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October/November 2009

 

TEACHING CHILDREN ABOUT MONEY

By Sandy Plone, Ph.D.

 

By Kathy M. Kristoff
LA Times Business Section;
Aug .9, 2009

The recession is a perfect time to give children hands-on training about how to manage money, and parents are now using this opportunity to teach their children not only about budgeting, but also about investing. Since the parents themselves are making changes, they are more likely to use the recession as a catalyst to talk about money with their children, according to a recent survey by T.Rowe Price Group Inc. Experts agree that this is an ideal time to introduce these concepts to kids~ it’s a “teachable moment”~ but parents seem to be at a loss about just exactly WHAT to teach, thinking they are not qualified, when in fact kids learn most of their money lessons from their parents~ whether or not it is talked about. Some explicit ways to help children get “money savvy” include the following:

ALLOWANCE:

Provide an age-appropriate allowance. For younger kids, a weekly dollar amount equal to half the child’s age is a good rule of thumb. As children get older, supplement that amount by paying them for chores.

WORK
If your child wants a big-ticket item, let him or her work for it. Offer pay for extra chores. This gives children a greater appreciation of how much work it takes to buy big-ticket items, but also teaches that if you do more work, you can reach your goals sooner.

GOALS
Teach money management by requiring children to separate their money into separate pots or piggy banks: one for immediate spending, one for longer-term goals and one for charity.

RESIST
Suppress the urge to bail out your children when they’ve run out of money. It undermines the budget lesson.

BALANCE

A healthy budget accommodates both needs and wants, allowing kids to enjoy their money without frittering it away.

 

 

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