Wealth of Knowledge: Teach Your Kids About Money

Give your kids the skills to make smart financial choices for life. Teach them to save their cash -- not throw it away.
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The lesson parents can take away from these tough economic times: the huge value of making educated choices when managing their money. And it has never been more important for kids to learn finance basics, too. But schools don't usually teach these skills, so it's a job that's largely left up to you. Here are some ways to show your kids the ropes -- and make a big investment in their future.

Set Up a Payroll

Giving your kids a consistent allowance will help them learn how to manage a cash flow. First choose an amount you can sustain over time: One easy system is to pay a dollar per year of age, so a 13-year-old, for instance, would get $13. Don't combine chores and allowance or you may wind up nitpicking every line item. Instead, let children know that they're getting an allowance because they are part of the family team -- and they are expected to do their chores as teamwork. If they don't fulfill their responsibilities, consider taking away privileges, not cash. It's okay to pay a bonus for extra chores (like cleaning the garage or doing the laundry for a week), which can be a great incentive.

Show Them the Basics

Before your teen starts making her own money -- be it babysitting cash or a check from a "real" job -- make sure she has the tools to handle it. Start by helping her open a savings account. Some banks have student account programs; such accounts don't normally have fees even if she carries a low balance. If your bank doesn't offer this type of program, open a joint account with your child. Ask for an ATM card, which she can use to access her cash (it can't be used like a credit or debit card). If you have an older teen who's mature and responsible, you can put her on your credit card account and give her a card in her name for emergencies or purchases you preapprove. It's a good way to help your teen build her credit.

Continued on page 2:  Get Savvy About Savings

 

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