Money Skills Important Now More Than Ever
Current Economy Represents Perfect Time To Teach Children
Last updated Monday, August 25, 2008 6:22 PM CDT in Your Family
By Tom McMahon
SPECIAL TO THE MORNING NEWS
Four-dollar gas, $3 coffee, fewer jobs, depleted debit cards, soaring college tuitions. Teens feel the recession like everyone else, but still manage to pump billions into the economy. But often not wisely.
This is the perfect time to teach our children about money. The current economy is offering real-life examples of what can happen. Seize this opportunity to teach one of the primary skills of life: money management.
Subjects for teens should include how to use a checking or debit card account, pay bills, save money, make a budget, shop for bargains and understand taxes and "take-home pay" if they have a job. Teens 18 and older should learn to respect credit cards and understand how interest can double the price of a purchase.
For younger children, teach them how to count money, make change, understand allowance and save money for short- and long-term goals (a new toy, concert ticket, etc.).
Our first contributor below offers some more good advice on this topic.
Allowance Lessons
I wanted our two daughters to have good financial skills by the time they reached young-adulthood. So when they were 9 and 12, we started them both on a monthly clothing and spending allowance. Each month we set aside the clothing allowance on paper and let them know how much they have to spend (the amount can accumulate). They now are completely responsible for their clothes, except that I impose "decency" restrictions. Shopping trips are now more fun for all of us, we have fewer clothing battles and fewer "never been worn" items in the closet.
We also give each daughter a cash spending allowance at the beginning of the month, out of which they must set aside a percentage for savings and charity. We still buy them all the basics, but everything else -- birthday gifts for friends, outings with friends, etc. -- comes out of their spending allowance. They now budget their money, are selective about what they want to buy and shop around for the best prices. -- N.K.M., Chicago
Note: Most banks have a variety of debit cards and checking accounts that you can co-sign with your child. Age 13 is a good time to start with a debit card. (T.M.)
Ask Questions First
Being a very frugal person, I always tell my children to ask themselves three questions before buying anything: 1. Do I need it? (Separate want from need.) 2. Can I afford it? (Stay within your means.) 3. Is it worth it? (Valuation.) As a result of this lesson, my son now searches for good buys and is quite proud of himself when he finds them. -- Pat K., Fremont, Calif.
Elevator Scare
One of my scariest moments as a parent came when my 3-year-old son stepped on an elevator without me just as the doors closed. I was picking up my daughter's toy that she had dropped from her stroller, and it took only half a second for it to happen. Hang on to those little kids in front of the elevator! I waited for the elevator to come back, and the people on it told me which floor my son was on, and that someone was taking him to a cash register. -- Linda L., Orinda, Calif.
The Ticket To Sleep
Our 3-year-old would prolong his bedtime by getting out of bed three or four times each evening to tell us something, show us something or ask us for something. Out of desperation, I gave him one "get out of bed" ticket that he could use before he went to sleep. After using the ticket, he had to stay in bed. It worked great, especially after I offered him a fancy sticker for each unused ticket. -- L. Thomas, Toronto, Ontario
Junior Navigators
As your children get older, take a map along in the car. Have them find their location and track their route through town. Before you know it, they will be mapping out your route for your next vacation. -- Anonymous, Calif.
Tom McMahon is a syndicated columnist, college professor and author. Send tips to tom@kidtips.com. Kid Tips is distributed by King Features Syndicate.
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