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How to Talk to Your Teenager About Money — Even If You’re Bad at It Yourself

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Talking about money may be complicated, but talking to a teenager about anything can be a minefield. Combine the two and you’ll almost certainly find yourself faced with eye rolls and resistance. But having open conversations about money can help foster a sense of financial awareness that will benefit your child in the long run.

And what if you’re hardly an expert yourself? Maybe your credit score has fallen in recent years or you’ve never successfully balanced your checkbook. All is not lost — with a little forethought, you can still impart financial wisdom through daily activities.

“There are so many opportunities to talk about money every single day,” said Nicole N. Middendorf, wealth advisor and CEO at Prosperwell, a financial planning firm. “When you’re out spending money, or the kids need equipment for sports, or even lunch money, you can discuss how to make money or where all the money is coming from.”

Make a list of broad topics you’d like to cover over time, and broach each subject when it seems appropriate. Creating these goals ahead of time can help you make sure you touch on all the financial concerns you want your child to be aware of without making them feel like they are being bombarded with parental demands.

What exactly should you discuss?

How to budget

Why it’s important: Budgeting is the cornerstone of a sound financial future. Yet, 34% of Americans said they don’t have a budget and, of those who do, 70% said they struggle to stick to it.

How to address it: Consider giving teens a fixed amount of money for lunch each week. If they want a more expensive meal or snack one day, they can opt to bring lunch from home another time. “Little lessons such as this go a long way in helping prepare for larger budgeting decisions in a few years,” said Brian Walsh, CFP and Manager of Financial Planning at SoFi, an online lender.

If your teen has a part-time job or side hustle, like selling artwork or babysitting, you can use their income to develop an more detailed budget. This can even work if you provide an allowance or cover the majority of your teen’s costs. “Even if the parents are paying for everything, it’s good to have kids work through a personal budget for themselves,” said Heather Reihs Keller, a volunteer instructor at My Money Workshop, a financial literacy organization serving the New York tri-state area.

Online checking accounts also make it easy for kids to have a record of their spending. But it’s still important to show teens how to track where that money goes. “Make sure teens understand the credits and debits and how things are going in and out of their accounts,” Middendorf said.

How to control spending

Why it’s important: Creating a budget is one thing, but learning to follow it is a whole new beast. According to a recent survey by Piper Jaffray, teens claim to spend $2,600 a year.

How to address it: Impart financial lessons while you’re shopping together, so teens can see smart money decisions in action. “If you’re back-to-school shopping, provide a set amount of money you’re willing to spend and teach your teens about trade-offs,” said Walsh. For instance, your teen can choose to buy a single pair of name-brand sneakers for $100, or – sneakers, a backpack, sunglasses and a shirt – by bargain-hunting and making smarter choices.

Reihs Keller also noted the importance of comparison shopping and how delayed gratification can pay off in the long run. “I try to never pay full price for anything,” she said, adding that she always looks for ways to save money on whatever she’s buying.

She recommended advising teens to shop online to find better prices on items they first spot in a brick-and-mortar retailer. Though she may be preaching to the choir — teens are becoming increasingly savvy about looking for savings online, with 50% preferring Amazon for their online shopping.

However, parents can help by introducing them to programs like eBates, which can help teens earn cash back on purchases when they shop online at select stores.

How to earn money

Why it’s important: While it’s good to let teens practice budgeting with money parents provide, you’ll also want to foster an appreciation for a hard day’s work. When teens start earning their own money, there’s a whole new set of financial lessons to teach.

How to address it: “Explain their paycheck and withholding taxes to them,” Middendorf said. “What seems like a lot of money, at first, may not be that much.”

For teens too young to work — or if job options are limited in your area — your teen can find other ways to earn money. “Help your teen develop a side hustle,” advised Walsh. “Help them think through creative ways [to earn money], such as mowing lawns, shoveling snow or selling unused goods.”

John O’Rourke III, vice president and Private Banking and Wealth advisor for First American Bank, in Coral Gables, Fla., also recommends paying for chores your teen can do around the house. “My siblings and I were paid our allowance at the beginning of the month, and a portion went right into our savings account for clothing. The rest was our ‘play money,’ for movies, candies, or toys.”

The trick to leveraging an allowance to teach teens about adult life? Show them that if they spend their whole allowance, they aren’t getting more money from you; they will have to find a way to earn more.

In adult life, this can translate into a tough lesson on frugality — or an incentive to find ways to make more money. “I learned to wash cars and mow lawns,” O’Rourke said. “It was a valuable lesson — hard at times, but valuable.”

How to save

Why it’s important: Of course, as the old adage goes, “It’s not what you earn, it’s what you keep.” Teaching teens the importance of savings can help set them up for a life where they aren’t living paycheck to paycheck. Instead, they will have a buffer for emergencies, investment opportunities, or even spur-of-the-moment experiences like trips and concerts. “If you can get your child into this habit from the start, you’ll be setting them up for future success,” O’Rourke said. “It’s empowering and comforting to know you have some money set aside.”

How to address it: “If there is a major purchase they want to make such as a trip, car or new phone, use it as an opportunity to help them plan ahead,” Walsh said. “If they are old enough, help them apply for a job and connect their earnings back to their savings goal.”

You can establish an online savings account and help them set up automatic transfers from checking to savings every time they get paid. “For every dollar they earn, encourage them to save 30 cents of it, and don’t put any limitations on the other 70%,” O’Rourke advised.

For teens who aren’t working yet, an old-fashioned piggy bank helps teach the concept of saving. “Spare change adds up quickly,” Reihs Keller said. Tie savings into a long-term goal kids can work for, whether that’s a set of high-end headphones, a car or college.

And don’t be afraid of instilling knowledge through small soundbytes. “Pay yourself first,” is a common mantra used by finance pros. Although cliches like this may elicit an eye roll or a groan, teens are likely to internalize these phrases, even repeating them to their own children years later.

How to pay for college

Why it’s important: “One of the biggest mistakes parents make is not speaking to their children about college costs and who is going to pay for it,” Middendorf said.

With student loan debt in the U.S. at nearly $1.6 trillion, not discussing how to pay for college is a huge oversight that can leave young adults in a financial hole when they should be getting ready to live on their own.

How to address it: “When you’re discussing college costs with your child, be very transparent and share the total investment being made into their education,” O’Rourke said.

If you’ve saved for them, either in a 529 plan or other savings vehicle, start by discussing how much has been put aside and helping them do the math to see how much of their tuition and living expenses is being covered. It’s important for teens to know how much they will need to earn, save, or borrow to make up the difference. Even if the picture is bleak, at least they will be prepared.

Also help them break down the total costs of student loans they might need to take out, and how long it will take them to pay off that debt. Once your teen realizes the financial costs and responsibility attached, he or she might decide to opt for a less expensive school or to spend two years at community college first.

Bottom line

Parents can find teachable money moments every day. You can have a family saving contest, putting money in glass jars to see who can save the most over six months, or have family game nights with old standbys like Monopoly where you can walk them through buying, spending and earning passive income.

Regardless of your approach, you can help your teens build a strong financial base by showing them how to budget, earn and save. Set an example by establishing these good habits yourself, and you may even find your own financial future looking brighter, too.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Dawn Allcot
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Dawn Allcot is a writer at MagnifyMoney. You can email Dawn here

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Cities with the Largest CO2 Output Per Household

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

A warming planet can really burn consumers…financially, at least. Climate change has cost U.S. taxpayers $350 billion over the past decade, according to one report from the Government Accountability Office, and that number is expected to swell to $35 billion per year by 2050.

So which households are to blame? We have found that the carbon footprints of households in different cities varies widely, with households in the West spewing more carbon emissions than ones in urban, denser areas.

For this study, we’ve defined carbon footprint as the combined total annual amount of carbon dioxide produced to support the lives of each member of a household. In other words, every time you drive your car, buy groceries or heat your home, you’re adding to your household’s carbon footprint.

The study analyzes the largest 200 metros in the U.S. by population, and measures the annual average annual metric tons of CO2 emitted, per household.

Take New York City, with a population of nearly 14 million. It’s consistently ranked as one of the biggest emitters of greenhouse gases among U.S. cities, but this study found it has the smallest carbon footprint on an emissions per household basis.

Key Findings

  • Among the top 200 cities that we looked at, Provo, Utah had the largest carbon footprint, spewing a whopping average of 10.55 metric tons of carbon dioxide per household a year.
  • The West dominated the ranking’s top three cities with the biggest carbon footprint, with Ogden, Utah ranking No. 2 — boasting an average annual 10.16 metric tons of CO2 per household. No. 3 was Greeley, Colo., with an annual average of 10.04 metric tons of CO2 per household.
  • In contrast, New York households had the smallest carbon footprint, emitting an annual average of just 5.38 metric tons of carbon dioxide.
  • California is quite climate-friendly. San Francisco had the second smallest carbon footprint, with an annual average of 7.12 metric tons of CO2 per household, followed by Los Angeles, with an annual average of 7.15 metric tons of CO2 per household.
  • In general, wealthier cities with more cars per household had larger carbon footprints, while denser cities had smaller footprints.

Cities with the largest carbon footprints

Our study revealed that cities in the West have the largest carbon footprints. The top five cities with the highest average CO2 emissions per household are:

  • Provo, Utah (10.55 metric tons)
  • Ogden, Utah (10.16 metric tons)
  • Greeley, Colo. (10.04 metric tons)
  • Appleton, Wis. (9.86 metric tons)
  • McAllen, Texas (9.81 metric tons)

Not surprisingly, we found that cities with larger carbon footprints tended to have more cars per household. Transportation is a major factor when calculating a household’s carbon footprint—one study even found that housing and transportation are responsible for more than half of all U.S. household carbon emissions.

Households in Provo which have the biggest average household carbon footprint in our study, own an average of 2.1 cars and travel approximately 25,000 miles annually by car, while only 2% of commuters take public transit. Ogden, with the second-largest carbon footprint, touted similar statistics: Households own an average 2.04 cars and travel approximately 24,000 miles in them annually, while only 2% of commuters use public transit.

Cities with the smallest carbon footprints

In general, dense, urban cities have the smallest average carbon footprints. We found that the top five cities with the lowest average CO2 footprints per household are:

  • New York (5.38 metric tons)
  • San Francisco (7.12 metric tons)
  • Los Angeles, Calif. (7.15 metric tons)
  • Miami (7.65 metric tons)
  • Chicago (7.65 metric tons)

One factor that is likely responsible for cities with relatively small carbon footprints is the widespread use of public transit. Our study found that households in New York City have 1.27 cars and travel 13,000 miles annually (compared to Provo’s household average of 2.1 cars and 25,000 miles of travel). Meanwhile, an impressive 31% of New York City commuters take public transit (compared to Provo’s 2%). The average San Francisco household has 1.66 cars and travels 17,000 miles annually, while only 15% of commuters take public transit.

Another reason for the smaller carbon footprint in big cities can be chalked up to urban density. New York City has the highest residential density score, likely due to the low number of single-family, detached homes in the city. We found that 37% of New York City households were single-family, detached homes, while that number was 67% in Provo and 75% in Ogden. Buildings with multiple apartment units have been known to use significantly less energy than single-family homes.

Why being eco-friendly is financially smart

Going green isn’t just good for Mother Earth. It can actually save you some green, too. Residents in the cities with the largest carbon footprints spent significantly more money on annual transportation costs than those in cities with the smallest carbon footprints. Residents in Provo, for example, spend nearly $16,000 annually on transportation costs, according to our study. In contrast, New Yorkers spend around $10,000 annually on transportation.

Indeed, making the switch from commuting by car to public transit can result in substantial savings. A household can save $10,000 by taking public transit and living with one less car, according to the American Public Transportation Association. It’s also beneficial for the planet; the organization claims that if communities invest in public transit systems, they can cut the country’s carbon emissions by 37 million metric tons annually.

An environmentally cleaner commute isn’t the only way going green can save you money. Cutting down on the energy you use in your home can help, too. Assess how your home is using (and wasting) energy. Sealing uncontrolled air leaks, for example, can save you 10% to 20% annually on your heating and cooling bills, according to the Department of Energy, while replacing your five most-used light fixtures with bulbs that have earned ENERGY STAR status can save you 9% annually on your electric bill.

Other simple steps you can take to reel in your energy bill include regularly examining your HVAC system air filter, reducing the temperature of your water heater to 120 degrees and shutting off lights when you are not using them.

Tips on being more eco-friendly while saving money

There are easy ways you can cut back on the amount of money you spend on energy, while also shrinking your carbon footprint. For transportation, you can:

  • Switch your commute from driving to taking public transit.
  • Bike or walk to work.
  • Carpool with a co-worker.
  • Consider switching to an energy-efficient car.

At home, you can:

  • Adjust your thermostat for when you’re not in the house.
  • Seal uncontrolled air leaks.
  • Switch to LED lightbulbs.
  • Insulate your water heater tank.
  • Fix leaky faucets.

Another way you can have a positive impact on the earth — while also doing yourself a favor financially — is taking a close look at socially-responsible investing.

Methodology

MagnifyMoney analyzed 2017 data from the Center for Neighborhood Technology Housing and Transportation Index.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Sarah Berger
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Sarah Berger is a writer at MagnifyMoney. You can email Sarah here

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Multi-Level Marketing and Military Families: How to Spot a Scam

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Being a military spouse isn’t an easy job. Non-enlisted spouses deal with difficult realities that many Americans don’t understand, from frequent relocation to defacto single parenting during deployment periods. That makes earning an income while caring for a family — especially one with young children — extremely difficult.

With challenges like these, it’s no wonder the unemployment rate among military spouses is 13%. That’s more than three times as high as the unemployment rate among civilian men and women.

Enter multilevel marketing businesses, or MLMs for short, that promote the opportunity to make money selling products directly to others. On the surface, their flexibility and built-in community may seem like a godsend to military spouses looking to bring in some extra cash. But are they all they’re cracked up to be?

How MLMs work

Besides selling your own products, MLMs involve recruiting others to join your team and sell products to the people in their circles as well. With most MLMs, you get a portion of your team member’s profits when someone joins your sales network. As the process repeats itself and your team members recruit sales networks of their own, you may continue to get a piece of the profit from everyone who signs up underneath you.

You can probably name several MLMs, also called network marketing companies, off the top of your head. There are the classics, like Tupperware, Amway, Avon and Mary Kay, along with newcomers like Beachbody, LuLaRoe and Rodan + Fields.

Yet although MLMs have been around for decades (or centuries — Avon was founded in 1886), they’re often a poor investment of your time and money. An AARP Foundation study reveals that 74% of people reported making no money or losing money as a result of their involvement with an MLM. (Investing your cash in a high-yield online savings account would actually be a safer bet, statistically.)

Why MLMs are so popular with military families

Military families in particular are often targeted by direct-selling consultants. Sometimes, this comes from a genuine desire to help military families that are looking for an additional source of income, suggested Anthony Kirlew, financial coach at Fiscally Sound.

Yet others believe the intentions of MLM recruiters may be more sinister. “Military wives are an easy target [for MLMs],” said Melissa Blevins, founder of Perfection Hangover, a small business website geared toward women, “because they’re seeking community, purpose and ways to stay busy and make money while their husbands are deployed.”

MLM recruiters often approach women (military wives or otherwise) with promises to solve the problems they’re facing. For example, a recruiter may show you a flexible way to earn extra cash (often lots of it) with a work schedule that fits your busy life. Plus, if you move, you don’t have to start over. You can take your direct-selling business with you.

The targeting of military families has a lot to do with the transient nature of military service, said Peter Marinello, vice president of the Direct Selling Self-Regulatory Council for Better Business Bureau (BBB) National Programs. “I think the military community is very vulnerable to direct-selling opportunities and a lot of different kinds of scams.”

This frequent relocation can also lead to loneliness among military spouses, and MLMs offer to help those who are seeking new friendships. But Blevins, who had her own negative experience selling for Beachbody, warned the friendships you make when you join an MLM may not last once you stop participating, and you run the risk of losing your existing friends if you start bombarding them with sales pitches.

The difference between a legitimate opportunity and a scam

You’ll find people who are superfans of multilevel marketing programs and others who despise MLMs as a whole. Perhaps the truth lies somewhere between these two extremes.

Marinello confirmed, “There are a lot of good MLM opportunities out there. They are not all scams.” But they require due diligence before signing up. To properly vet an MLM, Marinello suggests reading income disclosures to “see who’s making money [and] at what level.” You should also review compensation plans and rely on outside resources to help shape your decision.

If you want to learn more about a specific direct selling organization, the following ideas may help:

  • Check with your state attorney general for complaints before signing up for any networking marketing opportunity.
  • Search online to see if any lawsuits have been filed against an MLM before joining — such as the FTC’s settlement with Herbalife or the more recent lawsuit brought against LuLaRoe by the Washington state attorney general.
  • Talk to former consultants or search online for the opinions of people who once joined a particular MLM but ultimately left.
  • The BBB Institute for Marketplace Trust sponsors the Military & Veterans Initiative — a program designed to help veterans, servicemembers and their families avoid scams.
  • The Direct Selling Self-Regulatory Council (DSSRC), a collaboration between the BBB and the Direct Selling Association (DSA), is another solid resource to use when vetting MLMs.

How to spot a pyramid scheme

Some MLMs are pyramid schemes in disguise. A pyramid scheme may look like a legitimate network marketing opportunity on the outside. But there are key distinctions that could waste both your time and your money if you fall for it.

  • You don’t earn money by selling a legitimate product or service.
  • You’re trained to focus primarily on recruiting new team members underneath you.
  • Financial statements from the company either (a) are not available or (b) show that the MLM earns most of its money from recruitment instead of sales.
  • The commissions you earn come primarily from money paid by new team members themselves, not outside sales.

Working for an MLM is not a quick fix to your financial struggles

The reality doesn’t always live up to the hype where MLMs are concerned. Some MLM participants are quick to over-promise your chances of success in an effort to add a new team member to their network.

In reality, most people who join MLMs don’t earn the enormous sums of money often advertised by salespeople. AARP’s study found that nearly 21 million Americans have participated in an MLM. Yet only 7% earned over $10,000. Fewer than 1% earned more than $100,000.

Even those who do manage to make some money through MLMs may have to work much harder to earn that income when compared with other jobs. A MagnifyMoney survey finds that the vast majority of multilevel marketing participants earn less than 70 cents an hour.

Kirlew also advised approaching MLMs with the right mindset. “While MLM’s are pitched as a great way to earn extra income, people should know it’s not like a part-time job, but rather a part-time business.”

“If someone has a need for immediate income,” he continued, “I would recommend a part-time job and not an MLM.”

Most businesses don’t succeed — including MLMs — Kirlew pointed out. “The extra added pressure of trying to meet short-term financial goals is usually not a good combination with starting a new business.”

If you’re already in debt because of an MLM investment or other financial missteps, there are a number of tools you can use to improve your situation. This guide detailing financial resources for veterans in debt is a great place to start.

Seven red flags to look for before joining a multilevel marketing team

  1. Beware of MLMs that require a hefty buy-in. If you’re asked to put up a large upfront amount to join, Kirlew said it could be a sign of a scam.
  2. An aggressive sign-up pitch is cause for concern. Kirlew advised looking out for “high-pressure sales tactics to get you to sign up” when you’re considering an MLM. If someone tells you to “act now” or lose out on an opportunity, you should probably walk away.
  3. Proceed with caution if a company won’t buy back unused products. If you purchase product to stock your inventory and don’t sell it all, some MLMs offer to buy your unused product back. Mary Kay, for example, will repurchase product at 90% of the original cost for up to one year after purchase. MLMs that won’t rebuy your unused products should be avoided.
  4. Watch out for companies that require you to continue purchasing inventory after your sign up. The Federal Trade Commission (FTC) warns if you have to buy more products than you can sell in order to stay active in an MLM, you should hang on to your money.
  5. When an MLM focuses on recruitment, not sales, it could be a sign of trouble. Marinello said, “Anytime you hear a sales pitch that’s recruitment heavy and not focused on selling the product, I’d be very wary.”
  6. If a company promises a huge return on your investment, be on guard. Extravagant income claims made by a salesperson, particularly in the social media space, may be a warning sign, Marinello advised.
  7. You should also be on guard if an MLM company promises “miracle cures” for buyers. The FTC recommends avoiding any companies that make claims of “miracle ingredients” or “guaranteed results” where health products are concerned.

The bottom line

While some MLMs may offer the flexibility and community military spouses crave, don’t make any rash decisions and do your homework. Kirlew also advised that you trust your gut instincts before signing up.

“If something doesn’t feel right,” Kirlew said, “it is either not right or not right for you.”

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Michelle Black
Michelle Black |

Michelle Black is a writer at MagnifyMoney. You can email Michelle here