A recent survey by Northwestern Mutual found that all kids between the ages of 5 and 7 had piggy banks and that the percentage of kids with savings accounts increased as they got older. Parents are doing a good job of teaching their kids the importance of saving. But more than 60% of parents didn’t address more complex money issues with their kids because they lack confidence in their own money management skills.
Like health, education and ethical values, money management skills are essential to our children’s long-term success, so why do so many families find it so much harder to address? And what can families do?
If you are able to keep to a budget and make bill payments on time, you can teach your kids. Set some age-appropriate goals. For grade school kids, start with the most basic:
For middle school kids, introduce forethought and planning:
For teens, introduce real-world money management:
There is still some debate about whether an allowance should be based on chores or just dispensed based on age. From a money management point of view, what matters is that kids have one -- starting about the time they can be trusted not to swallow it. Decide on a portion that must be saved and then give them a degree of autonomy to make purchases; kids learn more from making a bad purchase than they do from our warning them against it.
It can be argued that some kid-oriented web sites aim to create little consumers, but those that feature virtual money, shopping and earning opportunities, can also be a revelation. Just watch your material kid transform as he weighs the merits of a purchase against his own hard-earned loot.
You can’t save what you don’t have – talk with your parents about ways to earn money. Ask them if there are jobs you could do around the house and yard to earn some. Most kids start with mowing the yard, shoveling snow or raking leaves.
Did You Know:
The average life expectancy of a one-dollar bill is just 18 months -- but you can fold it 8,000 times before it will tear.