This Year Give the Gift of Personal Finance Education
As “Black Friday” approaches, the personal finance blogosphere is exploding with ideas about where and how to find the best deals in holiday shopping. So, Mr. ToughMoneyLove thought he would chime in with his own, slightly contrarian suggestions on how to shop for Christmas gifts this year.
If you are part of a family with a history of holiday overspending and have struggled to find an escape route, 2008 has brought you a little gift buried in all of the bad news. Just tell your family and friends that you must cut back to prepare yourself for the deep recession that has begun. Who can be offended by that? Think about it – this is an ideal year to bring reason and accountability back into your financial life, including your Christmas shopping.
Mr. ToughMoneyLove is not insisting that you go gold turkey and stop giving entirely. As a compromise position, I suggest gifts that keep on giving: personal finance education. Mr. ToughMoneyLove has some strong feelings about the need for personal finance education in our country. I even have some recommendations for reasonable personal finance education gifts that you can give to people of all ages.
Let’s start with one of my favorite personal finance books for adults of all ages: “Spend ’til the End” by Larry Kotlikoff and Scott Burns. This book explains the lifelong financial planning concept of consumption smoothing. It is not filled with standard saving and investing advice repetitively found in most other investing and personal finance books. I have read many of those books and Spend ’til the End has information and cutting-edge guidance that you will not find in any of them. There is a link to the book and reviews at Amazon in the right sidebar.
For the teenager and younger adult, I suggest a subscription to Young Money magazine. Young Money comes from the publisher of Money magazine which I have enjoyed for many years. Money is geared primarily to baby boomers and the generation behind. Young Money makes a good step down in age demographic. You can get more information about the magazine at the Young Money website or you can use the Amazon link in the left sidebar.
Younger children probably aren’t going to understand or appreciate books about personal finance. For them, I suggest opening a goal-based savings account for them at SmartyPig. SmartyPig is an online savings account that makes it fun for the child to monitor the progress of the account and easy for you or other family members to add to it.
Another option for a child that has some knowledge of businesses and their brands is to buy them a share of stock in a familiar company and give the child the actual stock certificate. This is a teaching opportunity for you about investing for growth One source for stock certificates as gifts is OneShare.com. The link is in the left sidebar.
If you are in good shape financially and want to upgrade your gift for someone who is serious about investing and retirement planning but needs serious advice and help, I have two suggestions. You can give that person subsciption access to Financial Engines or to ESPlanner. Financial Engines uses patented algorithms to provide automated investment and portfolio analysis. What is unique about Financial Engines is that it also gives very specific recommendations for changes or additions to your portfolio. I am a regular user of Financial Engines and recommend it highly.
ESPlanner can be used as a financial planning software companion to the Spend ’til the End book. I have not used it myself but I have evaluated it and intend to become a user in 2009. I am very interested in the consumption smoothing concept, particularly after the market hit our portfolio has taken.
(Full disclosure: If you order anything using the links in my sidebars, I will earn a small commission. All advertising revenue from Tough Money Love is donated to charity. I don’t make anything from recommending SmartyPig, Financial Engines, or ESPlanner.)
In summary, skip the Black Friday sales. Instead, replace outright consumerism with gifts to help educate your family in matters of personal finance. Someday, they will appreciate it. If they don’t, send them here and I will be happy to scold them for you.