Teach Kids Good Money Choices

By MVParents/PIO
June 27, 2009

In order to survive-and thrive-in our American culture, we need money. We need money to pay for the necessities of life. We need money to save so we can plan our futures. We need money to give so we can help make our world a better place.

Yet, how do we teach our children and teenagers how to earn well, save well, give well, and spend well when we’re bombarded with conflicting messages of how to use our money well as adults? Fortunately, we can help our kids make good money choices by teaching them key financial skills, talking about the values that guide our money decisions, and giving them opportunities that not only help them manage money well now-but also in the future.

Focusing on kids’ financial literacy is important for people from all income levels. It’s not about how much money you have (or don’t have), it’s about teaching kids the skills to manage money well so that they thrive. The National Endowment for Financial Education says that as little as 10 hours of personal financial education affects young people’s spending and savings habits in a positive way. With only 7 percent of parents from the same study saying their kids understand financial matters well, it’s time for all kids to learn the skills they need to make lifelong, positive money choices.

 

Facts from Search Institute

While 46 percent of adults say it’s important for adults to give financial guidance to children and teenagers, only 35 percent of adults actually do so.
Young people are more likely to save money when they have more Developmental Assets. While only 27 percent of young people with 10 assets or fewer save money, 70 percent of young people with 31 or more assets save money.

Young people are less likely to gamble when they have more Developmental Assets. While 30 percent of young people with 10 assets or fewer gamble, only 4 percent of young people with 31 or more assets gamble.

The Asset Advantage

Many of the Developmental Assets are core skills and values that are foundational to making smart money choices. These Developmental Assets include positive family communication, service to others, adult role models, planning and decision making, responsibility, honesty, restraint, family boundaries, positive peer influence, personal power, and positive view of the future. Having more Developmental Assets contributes to making smarter money decisions and avoiding high-risk money behaviors, such as gambling.

Ideas You Can Use Every Day

Talking about Money

Kids often complain that they never have any money. Help them see where their money comes from by asking how often they receive money from these sources: allowances, gifts (birthdays, holidays), extra jobs around the house, part-time jobs, things they make and sell to friends, or running a small business (such as repairing bikes or mowing lawns).

Talk about how your values affect your money choices. For example, how does your caring for others impact how you save, spend, and give money away? Why do you sometimes wait to make certain purchases? What does it mean to you to be responsible with your money?

 Every parent needs to (and should!) say no to some requests for money and purchases. When you do say no, focus on values and responsible decision making. Instead of saying, we don’t have money for that, say, “We use our money in other ways” or “This isn’t in our budget” or “We need to save money for a while to buy this.”

When you’re struggling financially, be honest with your kids about your situation. You don’t need to worry them with all the details, but it is helpful for them to learn that money isn’t magical. It doesn’t appear when you want it to. Invite them to be creative and join you in making decisions that are within your means.

 

Learning More about Money Management

Financial management can be overwhelming. There are so many aspects to it, and it’s easy to feel inept about money matters. Focus on what you know and build on that. Research money advice via the Internet or a good book at the library, such as Raising Money-Smart Kids. by Janet Bodnar.

Periodically read about money news in the newspaper, a newsmagazine, or the Internet. Today, a lot of news stories about the economy are making headlines. What can you learn from these stories? What issues do these stories raise to talk about with your kids?

Practicing Money Skills

When you give your child an allowance, have your child set aside a portion of the earnings for saving, for giving, and for spending. By doing this up front, you’re more likely to manage money beyond just spending it.

Although it’s helpful to teach kids that they cannot spend more than they have, it’s also helpful once in a while for your kids to borrow money from you and then pay it back on a regular basis. For example, if your child wants to buy a bicycle, a video game, or an mp3 player, have your child save up a certain amount for a down deposit and then figure out a payment plan (and stick to that plan every step of the way) until it is completely paid off.

Open up a savings account in your child’s name. Take your child to the bank at least three to four times a year to make deposits. Show how your child earns money by saving money.

Help your child discover a passion for a cause, such as saving the rainforest or helping endangered animals. Research good causes at Charity Navigtor.

Source: MVParents

Editor’s Note: We would like to know what you think? dan@youngchronicle.com