TEACHING KIDS TO MANAGE MONEY IS A SNAP
Lori Z. Bahnmueller
Michigan Credit Union League - Your Money Matters
If you're a parent, you strive to give your children the proper care and attention they need to progress through childhood into adults. Providing them with proper nutrition, shelter, clothing and the best possible education usually top a parent's priority list.
However, many parents don't realize the long-lasting benefits of good money management training. Some parents choose to keep the subject of finances a secret from their kids, afraid that it might cause fear or stress. Others hesitate, because they grapple with day-to-day finances themselves and don't know where to begin.
You can help your children become smart consumers, regular savers and responsible borrowers by teaching them basic money management skills while they're young. How many times have you dealt with the "I wants" during the dreaded two minutes of commercial breaks between after-school cartoons or while shopping?
A co-worker recently illustrated just how little most children understand about the basic notion of money. During a shopping trip, my co-worker's three-year-old daughter had repeatedly requested an expensive toy. My co-worker replied, "No, we don't have enough money." Finally, out of frustration the child demanded, "Fine, the ATM machine does, get some there."
Children are quick to learn the convenience of credit cards and ATM machine, which grant purchase requests with one speedy swipe. Forty years ago, when children saw the exchange of money and understood that when it was gone, it was gone. Today's kids associate buying with plastic or checks, which isn't necessarily a bad thing. The problem arises when they don't understand that there is a limit to those seemingly endless funds.
Start talking about money with your kids around the time they reach age three. Use coin banks to help them learn to identify and count coins, and begin good savings habits. Small children best establish savings habits through a reward system. Tie savings to spending. Let them pick out something they really want and put a picture of it near their piggy bank. It will remind them why they are putting money away. When they reach their goal, make it a big deal. Consider a special shopping trip or take a picture of their new item and place that by their bank. This will offer encouragement as they begin the savings process again.
Help children open their own savings account. Most credit unions offer special savings programs for youngsters and often these programs come complete with a special mascot, reward system or monthly newsletter designed just for kids.
From age nine on, help your children learn smart shopping. Let them share in meal planning and shopping for groceries and other products. Teach them the value of comparison shopping and advanced planning by having them clip coupons.
Around age 12, encourage teens to use their own money to buy beyond-the-basics clothing and accessories. They will appreciate a $40 name brand shirt more if it means giving up two weeks of hard-earned cash.
When kids hit high school, begin to discuss savings plans for long-term goals such as college and their first car. Encourage part-time work if it doesn't interfere with school. You may even consider helping older teens open their own checking accounts. Don't be surprised if they ask for an ATM or credit card. Approximately 25% of teens ages 16 to 17 already have access to a credit card and more than 50% are interested in getting their own.
With today's financial world becoming more complex, it makes sense to prepare children for the financial demands they will face on their own in the years to come. Many of the habits and attitudes they form now will stay with them for the rest of their lives. In the long run, teaching your children about sound money management might be one of the best things you'll ever do for them.