Word of the Day

Commodity

Even if you don't think you do, you already know plenty about commodities. Want us to prove it? No problem.

What makes oil produced in Saudi Arabia different from oil exported from Nigeria? It's the same thing that makes the corn you ate at last summer¿s barbecue different from the corn used to produce ethanol. Stumped? Well, don't feel bad, it's a trick question. The answer? Absolutely nothing. Corn is corn no matter where it comes from -- just as wheat is wheat and natural gas is -- right! -- natural gas. (Though the quality may differ, the make-up is uniform.)

So, in less elaborate terms, corn and oil (and all other commodities) are homogenous goods that can be processed, resold and more often than not, used as an input to the production of other goods or services. These goods are traded on a commodity exchange, thus setting the price-per-barrel (or other metric unit) used to value them.

Now pay attention, here's a question that indeed does have an answer: What is the difference between a commodity and a stock? While a stock can tank and become worthless, a commodity cannot have its value be wiped to zero. One other difference: Most commodities are traded in futures, meaning traders buy and sell where they think the price of a product will be at a certain point in the future. Stocks trade based on the value of the underlying company at that point in time.

Home / Personal Finance / Financial Planning / College & Education

Tuesday, November 20, 2007

Kid Money

Internet Age Offers Financial Tools to Kids of a Global Economy

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Kathryn Elizabeth Tuggle

FOXBusiness

NEW YORK--A slew of web-based programs teach children how to manage chores and save money in an online forum.

“For parents, it’s a relief to have their kids do a lot of this on the computer themselves,” said Barton Listick, founder and CEO of MyRewardBoard.com. “The kids do it on their own, and they see what they have accomplished and watch their savings grow.”

MyRewardBoard.com currently has 25,000 users, who pay a one-time fee of $19.95 to access the program. Parents set a value for various chores, and once kids complete them they can log on and collect their money.

Listick said that when a child deposits money into his or her animated piggy bank, it squeals with delight. And, once a child’s savings goal is met, characters dance on screen. The program is geared for children ages 5-12.

Lori Mackey, founder of Prosperity4Kids.com and author of the parent’s manual “Design your Child’s Financial Future,” said that programs like MyRewardBoard offer important tools to children in need of learning how to succeed in a global economy.

“There is a cycle of financial illiteracy in this country that we need to break,” Mackey said. “It used to be that the parents were the only ones who kept up with the Joneses, but now the kids do it, too.”

Mackey teaches child seminars on saving, in which she explains the difference between saving for something you want to purchase, and actually saving money for retirement or a rainy day.

“Children think that saving money means prolonging spending, and parents need to help them understand that saving money -- truly saving money -- is a different thing entirely,” she said.

While Mackey said it’s difficult to use words such as “retirement” and “investing” when talking to groups of 10-year-olds, she opts for terms such as “freedom” and “enjoy,” telling them that if they save now, they’ll have the ability to “play” more when they are older.

“Kids already know that money gets them videos and toys, but what we don’t tell them is that money also provides a freedom of choice when they get older, and that’s what it’s all about,” she said.

Watch FOX Business Network every Tuesday morning to learn more about issues affecting kids and money.