Kids aren't getting much in the way of financial education at school, and if parents don't step up, they're going to get even less in the summer.
According to a white paper put together by the Consumer Financial Protection Bureau, just 22 states require high school students to complete an economics course before graduation, and just 13 require any kind of personal finance schooling. That's leaving a lot of kids unprepared to make basic financial decisions when they reach adulthood.
"We have not taken a position on whether [personal finances courses] should be mandatory, but we know teachers think it should be taught in schools," says Gail Hillebrand, the CFPB's director of consumer education and engagement.
But even if it became a mandatory high school class across the country, it still wouldn't be enough -- Hillebrand says that starting personal finance education in high school is too late. So with summer upon us, we suggest parents of tweens and teens take the reins and start teaching their kids about money.
There are a lot of ways to go about this. One is a summer job and a bank account, which should hopefully impart the importance of saving part of a paycheck. Another, more expensive strategy is to ship your kids off to one of several financial literacy summer camps.
But if summer jobs are hard to come by and you can't afford to send your 12-year-old to investing camp, there's an easier way to impart some basic financial lessons: Take your kids back-to-school shopping.
"I think if you can bring this down to needs and wants, then maybe that's the way to break it down for middle school kids," says Michael Eisenberg, a Los Angeles CPA. "What is it you need to have for school, and what is it that you want to have for school?"
Andrew Corrado, a senior vice president at Capital One and an active financial literacy mentor, echoes the notion that back-to-school shopping can be a good way to teach the basic budgetary concept of needs versus wants.
"As an adult, you have opportunity to sit down and say 'We're going to build a budget your back-to-school shopping," he says. He recommends that you allocate a fixed amount of money to your children's shopping budget, and then work together to figure out what they can and can't buy with it.
Both experts agree that middle school is a good time to start working with your children in this way, and both also say that it should be a guided process.
"I would have them go online, do comparison shopping and present to me what they want to buy," says Corrado. "I would never set them out at that age to make purchases on their own."
But that comparison-shopping experience can be even more educational than a solo trip to the mall. For kids used to having their parents buy them everything, it can be an enlightening experience to learn that shopping around and using some basic price-comparison tools can make your budget go further than expected.
Solo shopping trips and lessons in credit management may still be a few years off. But it's never too early to turn your kid into a penny-wise, budget-conscious shopper.
The Must-Have Tools to Guarantee You Get the Best Price
The Easiest Way to Teach Your Kids About Money This Summer
Sure, you could click through all your favorite e-commerce sites looking for the best price. But who has time for that? A few services do the legwork for you, instantly searching for your chosen item across a wide variety of retail sites. Two of the best are Google Shopping and PriceGrabber.
Google (GOOG) performs well in head-to-head tests between the two. Its interface is clean and intuitive, and -- as you might expect from Google -- the search tool is a bit better. For instance, when I searched for "season 2" of a TV show on PriceGrabber, it didn't find what I sought until I changed that part of the search string to "season two." Google Shopping had no such issues.
But Google has one big disadvantage: Due to its new policy of making merchants pay to have their wares listed in the search results, it doesn't list items from Amazon (which declined to pay up). It's hard to recommend Google's price-comparison tool when it excludes the biggest e-commerce site.
So both services have their advantages and disadvantages. For now, we suggest running your search on both sites.
Price-comparison sites are great if you're doing research on a computer before you make your purchase. But if you're in a store and something on the shelf catches your eye, your best bet may be to use a barcode-scanning app on your smartphone to make the relevant price comparisons.
As I noted in my roundup of the best showrooming apps, both Google and Amazon (AMZN) offer good barcode scanners, and Google in particular wins points for its ability to recognize books and DVDs by their covers alone. But the exclusion of Amazon hurts Google here as well, and Amazon's apps are, of course, limited to its own offerings. As such, our favorite is one of the original players in the barcode game: RedLaser, offered by eBay (EBAY).
It's also worth noting: Some retailers are trying to confound such apps by sticking their own barcodes over the originals or by offering "exclusives" that are just the same product with a slightly different model number. In such cases, manually search for the name of the product ... and then take your money to a business that doesn't try to trick you into overpaying.
FreePriceAlerts is a free browser extension that heroically dives in at the last minute to save you from overpaying.
Consider it a fail-safe of sorts: Maybe you forgot to use a price-comparison site, or maybe you simply didn't have time to do a bunch of research. In either case, FreePriceAlerts does the work for you. When you navigate to a product page on a compatible e-commerce site, you'll get a pop-up in the corner of the screen letting you know there's a better price on the same product elsewhere (or a check mark, which signifies that you've found the lowest price). When I went to check out a video game on Amazon, it told me I should instead go to Buy.com, where I would pay $26.71 instead of $31.50, a savings of 15%.
One caveat: It doesn't take tax and shipping into account when it makes its recommendations, so you'll occasionally be directed to a site where the final cost is actually higher. As such, your best bet is to do your research first on Google or PriceGrabber, which will show you the bottom-line price. But it's still a great tool to save you from spending too much on an impulse buy.
Most e-commerce sites now have a "discount code" field on the checkout page, but finding a code to use there can be a bit of crapshoot. For a while your best bet was to run a Google search for "[retailer name] coupon codes," or check out a dedicated couponing site like RetailMeNot.
But now a couple of browser extensions are taking some of the guesswork out of this process. Install the Chrome extension Honey and a prominent orange button will be displayed on the checkout page of more than a hundred participating retailers. Click the button, and it will automatically test out several coupon codes and apply the one that provides the biggest savings. With Coupons at Checkout (offered by CouponFollow), you just click inside the coupon code field and you'll get a drop-down menu of possible codes, showing both the percentage-off and the success rate of other users who tried that code. Honey is available only for Chrome, while Coupons at Checkout works with all major browsers.
Even if you don't find a code that works, it's still nice to get some reassurance that you didn't miss out on a potential for savings.
What happens when you use the available tools to find the best possible price, and it still isn't low enough? Well, then you'll have to play the waiting game.
Given enough time, most products will eventually come down in price. But waiting until an item falls into your price range can be time-consuming and frustrating -- nobody wants to run a search on PriceGrabber every week just to see if that video game has dropped below $30. And a weekly search might not even be enough, as a price drop or sale sometimes only lasts for a day or a few hours.
Fortunately, there are services to help. ShopAdvisor lets you set up email alerts on specific products that let you know when they drop in price. It also has a free mobile app that lets you scan barcodes of items you find in stores to add them to your watchlist. FreePriceAlerts, in addition to alerting you when you're about to spend too much on an item, also has email alerts and a free mobile app. In both cases, you get a heads-up when what you want to buy is finally cheap enough for you to pull the trigger.
Even if you've done everything right -- shopped around, checked for coupon codes and analyzed whether a price drop is imminent -- you can still get burned by a price drop or sale that takes place right after your purchase. But some credit cards now offer automatic protection against post-purchase price drops.
The most prominent of these services is Price Rewind, which is offered on Citi (C) credit cards. If you make a purchase with your Citi card and then a lower price turns up within 30 days, Citi will pay you the difference. The new price must be at least $25 lower, so in all likelihood this will mainly be used on bigger-ticket items like electronics. What makes the program particularly notable is that Citi will check for lower prices on your behalf and send you the discount automatically if it finds a better offer. It stops short of guaranteeing that it will find a better price, though, so we'd suggest setting up a price alert and making a claim if you find a deal that Citi doesn't.
There are a few other cards that offer this sort of purchase protection -- the Chase Sapphire Preferred offers a 90-day guarantee, though the Chase (JPM) card has a $95 annual fee after the first year. As far as we can tell, Citi is the only major issuer offering price protection on its full line of consumer cards, which means you can get this service on a card with no annual fee.