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Talking money with your pre-teen children

According to statistics reported by the American Savings Education Council’s 1999 Youth and Money Survey, 94 percent of participating students say they are likely to use their parents as financial information sources. That’s where the opportunity lies for parents wanting to make a difference in their pre-teen children’s financial attitudes and education.

Make finances a family affair. As a parent you’ve probably learned by now that it pays to be up front with your children by explaining in general terms how most of your income is spent. By comparing your income to such examples of monthly outlay as electricity, water and heat, your kids will come to understand that the family’s money supply isn’t “endless” and why their perceived share of the pot is often preempted by these monthly obligations. Another idea: when it’s time for vacation, involve the whole family early in the budgeting and planning process, and, once you are traveling, let them help you keep tabs on spending.

Provide experience with financial tools. As you go into a restaurant and produce a credit card to pay the bill, explain how credit cards work and the importance of using them wisely.

When your youngsters reach the age of 10, consider charging interest if you loan them cash so they will learn that it’s expensive to use someone else’s money.

This may also be a good time to bring them to a bank to open their own savings accounts. Allow them to complete the deposit and withdrawal slips on subsequent transactions and balance their accounts, pointing out the amount of interest that is accumulating.

To encourage aspiring investors, consider playing a stock market game with your kids. Give them an imaginary amount of money to invest and show them how to research and pick stocks of interest to them. By learning to get quotes from the Internet and the newspaper stock tables, kids can track their progress. Both gains and losses can provide valuable lessons in this process.

Adopt savings incentives. To help develop a savings mentality in your children, consider matching the amounts that they are willing to save. Obviously this can’t be a permanent arrangement, but it might make saving more appealing for kids having a hard time holding onto cash.

Serve as a positive financial role model. You can dispel the myth that there’s a money tree growing in your back yard by setting an example of sound financial management for your kids. To help set the stage for your family’s future, consult a knowledgeable financial advisor who can provide the guidance you need to become a solid financial role model and put your own goals within reach.

January 3, 2002

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