Money-Smart Kids

Don't forget to teach the importance of sending thank-you cards!

Today is TEACH YOUR CHILDREN TO SAVE DAY. This awareness day was established by the American Banker’s Association Education Foundation to express the importance of teaching our children how to save money, how to set up and use budgets, how interest works to make savings grow, and most importantly (in my opinion anyway) how to recognize the difference between needs and wants.

As a parent of a grown child, I tried to instill sound financial awareness in my now-grown son in the areas of saving, spending and charitable donations. But to him, money burned a hole in his pocket most of the time.

I’m very proud to say that as an adult, he’s finally learned to save, to use credit responsibly, to meet his payment obligations on-time, and to cut down on money wastage (he finally stopped smoking!). So even though you may not think you’re getting through to your kids at the time, sound money management education early on pays off in the long run!

I suggest every parent start a savings account for their first child (and any others that follow) as soon as he or she is born. But don’t just stick some money in it at first, then forget about it. Make a habit of depositing a small amount on a regular  basis (weekly is ideal, so monthly if that suits you better), so your child learns as he or she grows the importance of maintaining a savings habit. As the child gets older, let him make the contributions from a part of his allowance or after-school jobs.

photo courtesy http://pdphoto.org/   Thanks, Jon!

Also, start small. Sure, the lowly penny won’t buy anything nowadays. But a piggy bank or a simple jar with a slot cut in the lid will soon fill with lots of pennies. And when it’s full, it’s so exciting to take your little one to the bank to exchange those pretty copper coins for paper money and then a trip to the store to pick out a special toy or book that they can proudly buy with their own money. Later your kid(s) can graduate to saving larger value coins: nickels, dimes and quarters.

But my favorite tip is to teach your little ones that Mommy and Daddy are not money-dispensing machines and that money doesn’t grow on trees (as old-fashioned as that sounds). Saying no to whim purchases teaches the difference between needs and wants, and encourages them to save for the things they want. There’s always plenty of time when they’re older to learn about credit and plastic.

Here are a couple of good books that teach kids all about money:

THE KIDS' ALLOWANCE BOOK
by Amy Nathan (86 pages)
©1998  This cute and informational book was written for children ages 9-14: to help them learn about allowances, how to ask their parents for one, how to handle their money responsibly, the pros and cons of both chore-based allowances and “just because” allowances, what to do if parents forget to pay up, and how to save.

Parents would also benefit from reading this book, preferably before the discussion of allowances comes up. About half of children in the target age group receive allowances, according to surveys done by Nickelodean TV and Zillions magazine, which is published for kids by Consumer Reports. Many of these children were interviewed about how allowances were handled in their families. I wish I’d read this book when my son was little---I learned a lot of great parenting tips from it, and you can too!

ULTIMATE KID’S MONEY BOOK - Neale S. Godfrey (122)©1998 This really IS the ultimate book about money for kids! It has everything that the average person should know about money (and many don’t). It starts out with a history of money, then talks about making money, spending it, saving it, sharing it, etc.  It also has chapters about how banks work, different accounts you may have, the economy (local, federal and global), investing money, taxes, and government spending. I was amazed at how much useful information is packed into this fun book which could be used to teach a valuable mini-course on finance to kids.