Children and Money (Part II)

The following information comes from an informative pamphlet entitled “Putting Kids on the Road to Financial Independence,” published by Charles Schwab.

Jump Start the Savings Habit

Allow your children the opportunity to set down both a long term and a short term goal.

Teach them how to set aside a percentage of their allowance, gifts, or other money to achieve that goal.

Teach them how to calculate how long it will take to achieve that goal at different savings rates.

Young Kids: Decorate separate jars for each saving goal. Create a bulletin board to track progress.

Middle Schoolers: Help your child open a no fee savings account. Ask the manager for a tour of the bank and a demonstration of online banking.

Teens: For teens who work, help them set up direct deposit to put part of their paycheck into the saving account.

All Kids: As an incentive consider matching your child’s savings (25 to 50 cents on the dollar) or offer a bonus when they reach a goal.

Giving – It’s a Family Affair

Volunteer as a family

Teach children how to research and choose an organization to support

Match your children’s donations, DOLLAR FOR DOLLAR!

Make donations as a family

Smart Spending

Young Kids

Help a preschooler understand the value of money by giving a dollar for a snack. Let her pay for the snack herself, get a receipt, and keep the change. Encourage saving the change.

Turn grocery shopping into a bargain hunting game

Teach your children the basics of comparison shopping

Older Kids

Give them a budget to plan a family night out or a vacation.

Then teach them how to research an estimate expenses for transportation, lodging, meals, and activities.

Teach them how to make trade offs to stay in budget.

Be a hands-On Credit and Investing Coach

Teach your child how to balance a check book

Explain the basic use, risks, interest rates, and fees associated with the use of credit cards

Once the child has a checking account and a credit card, help them manage its use and the payment of bills.

Investment 101

This is free from me: Let your children participant in your investment activities as you discuss the purchase and sale of stocks, bonds, and other investment vehicles. Make it a family event. I once read a very good basic investment book by a very successful stock broker. Every Sunday afternoon his extended family would get together for a meal. His father, uncles, mother, and aunts would argue the relative merits of different investment strategies. As he grew older he was surprised to learn this was not normal for all families. He believes his skill with investments was born in these family arguments.

Back to Schwab

Ages 10 and up: Teach by virtual investment. Have your child select a number of different stocks and help him learn how to track their value, including “drip” reinvestment.

Teens: Open a custodial account and help your teen select and track appropriate investments

Young Adults: Once they are out on their own, continue to coach their use of money. Particularly encourage them to save for retirement.

Now just to lighten the mood a bit, let me share the best advice for any child, direct from Saturday Night Live!

http://www.hulu.com/watch/1389/saturday-night-live-dont-buy-stuff