Unemployment rates have become big news in the news world. They are critical to overcoming the recession and everyone should realize that the United States has an unemployment rate approaching (if not over) ten percent. For my children, they have never known such an incredibly limiting and worrisome time in their lives in terms of jobs.

What is interesting is the effect this is having on them. After graduating college, will they find a job? What happens if a loved one loses a job and how can that affect day-to-day life? My daughter brought to attention this over dinner. She asked, “How exactly does unemployment work? Why are rates so high right now?”

This was a loaded question for sure and I took the opportunity to offer a few lessons on what happens when the unemployment rate gets very high. Here is how it played out.

I asked my daughter what she knew about unemployment. She said, “It’s when people do not have a job. I know that sometimes they can get benefits from the government, but what about finding a job? Why is it so hard right now?”

We decided to postpone the discussion until later and then we both headed online for a bit more information and research. I wanted to show her real reasons why unemployment rates are up. We talked about a variety of factors:

• We discussed the enormous job losses in many Midwestern communities due to factory shut downs. In our area, car manufacturers are closing plants because people are not buying American vehicles because of the higher costs.
• We talked about the financial sector and the recent financial scandals Wall Street and the banks are dealing with.
• We talked about how lenders are concerned about the lack of actual loans offered by banks because of the high number of defaults since people do not have the money to repay the debts.
• The subprime mortgage crisis came up too. We discussed how many lenders mislead people into adjustable rate loans who ended up unable to afford those loans and later would foreclose. I explained what foreclosure was. She pointed out that she passes a home on the way home each day that she thinks is in foreclosure.
• We also discussed what a recession is in general. I told her about how most recessions are syndical and that they almost had to occur, but how this particular one was much more significant. We did talk about the Great Depression for a few minutes, and I noted that the country was unlikely to head into such hard times now.

Of course, the next conversation centered around fixing the situation. As a mother, I wanted to offer a one size fits all, easy as pie type of answer to her questions.  I wanted her to know there was an easy solution, though there really isn’t.

We discussed the options out there and about the federal government’s use of fiscal policy and stimulus funds to help boost the economy. This was valuable information to her because she had no idea just how important these programs were.

Overcoming Concern

One of the most important factors for parents is teaching kids about the hard lessons, times when there is not a simple solution to fix financial difficulties. I wanted my daughter to know that she could protect herself in the long term by making wise financial decisions throughout her life. She understands the value of getting a solid education and I reinforced with her the value of working hard to be financially independent. Sure, it might be easier for her to head out and boost the economy with some spending, but it is just as important for her to protect her long-term interests.

She asked how in the world this family friend could retire from work at age 55. With life expectancies longer now than ever before, funding retirement for 30 or more years can seem like a daunting task. It was a good question. How can someone retire early?

Talking about Retirement Accounts

In our family, we have made it a point to talk about how to save money and how to budget wisely. I’ve shared many of those stories with you. While we have talked with our children about things like college savings and credit card usage, we have never really stressed the importance of retirement accounts.

I decided it was time to talk about what this was. My rationale was simple. My children needed to know the importance of putting money into retirement accounts, even at a young age, so that they made this their goal while working. I did not want them to grow up to work to pay the bills. I wanted them to work to fund retirement and have the things I wanted. But, how do you talk about retirement to teens and slightly older kids?

My daughter asked what the difference was between a savings account and a retirement account. I explained that most types of retirement accounts had tax advantages. Most allowed people to put money away specifically for retirement without charging as much task.

We talked about how to start a retirement account. She is not yet out of school so she has yet to have to learn about 401k’s and other employer sponsored accounts. We discussed how anyone can open an account if they use an Individual Retirement Account, or IRA.

She asked one question I found somewhat difficult to answer. When should she start a retirement account? The answer to this depends on many other situations.

• Did she have money to put aside for retirement?
• Did she have at least six months of funds put away to cover a job loss (after she began working.)
• Did she want to put money away now or did she have other financial goals to work towards first, such as paying off student loans or other obligations?

We were not only talking about these questions right now but how they may apply in the future. Once she began working, opening a retirement account made better sense than worrying about it right now.

One last thing that I did with her was to use a retirement calculator I found online. I punched in some basic information and we got to work. It showed how much money one would have after investing various amounts each year. I felt it important to teach her the importance of time when it comes to planning for retirement. I left the discussion about risk and stocks and bonds for another day, but focused instead on the concept that the sooner you start planning for retirement, the less time you would have to work to reach it.

It is important to talk to your children about retirement. Even if they are not ready to start investing in it right now, they are ready to learn more about it and they need to know, often, that you are concerned with retirement, too. I found that she needed to know that I take retirement planning seriously and that she should too.

My daughter is not yet ready to start putting money away for retirement. However, in the coming years, we will talk more about it and it is likely that she will open a retirement account early on. Doing so means she will need to work less to achieve her financial freedoms and goals for the rest of her life.

Credit CARD Act

Congress has stepped in and helped to make these decisions a bit more clear. Today, a child under the age of 21 must have a parent or guardian help them to obtain the credit card. The Credit CARD Act was put in place to help curb the number of young adults who get into financial trouble at a very early age due to poor spending habits. Now, a parent or guardian must cosign on that credit card before the teen can get it.

This is a good thing in most cases. Enter my son’s friend, Jake, who was 18 when he first received his first credit line a few years ago. My son told me one day that Jake had managed to buy himself a motorcycle on credit and was struggling to pay his debt back after losing his low end job. Not only had Jake struggled to meet this financial need, but he also had a hard time getting a college loan he could have qualified for because he had caused his credit score to drop. He owed too much money, more money than the bike was worth, too.

• My son and I had a long talk then about credit card usage. Specifically, we talked about ways to help start a strong financial future without running into problems that Jake had. Here are some of the things we talked about and how we approached the topic.
• My son asked if it was wise for him to get a credit card to help him to build a credit score. He said, “you can trust me to make better decisions than Jake.” I did trust him, but I knew temptation was a big factor.
• We discussed what he would use such a credit card for, “not big purchases like Jake did, mom.” Rather, he suggested that perhaps he use it to pay for gas for his car and nothing more. He could easily pay that credit card balance off in full each month.
• We talked about how else to build a good credit score, such as making payments on his vehicle (which he is named as the owner of and holds the loan with a cosigner on) and how he could minimize risk to his credit score by not requesting numerous loan offers.
• My son brought up the fact that a secured credit card could be a good idea for some teens who would otherwise not be able to establish their credit rating. These credit cards require a deposit be made to establish the credit limit. This way, the teen could not get into too much trouble financially.
• My son then came to the realization that it would like be 10 years before he wanted to get a home and therefore he was not too concerned with improving his credit score right now. “Why should I pay interest to someone else when that money could be in the bank earning money for me,” he said.

As you can see, we are lucky in that our son has a strong financial background and understands the importance of maintaining a good credit score while also using credit cards wisely. However, it is important to also understand what their needs and desires are. By simply having a conversation with your son or daughter about credit cards and the consequences of using them poorly, you can really see what their opinions are and correct them.

Whether you believe kids should have credit cards or not is a decision you need to make. However, the new laws make it the parent’s job to talk to their child about credit cards before agreeing to cosign for one.

What You Need

Before buying a wide range of items for college, here is what we did before spending anything. We contacted the college itself and spoke to someone who manages the dorms. What great information they provided to us. They told us exactly what was in the rooms and what was recommended purchases. We knew these were likely the bare minimum. We also found out there were a range of items not allowed (some of which line those shelves in the store!)

From there, we created a list of items that we thought were important for her to take to school and things that were just needed in general. Here is a look at some of the decisions we made, together. Keep in mind, my daughter and I agreed to split the costs on some items, since this was her official start to adult life. Who purchases the gear in your family is really up to you, but we agreed she would pay for some items.

• A Computer: One of the essentials today in college is a laptop. This is where we spent the most of our money. To save on the laptop, we invested in a quality product (with a warranty) and we shopped around extensively. We paid less attention to the name brand and more attention to the features and warranty. However, we did not overbuy.
• Bedding: This was an important one because although the school provided us with a mattress and the actual bed, she did not have bedding for it. We found some great bedding sets for teens, in the sales available. We also shopped online to find savings. Also, our college mattresses were extra long twins, which you need to buy special sheets for. Check on the bedding sizes.
• Chair: A desk and a traditional style chair was provided by the college in her dorm room, but she wanted to have a butterfly like folding chair to relax in. She also considered a beanbag style chair. We found some good pricing options available though, especially when we shopped at the local sporting goods store.
• Supplies: We purchased as many of the school supplies as possible before she headed to school. This included notebooks and pens, and all of the other small items she needed. The reason for this is that most college bookstores are incredibly expensive. We also found at least one of her college textbooks at a discounted price.
• Electronics: This is an area where we saved significantly. My daughter was taking most of what is already in her bedroom with her to college, such as her radio and television. She has an MP3 player as well. However, if you need to buy these items, shop the sales and keep all items small. There is not a lot of space in most college dorm rooms for bulky items.

Keep in mind that there are many things you may not need when it comes to buying college gear. Focus on the options you do need and then allow your child to pick out and pay for those items that he or she wants to take with them that may not be necessary or needed. The good news is that most of this gear can be inexpensive if you buy during the pre-school sales season.

One of the first questions to ask is, “who is going to pay for school” and follow that up with “will parents contribute to the child’s college education.” These two questions are going to have differences no matter who you are and what your college goals are. As parents, we have looked at numerous factors here.

• Should a student pay for his or her own education since this is the start of their adult life?
• Should parents help students?
• Should parents pay for their child’s education outright?

It is up to you to determine where you fall in this scale. No answer is the wrong answer, but it needs to be the right answer for your particular family’s needs. In talking with my child about college costs, we discussed what one of her friend’s families had done. That family has turned to the Parent PLUS loans.

Here is the breakdown of what this loan option offers:

The Parent PLUS Loans are federal loan programs given to parents, rather than students.

• Parents are responsible for repayment of these loans, not the student. Guardians can also qualify for these loans.
• Those with good credit should apply (there can be some stipulations on who will qualify for these loans.)
• The interest rate on Parent PLUS loans is significantly lower than what is available for private sector loans. It is a fixed rate and it may be tax-deductible interest as well.
• These funds can be used to pay for virtually all college educational expenses your child has.

Are these loans right for you and your family? If you would like to pay for your child’s college education but you have not saved the funds previously, this may offer you the opportunity to do so. However, it is important to keep in mind that you, not the student, is responsible for repayment of the loan. It is in the parent or the guardian’s name, not the student’s name. For some people, this can be financially difficult to manage.

There are key benefits to using the Parents PLUS loan rather than using other types of loans. For example, some loans have a significantly higher interest rate than this federal loan program. Further, for college students that do not qualify for other loans, this type of loan can be an ideal investment.

Before investing in these loans, keep in mind that your child may still qualify for other options. For example, your child may qualify for other PLUS loans or other federal student loans. Scholarships and grants can also help to offset the amount of money that you need to borrow to cover your child’s education in the long term. In addition, you do not have to borrow the full amount of tuition.

Parent’s PLUS loans can help you to pay for school for your child if you decide this is the route to take. Before taking on this financial difficulty, talk to your child about the financial responsibility you are taking on for their education. You also want to ensure that you can afford to make these sometimes high payments. Overall, it is critical to consider all types of loan options before making a commitment. This also includes private sector loans, which currently have some of the lowest rates available.

You do not have to pay for your child’s college education. Numerous programs give students affordable loans they do not have to repay until after they are out of school.

While I will provide some information about our decisions here, please note that it is up to you to make decisions right for your family. However, this conversation is necessary for nearly all parents and children who are thinking about college. We sat down to discuss our options and we considered the various ways we could help without turning into that never-ending ATM machine!

Who Will Pay for School?

One of the first things we brought up as a family is the expectation that mom and dad would be paying for college. Regardless, of if, we could afford to do so with several children, we felt that college was the start of our child’s financial future. Therefore, while we would offer help and support, we wanted our children to know that a blank check was not being written for their college education. Here are some of the topics we discussed, and you might want to discuss, with your children.

Our children have goals and they know which schools offer the best education for those particular goals. Therefore, we decided that we would focus on finding the best school for each child, without regard to the costs unless more than one school was an option.

Our children have focused on their education for some time. They may be able to obtain scholarships from some of the activities they are active in. We decided as a family to spend lazy Sunday afternoons applying for scholarships. Further, we found out that the high school guidance counselor was an outstanding resource for information for seniors on scholarship information.

We did some investigating to learn about the options in school loans. In short, there are several options:

• Federal Stafford Loans
• Federal Parent PLUS Loans
• Private Student Loans

Federal Stafford loans offer most students some financial aid, but often need to be supplemented with other financial aid options. These US Government loans are available as both subsidized and unsubsidized options, of which students qualify based on financial need. The interest rate is low and students do not make payments until they are out of school (after six months.) There are no credit checks involved. The amount received is based on need and what the organization determines students and parents should cover.

Federal Parent PLUS Loans are a bit different. Here, the parent can borrow the funds for the student’s education from a federal government loan program at a low interest rate. However, rather than the loan being in the student’s name for repayment, it is the responsibility of the parents. In other words, if you want a low cost way to pay for your child’s college education, Federal Parent PLUS Loans may be the route to take. You can borrow the full cost of tuition minus any other financial aid the student receives. However, parents will have a credit check done and you will need to qualify for the loan.

The final option is private loans from non-governmental lenders. These loan options can be a good thing, especially right now where the interest rates on loans for home equity and other secured loans are so low. You will need to compare your options from several lenders to learn about qualifications, limitations and interest rates.

Financial aid options for our children have been something we have thought about for some time. It can be hard to make the decision on how college education will be paid for however, it is a decision to make with your children. Talk about the options available, the costs and the commitment to repaying the debt. When you do this, chances are good that you will come to a good conclusion for all involved.

How did this topic come up? During the warmer weather days, I often feel like I am being asked for money left and right for one or another thing. I do want my kids to head to the museum for a Tuesday afternoon or to have fun with their favorite download, but it can get expensive. Even if your child is paying for these costs themselves, it still adds up. Therefore, after being asked again about money, I decided to investigate some of the student discounts available.

Student Travel Discounts: Students who travel back and forth from college can save money by using student discounts. For example, the company STA Travel offers student discounts for trips around the world. This is a fantastic option for students who are studying overseas or who want to spend their summer break touring Europe.

Apple: If your child downloads music, uses computers or needs a new MP3 player, one of the best routes to go is through the Apple Store. Online and local stores offer discounts for college students. The program is called Apple Store for Education since schools get a cut of the savings, too. This is a simple and easy way to save money on electronics. Also, note that Dell and HP offer student discounts on purchases, too.

Microsoft: If your student is like mine, he has to have the most up to date software programs on his laptop but that gets expensive. I learned that Microsoft offers discounts on their Office products for a limited time after their initial release. All your child needs to do is to have an email address through the school (ending in .edu) to qualify.

Banana Republic: This popular clothing store among teens is a great tool for savings, too. You can even use the 15 percent discount that college students get on top of storewide sales. You will need to show your student ID card to get the savings.

BulkTix.com: This organization may allow your students to save significantly on movie tickets. You can often find promotional codes for the company too. You do have to buy tickets in bulk, which is a minimum of four tickets, but the savings adds up.

Finding More

This is a good place to start if you are looking for great student discounts. However, what you may not realize is that there are plenty of other options out there. Most of these are temporary offers and promotional codes, though. If you are interested in learning about the latest savings, visit StudentBuyingGuide.com where it is updated with the latest savings options available to your students.

Keep in mind that student discounts do change from time to time. You will either have to have a proper email address showing you are a student or you will need to show your student ID to quality for these discounts. Parents, let your kids buy these items in their name rather than trying to do it yourself. I found that it is easier and faster if my student’s name is on the payment slip rather than mine! Nevertheless, this is an excellent way to cut a few dollars off the cost of your day-to-day expenses, if you have a college student!

So, we both decided to find out what was behind the value of the dollar. We found some interesting facts about it, too. For one, we found several reasons why the dollar was worth much less than other currencies:

• The United States has a great deal of debt, which means that the country owes foreign countries a lot of money.
• With debt rising, this may force the United States to raise taxes, which in turn could make the dollar less valuable.
• Investors play a big role in what the dollar is worth. In fact, the dollar’s value is based on the same thing that any other asset’s value is: what someone else will pay for it. As investors are willing to pay less for the dollar as an investment, its value falls.

How is the value measured then? I explained that the value of the dollar is most commonly measured against the value of other currencies through the exchange rate process. The exchange rate compares the value of the US dollar to the value of other currencies. What was hard for my child to understand was that currency values change every day. To get a good idea of the value of the currency over the span of a few weeks, we checked out some sources online. We found that the US dollar may be worth less but that there was a lot of movement in value.

Safety and Risk

One of the aspects we learned about the US dollar’s value was that risk plays a significant role in the process. Of all of the major currencies, there are two that investors considered to be the safe place to be, the United States dollar and the Japanese yen. The euro, which is a currency used by many nations in Europe, is one of the riskiest currencies for investors, especially right now because of the turmoil in the financial markets in the euro zone (the countries that have the euro.) Other currencies, including the Canadian dollar, New Zealand dollar and the Australian dollar are very much valued based on the global economy. These currencies rise in value when the economy is doing better because their economies are based on the production of goods. Some countries, such as China, have currency values that many believe are influenced by the government.

After reviewing a few months of currency fluctuations online, we learned that the US dollar has gained value against the euro, which is it commonly compared to, recently because it is a safer bet. Investors will not make as much with the US dollar, but they are less likely to lose a lot of money either.

In the grand scheme of things, my child learned a few important points.

1. Being a huge economic factor in the world does not mean that the value of the currency is going to be the best.
2. Safety is an important part of the value of any investment. Safer currencies are often worth less.
3. Currency values change widely but watching the currency news is a good way to learn about the ups and downs.
4. The value of the dollar is often measured by three things: the value of Treasury notes (the amount of money the government owes,) exchange rates and the amount of US dollar held by other countries.
5. The dollar has lost value over time, but in recent months has increased in value as investors turn to the safety of it over other currencies.

The complex process of economics and currency valuation is not a topic for all young adults, but it can be an interesting conversation piece over dinner. I have even seen my daughter tuning in to learn more about the various occurrences around the globe that are affecting the value of the currency. Make this a conversation you have with your children. Talk about the way that the US dollar is seen around the globe.

Discussing Unemployment

One of the most important things to give children is safety, but I have found that this is something you cannot always easily do. In fact, it has become very clear to me that the process takes much more than just providing them with shelter and food. It is in discussions about topics like this that I feel my children are looking for reassurance that this will not happen to them. In reality, I could make no promise of that.

Therefore, I decided that they needed to understand the process of unemployment, as well as what it would mean to them if they ever stopped working. Here are some of the most important topics we talked about.

• My daughter asked if everyone gets unemployment. She said, “If unemployment is available why don’t more people just quit their jobs to get it?” We talked about how unemployment is a backup plan for situations when people who lose their job through no fault of their own can obtain financial aid. To clarify, we talked about how those who are fired for doing a poor job do not qualify for it.
• We discussed the amount of money people get through unemployment as well and how the amount is usually much less than what they would be making if they were to be at a job. This seemed to perplex her, especially since she thought everyone would receive the same amount. We talked about the application process that allows for people to provide documentation of their wages and a reason for their job loss. Then, we talked about how caseworkers determine how much unemployment compensation people get based on what their income was.
• My son asked if the rules about unemployment were the same everywhere. We learned that each state has their own rules on unemployment compensation. Local bureaus and offices are available for people to use.
• My children were not surprised to learn about the time limits on unemployment compensation. My son said, “Well, it makes sense to limit how long people can obtain unemployment. Some might just keep taking it.” However, they were both very concerned over the fact that in a poor economy, like the one we are in right now, that unemployment might run out before the person gets a new job. We talked about the unemployment extensions that the government has recently used, too.
• I talked to my children about the responsibility of someone who is unemployed to get a job. We discussed how most states require individuals to show they had applied to various jobs each week.

In short, we discussed the process of applying for unemployment through local offices and the process of reporting each week. At the end of the conversation, we also talked about things they could do to ensure they would not be faced with financial difficulty if they did lose their job some time later in their life. For example, we talked about having three to six months of expenses put away in a Certificate of Deposit or savings account for emergencies like this. While my children are still young, I found the conversation about unemployment to be one that was very important for their financial futures. I stressed to them that they might be unable to control everything that happens to them, but if they have good financial skills, they can overcome virtually anything.

The subject came up the other day as I watched by older teen create a sandwich, filled with virtually every type of lunchmeat he could find, plus all of the condiments and veggies he needed. I did not think he could finish it, but within a matter of minutes, it was gone. I asked him if he thought he needed to consume that much at one time to which he replied, “I’m just hungry.”

Our conversation later progressed to the cost of food, though we are not the type to limit how much he can eat, I still thought this would make a great opportunity to learn about food. I learned that he also spent money grabbing snacks while he was “on the road’ to and from work. Have you ever thought about your teens and the amount of money they could be wasting on the grocery bill?

Is Money Spent on Food Okay?

I spend a good amount of time educating my children on money matters. Everything from credit cards to going to college to finding the best way to tell them that their expensive cell phone bills needed to stop. But what about food?

I decided that the first step was to teach my kids about the cost of food. I wrote out a list of groceries that I commonly purchase (including all of those sandwich ingredients.) I asked my son to list what he thought each item cost on the paper. Then, I gave him money and sent him off to the grocery store. What he found was that there was a great deal of difference in what he thought. With college quickly approaching, it makes sense to educate kids on how to eat right as well as how to spend money on food properly.

Saving Money

While educating kids on the cost of food is important, it is also very important to teach them how to save money while shopping. The next week, my son and I went to the grocery store together. We wanted to find ways to save and, led with his help, here are the tips we can share from our experience.

• Coupons are a no brainer. Why spend an extra dollar when you do not have to, says my son! Watching a television show, we clipped coupons and got to talk a bit too, one night.
• My son signed up for his own bonus card, offered by the grocery store as a way to save on purchases there only. He was shocked to learn that not everyone received the sale prices, that you needed to have a special card to get them.
• We also compared products properly. We looked at name brands compared to generics. We looked at the cost of frozen and canned products against fresh (though we are proponents of fresh living.) We did find a great farmers market for lower prices than our grocery store.
• We bought products based on needs and not all of the junk food that commonly costs more. Interestingly, my son said, “I really don’t need two bags of chips. Really, we can buy twice as much fruit for a bag of chips.”

It is these hands on experiences that I find are more fulfilling to me when it comes to educating my children. Although your experiences may be different, by simply including your kids in the education process you can help them to learn the true cost of what they are eating.