Local 'Money Mama' goes national

Lori Mackey Teaching children financial responsibility has become a passionate pursuit for Agoura Hills resident Lori Mackey.

With April declared as Financial Literacy for Youth Month, Mackey has transformed her personal money managing techniques for her two children into a cottage industry that is now taking shape across the nation.

The company, Prosperity 4 Kids (www.prosperity4kids.com ) was launched by Mackey in 2003 with her trademark product- a four-chambered, ceramic piggy bank and the book "Money Mama and The Three Little Pigs."

The bank and book set enable children to implement Mackey's basic "10/10/10/70" philosophy of saving and spending earned through an allowance. The piggy bank serves as a tool for saving, investing, donating- and spending- their allowance. Each of the three smaller chambers of the bank are designed to hold 10 percent for charitable donations, 10 percent for investments to "build fortunes," 10 percent savings for the future and 70 percent for everyday expenses, including entertainment, toys, video games, candy and any other non-necessity, Mackey explained.

Mackey's latest innovation is an allowance chart that is designed to help parent's link household chores with monetary values while organizing their children's weekly chores and responsibilities. She said the chart teaches children vital lessons, from how the "supply of money is finite" and how small amounts of money can grow to large amounts over time.

"In other words, they learn to live within a budget," Mackey said. The chart also includes a "goals, dreams and desires" section to encourage youngsters to write down goals and make the necessary steps to reach them over time. "Giving children money for nothing creates entitlement attitudes, but allowing children to be creative and participate in structuring chores creates successful work habits," she said on her website.

From the board room to the classroom, Mackey's message has struck a chord with educators, business executives and the media. She recently discussed her strategies on "Good Morning America" and forged a partnership with ING Direct. ING Direct offers savings accounts with no minimums and a 4.5 percent interest rate, which in Mackey's view offers children a means to watch their money grow.

Mackey's work has also triggered a national discussion on the need to teach financial responsibility in every class, starting in kindergarten.

"There are a lot of people talking about it now," Mackey said. "It doesn't matter how much you make, but how much you save."

The National Association of State Boards of Education released a report in 2006 called "Who Will Own Our Children?" which assessed whether public schools were teaching students about financial responsibility, including investment strategies.

An average college graduate starts off his or her new life with $16,000 in student loans, $3,500 in credit card debt and a need to buy a car, the report said.

"Add to these initial debts the likelihood that the individual will never work for an organization that provides a defined benefit retirement plan, combined with the fact that the Social Security system will inevitably undergo significant revision with reduced benefits," the report begins.

"At least it's on the radar how important this is," Mackey said of the association's interest in launching a new financial and investment curriculum in schools. Mackey's mission now reaches parents through seminars, coaching sessions and a new book aimed at adults. "Design Your Child's Financial Future" is a workbook designed to help parents teach their children about money management. The book includes tools to demonstrate how the stock market works, investment resources and a plethora of information on how to get children excited about saving money.

A teen version of the workbook is in the works, Mackey said.

Turn $2 into $980

Mackey and her husband and business partner, Dana, have taught their own children how to be savvy investors. Briana, 13, and Devin, 11, have developed a habit of divvying up their allowances and investing.

"They can have whatever they want, but they have to save and decide whether to buy it," Mackey said.

A financial calculator helps the children see how their money can be put to work. The children figured out if they invested $2 at 10 percent for 55 years, their initial investment would grow to $980. "We've shown them that if you take a $50 video game, it equals $10,000 (by the time they are ready to retire)," Mackey said.

The Mackey children also invest in the stock market and are always on the lookout for launching a new business. Briana started a soccer business last year training younger children in the sport.

"It felt good earning my own money doing what I love, which is soccer," Briana said.

"My biggest thing is to teach our children to start saving their money," Mackey said. She said if children just cut out buying one video game per month and invest the money, they will build a sound financial future.

"Social Security . . . investment pensions, it's all going to be on the individual," Mackey warned. "People don't realize how it's going to be completely different for our kids."

For more information, visit www.askmoneymama.com.