money
Cash-savvy kids. Finance writer Eric Tyson says the holidays are ideal for teaching children about money management. “Kids are surprisingly aware,” says Tyson, author of “Personal Finance For Dummies, 6th Edition” (Wiley, $21.99). “Sheltering kids from financial realities does them no favors.” He compiled the following tips for fostering smart-money habits.
Tell kids the truth. Rather than letting them wonder why lately Mom and Dad are working more or constantly talking about money, explain — in terms they understand — what’s going on in the family’s financial world.
How much do things cost? A great hands-on way to open kids’ eyes to what things cost is to take them on a “money tour” of the house. For example, kids might not understand that hot water costs more than cold water, or that bumping up the heat results in higher power bills.
Kids learn what they live. When you ring up a barge-load of credit-card debt or take out exorbitant mortgages or car loans, that’s what your kids come to see as normal. If you are modeling unhealthy financial habits, you can’t realistically expect your kids to “do as I say, not as I do.”
Deprogram them. Kids are bombarded with commercialism. What they aren’t bombarded with is knowledge concerning how to manage money effectively.
An allowance is a great teaching tool. It can mimic many money matters that adults face. From recognizing the need to earn to learning how to responsibly and intelligently spend, save and invest their allowances, kids can gain a solid financial footing from a young age.
Teach them how to shop wisely. Family shopping trips are likely to be your kids’ first encounters with spending. They’ll see you make decisions based on what the family needs, watch you use coupons when possible, and observe how you pay. These trips are a great time to teach them lessons about money and the value of product research and comparison shopping.
