Teaching Kids About Money: Teens

Teens have one foot in their parent's home and one foot out with the rest of the world.  The 'real world' is fast approaching, but often times these kids are not prepared to deal with fiscal responsibility.  Here are a few tips for your teens:

• College:  Around the end of eight grade or freshmen year of high school, you need to have a discussion with your teen about college.  This is an investment that is very important, but you don't want them paying for it for the rest of their lives.  As a parent, you will need to start to research how it will be payed for and involve your child in that discussion.  Also, insist that your child start a savings of their own. 
• Getting A Job:  Nothing teaches the power of a dollar like earning it yourself.  This part-time gig should not interfere with school or sports, but it is an important part of the puzzle.  The more flexible the hours, the better.  Even regular babysitting or lawn mowing can be very lucrative.
• Learning about investments.  Even if you are not a financial wiz yourself, you can always steer your child to good resources.  I have even heard of buying stocks as gifts so your child can learn to follow the market.  There are sometimes accounting groups or other clubs at the high schools.  My husband thinks that entire classes should be taught in high school about personal finance. 
• Credit Cards:  By the time your child hits junior or senior high school, they need to start to understand how credit works.  Talk about interest rates, 'teaser' rates to get you hooked and other tricks that credit card companies play.  Experts suggest sitting your teen down and going through your own credit card bill to explain grace periods, due dates and other potential foreign things.  If you decide to let your child have a credit card of their own, continue to go over statements together to ensure smart shopping.  In my opinion, it is imperative that the basics of credit be taught either way.  When you child reaches college, there will be opportunities around every corner to sign up for credit cards.  If your child is not equipped with the knowledge of how credit cards work, things can get out of hand very quickly, just ask my husband.  He learned many of these things the hard way. 

These are not always easy things to talk about, but I think that it is important to be honest about your financial history.  If you don't know an answer, don't be afraid to say you need to look it up.
Good Luck!

Teaching Your Kids About Money: Tweens

Ahh, the tween years... Trying to find your place, still wanting to play like a kid sometimes, but hormonal changes can make you act like a teenager other times.  Some gawky, some just finally growing into their faces. Here are some thoughts about children this age dealings with money:

• Set savings goals:  As you child ages a little bit, he/she are more able to think about saving for a special item or experience.  For example, an eighth grade trip, a trip to Cedar Point or an iPod.  Whatever the goal is, help your child to set up a savings plan that will enable them to pay for necessities while they are saving for their long term goal.
• Giving to Charity:  Even if it is only a little money, this is a great time to start learning to give to worthy causes.  Let your youngster research and pick the charity. 
• Kids this age might be starting to shop by themselves (with friends, not you).  They are also extremely brand conscience.  Experts suggest telling your tween to wait a few days before buying something.  Another approach is to have him/her make a list of pros and cons about the coveted item.  If he/she still wants it, help them go online to comparison shop.  Kids, like adults, love getting a deal, but often they do not have the patience or know-how. 
• Plastic, the inevitability:  Let's face it, the probability of this generation being card carriers is high.  Why not teach them how to use it wisely while they are still solidly under your roof.  Experts say that a good first step is an ATM card tied to their savings account.  Your child can draw from funds saved himself (Christmas, birthday, allowance, etc.)   Plus, you can track spending online and nudge them back in the right direction, if need be.  Experts also suggest opting out of overdraft protection fees.  If they go over, it is important they learn what can happen.  Make them work to earn the money for the fees.

The sources I used for this post are

• Konrad, W. (2011, October 17).  Boosting Your Kids' Money IQ.  Family Circle, 59-62.
• http://life.familyeducation.com/money-and-kids/money/47957.html?page=2&detoured=1

Teaching Your Kids About Money: School Age

Once children reach school age, they can start to understand a lot more about money.  Here are a few things to think about with your school age children:

• Identifying Money:  Make sure your kiddo knows what each coin/dollar represents.  A good way to know if they really grasp this is to ask (while holding one of each), "Which is worth more, a dime or a nickel?"  The nickel is bigger, so those that are still catching on will often choose that one.
• Making Change:  Present various situations and have your kiddo make change for you.  This is more applicable once they can do the math.
• Being Responsible with money:  If they lose their lunch money or misplace that Christmas money, you can't replace it.  (Or, in the case of the lunch money, they have to earn it back).  This will teach them to be more careful. 
• If you decide to give an allowance, be sure your kiddo stays within his/her means.  Help them set up a savings plan if they want to save for something big.  Just like mom and dad.
• Discuss your household budget on broad terms.  You don't have to use numbers, try a pie chart so you can illustrate how much is allocated to each category.  Go to mint.com to create your own household pie chart.  This helps kids realize how little is really left over after meeting all of the family's needs.
• Let your school age kids shop with you.  Have them use a calculator to add up the total of what the bill will be.  They can make it a game to see how close they will get.  They can also calculate price per unit and determine what is the best deal. 

Any way you can include your child in financial decisions helps to eliminate the mystery and also gives them confidence when moving into the tween/teen years.  It is then that they will really have to start being responsible with money.

Teaching Kids About Money: Babies Through Preschool Age

You can't really teach babies about money, but you can do a few things to set them up for their financial development.  Here are a few suggestions:

• Set up a savings account for them as soon as you get their social security card.  You will need their social security number to set up the account, so don't try before then. 
• Buy bonds for birthdays or other special occasions.  There are several different types of bonds that mature at different rates.  You can find all you ever wanted to know about bond at this website.  My dad gave each of us a bond when we were born that matured about the time we went to college.  I know this doesn't seem very exciting for the little kid, but think how excite you would have been to receive this at your high school graduation. 

Once your little ones reach preschool age, you can start to discuss money and what it is used for.  Here are some tips for the preschool kids. 

• Let them deposit money they have earned into their savings account.  Many banks have little incentive programs that will help reward their savings. 
• Once your kiddos are old enough to hand scissors, let them help you cut coupons.  Even if you don't completely trust them, give them a coupon that you know you won't use to cut and let them sit at the table with you.  They feel important.  When they get a little older, you can even have them help to sort them.  This is a good time to talk about how things cost money and what the coupons are for.
• PNC bank has a program called, For Me, For You, for Later:  First Steps to Spending, Sharing and Saving.  You can sign up for a free kit at pncgrowupgreat.com. 
• Have your kiddos do little extra jobs to save for things.  Right now we have an envelope on the fridge for a "little boy who needs a toy".  This came out of a fit that my four year old threw after we did not buy something at the store.  We got home and discussed why he acted like he did.  I realized that he had no real concept of what money was.  He said, "You swipe the card and we take the stuff home, Mama."  See, even us Frugal Fort Wayne sisters don't know what we are doing!  My son is going to have to take a toy for a little boy to Sunday School at Christmas time.  We decided that he could learn a little about money by saving up so he can pick out something and buy it himself.  He gets quarters to put in his envelope if he does extra work. 
• Kids at this age just love being around their parents, so anything you can do to include them in your quest for frugality is one step closer to educating the next generation.  Good Luck!

These are just a few ideas.  How do you teach your preschoolers about money or frugality?  We would love to hear about your ideas, too!

Teaching Kids About Money: Frugality is a Learned Practice

Around our house, if you ask my kids what we do with money, you'll get a standard response from my four and 6 year olds.  "You spend some, save some and give some away to people that don't have enough to buy food."  Recently, I read something that suggested adding a fourth category for investing.  That is great idea as well.

Getting started early and having honest discussions often are great ways to prepare your kids for a stable financial future.  Granted, my kids are still little, so I haven't been successful yet.  However, my parents were very forth coming with myself and my sisters about the management of finances.

Kate and I are not experts in the realm of money.  Kate's degree is in marketing and I test blood and body fluids as my second job (mom first).  So, any information we are sharing is just what we have learned (by trial and error) ourselves or we have researched.  When it comes to teaching your family, it is up to you to determine what's best for each of you. 

I think the concept of frugality has been diluted since the days of the Great Depression.  Our Grandma (the farmer's mom) was a product of this and our dad passed this on to us.  When you raise 11 kids on a farming income, not ever knowing what next season will bring, you definitely rely on faith and using everything to it's fullest potential. 

However, it is my thought that many who were children of those who lived through the depression did not want to 'deprive' their kids, so this culture of materialism and 'keeping up' was fostered.  In comes the credit card, combined with parental guilt and now you have a generation that doesn't know how to say no to anything. 

This isn't anybody's fault.  It just means that many in our generation simply haven't had frugality instilled in them.  Kudos to you that are trying to teach yourself.  Kate and I just lucked into it!  In fact, we learn new things daily, too. We hope we can help others learn, because this way of life isn't going away. 

This week I am going to talk about different ways to teach your kids about money.  Most of what I say will be based on web research and some of it is things we are doing or were taught.  As always, we love comments, good or constructive criticism.