Category: Parenting

Posted in Discipline in kids, Kids, money management, Parenting, teaching teens

Simple Ways to Teach Your Children the Value of Money

Posted on by Tim Connolly
teaching child value of money

Children aren’t born knowing how to manage money. Yet, teaching kids about money is often neglected. This can lead to poor choices in adulthood as well as costly habits and mistakes. As parents, we owe it to our children to talk freely about money and teach them how to become responsible when it comes to their finances. Then, we must follow up by providing real-world opportunities for to handle money on their own.

The Grocery Store is Your Friend

For a real-life budgeting and shopping, it’s hard to beat your local supermarket. Including your kiddos in the weekly grocery shopping is an excellent way to let them practice the skills you are teaching them. Share your grocery list and budget and then let them help you track down some of the items. Give them a set amount of money and challenge them to purchase as much food as they can with it. Or consider assigning older children a weeknight to be responsible for dinner. Require them to plan, budget, and shop for their meal and then actually prepare it and feed the family, it’s a great boost to their self-confidence.

Make a Plan For Your Kid’s Allowance

It’s hard to learn to manage money if you don’t have any. Children need access to money and opportunities to practice using it. Allowance is a great way to create those opportunities. Some parents link allowance to household chores; others expect their kids to help out with chores as a contributing member of the family and keep allowance separate. Regardless of which method you prefer, what matters is using allowance as a tool to teach your child the value of money and how to handle it responsibly. Here are our favorite tips for handling allowance for different ages:

Preschoolers and Early Elementary Students

Very young children can learn a lot from playing with Monopoly money and a toy cash register. Playing store and buying and selling items around the house is great fun for little ones. Once they reach school age, a regular allowance is appropriate. A good rule of thumb is one dollar per year of age per week. So, for example, an 8-year-old would receive $8 each week as compared to the 17-year-old’s $17 per week.

Late Elementary Students and Junior Highers

You may choose to provide your children with opportunities to earn over and above their regular allowance by taking on larger house projects like cleaning out the garage or washing all the windows. Plus, as they get older, money-earning opportunities outside the home will become a reality. Kids can babysit, pet-sit, mow lawns, and hold down part time jobs at stores or restaurants.

High Schoolers and College-Aged Kids

Finally, at an appropriate age, replace weekly allowance completely with your kid’s own earnings. Let your child have his own checking account to help him build skills and practice with actual financial tools. And remember, he is going to make mistakes, but that is an invaluable part of the process. Better to make $50 mistakes now than $50,000 mistakes later.
Spending. Saving. Giving.

Don’t make the mistake of indiscriminately throwing weekly allowance at your kids with no rules about what to do with it. Help your children use their allowance to establish a budget. A common rubric is to designate three categories for their allowance: spending, saving, and giving. A breakdown of 30% for spending, 30% for short-term savings, 30% for long-term savings, and 10% for giving works well for many people. Make sure to teach them wise decision-making practices in each category:

How to Spend

Teaching your kids how to spend wisely is one of the greatest benefits of giving an allowance. Kids shouldn’t be left unchecked to spend their money however they choose. Create expectations for spending and, as they get older, give them increasing responsibility for their own purchases.

Reasonable expenditures for kids include entertainment, birthday and Christmas gifts for loved ones, a set portion of their clothing, toys, cell phone bills and other electronics. Once your kids are of driving age, you may also consider having them pay for their gas or a portion of their insurance.

Use their spending endeavors as a vehicle for teaching about needs versus wants and help them make wise choices. For example, is there a critical difference between the $35 jeans and the $85 jeans? Encourage them to consider the values behind the decisions they make.

How to Save

Saving money must become a habit or it simply won’t happen. The earlier you begin, the better you will be at it. Talk with your kids about saving for short term wants, like a new cell phone for older kids or a Lego set or doll for younger kids. Help them set aside a specific amount of allowance each week to save so they can reward themselves with the exciting purchase.

Long-term savings is critical, but often neglected. Often times, long-term savings is used for large purchases like a first car or college tuition. You might open a special savings account earmarked for these long term goals.

How to Give

Lastly, nurture your child’s compassion and generosity by encouraging them to donate to their favorite charity. Help them choose an organization or cause that is near and dear to their cares and interests and make regular contributions to it. The more they believe in the organization they are supporting, the more motivated they will be to donate. Of course, money isn’t our only valuable resource—you can also encourage your kids to give their time and work to charities they love.

Teach Them to Delay Gratification

Teaching children the concept of delayed gratification is hard because everything is at our fingertips with the tap of a screen. Unfortunately, having instant access to whatever they want can set them up with poor or impulsive spending habits. Help your children develop self-control and the ability to delay gratification by requiring them to wait a set amount of time before making a purchase. Often, with a mandatory wait time imposed, your child may change their mind about making the purchase.


You can also nurture their capacity to delay gratification by implementing a wait policy for Keeping Up With the Jones. What we mean here is, when a new toy, gadget, or clothing item becomes all the rage among your child’s peers, don’t jump to make sure he’s the first to get the newest phone or the trendiest shoes. Give it a little time to play out. Let five or six friends or classmates be the cool kids first. The character development will eclipse any disappointment they may express along the way.

Don’t be scared to talk to your kids about your own finances.

Many parents shy away from talking openly with their children about finances. The topic has a history of being taboo in American households. In short, many of us were never given the tools to talk about money with our partners, much less with our children.

Or maybe we’re worried we are not modeling responsible financial management and don’t want our kids to know. But the truth is, parents are the biggest financial influence on their children. We are teaching them about money every day whether we realize it or not. They are watching us like hawks and picking up cues from our behaviors. To avoid wrong conclusions and misconceptions, it is far better to speak openly and honestly with your children about the household finances.


Within reason, allow your children to be privy to the family income and budget. Let them know what goals you are working toward and how you are preparing for retirement. Don’t shy away from sharing with them the financial mistakes and less-than-ideal financial decisions you have made over the years. Knowing your mistakes may be the very thing that helps them void a similar pitfall in the future.

Consider giving them some input on certain appropriate family financial choices and decisions. Integrate them into the process to foster an appreciation for how the family budget works. A plus side to this practice: When kids know how the family budget works, and what’s on it, they are less likely to pester their parents for extras.

Posted in Financial freedom, Kids, money management, Parenting

How to Use Allowances to Teach Kids About Money

Posted on by Tim Connolly

For one thing, you don’t want to turn your children into little mercenaries who balk at washing the dishes unless they’re paid. Kids should help out around the house without expecting anything in return because they’re part of the family.

It’s also been my experience that parents have a tough time keeping track of whether their children have actually done their assigned jobs. As a result, the kids often end up getting their money even if they don’t do the chores. Or they end up getting nothing and miss out on learning how to manage their own money, which should be the purpose of an allowance. Either way, the system falls apart.

At the same time, it’s disappointing that 15% of kids get their money with nothing expected in return. In that case, the allowance becomes just another handout, and kids don’t learn the connection between work and pay.

So what’s a parent to do?

The practice of teaching kids about money seems to have caught on in a big way. In the 2015 Parents, Kids & Money survey from T. Rowe Price, 70% of parents reported giving an allowance to their children ages 8 to 14. That’s way up from 47% in 2013. Among kids who receive an allowance, 85% are required to earn it, versus 15% who get it with no strings attached.

  • Smart Ways to Talk About Money With Your Kids

I have mixed feelings about those results. I’m convinced that an allowance is one of the best hands-on teaching tools for children who aren’t yet earning money of their own, so I’m glad that allowances are becoming more popular. But one thing I’ve learned from speaking with hundreds of families over the years is that tying an allowance to chores isn’t necessarily the best way to go.Related Videos

A System That Works

My solution is a two-tier allowance system (see Don’t Tie Allowance to Chores and How to Handle Allowances). Kids get a base allowance that isn’t tied to basic household chores, such as doing the dishes and making their beds, which they’re expected to do without pay. But it does come with what I call financial chores—spending (and saving) responsibilities that the kids take over from you. So, for example, young children may be required to pay for their own collectibles or refreshments at the movies. As they get older, they can take responsibility for more expenses, such as after-school outings with friends, concert tickets and even clothing purchases (see How to Handle Back-to-School Shopping with Teens).

To make the connection between work and pay (and to earn extra money), children can take on extra jobs, such as taking out the trash or recycling, vacuuming the family room, raking leaves, washing the car, or whatever you define as service above and beyond.

This system has three pluses: It sets up a sensible, and workable, arrangement for tying allowance to chores. It’s easy to keep track of—you can pay for jobs on the spot, assuming the work meets with your approval. And it’s an effective way to make kids responsible for managing their money.

How Much to Give

Not only are more children getting an allowance, they also seem to be getting more money. Compared with 2013, fewer kids in the T. Rowe Price survey are getting $10 a week or less (50% versus 68%), and at the very top the number of kids getting $51 or more per week jumped from 2% to 9%.

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For 8- to 14-year-olds, the $10 figure sounds reasonable. My guideline is to start with a weekly base allowance equal to half a child’s age, and then increase it as necessary depending on where you live, how old your child is and what he or she is expected to pay for.

So for an 8-year-old, $4 a week should be plenty. A 14-year-old could need more than $7 per week, especially if he’s paying for his own entertainment and school-related expenses. But for the life of me, I can’t figure out why any kid in this age group should get $51 per week

Posted in Financial freedom, money management, Parenting, teaching teens

Four simple ways to teach kids to save money

Posted on by Tim Connolly

Every April, the ABA Education Foundation sponsors ‘Teach Children to Save Day’ to highlight the importance of Teaching Teens About Money management. Financial experts say that we set children up for success when we teach them financial literacy skills.

 A year-long study showed members of Junior Achievement Canada’s financial literacy program were three times more likely to save more, borrow less and spend less than they earned.

Financial literacy is a learned skill, but it doesn’t have to be complicated to be effective for children. Here are four simple financial literacy techniques to help your kids prepare for their financial future:

1) Show them that a budget can be simple .

Many people grow up feeling intimidated about budgeting, so they never learn. You can make budgeting straightforward for children by using the four-jar budgeting technique.

  • One for short-term savings goals (30 percent of income)
  • One for long-term savings goals (30 percent of income)
  • One for spending (30 percent of income)
  • One for donating (10 percent of income)

If you give your child allowance or chore money, be sure to provide it in small denominations, so it’s easy for them to divide between their jars.

2) Illustrate their savings goals.

Break out the art supplies with your child to create an image of their savings goal. Having a visual reminder of their savings goal will help your child stay focussed on the prize.

3) Help them learn the differences between needs and wants.

Use examples they can relate to; look around the house and discuss your family’s choices and the things that you could live without. This process will help them to make more informed spending decisions in the future.

4)  Set up a children’s savings account at a financial institution.

While the four-jar budgeting method is effective, it should work in conjunction with an actual savings account. Set a threshold for the amount in the long-term savings jar ($20, for example), and when your child reaches that threshold, make a big deal about depositing his/her savings in an account where that money will earn interest.

Posted in Discipline in kids, Kids, Parenting, teaching teens

10 Essential Financial Lessons For Teens

Posted on by Tim Connolly

When talking to teenagers about money, you’ll quickly learn that many believe they are experts on the topic. As teens, they understand you go to work to earn money and that it takes money to pay bills and buy things. Most teens also know that saving money and donating to causes, and those less fortunate is essential.

If your teen has figured all of that out, they’ are on the right track to managing their money.

Us adults know, though, there’s still a lot more for them to learn. As children mature and start making their own money and spending decisions, the stakes get higher. That’s where we have to take our job as parents seriously. While your teen may think they know it all, becoming financially literate is a process.

Just like your child takes math, history, science, and language arts classes at school, there are essential concepts your teen needs to master about money.

Teens looking at a phone

Here are ten essential lessons that help you in teaching teens about money . The sooner they understand this information, the greater their chances of becoming financially healthy adults.

Ten Money Lessons for Teens

1.  Needs vs. Wants

Your teen may think they need the latest smartphone, video game, or even a car. And be prepared for a well thought out rationale if you question why they think it’s a need.

While your teen may have some good reasons to call something a need, make sure you are firm and give examples when discussing the difference between needs and wants.

  • A smartphone might be a need, but the latest smartphone is a want.
  • Without a new video game, they might miss playing with their friends online, but it’s still a want, not a need.
  • It might help everyone if your teen can drive to school or work, but in many cases, an extra car is wanted more than it’s needed.

We don’t want to send a message to our children that their wants don’t matter, though. If they budget for their needs and have an emergency fund in case something unexpected happens, they can set up savings accounts (also known as “sinking funds”) for their wants.

Practicing delayed gratification by resisting the urge to buy things on a whim will help prevent them from going into debt in the future.

2.  Spend Less Than You Earn, Save The Difference

Your teen understands negative numbers from math class, so it shouldn’t be hard to transfer that to money. When you consistently spend more than you make, you will end up with a negative account balance.

We need to teach our teens that if you spend every dollar coming in, you’ll never get ahead.

Saving money

When you spend less than you earn, you can pay your bills, avoid credit card debt, save for the things you want, and even invest for your future.

Your teen’s goal should be to grow the gap.

The bigger the difference between what they earn and what they spend, the faster their savings will grow.

3.  Track Expenses and Start a Budget 

Whether your teen has a job, gets an allowance, or has money from gifts in an account, they should track what they spend and set up a simple budget.

Most teens are surprised to see where their money goes when they start tracking all of their spending. If your teen has a smartphone, they can use a free app like Wally or EveryDollar rather than saving receipts.

Once they have a better sense of how much they spend and in what categories, your teen can create a simple budget with the same money management apps.

In the budget, your teen should consider setting aside money to save, spend, and give. This helps teens put cash in the bank while still allowing them to spend responsibly. By creating a giving fund, they can donate to important causes without worrying about running out of money.

4.  Save, But Start Investing Early

When your teen starts budgeting and works to grow the gap between earning and spending, they’ll have more money to save.

Consider introducing your teen to high-interest savings accounts for funding short-term financial goals. While the interest they earn on small account balances might not be significant, teach them how .01% and 2.0% annual percent yield (APY) savings accounts compare.

For example, you’ll earn $20 in interest if you have a balance of $1,000 in a 2.0% APY savings account for a year. The same $1,000 will only earn $.10 after a year in a .01% APY savings account. Teach your teen that you always want your money making more money!

Once teens have accumulated some savings, they should consider investing too. The longer their money is invested, the more wealth they will build over time – even if they deposit tiny amounts.

Introduce your teen to simple investing terms and help them open an investment account. At this point, you want them to use the “set it and forget it” investing strategy knowing that this is money for long-term goals in the very distant future.

5.  Use the Power of Compound Interest

Your teen now understands why they should use a high-interest savings account. After all, teens love money! Why should they settle for a local bank only giving a few pennies of interest when an online bank lets you earn dollars?

Now it’s time to show them the power of compound interest. When they invest money, and it starts making money, they’ll keep earning interest on top of interest. If they leave the money invested over several decades, they’ll see the “magic” or power of compounding – even if they never add more money to the initial investment.

Compounding interest

Time is the critical factor in building wealth through compounding. The earlier your child starts investing money, the more they’ll earn in the long run.

If they don’t believe you, show them a graph from investor.gov of a $10,000 investment at 4% interest compounded monthly over 30 years by using their compound interest calculator. Without adding any more money to the investment, the $10,000 grows to almost $34,000.

Your teen can try out this calculator for themselves to see how different initial investments, interest rates, compounding frequency, and years invested affect how much your money will grow over time.

6.  Understand Gross vs. Net Pay

When your teen gets a job, they’ll count the days until their first paycheck. But the excitement of getting paid can turn to disappointment real fast.

When your teen calculates what their paycheck should be, they’ll likely multiply the hours worked by their hourly rate. But kids don’t realize, or they forget there are withholdings and deductions taken from earnings.

If you want to prevent your teen from being shocked by their first paycheck, make sure they understand gross vs. net pay.

Money will be withheld for federal income tax, Social Security tax, Medicare tax, and any applicable state or local income taxes. There may also be deductions for any retirement plans your teen may be eligible for through their employer.

Your teen should know they may receive a refund after filing a tax return if too much money has been withheld from their paychecks during the year. But they should get used to planning their budget on their net pay instead of the higher gross pay they anticipated.

7.  Good vs. Bad Debt

Teens need to learn about different kinds of debt. While all liabilities need to be repaid as a part of every budget, one type of debt can move you forward while the other holds you back.

“Good debt” is money you borrow that helps you reach your goals. Student loans can be considered good debt if they help your child earn a degree leading to employment.

But the amount of good debt someone takes on can also be a real problem. The average student loan debt per person in 2019 is over $30,000.

Teens should consider all of their options before taking out massive student loans to fund their education. Is community college for two years an option? What about living at home or graduating from college in three years instead of four?

You want them to avoid “bad debt” at all costs. Bad debt usually carries high-interest rates and is often used to purchase our wants instead of needs. Swiping a credit card too often can put teens in a cycle of debt that’s hard to recover from.

8.  Your Credit Score Matters

As young adults age, they may be able to open up credit cards. Even with small lines of credit, your teen can make mistakes such as making late payments, keeping high balances on their account, or only making minimum payments.

This can prevent them from paying off their debt and negatively impact their credit score. A cycle of financial problems results when credit card debt grows.

Range of credit scores

Teens need to understand that building a high credit score can save them money on costs, including car insurance or cell phone contracts. When your teen is ready to leave the nest for their own apartment, having a high credit score can increase their chances of approval on rental and loan agreements and may save them money on utilities.

Teach your teen that their credit score can be damaged quickly by irresponsibility. Also, consider talking to your kids about reviewing their credit report each year to make sure no one has opened an account in their name.

Tell your teen to watch out for sites that want you to pay money to get your credit report. Everyone has access to a free copy of their credit report from each of the three credit bureau’s once a year from annualcreditreport.com

9.  Big Loans Can Really Affect Your Life

Teens can be faced with adult-level decisions when it comes to taking out large sums of money for things like cars and college. Before they earn a steady paycheck, they can be thousands (or tens of thousands) of dollars in debt without understanding how long or difficult it will be to pay the money back.

A car might only cost $10K to them – or a few hundred dollars a month. But young adults forget that’s only one expense they’ll have as they become more independent.

When teens consider college loans, they’re thinking about their first “real” job and how big their paychecks will be. They may not realize they could be paying back loans for decades – even if they have good jobs.

Teens considering big loans need to use student loan calculators and look at loan amounts, terms, and interest rates to better understand the debt they want to take on.

If they’ve already tracked expenses and started using a budget, have them project all of the expenses they could have as a young adult and compare it to their net pay from a career that interests them. When you add in a student loan payment, the idea of taking out a big loan may not seem like such a smart decision.

10.  You Can Be an Entrepreneur Without Taking on Much Debt

Some teens are natural entrepreneurs and have terrific ideas for starting small businesses. But they may spend time online trying to figure out how to grow their business – including spending too much money to get their business started.

You don’t want to dampen your child’s enthusiasm by only talking about money. But you also don’t want your teen (or yourself) to take on too much debt before you know that they’ll stick with the business. And that it will be profitable.

Help your teen figure out ways to market their business, get the equipment they need and find customers for as little money as possible. This will also help them make money faster because they won’t have a debt to pay off.

If their business takes off, they can put their profits back into their company to help it grow. Or they can find other low-cost options to help scale their business.

Posted in Discipline in kids, Financial freedom, Kids, money management, Parenting, teaching teens

Pocket money for a two-year old? How to teach children about money

Posted on by Tim Connolly
“A weekly allowance is great way to help kids to manage their money. There is no better way to help children learn to manage their money than to make their own mistakes.”

If your children, like so many, enjoyed a Christmas of munificence, the sight of an overflowing recycling bin and ever-too-swiftly discarded presents may have left you with a slight sense of the Grinch. But if cutting down on the amount of presents your children receive from friends, family and Santa is out of the question, how about opting for an alternative tack: taking the time to instil in teaching kids about money.

Yes, they may still end up getting too much in your eyes, but they may also have a greater appreciation for how much things actually cost. And you never know: convincing your offspring of the benefits of financial prudence might just help you keep your own finances in check this year.

It is hard to dispute the fact that childrens’ expectations today have risen sharply when it comes to Christmas and birthdays – and even in day-to-day life, when eating in a restaurant or getting a takeaway is not an unusual occurrence.

If you’re a parent, you’re probably already familiar with a child coming home from school bemoaning the girl or boy who received 20 presents from Santa or €1,000 for their communion.

“My sense is that children seem to get much more compared to previous generations; it’s probably a function of prosperity and the consumer society we live in,” says financial adviser Simon Shirley. A parent himself, Shirley’s seven-year already has his eyes on his Christmas 2017 wish list.

This environment of relative bounty means that it has never been more important to educate children about just where all those presents come from or risk having them reach adulthood unable to adjust when the parent turns off the financial tap.

For Marah Curtin, head of client engagement at Davy Stockbrokers, it’s never too young to start teaching your children about money. “The value of money, how to earn it, and save it, and maybe even share some with those less fortunate, are all good lessons to learn as early as possible in life,” she says.

Curtin runs Davy’s Cents for Kids programme, aimed at teaching young children about money. She says that even very young children do grasp the basic concepts of money and budgeting.

And the earlier you can start, the better.

“We’re not raising children, we’re raising responsible adults,” she says. “One of the biggest mistakes is to wait until they’re in their teens to start talking about money.”

Pocket money at two

Whether to give weekly pocket money, how much, at what age, and whether it should be linked with household tasks is something most parents will grapple with at some point. Not Curtin, however. When her eldest child was just two years old, she started giving him an allowance.

“A weekly allowance is great way to help kids to manage their money,” she says. “There is no better way to help children learn to manage their money than to make their own mistakes.”

She suggests that children should get €1 per year of age. So, for example, a five-year old would get €5 a week and a 10-year old €10. “As the child gets older, the money increases, but so do the responsibilities associated with receiving that money.”

And don’t be tempted to put your hand in your own pocket when the inevitable happens and the child spends their money too quickly. If they waste all their money on Pokémon cards on a Friday and have nothing left for a treat on a Saturday when their siblings are eyeing up an ice-cream, let them suffer.

“Don’t bail them out!” advises Curtin. “Too often parents don’t express that there are limits.”

Sometimes, we as parents take the easy road; when you’re busy, stressed, under pressure, isn’t it easy (if you have the means) just to buy whatever your child needs rather than make them to wait to save for it, and possibly endure the associated whingeing that comes with it?https://tpc.googlesyndication.com/safeframe/1-0-37/html/container.html

Maybe, but it’s not always the best option.

This Christmas, Curtin’s 12-year-old learned a life lesson when he found a gift under his tree that he may not have dreamed of – his school uniform. Earlier this year, he lost his school tracksuit and, rather than putting her hand in her pocket to buy him a new one, Curtin put it on his Santa list. So, while he may have gotten all the traditional trappings of a 12-year old as presents this year, he also had to sacrifice one of his gifts.

“It’s a big lesson for him,” she says.

Pleasure of saving

For many kids, the joy of getting money is in spending it. But others will take as much pleasure in saving it. The key is instilling the benefits of delayed gratification and encourage those who are loathe to save to do so.

A nine-year old getting pocket money of €9 a week, for example, won’t immediately have enough for a new Barcelona or Leinster jersey. But if they are taught how to save, and manage to do so, the benefits are twofold.

“It’s quite satisfying for a child to get something they want to buy with their own money; it’s an incredibly important goal,” says Curtin, “It’s empowering”.

Ron Leiber, a New York Times personal finance writer and author of The Opposite of Spoiled, suggests that parents give their children three money banks, rather than the traditional one, with each one labelled “give”, “save” and “spend”.

To make it even easier for kids to understand the impact their saving has, use transparent jam jars so children can see their money grow. It also introduces the concept of giving something away to charity.

So, if a child gets €9 for example, you could encourage them to put 20 per cent (€1.80) in the “save” jar, 10 per cent perhaps in the “give” jar (which can be donated to a charity of their choice at the end of the year) and the rest in the jar for spending.

When it comes to teaching children about money, many parents may be looking to recreate the days when they got their Henri Hippos and little blue savings book from the bank. But for younger children especially, understanding the link between a bank account and their money may be a step too far.

“It doesn’t always make sense to open an account,” says Curtin, pointing to the charges and minimal interest. “It can actually cost to have money in the bank.”

Instead, keep it simple by adopting the money bank solution outlined above. “I really think the power in teaching children about money is keeping it tangible,” she says.

SSIA for the home

So, instead of earning maybe €1 in interest every year, an easier and more concrete way of encouraging your children to save is by running your own family-style SSIA scheme. This could see you offer an extra €1 for every €10 saved, or you could add a €5 to every €20 saved, or some such approach.

Anther option is to encourage children to convert their money into “Cyril Squirrel” savings stamps at the post office. You can buy a stamp for just €1, and younger children will enjoy sticking them into a savings card and watching them grow.

The downside of these stamps is that, to cash them in, you have to lodge them to an existing Post Office deposit account, which you may not want or need. And savings stamps may not be as tangible a sign for a child, in the way a tower of €1 coins in a jam jar is.

For older children, a bank account can be a useful way to introduce them to the formality of finance, or even a safer place for their funds once they start raking it in after their communion.

“I remember vividly I got £29 for my communion and opened an ICS building society bank account with it,” recalls Shirley. “It’s a good way to gain an understanding of money and get into the savings habit”.

When the time comes to buy new football boots, a new swimsuit or school bag for the child, rather than go off and do it yourself, get the child involved in shopping around for the best price. Thanks to online shopping, it doesn’t necessarily mean a tortuous expedition to your local shopping centre.

“Take advantage of teachable moments,” says Curtin, who adds that the weekly shop is another good place to get children involved in looking for the best value.

For tech-savvy older kids, there are plenty of apps available that they might enjoy using and which will help them track what they’re spending their money on.

Financially sheltered

It may be tempting to keep children sheltered from the harsh realities of your family’s finances, where you may not have enough money for everything and struggle to stay afloat. After all, why burden them with this knowledge when still so young?

However, a little knowledge, delivered in a child- or teen-friendly way, can offer an important early exposure to adult life.

“In my teenage years, I understood how much my father was earning. The sooner they [children] are exposed to this, the sooner they grasp it,” says Curtin, noting that some people may feel ashamed to tell their child that they don’t have the money for something.

“We don’t want to worry children, but it is okay to say ‘we don’t have money for this because we’re saving for this right now’. The more we talk about decisions, the more our children become aware.”

Shirley suggests taking it a step further and equating something the child wants with the amount of work needed to generate it. So, for example, if a Lego set costs €100, then this could mean 11 hours work in a shop.

“Childhood should be carefree,” he says. “But a child should have some sense of what the family can afford and not afford.”

Posted in Discipline in kids, Financial freedom, money management, Parenting, teaching teens

The Most Important Life Lesson to Teach Your Children

Posted on by Tim Connolly

Across the country, or even statewide, we don’t currently have a formal process for teaching our kids about their finances, but we should absolutely be teaching our kids about their finances. There are lots of different ways it can be done, but the important part is that kids grow up with an understanding of spending only what you have, contributing to savings and that one day, they will have bills to pay. When we instill ideas in our kids from an early age, we help ensure they are prepared when that first credit card offer comes in the mail, and when they go out on their own and have to pay rent and utilities. How you go about teaching your kids is up to you. 

Lots of people don’t want to share their personal financial situation with their children, and I personally think that’s totally fine. There are lots of ways you can focus on teaching money management for children without sharing your own details. Here are a few examples that I have encountered among my friends and family.

1. Decide on a Savings Plan

Pick a percentage you think is reasonable, and let your kids know that a percentage of any birthday checks they receive or babysitting money they earn will go into savings and explain to them that this is a habit they want to have for the rest of their lives. People I know who have done this chose a percentage higher than what you would probably save in the real world, in an effort to set their kids up to have a good amount in savings by the time they enter the real world. The exact amount you choose is up to you, but I like this idea because it gets kids thinking about saving and starts the habit of not spending everything you earn early on.

Other friends of mine have let their kids spend any cash they receive, but any checks go into savings. For birthdays and things, often checks will be larger than cash amounts given, so this can be a good plan for building your child’s savings account, but is less translatable to the real world. If you choose this plan, I would use it in conjunction with other methods of teaching your kids about personal finance.

2. Mandate a Savings Account Minimum Balance

As your kids get older, the toys and things they want seem to increase in price. For those items they really want and are willing to spend their own money on, come up with a savings plan for them. Allow them to spend what they want as long as their savings account has a certain amount in it. Or make the savings account they normally contribute to like the adult version of a retirement account, and explain that they can’t just empty it when they want a new toy. Instead, they’ve got to save up by not spending their future income and put that money away separately towards a certain goal.

3. Turn their allowance into a real world income

This is the most complicated one, but perhaps the one that would teach them the most about how the world of personal finance really works. Each week they receive an allowance for chores completed, which effectively equates to their paycheck. Once a month, they have to pay some of that back to you for various expenses, which would represent, rent, utilities, groceries, etc… If you choose to go this route, you will want to make sure their allowance is enough that they can pay you a portion back and still have some left for spending, and of course the amount they would pay you back would simply be so they get the idea, not necessarily a real world portion.

How you choose to teach your kids about personal finance depends on how much effort you can and want to put into it, but the important part is that it is something that is talked about. Whatever method you use, take the opportunity to explain to your kids how things will work when they go out on their own and help them set up good habits now that will serve them well later on. Hopefully these ideas have gotten your creative juices flowing.

Posted in Discipline in kids, Financial freedom, Parenting, teaching teens

How to Teach Teenagers About Money

Posted on by Tim Connolly

They are four years old one day and 34 the next. And we don’t mean that time flies. We mean teenagers are all over the map in terms of their maturity.

Once they get past age 12, they are adults in training. As the grown-up of the house, it’s your job to teach them what they need to know so they can survive on their own when it’s time to move out. If you don’t prepare them for that, then don’t make plans to remodel their bedroom. They’ll still need it.

You are the parent, so act like it. Sit down with your kids one by one and show them how to make a budget. Find out what they spend their money on and work out a plan with them. Don’t make it for them. Let them give mature input. Let them know that this budget is theirs. If something is out of whack, you can correct it, but you’re not babying them. You are letting them set their own priorities. Make sure that they know that.

Teach them about having long-term savings goals. At this age, their own car is probably the first thing on their minds. If they want one, they can pay for it. Both of you should put down in the budget what they should save each month, and for how long, before they have enough to pay cash for a ride. Early exposure to goal setting helps to give them patience and vision, two things they’ll need in life.

This should be a given, but no credit cards! A teen with a credit card is only slightly less dangerous than one with a loaded gun. Don’t fill their brains with that “you need a card to build your credit” crap. That’s for people who want to make a life habit of borrowing money. Break that cycle before it even gets started by teaching them to not borrow.

The great thing about providing financial education for kids is that the feeling of responsibility spills over into other areas of life. Money is important to a teenager, so someone who is careful with how much they spend won’t carelessly hang out with the wrong crowd or be foolish about not making grades in school. That sense of accountability will permeate their lives and help them behave.

It’s all right if your kids don’t think you’re cool because you are on their case about money. A parent who is most concerned about being liked by their kids isn’t a parent. He or she is more like a jellyfish. Neither has a backbone.

Love your kids enough to properly teach them about being adults. If they are deeply in debt with a marriage hanging by a thread in 30 years, what are you going to say? “Sorry, son, that I didn’t teach you better … but at least you thought I was cool when you were a teen!”

Posted in Financial freedom, Kids, money management, Parenting, teaching teens

Talking to Kids About Money

Posted on by Tim Connolly


92 per cent children in India read books for fun, says survey | Parenting News,The Indian Express

From starting a piggy bank to sending your kid off to college with a credit card, helping kids learn healthy habits around money can take a lot of work — and patience.

But teaching teens about money early on will help them cope with challenges like setting limits, planning a budget and resisting impulse buys. There are a lot of different ways to help kids get smart about spending, but we’ve put together some basics to help parents get started.

Start young

Although it’s never too late to develop good money habits, starting the conversation when children are young will make things easier down the line when the stakes are higher. Dr. David Anderson, senior director of the ADHD and Behavior Disorders Center at the Child Mind Institute, suggests beginning to talk about money when your child is in second or third grade. “That’s when most kids’ math skills get to the point where they’re able to understand this kind of arithmetic.”

Talk about money

Talking comfortably about finances is an important part of helping kids developing a healthy relationship with money. “Talking about money can’t be relegated to a one-time conversation,” advises Lynne Somerman, a money coach and founder of The Wiser Miser. “It needs to be part of the day-in, day-out conversation. As money topics come up and your kids are around, talk about them as openly as you feel comfortable.”

One way to do this is by including your children in basic financial decisions. For example, at the supermarket you can look at the circular together to see what’s on sale before deciding what to make for dinner. Or you can ask them to make budget-based decisions, like they can have one pair of more expensive shoes or two pairs of cheaper ones because you have only budgeted so much for shoes.

You can also start the conversation about why some things cost more money. Ask your kids to help you compare prices and examine product claims. Is it essentially the same product but more expensive because it is a name brand? Or are their other factors that might justify a higher price, like better workmanship or more humane farming practices?

Model responsible money habits

Kids look to parents for cues on how to behave — and money management is no exception. A big part of teaching kids good financial habits is making sure you’re modeling them yourself. Let your child know what the expectations and norms around money in your family are by setting easy-to-follow examples. A few things to try could be:

  • Setting a budget before heading to the store, and sticking to it when you shop, even if that means leaving a treat behind.
  • Being open about saving money for things like vacations, a new car, college funds and retirement.
  • Teaching kids to fix things when they break, instead of throwing them away.
  • Avoiding “retail therapy,” or shopping with the goal of cheering yourself up.
  • Imposing a waiting period to guard against impulsive purchases. Are you still thinking about that pair of shoes a week later?

When parents model good behaviors early on, kids get the message that being smart about money is part of growing up, says Dr. Anderson, “and limits become something that follow much more easily.”

Allowance

One of the most common ways to introduce kids to the idea of responsible spending is by giving them an allowance. How much you give is up to you, but any amount can be a great way to teach kids money basics.

The first thing to think about, says Dr. Anderson, is “what behavior should be tied to receiving that money.” Of course there are times, like a birthday or holiday, when a child may get money as a present, but an allowance should be seen more like a paycheck —something earned rather than a weekly gift. These expectations, whether they are tied to academic achievement or chores, should be clearly laid out and discussed.

Spending and saving

The next thing to think about when it comes to allowance is how they will spend their money. This is where parents can begin to introduce lessons about budgeting, saving, impulse control and delayed gratification.

One way to do this is to start by creating a savings account. “We’ll often encourage parents to pay kids a certain amount of their allowance in cash for spending, and a certain amount that’s not flexible that goes into their savings,” says Dr. Anderson. Start by agreeing on a savings plan with your child, and have a conversation about what he’d like to save up for. A few ideas could be:

  • A trip to his favorite amusement park
  • An upcoming movie he’s been looking forward to seeing
  • A toy, game or item of clothing he wants (but doesn’t need).

Once your child has saved up enough money to meet his goal, Dr. Anderson suggests giving him the chance to decide if he’d like to use it, or keep saving. That way, he says, “Kids can decide when to dip into their savings and when something is meaningful or valuable enough that they want to spend some of the money they’ve saved.”

Talk about value — and values

Another tactic that has become increasingly popular is to break down the child’s money into three categories: spending, saving and donating. This not only gets children to think about budgeting and delayed gratification, but also teaches them to “think about their place in the larger world,” says Dr. Anderson. Deciding what causes to donate to can be a valuable family conversation.

Somerman agrees. “Talk about income inequality and poverty, too, as examples come up in your life or on TV,” she suggests. Understanding that not everyone has the same amount of money — and the same access to things money can buy, like food, toys, clothes or even a comfortable home — will help kids get a better sense of what’s really important.

For older kids, parents can maintain this strategy while introducing greater independence into their decision-making. Somerman recommends something like a simple envelope system. Parents should sit down with their child to decide what they are expected to pay for with their allowance, then break those things down and put the budgeted money into specific envelopes. Categories might include clothing, transportation and general “fun money.” Whatever they don’t spend gets rolled over to the next month; likewise, if they didn’t budget enough for, say, gas, it might have to come out of fun money. Seeing the money in the envelopes (and especially watching it disappear) can make spending seem a lot more “real,” especially compared to paying for things with a debit card.

If there are some things in the budget that aren’t flexible — like saving for college — then that money might bypass the envelope system and go straight into a savings account.

Helping kids with ADHD

If your child has ADHD, managing money can be a particular challenge.  “Some of the major behaviors that we see with kids with ADHD,” explains Dr. Anderson, “involve not being able to delay gratification, not considering the downstream consequences of a decision and prioritizing perhaps a small initial reward over a larger one that might happen later.” These can all lead to poor financial decision-making.

Another potential hurdle is that, because there is a genetic component to ADHD, parents of children with ADHD often have the disorder themselves. It can be particularly challenging for parents who struggle with executive functions or organization to teach kids good financial habits, especially if the parent doesn’t feel that they have mastery over their own finances. “That’s where a good therapist or mental health person can help,” says Dr. Anderson.  Working with a  professional can help struggling parents improve their own money habits, and make it easier to pass those skills along.

Let them make mistakes

At the end of the day, one of the hardest parts about teaching kids about money is that they will inevitably make mistakes, and those misjudgments result in real, tangible financial loss. However, it’s important to give kids room to test out certain behaviors and learn from the consequences.

When the child makes a mistake, especially an expensive one, it can be tempting to take away all responsibility and privilege forever. But keep in mind that it may take some trial and error (and patience on your part) for kids to learn good habits. “The reality is,” argues Dr. Anderson, “we still have to figure out how to help them practice those responsible behaviors at some point, or else they will never learn them.”

Posted in Financial freedom, Kids, Parenting, teaching teens

How to Teach Kids About Money: 19 Tips and Activities

Posted on by Tim Connolly
How to Teach Kids About Money | If you’re looking for learning ideas to help you teach your children financial literacy, we’re sharing 19 tips and activities that work. From practical tips for parents, to simple work stations for teachers, to budget-friendly games and toys, these ideas will teach your child how to be a financial superstar. #moneyactivities #teachkidsaboutmoney #financialliteracy

Unlike most of my friends, we didn’t have a ton of disposable income when we were growing up, and my mother made me earn every single penny of my weekly allowance. From laundry and ironing, to vacuuming and scrubbing toilets, to preparing dinner and helping with the groceries, weekends and summer vacations were not a time for me to sit back and relax.

There was always a list of jobs I needed to complete before I was able to talk on the phone or hang out with my friends, and while I found this highly irritating and unfair when I was a teenager, I do appreciate the time my parents took to teach me the value of hard work and the importance of planning and budgeting. It definitely served me well when I was a poor 20-something trying to make a name for myself in the corporate world!

With that said, I’ve always questioned whether I was forced to take on too much independence and responsibility too soon. I have memories of my mother cutting sleepovers short when I was in grade 6 so I could spend my Sundays ironing my school uniforms, and I resented the fact that my summer afternoons were spent making beds, scrubbing toilets, dusting, and mopping while the rest of my friends were allowed to do whatever they pleased. It just didn’t seem fair.

Of course, hindsight is always 20/20, and while I have no intentions of enforcing the same kind of expectations and responsibilities on my own daughter, I’m the first to admit I’ve done a crap job of teaching her about finances. I’ve fallen into the trap of wanting to give her more than I had growing up, and now that she’s getting older, I’m starting to realize I’m not exactly doing her any favors.

So, I started researching tips to teach kids about money and I not only came up with some really great ideas, but I also found some spectacular activities to teach kids about money to boot.

Finances for Kids: Why It’s Important

When I first started poking around online for basic tips to teach kids about money, I assumed most parents start to teach their kids about finances at a really young age, and was surprised to find the opposite to be true. Not only are parents neglecting to teach their kids money management skills, but schools aren’t doing a great job either, which doesn’t bode well for our children’s financial future.

Teaching your kids about money goes above and beyond making them appreciate what they have. It also teaches:

  • Good work ethic
  • Delayed gratification
  • Wants versus needs
  • Accountability
  • Planning and budgeting skills
  • How to borrow money wisely

At What Age Should I Teach Kids About Money?

If you think you don’t need to worry about teaching your kids about money until they become teens, think again. A lot of the literature I’ve read suggests parents should begin to teach kids about money when they’re about 4-years-old, and that an allowance can be successfully introduced as early as 6 years of age.

Of course, the communication needs to be age-appropriate and will progress as your child gets older, but the sooner you start to teach kids about money, the more financially responsible they will become.

9 Tips for Teaching Your Kids About Money

Put savings in a clear jar. One of my favorite tips to teach kids about money is to replace their ornate piggy bank with a clear mason jar. This helps them visually see their savings grow over time, which can be extremely motivating.

Demonstrate what things cost. We live in a day and age where we pay via debit or credit card for almost everything, and while we can all agree the convenience of these methods of payment are fantastic, they don’t do much to help us in our quest to teach kids about money. Wherever possible, make it a point to pay in cash so your child can better understand what things cost. This lesson is most effective when your child uses the money in his or her savings jar to pay for something as they can visually see the impact the purchase has on their savings.

Be a good role model. If you want your child to grow up to be financially responsible, remember to model the same behavior yourself. Be deliberate with your purchases, and show your child the process you go through when weighing the pros and cons of your financial decisions. The more you get them involved, the sooner they will learn.

Enforce daily and weekly chores. As I mentioned at the beginning of this post, I had a lot of household chores on my shoulders each week as a child, and while I was very hesitant to put a chore chart in place for my own daughter, I have learned that a little accountability can go a LONG way in the life of a child. CLICK HERE for a list of age appropriate chores and chore charts I love!

Provide monetary rewards. Everyone seems to have their own opinion when it comes to giving their child an allowance. Some believe tying an allowance to chores provides motivation, teaches financial responsibility, and teaches kids the rewards of working hard, while others feel paying children an allowance in exchange for household chores teaches them that housework is an undesirable behavior. Whatever your take is on this debate, finding ways for your child to earn money regularly is a great way to teach them about finances.

Provide additional money-making opportunities. Whether you choose to pay your child an allowance or not, finding additional ways your child can earn money throughout the week/month can go a long way to teach them about money. This could be as simple as helping out with seasonal chores like raking leaves and shovelling snow, or lending a helping hand while you’re cleaning out the garage, preparing a holiday meal for your extended family, or taking on more responsibility when another family member is sick or injured. There are always ways to get your child involved, and providing a little monetary compensation can go a long way.

Teach the art of delayed gratification. Another great tip to teach kids about money is to enforce a one-day waiting period after your child sees something he or she wants to buy. This will provide you the opportunity to have some really great conversations with your child.

You can help your child evaluate how much he or she has in his or her savings jar, how much the item costs, and how much will be leftover in an attempt to make him or her understand the implications the purchase will have on future spending opportunities. You can also help your child see that time can oftentimes remove the emotion from spending decisions, making us realize we’d prefer to save our money for a more worthwhile purchase.

Set a budget. When your child reaches an age where he or she begins making purchases more frequently (i.e. buying lunch at school, going out to the movies with friends, etc.), make it a habit to sit down together each week to create a budget. Show your child how to allocate his or her funds such that important purchases (food) are covered first, and help him or her see the importance of thinking ahead (and finding ways to earn additional money) to cover nice-to-haves (entertainment).

Encourage saving. While my parents were great at teaching me how to set and stick to a budget, I didn’t learn the art of saving until I met my husband. Up until that point in time, I lived my life such that I spent every single cent of each of my pay checks, giving little thought to paying down my mortgage or credit card debt. He’s obviously the more financially responsible of the 2 of us – LOL – but I was amazed at how big a difference it made to automatically allocate a portion of my earnings to a savings account each month.

Teach your child to put a small amount of his or her weekly allowance aside each week and, depending on your child’s age, find ways to appropriately reinvest the money as financial education for kids is really very important. Younger kids may use their savings for a large purchase, while older kids can open a savings account and begin learning about compounding interest.

Posted in Financial freedom, money management, Parenting, teaching teens

9 WAYS TO TEACH KIDS ABOUT MONEY

Posted on by Tim Connolly

With inflation on the rise (gas prices, grocery bills, health insurance premiums, etc.) and many companies being more conservative, more American families are feeling squeezed. So if you’re feeling guilty because you can’t buy your child that video game system he desperately wants or send him to that trendy summer camp, Eric Tyson has one word for you: Don’t. In fact, he says, now is the perfect time to teach your kids some valuable financial lessons.

“Kids are surprisingly aware of what’s going on in the world,” says Tyson, author of the new book Let’s Get Real About Money! Profit from the Habits of the Best Personal Finance Managers (FT Press, 2007). “And if they don’t know that times are a little bit tough and Mom & Dad are having to watch their spending, it’s time to tell them. Sheltering kids from financial realities does them no favors. You should start focusing on money management for children as it is going to help them in their future decisions.

Indeed, the opposite is true, says Tyson. A good grasp of personal finance is one of the most valuable life skills a person can have. And while previous generations may have been raised with the constant admonishment that “money doesn’t grow on trees!,” too many of today’s parents neglect that lesson. It’s time to change that – and the economic slowdown we’re in now provides a great incentive for doing so.

“In many ways, a slower economy can be a blessing in disguise,” admits Tyson. “It leads families to make a budget and stick to it. It forces them to be conscious about how they handle money. That’s good for kids. It shows them how the world is supposed to work.”

Ready to get started? Tyson offers the following helpful hints:


1. Realize that kids learn what they live. It may sound like common sense, but you – Mom & Dad – are your kids’ most influential teachers. When you ring up a barge-load of credit card debt, take out exorbitant mortgages or car loans, and fail to save anything, that’s what your kids come to see as normal. If you are modeling unhealthy financial habits, you can’t realistically expect your kids to “do as I say, not as I do.”

“Adults who live it up now and fail to save for the future can expect to raise children who are accomplished spenders and poor savers,” notes Tyson. “Be honest with yourself about the powerful money messages you’re sending your kids. If your financial habits are poor, overhaul them now. You owe it to your kids.”

2. De-program them. Kids are constantly bombarded with information about what things cost, whether it’s the fancy sports car they like or the wardrobe of their favorite athlete or actor, not to mention the 40,000 commercials that the American Academy of Pediatrics estimates the average American child sees each year.

What they aren’t bombarded with is knowledge on how to manage money effectively. And while schools are increasingly incorporating money issues into the existing curriculum, the broader concepts of personal financial management still aren’t taught. Frightening though it may be, some schools rely on free “educational” materials from the likes of VISA and MasterCard!

“These credit card titans provide materials that implicitly and explicitly support carrying consumer debt as a sound way to finance significant purchases and living expenses,” says Tyson. “In fact, VISA and MasterCard school-supplied resources endorse spending upward of 15 to 20 percent of one’s monthly take-home income to pay credit card and other consumer debts! Explain to your kids that such spending puts a lot of money directly into the credit card companies’ pockets, so of course they’re going to offer that advice…but that smart people don’t listen to it.”


3. An allowance is a great teaching tool. You don’t have to break child labor laws to find great ways to help your kids earn their allowance rather than just have it handed over to them. A well-implemented allowance program can mimic many money matters that adults face every day throughout their lives. From recognizing the need to earn the green stuff to learning how to responsibly and intelligently spend, save, and invest their allowance, children can gain a solid financial footing from a young age.

“A great time to start is when your kids reach the five-to-seven age range,” says Tyson. “Start them on some household chores, and explain to them that they will be paid for their work. Of course, the size of the allowance should depend, in part, on what sorts of expenditures and savings you expect your child to engage in and, perhaps, the amount of ‘work’ you expect your child to perform around the house. I recommend paying $0.50 to $1.00 per year of age. So, for example, a six-year-old child would earn between $3 and $6 per week.”


4. Start them saving and investing early. It’s never too early to start saving, and the sooner you can instill the importance of saving money into your kids the better. After they start earning an allowance, have your kids save a significant portion (up to half) of their allowance money toward longer-term goals, such as college (just be careful about putting money in children’s names as doing so can harm college financial aid awards). Tyson recommends that children reserve about one-third of their weekly take for savings. As they accumulate more significant savings over time, you can introduce the concept of investing.

“Rather than trekking down to the boring old local bank and putting the money into a sleepy, low-interest bank account, I prefer having kids invest in mutual funds,” says Tyson. “Another option is for kids to buy individual stocks. Kids can learn more about how the financial markets work and understand stocks better by sometimes picking individual stocks rather than using funds. Just be careful to keep transaction fees to a minimum and teach your kids how to evaluate a stock and its valuation and not simply buy companies that they’ve heard of or that make products they like. The money they are able to save and invest will be a huge help to them later on in life.”


5. Reduce their exposure to ads. The primary path to reduced exposure to ads is to cut down on TV time. When kids are in front of the tube, have them watch prerecorded material.

You can direct the television viewing of younger children, in particular, toward videos and DVDs. And for older kids, if you use digital video recorders (DVRs), such as TIVO, you can easily zap ads. But when an ad does sneak under the radar and set the kids to begging, address it. Explain to your kids that there’s never a good time for frivolous impulse spending – but it’s especially harmful when money is tight.

“Invest the necessary time to teach and explain to your kids that the point of advertising is to motivate consumers to buy the product by making it sound more wonderful or necessary than it really is,” says Tyson. “Also explain that advertising is costly and that the most heavily promoted and popular products include the cost of all that advertising, so they’re paying for it when they buy those items.”


6. Find entertaining ways to teach good money habits. You’ll probably be facing an uphill battle when trying to get your kids to sit down and learn about personal finance. That’s why it’s so important to find entertaining ways to instill good financial habits in them.

For younger kids Tyson recommends age-appropriate books like The Berenstain Bears Get the Gimmies. For late-elementary-school-aged kids, Quest for the Pillars of Wealth by J.J. Pritchard is a chapter book that teaches the major personal finance concepts through an engaging adventure story. You could also get them a subscription to Zillions, a kids’ magazine from the publishers of Consumer Reports, which covers money and buying topics.

“Another great opportunity to teach your kids about personal finance and get to spend quality time with them in the process is through board games,” suggests Tyson. “Monopoly and Life are two games that are very effective at getting your kids to think about the best way to manage money and plan whether they should spend or save.”


7. Teach them how to shop wisely. Family shopping trips, whether for groceries or something else, are likely to be your kids’ first encounter with spending. They’ll see you make decisions based on what the family needs, maybe see the occasional coupon used, and will observe how you pay. These trips are a great time to teach them lessons about money.

“Explain that being a smart consumer requires doing your homework, especially when buying more costly products,” says Tyson. “Teach your kids the value of product research and comparison shopping. Demonstrate how to identify overpriced and shoddy merchandise. Finally, show them how to voice a complaint when returning defective products and go to bat for better treatment in service environments, two additional tasks that are part of being a savvy consumer.”


8. Introduce the right and wrong ways to use credit and debit cards. Those plastic cards in your wallet offer a convenient way to conduct purchases in stores, by phone, and over the Internet. Unfortunately, credit cards offer temptation for overspending and carrying debt from month to month. Teach your kids the difference between a credit and debit card, explaining that debit cards are connected to your checking account and thus prevent you from overspending as you can on a credit card.

“Explain to them that credit cards should be used sparingly and then practice what you preach,” says Tyson. “Wean yourself off of using your credit card, and tell your kids why you’ve decided to do so.”


9. Encourage older kids to get a job. An allowance doesn’t have to be the only way for your kids to earn money. Your child’s initial exposure to the work-for-pay world can start with something as simple as a lemonade stand. Depending on age, he or she might do yard work for neighbors or offer babysitting services. And the fact that we’re in a recession makes it all the more appropriate for older kids to “help out” by getting a part-time job—especially to fund unnecessary purchases like DVDs or cool clothing.

“I had an extensive newspaper route for a number of years, and I cut lawns and did other yard work during high school and college summers,” says Tyson. “By holding down such jobs, kids can learn about working, earning, saving, and investing money. It also provides welcome relief for parents to not continually be the source of spending money. Working outside the home does raise some safety issues, so by all means be involved in ensuring that your child has a safe work environment.”

Besides the learning opportunities it presents, there’s another positive to the economic downturn, says Tyson. It forces families to be more thoughtful about how they spend their time – and this often leads to the stunning realization that money really doesn’t buy happiness.

“Often, the pricey toys we buy for ourselves and our kids and the lavish vacations we take are simply distractions from the people we love,” he says. “They send the message that it’s necessary to spend a lot of money in order to have a good time. It’s not, of course. The best things in life – friends, family, quiet evenings at home just being together – really are free. Sometimes it’s good to be reminded of that.”