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The Money Minute - October 2011

Child Identity Theft

A recent study by Carnegie Mellon CyLab reported that children are 51 times more likely to be victims of identity theft than adults. They scanned identities of 42,232 children during a one-year period from 2009 to 2010, and 10.2% of the children had their Social Security number used by someone else. The youngest victim was two months old, and the largest debt reported was $725,000. 

Child identity theft is believed to be one of the fastest growing segments of identity crime. Often the theft of a child’s identity isn’t discovered until years or even decades later, when a young adult attempts to apply for student loans, get utility or cell phone service established, purchase a car, or get a job. Getting their credit re-established is not an easy task. They must follow the same dispute process as an adult to have inaccurate information removed from their credit report. This would require time and diligence, and could impact their lives for years to come.

 

Here are some tips to help protect your child from identity theft:

  • Obtain a free Child ID report from www.allclearid.com which will report any debts listed under their social security number.
  • Monitor Experian, TransUnion, and Equifax credit bureau reports – Credit agencies do not begin reporting on an individual’s credit history until a person’s data is used to open an account or line of credit. Your child should not have a report if no accounts have been opened in his or her name. Be especially vigilant if you begin receiving pre-approved credit cards or other unsolicited financial offers in your child’s name.
  • Teach your Child about Identity Theft -Talk to your child about the dangers of sharing personal data online. Children surfing the web are particularly vulnerable to exposing personal information in chat rooms or on social networking sites. Make sure children understand the importance of keeping this data private.
  • Keep your child’s Social Security Card in a safe place. Most will need their card when they go off to college, but make sure they know to keep their card in a safe place rather than carry it around in a wallet or purse.
  • Make an honest assessment of your child’s  ability to deal with data related to identity. Gauge their level of responsibility before sharing banking and credit information with them, even if it is in their names. Do not give access until they are able to guard such data carefully.

 

Protecting Yourself from Identity Theft

Americans go to great lengths to protect against being robbed.  We lock our doors, install alarm systems in our homes and cars, and insure our valuables.  However, we do not pay an equal amount of attention to the crime that impacted more than eight million consumers last year, the crime of identity theft. Here are 19 tips to protect yourself:

  • Keep your confidential information private. Do not give your information on the phone or by email to a bank or credit card company claiming to need it.  Your bank or credit card company won't call or e-mail to ask for your account information.  They already have it.
  • Keep an inventory of everything in your wallet and your smart phone, including account numbers. Don't keep your Social Security card in your wallet.
  • Password protect your smart phone.
  • Stop getting banking and credit card information in the mail. 
  • Monitor your bank and credit card transactions for unauthorized use. Crooks with your account numbers usually start small to see if you'll notice.
  • If you conduct business online, use your own computer. Public computers and wireless internet are  less secure. 
  • Look for suspicious devices and don't  let anyone stand nearby when you use an ATM. Take your card and receipt with you.
  • Keep your PIN in your head, not your wallet. 
  • Don't store credit card numbers and other financial information on your cell phone.
  • Install anti-virus, anti-spyware and firewall protection on your computer, and keep them up to date. 
  • Don't open e-mails from strangers. Malware can be hidden in embedded attachments and graphics files. 
  • Don't open attachments unless you know who sent them and what they contain. Never open executable attachments.
  • Configure your operating system  so that the file extensions of known file types are not hidden. 
  • Don't click on pop-ups. Configure your operating system or your Web browser to block them. 
  • Don't provide your credit card number online unless you are making a purchase from a web site you trust. Reputable sites will always direct you to a secure page with a URL starting with https:// whenever you actually make purchases or are asked to provide confidential information. 
  • Use strong passwords: at least six characters, including at least one symbol and number, and no reference to your name or other personal information. Use a different password for every site that requires one, and change passwords regularly. 
  • Never send a user name, password or other confidential information via e-mail. 
  • Consider turning off your computer when you're not using it or at least putting it in standby mode. 
  • Don't keep passwords, tax returns and other financial information on your hard drive.

For more information about protecting your identity, visit our Quick Tips.

 

How Much Allowance Should Your Child Receive?

How do our kids learn to manage money? They are usually not taught this skill in school and, often times, not at home either. A good first step in teaching money management is giving your child an allowance. Last month on our website, Apprisen Financial Advocates asked “How much allowance should your child receive?” and sixty-five  percent of respondents indicated that they do give their child an allowance, but how they determine the dollar amount varied.  An allowance provides children with regular income to help them learn how to manage money. It provides the opportunity to make spending choices between the many things that they may want. It also creates a safe environment for mistakes, when the cost is minimal. Additionally, they will have more appreciation for the things they buy when they use their own money.

Results of the survey showed  that forty percent of respondents indicated that money was given based on household chores. But should allowance be tied to work being done? Should chores be done because children are a member of the family and is the loss of privileges a better consequence than a loss of funds? Twenty-two percent of people give an allowance based on one dollar for every age of the child while two percent matches the amount that their friends get. Only one percent of people who responded indicated that they give an amount equal to what they would normally spend on the child.

However you decide on the dollar amount you give your child for an allowance, it is important to consider giving them one. If you don’t, you are the one managing their money for them by deciding what they will buy. Their role is salesperson and manipulator. Think about the goal, effective money management. If a child is getting a certain amount of money on a weekly basis, they are more likely to learn how to budget their spending and save for the things that they want.
   

 

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