Teach Your Children Well

Your kids learn their money habits from you. Make sure they’re good ones.

Every Christmas, one of our customers says she gives her teenagers coupons for family outings: a St. Louis Cardinals game, a night at the ice rink, Maiden Alley tickets, and a purse with an invitation to volunteer at a local charity during the year. This mom believes that it’s important that kids see that charity isn’t just writing a check. It’s about helping real people.

Neale Godfrey, author of Money Doesn’t Grow on Trees, has some other suggestions about how we teach our children well about the world of finances:

Teach your childrenTeach the value of saving
Create a spreadsheet to explain the concept of compound interest to your children. It’s a great visual way of helping your kids to understand the concept of letting the money “sit there” and earn. There’s software designed just for that purpose called KidsSave. It creates a virtual account to track the real money in piggy banks.

Use technology
Tech-savvy kids have plenty of options for online money-education sites, such as kids.gov. But before they play with virtual money, they must be comfortable with the real thing. They need to touch dollars and coins, count them, stack them, and learn that they’re concrete things.

Walk the walk
Kids watch more than they listen to lectures; we all know that as parents. You may be the greatest money manager in the world, but if you don’t show and tell your children what you’re dong, they can’t learn from you.

Make allowances count
Kids should pay for actual expenses with part of their allowances, such as school book orders. It teaches kids how to make hard choices.

Go beyond spending lessons
Require kids to save, invest, and donate. They need to learn that money isn’t just for spending.

Create money-matching programs
Matching your kids’ savings, the way employers match money in a 401(k) plan, can be a powerful motivator. Grandparents might also offer matching funds.

Don’t be too generous
Even if you can afford to give your teens a comfortable allowance, don’t. By about age 12, kids should do small, paying jobs for friends and family members. By 16, they’re capable of getting summer jobs and saving for year-round expenses.

Godfrey adds, “Kids learn what they live. Teach them well.”