Start early to teach kids about money
The Financial Planning Association offers these steps for teaching children about money:
1. Start early. Match an allowance with a child’s age and , starting as early as kindergarten or first grade. Stress why working is important. Keep watch frequently – almost every day at first – on how he or she spends the money, and then check less often as they mature.
2. Consider your own behavior. Do you drive a bigger car than you can afford? Do you pay with credit cards and not pay off the balance? Do you argue with your spouse about money? Children learn by example, so make your own money behaviors positive.
3. Buy a piggy bank. Save pocket change. Talk about what children want to buy, which sets their financial goals.
4. Be alert for possible lessons. When you hear, “I want” or “I need,” talk about what it costs and how to save money to pay for it. Have children make spending “wish lists” year round, not just at Christmas. That delays gratification and sets spending priorities.
5. Open a savings account. Open a small-balance account, encouraging deposits at least once a month. Also consider an educational mutual fund and review the monthly figures together.
6. Handle mistakes carefully. Children will lose money, make wrong spending decisions or even give it away at the wrong time. Talk about the right way to use money and how to do things better next time.
7. Discuss charity. Setting money aside for those less fortunate and taking part in charitable activities are good lessons toward a lifetime of sharing.
8. Adjust conversations with age. Teens want more autonomy. Talk about what you will pay for and what they can pay for. Let them know when you will say “no” to their requests.
9. Be open about your investments. Children can learn about stocks, bonds, mutual funds or other investments. Subscribe to a magazine or newspaper or buy a book if they want to learn more.
10. Talk about college early. They need to know what you plan to pay for and what they are expected to cover, and they need to understand that college is a financial investment for their future.