Another great comparison shopping money lesson for teens, and this one may even inspire them to remember to lock the front door when they leave the house next time. Seriously, when teens have stake in something, it makes them more careful. That’s true for everyone, actually.

There are more homeowners insurance options than you may think, and if you haven’t revisited your policy in a while, now may be a good time. Recession means everyone is competing for business, and insurers really are no exception.

My insurance agent told me, in confidence, that he feels like he has to sell longterm clients all over again. I feel for him, but it means people are shopping and finding deals.

And just in case you are refinancing your home: It’s another great time to take a look at your homeowners insurance.

It happens to be a fun comparison shopping challenge for teens because there are some fun websites out there, with homeowners calculators, which require kids to answer a lot of questions about their own house. They’ll learn about their house, what levels of coverage mean, what household goods are worth in the insurance world, and an overall lesson in cost of owning a home.

Here are some steps to have them follow.

1. Start the kids at this homeowners insurance website. It’s a good calculator with a lot of details.

2. Then tell them what your current homeowner policy is–features and costs. Show them the actual policy. It’s good for teens to look at documents.

3. Have them determine if there are household items that aren’t insured (like artwork), or whether you are amply insured for certain situations, like flooding for example if you live in a place that frequently floods.

4. Have them compare your policy to the one they found using the online calculators. They need to write down a side by side comparison: price at the top, feature set versus feature set underneath. Have them focus on both cost savings and protection.

5. Have your teen call your insurance agent and ask about features and costs not on your current policy, but available on others. Also have them ask the agent to explain why certain coverage is deemed important, especially if you, and your teen, isn’t sure it is. Depending on your insurance agent, it may be best if you were on the phone with them. Determine before your teen gets on the phone whether the goal is to save money or get more features.

Your teen will be thrilled if you either change policies, add features, or save money. And you may likely do one of those three.

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I have cousin visiting from overseas, and when he chipped his tooth while cooking the other night–don’t ask–he said something that I had never thought of before, and it struck me as a brilliant way to look at going to the doctor.

He was in a lot of pain, and really wanted to see a dentist because the chip was near the gum–I know, I still can’t really picture the whole injury well, and honestly I don’t want to take a close enough look to find out.

Turns out that he has dental coverage, which is unheard of here in the States, but just bear with this story because the concept is good for use with any doctor visit.

Anyway, his first reaction, while clutching his mouth, was to run to his phone, make a call, and see, in this specific situation, how much his insurance company was willing to spend to make his tooth well. He gave all the specifics: He’s traveling (therefore out of network), it’s an emergency, etc. After a few minutes on the phone, he came back into the kitchen and announced:

“Okay, they will spend $400 guaranteed on my tooth. Maybe more, but I’m not banking on it. Do you know a dentist who will look at it and fix a chip for that much?”

“Otherwise what?” was my first question, looking at him, still gripping the side of his mouth, while he searched for a glass of wine, presumably as an anesthetic.

“Otherwise I’ll wait a bit–or at least see if I can. But first, let’s price some dentists.”

I hate my dentist. He charges way too much for the simplest cleaning. Yet, I’ve never moved on. Now was my chance. I called five dentists–recommendations from friends–thinking this would never work in America.

But guess what? It did. One of the dentists said he would do it for that. My cousin got on the phone and said his budget was strict.

By the time my cousin was at the dentist’s office, he had all the leverage. Tell me, have you ever felt that way in a doctor’s office?

He had details, too. “If you take an xray, my insurance says this much is customary. You won’t charge more than that? Otherwise, they won’t pay.”

The dentist nodded. My cousin spoke his language.

From now on, I will never go to a doctor without calling my insurance company first. This is exactly what we should all do.

Now, turn that lesson on the kids. They are perfect for calling an insurance company, and going online, before they have to go to a doctor, to find out what their visit will cost. They can find out before a check up, or if they have an injury–how much will they cover for a follow up visit?

My cousin laughed at the follow up visit. “If it doesn’t hurt, the sprain looks healed, and you’re not sure they’d cover it, why would you go?”

One teen in the room said: “Yeah let’s go shopping instead with that money.”

Yes, of course that teen was related to me. Never mind that.

But my cousin’s point is so true. The follow up visit is a way of making money.

Have your teen call ahead before you go to the doctor, too. Then you can tell the doctor how much you have to spend.

It’s just another budget item. I think this is one great money lesson for kids and adults. And if teens learn this now, they’ll grow up savvy about one of the biggest expenses in their lives.

Please share stories if you try it!

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Everyone once in a while– a while being the key phrase here–it will look like a lightbulb went on above my husband’s head. His eyes will open wide, and he’ll pull himself up to a full seated position on the sofa.

That’s the sign that a household project is going to start soon.

The last project was changing our lightbulbs from incandescent to the environmentally friendly compact fluorescent light bulbs (CFL). Every single one of them in the house, including the mood lighting I used to have in the sitting area in the living room, which has a dimmer. Except he bought non-dimming bulbs. They have dimmable compact fluorescent bulbs, but he was too cheap to buy them. Or forgot, and was too lazy to go back to get them.

Before I waste too much space on the argument over the dimmer, let’s just say that his idea to change all the lightbulbs was the first time he has ever sparked a money lesson in a positive way.

It is very difficult to teach teens cost effectiveness, and why cheapest isn’t always really cheapest. Teens live in the moment, and long term implications are simply hard for them to see as tangible. Yet it’s one of the most important money lessons: How much does something cost in the long run when it is an item with a long shelf life?

If they can get their minds around the cost effective concept they will be much better managers of money. And new age lightbulbs–those coiled ones–are a perfect opportunity, if you’re willing to have your house go green. The cost out of the box for CFLs are higher than regular old lightbulbs. So teens have to do the math to get to the cost effectiveness.

It’s a project teens can handle. Have them go through the house and count how many bulbs there are. Then have them comparison shop the best prices for the number of CFLs you’ll need to overhaul your home. Have them compare costs for online offers versus your local hardware store.

The basic equation they need to understand: A CFL uses 75% less energy and lasts about 10 times longer than an incandescent bulb. So even if it takes 6 months to pay for itself (the average), it’s still worth it because the CFL lifespan is so much longer than 6 months. Point out that they’d have to keep buying incandescent bulbs, which don’t even last 6 months. CFLs can last years.

For a fun math challenge, ask your teen–once they have priced the CFLs and regular bulbs–if they can figure out how much money a CFL saves over its lifetime if its lifetime is a) 1 year; b) 2 years; C) 3 years, etc. etc.

Now, that challenge will be based on only one factor: that the fact that the CFL bulb pays for itself in six months.That return on investment timing may vary, depending on the prices your teen finds. It may be that it pays for itself in 5 months, or 7 months. In any case, that’s a one variable challenge.

Here’s the more advanced challenge: If a CFL bulb uses 75% less energy AND it lasts, say, 4 years, then how much money do you save over its life? They’ll have to calculate energy cost savings for the CFL versus the incandescent over 4 years, then add it to the mere lifespan savings.

Good luck, and make sure they purchase at least a few dimmable ones!
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This time of year is even scarier than the beginning of December in terms of me being an ATM. Maybe because kids can blindside you now, and by December you’re ready for them.

So innocently, my daughter said to me yesterday: We’re going to see her cousins on Thanksgiving, the first holiday of winter, as she calls it, and she knows just what gift to get them. But we should order it online now before they run out.

I was sitting at the computer entering my credit card number on the latest greatest kid electronics before I realized that we were also going to see the cousins-aunts-uncles over Christmas.

Wait just a minute. We¹re going to do Christmas/Hanukah/Kwaanza/Winter Solstice/Whatever shopping at Thanksgiving and then again in December?

How did that happen? But once she was done with her rebuttal, which seriously rivaled Jimmy Stewart¹s court speech in Mr. Smith Goes to Washington, I realized that she was right, that our society has demanded double gifts, and did so nice and slowly so I didn¹t notice I was being had.

Here’s her argument: You can’t go to someone’s house and stay the long weekend and not bring cute gifts. And you know darn well when we go back to the cousins at Christmas, we’re not going empty handed.

She had me. And I’m a pragmatist. Looking at her folded arms, her smug look of victory, her iron clad logic in pink fuzzy leg warmers as she pointed back to the computer screen, I knew this was my new reality. My next challenge was to find a way to bring it within some semblance of control–after I ordered the pink electronics, of course.

So here’s the deal: I love budgets and revenge. I called my sister, knowing full well that if my little lawyer was selling me on cousin gifts, the cousins were doing the same thing. And if I was going to impose serious restrictions on my daughter, it was important that it be the same on the other end, so they weren¹t being extravagant while we were being controlled. Nothing worse than looking like the family tightwad at a holiday gathering.

That said, if you can only get your immediate family to buy in, do it anyway.

We came up with this plan:

Have your teen make a Gift Chart that includes every kid in the extended family that you’re going to see between now and New Year’s. If you¹re not going to see them, but there are other family members, they get a homemade card and a homemade food gift.

Next, put on the chart how many times you’re going to see each kid. e.g. We’re going to see cousin Olivia at Christmas but not at Thanksgiving. So she will be budgeted for one gift. We’re going to see cousin Christopher at both, so he’s budgeted for two.

Tell your teen that this year you’re doing three categories of gifts: purchased ones, handmade ones, and handmade food ones. The food ones are automatic for anyone you¹re not actually seeing, and they are one of two gifts for anyone your family is going to see twice. Food is also going to be made for stocking stuffers.

Tell your teen they can choose two people to buy gifts for, and the rest will be homemade gifts. For the purchased gifts: Have your teen go online and price what he or she considers a good Christmas gift. This can be a category, such as: kid iPod.

Have them search on an item, and then look for the best deals–may as well add the comparison shopping challenge in there. Once you find the best price, that¹s the budget. And that is it. You put the cost ceiling for each kid that is getting a purchased gift. If you have a more than one kid, it is likely that the purchased gift would be for a sibling. (Another idea to bypass even this is to get one family gift for your entire household, like a DVD player.)

Once the budget is set for the purchased, it is immovable, even if your kid decides they want to get their sibling a Wii game or a karaoke machine instead of a kid iPod (which runs $20 - $40). The reason for this is key: This is how teens get you. They rely on being fickle. As the advertisers, who are smart, don¹t forget, when they up the ante for expensive gifts, your kids are first in line to buy in.

5. An addendum rule: My daughter can spend a fortune in the “wrapping paper” category: keychains for backpacks with cute stuffed animals on them, singing cards, pocket lip gloss—all the impulse purchase stuff at the checkout counter. Have kids make these novelty items with some pom-poms, googley eyes and glue, and some clip ons you get at the crafts store.

The crafts store. Now we¹re getting to the heart and soul of this Christmas and Thanksgiving and whatever else shopping season. Craft stores are amazing fun, and kids can come up with great ideas. Honestly, they¹ll remember how much they love making things.

You make two trips. The first one is for ideas: Bring the gift chart and have the kids decide what they want to make for each person. Then go back home and see what materials you already have. You may be surprised. For instance, if you¹re making handmade stuffed animals or dolls for younger kids, old clothing can be used for the material, yarn for hair or a horse¹s or lion’s mane, old pillows for stuffing.

And you know what makes beautiful wrapping paper? Brown paper grocery bags that are painted.

After you’ve exhausted what you can make with available materials, if you still have people on your list, make a list of ideas and the materials you still need.

Then go back to the craft store, or the hardware store, or the dollar store.

In fact, comparison shop all of these for the materials you need. Include online outlets for discount craft supplies.

Keep track of everything you spend this year, if you do decide to go the homemade route. And take stock: If you have a way to compare to last year’s spending, show the kids. They¹ll be amazed. And I¹d be surprised if they don’t like what they produce far better than what they¹ve bought in the past.

I’d love to hear about craft ideas as well. And not just for the holidays: Birthdays, anniversaries, baby showers…

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When I was at the high school yesterday for a Board meeting, I literally ran into one of the seniors when she plowed into my back, her nose in her cell phone, madly texting.

I should have known better than to think she was merely chatting with a friend, even though she was late for class. This senior is one of those enterprising ones, the sort who makes me remember my incredibly lazy high school days with embarrassment.

“Do you use an online travel agent?” she asked.

First of all, I can’t remember the last time I could afford to go anywhere. Second, what’s an online travel agent?

“I’ve used Expedia,” I said.

She wasn’t impressed. She was trying to comparison shop airline tickets to have her favorite aunt come for Thanksgiving, an aunt who said she couldn’t afford to fly across the country from California to New York this year.

“Even Travelocity is better than Expedia. We’re still more than 30 days out, best price so far is $267 if she leaves the Saturday before. I’ll ask for donations from every family member. Can’t be that much each. I have a big family.”

She ran off to Calculus and I stood there, thoroughly impressed by her planning skills and strategy. And, of course, it then occurred to me to turn this one-month-in-advance sweet spot in time into a money lesson for teens that aren’t so enterprising without a little nudge.

What all teens are good at is online comparison shopping, if you put it to them the correct way, as in: Pretend you’re buying something for yourself, and you desperately want it, but have a limited budget. They instantly become Google Jedis.

So, here’s the holiday money lesson to hand your teenagers this weekend, while there’s still 30 days before Thanksgiving. It may save you a bundle, while showing them how expensive holidays can be:

1. If your family is traveling somewhere, have them do a cost analysis of the trip, by creating a ledger of line item expenses. Before you tell them which line items to include, see what they come up with on their own. It’s interesting to see which expenses they’re aware of, and which ones don’t come across their radar.

Ultimately, the line items for travel should include Travel, Lodging, Daily Expenses.

First, will there be air travel for the family (or cost of car travel). Air travel means asking if there are frequent flier miles available for any or all of the family, and then seeing if they’re worth using, or if the flights are cheap enough that the miles should be saved for another time. It also means comparing flight routes and possible days of departure.

Car travel means calculating gas and parking costs. Maybe train travel is another option. Have them look into all transportation options.

Then they should include whether the family is staying at a relative’s house, or at a hotel. If a hotel, have them comparison shop hotel prices online. Also include rental car, parking, and gas costs if they apply.

2. If you are staying home this Thanksgiving, let your teens do the grocery shopping, and any other related expenses. If your family is entertaining this Thanksgiving, expenses add up quickly.

First of all, you buy a lot more food and possibly wine. If you host guests, there may be outings that are costly. Have your teen create a ledger of line item expenses for all these costs.

The ledger should include: Consulting about the size of the turkey (or whatever your traditions are) and then comparison shopping the best place to get what you’re looking for. Many people order turkeys now or pretty soon. Then: other food, comparison shopping the price of any wine or beer online or on the phone (naturally you can’t send them out to get these items). I include the liquor not to invite aghast emails, but because it’s a considerable expense that we end up paying. Then other expenses, such as an ice skating or movie outings for the extended family.

When it comes to activities, have the teens brainstorm what would be fun and at what cost.

If it’s possible, compare what costs your teens come up with to what you spent last year. Really go to some effort to look up last year because it will be very satisfying to the kids to know.

I’m curious if they save you money. My bet is they will, simply by creating awareness early and then planning. We’re all so busy we tend to shop last minute (I’m the absolute worst when it comes to that). Last minute shopping is always expensive. To have everything mapped out in advance is a great lesson in planning, too. Maybe it will spill over onto their schoolwork. Hey, I can dream, can’t I?

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Our teenagers should understand that by the time they’re teens, just starting up that hill to adulthood as we reach down from the top to give them a hand, their grandparents are starting their descent down. And we have to keep a watchful eye on their grandparents, our parents, so they don’t trip and fall on the way down the hill. Sometimes we have to run down, help them walk along, and then run back up to keep an eye on our teens’ ascent, all in the same moment.

As parents of teens, we are collectively the age where we must parent both our kids and our parents. This isn’t a new phenomenon, but boy does this economy make it tough, especially in a country as spread out as ours.

We live in a huge country, and it’s common that a family of origin is spread out: I live in New York, my mother lives in Washington, D.C., my brother in Los Angeles. Teens don’t learn about generational hand-me-downs like they do in other cultures, in smaller countries where grandparents, adult children, and kids are born and raised and still live in the same town.

By the way, there is a lot of intimacy lost in our spread out existence, as well as additional expenses for us adults with both teenagers to raise and parents to care for. (I was teasing my husband that in a pack of gorillas I think they call the adults with both elders and offspring to care for “mature males.” What do you know about that? Inevitable maturity for gorillas, but not necessarily for humans.)

Okay, so here’s a way to foster a connection between the young and old generation that may be lost in your family, especially if you don’t live near your parents and your teens only see grandma and grandpa on holidays.

Put your teens in charge of comparison shopping something in your parents lives: If they are local, it could be grocery shopping. Have your teen do the shopping. They have the energy to go to different stores for better prices, or even just carry cheaper bulk quantities of things they love, like seltzer or tonic water. Or, as we discovered in the Turn Trash into Cash post, there are so many things that can be purchased in bulk.

Your teen can also help organize bulk purchases for their grandparents,by cleaning out storage space in the garage, basement, or attic for bulk items, and bringing them out as needed.

The grocery shopping challenge for your teen also means they’ll see their grandparents at least once a week. What could be a better benefit than that? And helping their grandparents will feel so good to them.

Put the money they save on weekly grocery shopping–or any other comparison shopping ideas we’ll list here in a moment–into a 529 College Savings Account for your teen. Think of it as a living inheritance. That way, it’s not paying them to care for the grandparents, which has negative connotations. Having the grandparents contribute to a college fund in an indirect way will make everyone in the family feel good. And of course your parents are of the age and generation that will be proud to see their grandkids earning their college education.

Here are some other ideas for comparison shopping, some of which are easily done long distance. Do have your teen keep a monthly ledger of how much they’ve saved. It can be an online one that they even mail to their grandparents. Have them chart the expense, and then the reduction in expense, per month, for one year. If they enjoy the project, they don’t ever have to stop. It can be something they do for their grandparents from college, from 20something adulthood wherever they are.

Ideas that can be accomplished long distance, by having grandparents send the bills for these things. Teens can research better deals online, and by calling customer service departments.
1. Phone service, both landline and cell phone.
2. Car insurance.
3. Cable TV or satellite TV service.

One more idea for teens if grandparents are local: Have your teen go through their grandparents house and see what needs to be repaired or maintained. If the teen can do the repair him or herself–such as painting a room–then have them do that, for a small monetary reward that goes into the college fund. If it’s a repair that requires some kind of contractor, let your teen do the research, set up appointments, and choose a contractor for their grandparents.

Please share any experiences with teens taking care of grandparents in this way. And any thoughts from grandparents on how they feel about the experience would be more than welcome.

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On some days, when patience is thin—okay, yesterday—one of my pet peeves starts bothering me more than ever. It’s the pop-up discount offers that take over your screen when you go to a newspaper site, or try to open web mail. They’re no longer little boxes. They cover everything else. So aggressive. And if these discounts are so pervasive, why do teens and college students seem to have relatively small gains when it comes to understanding the value of money, the recession, and why a $500 purse is ludicrous.

Okay, so you see what a bad mood I was in. Today I’m trying to recuperate by turning this advertising madness into something constructive. And so the coupon challenge game was born. If I had to choose three recurring life expenses, budget items, that I want teens to appreciate, understand, and learn to manage it would be: groceries, home repair/improvement/maintenance, and car maintenance.

If they can get their minds around those things, and learn to try and conserve in those areas, my guess is that the awareness and knowledge would expand to other areas, and translate into something more core: a disposition about expenses that is money saving.

Here is the teen coupon challenge game:

You put your teen in charge of finding the best coupons for groceries, home repair, improvement and maintenance, and car maintenance and repair. They do it for two months. For each month they create a chart for the coupons they found in each category, and what the total savings was. If they find more the second month than the first, they get a prize. But, here’s the catch: You don’t tell them all that up front, or they’ll do a lousy job the first month to make sure they’re a shoe in for the prize the second month. You start by telling them there’s a prize for the first month if they save 10% of costs in those three categories across the board. Then you tell them that there’s only a prize for the second month if they beat that percentage. If it’s 10% or less, no prize.

Make the prize something really good, that they really want.

Sounds simple? Well, it is and it isn’t. The concept is simple and it should be: First you take a look at something and make changes. Then, when you take a deeper look, trying to achieve more, usually in life there will be room to do so. That’s a very valuable lesson because it breeds a sense of take action when things are tough, instead of the very common sense of victimization and futility. There is always room for change and improvement if need be.

So, to get them started:
1. Have them make a chart with the 3 category heads.

2. Sit down with them and make a list of all home repair, maintenance, and improvement things your home needs. Making this list in particular is helpful in so many ways. They’ll see how overwhelming the details of home ownership are, and how much there is to do. They’ll also be creating a list they can work on later, perhaps for hire! They can do odd jobs for you in order to earn allowance or extra money. They’ll have a stake in these projects once they do the research to get materials at the best price possible.

3. Send them on their way by telling them to start Googling coupon discounts in the 3 categories. They’ll find so many so fast they’ll feel immediately successful and get motivated. Honestly, if they can’t save 10% and much more on all expenses coupon hunting, they’re not trying. The goal is specifically set so they can accomplish it easily.

4. Tell them to use the real world as well. They should go to grocery stores, drug stores, hardware stores, Lowes and Home Depot, tire and muffler and car wash places. They should look for the coupons that are offered in the store and ask customer service about special deals. In the same vein, the local newspapers are very important, especially Sunday papers with whole coupon sections.

5. Have them record, on their chart, each coupon they use, and then total them at the end of each month.

One thing to advise your teen, particularly in the second month when they’re trying to beat their high score, is to tell them not to worry if they can’t tell if they got the very best deal available out there. Just saving money is a job well done. The problem is that there are so many offers out there, and they all claim to be different, and most are the same really. The second month is about finding more offers on more products, not necessarily a better offer on the same product.

Enjoy having your kids save you money, and time, if you are the household coupon clipper.

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Maybe it’s not nice to scare kids, but I do it all the time to my students, and I have to say I’m a believer. Besides, they’re over 18. And how could I teach finance to them without scaring them? You try it. Some of my students point out that I seem to enjoy it, and, okay, I admit that. But I have to be able to get back at them for spending a lot of time staring at their computer screens and checking their email during class. At least scaring them wakes them up.

So, having them comparison shop for their own health insurance will do the trick. And it’s not a gratuitous scare tactic (like some that I deploy before exams). They all need health insurance, and they all need to understand how providing health care is one of the most difficult challenges our society faces. Even if your health insurance policy allows them to stay on until after college, many college health centers won’t accept outside insurance, so you have to buy in anyway. If your kid goes to school at a campus in the middle of nowhere, it can be a problem otherwise.

Also, students avoid important health diagnosis processes if they’re cumbersome or expensive. For instance, there’s a huge black market at some universities for ADD drugs because students don’t want to tell their parents, or pay out of pocket to be diagnosed, but they’re having trouble concentrating.

That’s very dangerous. They could be having trouble for a million different reasons, like the fact that all they eat are Cheetos. I try to explain that if you take medication that’s not right for you, it can cause bigger problems. Health care should be readily available to them, with some privacy thrown in.

So here’s how to get them started comparison shopping for health insurance that you may or may not help them pay for:

I start by pointing out that for families, the monthly cost of health insurance can be as much as a mortgage payment, and still not cover everything. This is when they start to fidget and grumble, muttering under their breath that they’ll take their chances. So then I tell them if they have a knee injury it can cost, oh, I don’t know, about $12,000.

They’re awake again, so I throw them a bone. I tell them that in some cases student health insurance is as little as $20 per month, though their deductible might be $500, $1,000, or $2,500 even. Still, it’s a lot less than $12,000, especially important if they play sports of any kind.

After you explain what a deductible is, tell them to look on their own university website for health insurance information, and then to call the university clinic to find out more. Get a price for the insurance offered through the university. Find out if their university accepts the health insurance your family already has.
But even if the university does accept your policy, have them do the next step:

Tell them to visit the Student Health Insurance website and compare costs. If they see a really good deal, have them call the clinic at their own university and see if they accept the policy.

Last step: Have them compare health care costs once they graduate. Are the student policies transferable to another policy? Their own university policy won’t likely transfer, but another one they find on Student Health might. That’s why it’s important to have them comparison shop even if your policy has them covered for now. The won’t be covered once they graduate, so they may as well get a jump on it.

Please share any stories or thoughts about health insurance problems.

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I can’t wait another second to write this post. Whenever something terrifies me my fingers start moving at lightning speed. For some reason over the last few days there’s been a lot of chatter in blogosphere about buying car insurance for your teen or college student. And what I’m seeing is a lot of discussion about going on the cheap for that insurance.

That is the sort of advice I fear you’ll live to regret.

There are many times when the law determines a best practice that simply isn’t. Making Liability Insurance the sole legal requirement for teens is one of those times. (Not all states are so lenient, but many are. (Check out drivinglaws.org to look at legal requirements for teens by state). Liability only covers your teen as the driver in an accident, not your car, regardless of whose fault the accident is. So even if your teen is a responsible driver, it still doesn’t matter because teens just don’t have the experience to do the sort of evasive and defensive driving required to avoid accidents that are someone else’s fault.

They could spend years paying off damages to someone else’s car for an accident that wasn’t even their fault. Or worse, you could.

Look, I know times are tough. There is a lot of motivation to get insurance that is the least expensive but still meets legal requirements. But teen accidents are some of the most frequently occurring accidents. Of course they are. They don’t know how to drive in snow, rain, at night, on highways. When I think of how little I knew as a teenage driver, I can barely stand watching a teenager drive.

I think an important lesson to teach kids is that sometimes cheapest isn’t best, and spending a bit more up front can save you money in the long run.

Here’s a way to look at the very expensive cost of teen car insurance—and it is extremely expensive, considering that adding a teen to your own policy can double the expense. Just because your teen is of legal driving age doesn’t mean they can afford to drive. This is a huge life lesson. For instance, I am perfectly able to spend weeks on an expensive island resort, lounging in the sun. But can I afford it? No. Bring them in on this discussion. Learning to drive is a right, but getting to driving is a privilege. Ask them for ideas about affording a privilege.

I’m a firm believer that a teen should contribute some money toward their car insurance. It will make them safer drivers. After we’re finished with the rest of this lesson, and they’ve discovered how much you save if you demonstrate that you’re a safe driver, versus how much it costs if you’re not, they won’t want to be paying out more than they have to. Maybe they’ll need a side job to afford driving a car.

So here’s how they should comparison shop for car insurance.

1. First, give them definitions. If it is something you can bear to help pay for, please steer them toward Full Coverage, which includes Comprehensive Insurance and Collision Coverage. That means everything is covered for both parties in any accident, regardless of fault. Liability Coverage covers the driver and the damage the driver causes to another person, their property and car.

Then I suggest interjecting a moment of preaching: Tell them if they ever text while they’re driving you’ll hunt them down and they won’t drive again until they’re 40. I’ve known two kids who have died because they were texting while driving. I see it all the time when I’m on the road, and yes, I’m the crazy lady who honks and rolls down my window and yells at your teen to stop texting.

2. Make a comparison chart. Have your teen use the cost of putting them on your insurance policy, if you’re willing, as the baseline. Have them Google insurance companies that offer Comprehensive Insurance and Collision Coverage and compare the costs. Tell them to beware of insurance companies that only offer Liability Insurance.

3. GEICO gives a test online. Tell the kids to take it and get a rate. Do that at other insurers where possible.

If for whatever reason it’s not feasible for them to get a side job to help pay for car insurance, I do suggest them doing extra chores, or jobs around the house. It’s really important that the teen brain remain aware of the high cost of car insurance. It will translate to them being more cautious drivers.

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It’s not too soon to teach your kid to plan financially, and invest in the world. In fact, if you wait until they learn it in school, or from some cold-calling financial planner, it will too late for them to have a confident relationship with making money from money.

I bought my first share of stock at age 13, compliments of my father. I tracked it for years. Never mind the economics classes I took. I learned how the stock market works because of my shares in Kaiser Cement. And I’ll get to the teen lesson about buying equities (individual stocks). But not first.

I’m going to start with how to buy Certificates of Deposit (CDs), or, as credit unions call them, Shared Certificates, for a couple of reasons. One, explaining what CDs are and how to buy them gives a primer on how financial institutions think and operate. Two, despite popular opinion, I do not believe everyone is cut out for buying stocks. I will address that in the Buying Stocks post. CDs, on the other hand, are a great starter investment for anyone.

And there’s never been a better time, because in this economy, they’re safe and sound. And now you can buy in for as little as $5. Check out this credit union offering a $5 Shared Certificate, designed especially for students. Financial institutions want Generation Y investors.

How to teach your teen to buy a CD:
1. First, give them a definition. A CD, or Shared Certificate, is a fixed-income investment issued by banks and credit unions, and is insured up to $100,000 ($250,000 on retirement accounts). Here’s what fixed income means and how it works: You give the financial institution a fixed amount of money for a set period of time—6 months, 1 year, 2 years etc. You may not use the money during this time.

In return, when that time is up, the financial institution gives you back the principal (your initial investment), plus a fixed amount of interest that is set at the time you buy in. That interest rate is going to be higher than a checking, savings, or money market account, which is why people like CDs. You make money on your money by tying it up. And that’s the key concept: If you withdraw your money before the set time is up, you get penalized by losing interest and in some cases, some of your original investment.

2. How to buy one: The simplest way is to go into the financial institution where you do your banking and ask them to sell you one. But, teach your teen to comparison shop. They can go online and Google CD rates, and see who has the best offer. Also, because their initial investment may be seriously limited, so may the offers.

Also have them look at potential types of CD—some have flexible withdrawal periods, some allow you to get the benefit of a better interest rate even if you’re in the middle of your locked in time period. But there aren’t a lot of options at low buy in rates. Still, no harm in asking. Have your kids write down questions to ask the financial institution once they find a good rate.

Comparison shopping is a key lesson here because they’ll learn an overarching investment principle: The more money you invest, the better deal you get. Period. People who dump $5,000 into a CD will get a better interest rate than someone investing $50.

3. Call the financial institution. Once they’ve chosen the deal that suits their needs, they simply call the financial institution, fill out the paperwork, and pay for it. (They may be bummed that they don’t receive an actual certificate in the mail, only a bank statement. I know I still am.)

4. Make sure to be clear about what happens for early withdrawal: Each financial institution is different. Some levy interest penalties, but some cut into your principal as well. Tell your kid to get the facts before they sign anything. For instance, don’t let them tie up money for 2 years instead of 1 because they didn’t realize if they changed their mind they’d have to pay for it.

5. Make sure they write down the CD maturity date and then call the financial institution to cash out before that date. Most CDs roll over (are reinvested) automatically if you don’t actively cash out. Legally, the financial institution has to notify you 30 days prior to a CD maturing, but don’t let them rely on that. Who wants to get embroiled in the paperwork of arguing who was right. You’ll win if they forget to notify you, but no one needs that headache. And they’re only required to send something out in regular mail, so all they have to do is prove they mailed it, not prove you got it.

This is a great lesson for kids in personal responsibility. Don’t stand on ceremony and blame others if things go wrong. Take the reins and make sure nothing goes wrong.

It’s like that old driver’s ed saying: Most accidents can be avoided with alert, defensive driving. Same is true for money.

What age do you think is appropriate to buy CDs? Please share your thoughts.

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