Money Management for Kids
self help article
by Gary Foreman

Prosperity and financial wellbeing self help article:

"Our kids started learning about money before they were five. They each had small savings accounts at the bank by the time they entered school.

From the beginning we told them we would match any money that they put into their savings account. Everyday they see ads telling them to spend.

John and I figured it would be a good idea to help encourage them to save."

Mary looked at Judy's two toddlers and remembered when her children were that small. Was it really so long ago?

They were teens now and were pretty financially sharp (even if it was their own Mom who thought so!). Judy had just moved into the neighborhood and was taking an evening walk when she and Mary began talking.

"David and I just aren't any good with money! Our parents just used their charge cards and sometimes when they thought we couldn't hear they'd argue about who bought something."

"We began to give them a small allowance when they were about five. Not much, but enough so that they could see a toy and figure out how long they'd need to save their allowance to buy it.

"John and I were both raised in families that were intimidated by financial questions. So we wanted to put it in bite sized pieces for our kids. We took every opportunity to try to explain what different items cost. I remember when Junior thought that electricity was free. Boy, wouldn't that be nice!"

Judy smiled, but Mary could tell that her guest had a question. "Dave and I are just starting to learn how to budget. I'm afraid that we won't be able to teach something that we barely know ourselves."

"Don't worry about that." Mary's face displayed just a hint of a grin. "John and I couldn't figure that out either until older friends suggested that we play games with our kids.

We went to some garage sales and bought Monopoly, Monopoly Jr. and Life.

As we played we explained how rent, ownership and interest worked. Boy, I sure miss some of those evenings when the kids were smaller!

"When they were about nine or ten we began to expose them to the family budget. Not everything at first. We didn't want them blabbing to the neighbors what we were making, but enough so that they began to understand what food and clothes cost. John and I discuss our budget once a month and they became part of that family meeting."

Judy listened intently as her new neighbor continued reminiscing. "One thing that surprised me was that we had fewer arguments with them about designer clothes. Once they understood that our electric bill was $120 a month they were less likely to ask us to spend that much for Air-Whatevers! I can actually see some of our frugal ways rubbing off on them."

Judy's mind fast forwarded into the future. "Boy, I dunno. Dave and I are really pretty shaky about this budgeting stuff. You make it sound so easy."

Mary thought for a moment. Was it really that easy? Were her kids actually on the way to understanding how money really worked? "Well, at first we worried about that, too. But someone advised us to just break it down into a lot of small learning experiences.

We didn't try to teach them about debt and interest all at one time. But they learned a little about earning interest from their savings accounts. Monopoly showed them that you have to pay interest when you borrow money.

Each little bit added to their understanding. Before you knew it they saw why we refused to run a balance on our credit cards.

"It's really funny listening to them sometimes. When they got to be teenagers we basically turned over their clothing allowance to them. We set a few minor rules so they look presentable for school. But they shop for and pick out their own stuff. You can almost predict that in the first year they'll spend too much for things that their friends will like.

Then comes the hard part. When they ask for more money because their shoes are getting ratty you have to say no. But just last week I overheard my daughter on the phone explaining to one of her friends that if she bought this neat blouse she wouldn't have enough money to replace her underwear! It really was great! She's learned the trade-offs that all adults face."

A look surprise crossed Judy's face. "Boy, are Dave and I behind. We're still learning that one! In fact, just yesterday we made an appointment to see a stock broker for the very first time."

Mary was quick to encourage her new friend. "Hey, you're doing fine. Not only are you and David taking steps to put your finances on the right track, you're already making plans for teaching your kids. You should be proud of yourselves.

About fifteen years from now when you take these little guys to they're first meeting with an investment counselor, you'll look back and realize that it really wasn't that hard after all.

"Say, how about some lemonade? All this money talk has made me thirsty." Mary headed inside leaving Judy to her thoughts. Already Judy was thinking about how she and her husband could give their children an understanding of money that would last a lifetime.

If you were to look at Judy closely, you'd notice that she wore just the hint of a smile. It was the look of a mother dreaming about a successful future for her children.

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by Gary Foreman gary@stretcher.com
Gary Foreman is a former financial planner who currently edits The Dollar Stretcher.com website. You'll find hundreds of articles to stretch your day and your dollar. Visit today!

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