities
Dollars and Sense: Teaching Teens with LD Consumer Skills and Money Management [GreatSchools]

It’s important to impart a financial education to younger generations, just like the Rogersons who are teaching their children about investing. When you invest, you are relying on other companies before you can make any money. The companies in which you invest must perform well and brokerages must stand between those companies, their profits, and you. This is likely one of the reasons that entrepreneurship—finding ways to grow a business from the inside—is a lesson some parents would like to impress upon their kids.

This is the case with the Becks, another family profiled in a recent New York Times article. Ted Beck is the president of the National Endowment for Financial Education and his wife is a former banker, so it’s likely that he has a good handle on how to provide children with valuable lessons about money. His method involves garage sales. Mr. Beck allows his children to plan garage sales, from inventory to pricing. By working together, the kids have learned about themselves and about effective teamwork.

“What really struck us was that the kids knew each other’s strengths better than we did,” he said. “They split the $100 that they earned, but they agreed not to split it equally because Katherine had done the most.” Mr. Beck was quick to add that projects like this one wouldn’t necessarily interest all children equally. While his children all participated and cooperated well, he said, only Katherine showed real interest in business. She is now majoring in marketing in college.

As long as entrepreneurship isn’t being forced upon the children, I’m happy with the idea. The article mentions that the projects don’t interest all the children equally; I would hope that if one is not interested, they would be encouraged to find an activity for which they are more suited. Business lessons are fine, but it’s not for everyone. Matters of managing money are more important, in my opinion. Also, children are not adults and shouldn’t be expected to consume their lives with more adult-like activities. Every person only has one chance to be 16, and an upper-middle-class teenager should appreciate that he or she doesn’t have to work to support his or her family.

There will always be time for work later. No one on their death bed at the age of 90 has ever said, “I wish I worked more when I was a teenager.”

photo: colros

Last week, I wrote about a family that has a hard time saying no to the children when it comes to fulfilling the kids’ material desires. There were a number of suggestions in the article and the discussion on Consumerism Commentary with thoughts about how such a family could impart healthier financial values.

A recent New York Times article featured two families who have taken different approaches to teaching their children about finances. In Teaching Teamwork, but with Real Money, two upper middle class families are teaching their children about investing and entrepreneurship.

Mr. Rogerson is the director of family wealth services at BNY Mellon Wealth Management. In that position, I think it’s safe to assume he has some experience with investment. That’s the approach to financial education the Rogersons are taking.

Six years ago, when they ranged in age from 5 to 15, he and his wife decided to entrust them with $5,000 each year. The children were to invest the money, which would be used for the family’s summer vacation. If the fund prospered, they might “go to Disney World,” he said. “If it stayed flat, we would go around the country and visit family members,” he added. “If the investment fell, there was always a camping trip.”

The kids work with each other to come up with each year’s investing strategy, and haven’t always prospered. One year, their initial investment of $5,000 dropped 60%, and the family still managed to take a vacation. That’s not a bad reward for poor performance, but I also don’t think that it would be “fair” to plan a vacation contingent on short-term investing skills.

In fact, I’m not even sure that short-term investing skills are what these kids need. Chasing these quick gains is similar to the family from the previous article, in which the kids want instant gratification. Picking stocks in this style is akin to gambling unless you hold insider information. Investing in fundamentally good companies, which is the lesson I think these children should learn, may not pay off in the short-term. Therefore, they should not be “punished” when their results are less than stellar, as nothing as been proven yet. (It’s hard to call a camping trip “punishment.”)

A bad year can mean poor decisions for the following year.

During the second year, the children were so nervous about “putting Mom and Dad back in a tent again that they eventually put all the money in money market accounts,” he said. “They made $50,” he added. “That year we drove down to Florida to visit family…”

Education is a continuous process. I think it’s great that the children are given the opportunity to fail, make decisions on their own, and evaluate their success. I just think short-term investing isn’t perfect.

photo: mathewingram

I have to applaud Kerri and Mike Miller for one reason. They were willing to share their financial problems with the readers of Money Magazine and CNN Money, despite the level of embarassment that kind of publicity might create.

While the article spotlighting the couple did not say explicitly whether the Millers are spending more than they earn, their level of debt is climbing higher each month. It’s clear they’d like to cut back their expenses, a big portion of which is caused by the desires of their children.

Thanks to bombardment of commercials and peer pressure, kids have strong desires for nice clothing and cool toys. It’s not really these desires that cause the spending, it’s the fulfillment of those wishes. How bad is it?

There’s 12-year-old Kate, a seventh-grader who covets a pair of $160 boots, prefers clothes from American Eagle rather than Target and recently got a $300 cell phone.

There’s nine-year-old Landon, who has a voracious appetite for video games. And their youngest, four-year-old Claire, will soon start taking ski lessons (cost: $224, not including equipment).

All three kids attend summer camps that run about $60 a day for each child. And then there’s the cost of babysitting ($200 a month), preschool ($4,000 a year) and braces ($3,000).

All the items mentioned above are not life necessities. These kids could easily survive without these luxuries, and at the very least, there are less expensive choices for everything. The only things listed above that I would disagree with in almost all circumstances are the ski lessons for the four-year-old.

The article contains a number of suggestions for the Millers, and presumably for the millions of families who find it hard to make ends meet while fulfilling their children’s desires. Start with saying no to the kids. When your son or daughter expresses a wish for a $300 cell phone, it should be an obvious candidate for an inflexible negative response. There is simply no reason for it—unless the kid is running a business where he needs instant access to clients through voice and email.

• Examine your motives. Are you throwing a blow-out birthday party because it’s what the kid wants or because you want to show off to the neighbors and the parents of the kid’s friends?
• Stop the whining. Saying no is difficult, but the kids may take rejection better if they are given an inside look at the household financial operations. If you can help them get a sense of your inflexible expenses, perhaps they can sympathize.
• Teach money management. Give the kids control of their budget, so they can learn to make the best financial choices. Let them make mistakes and learn.
• Save on the must-haves. Negotiate wherever possible and don’t immerse a kid with high quality activity equipment until they’ve been participating for several years. Hobbies and interests at a young age are fickle.
• Nip surprises in the bud. Stay on top of your finances to catch things like a stratospheric cell phone bill due to excessive text messages.

  Kids will be kids. You won’t be able to control every aspect of your children’s lives. Even with your best protection, they will be exposed to a world of materialism. They should be familiar with this world—it is the world they will live in their entire lives. I don’t believe children should be forced to act too mature for their age, but as they grow older, you should help them be aware of different forces in the world that try to share their thoughts and desires.

  Help! Our kids are driving us broke [CNN Money]

Here’s a hypothetical situation. Let’s say you’re a single mother with two children to support. Let’s also say, for the sake of argument, that thanks to royalties and such you earn $737,000. That is $737,000 a month. Even if you’re a big spender, surely close to $9,000,000 a year, and the income generated from investments of that money, will allow for a solid future for yourself and your kids.

Not if you’re Britney Spears, according to court papers reviewed by CNN. The former pop princess doesn’t save or invest any of her income. Is she financially reckless? Or does she simply believe that this income will always be present?

Britney’s spending habits certainly paint a picture.

Spears’ monthly expenses include $49,267 in mortgage for two houses, $16,000 for clothes and $102,000 on entertainment, gifts and vacation, according to her financial declaration… Spears declares she spends about $4,758 per month dining out. Meanwhile, she spends zero on education, savings and investments and gives $500 a month in charitable contributions, the documents said. She has to pay her ex-husband $15,000 per month in child support and $20,000 in spousal support.

It seems to me, and it’s no surprise, Spears has income to spare. Think of the possibilities of a $9 million income, a good portion of which possibly guaranteed for the rest of one’s life, for someone who handles their finances with sanity. I dream of starting a foundation. I could do that and have a nice house and provide every conceivable opportunity for my theoretical future children for the amount of money this particular has-been wastes every month.

Thanks to Advanced Personal Finance for pointing out the article.