Any advice on Teaching Kids about $$$?

[mountainharts]

Does anyone have any advice or ideas on teaching kids about financing? When I was a kid I tried to make money lots of ways but never did anyone ever teach me about saving etc. I'm taking my daughter and a couple of her friends on a trip to the "big city". We're going to Denver for a "culture weekend". I would like to make it a learning thing too. Her friends will all have money that their parents have given them and a little they've earned helping me. I just thought I'd like to help educate our future on money.
Thanks a lot!
Michelle

[momof1in150]

Mary Hunt's, "Debt Proof Your Kids" is a great book.

[PrincessPerky]

I just have a couple general rules of thumb...mostly ones I have formulated after being on Saving advice for 2 years...some from my childhood.

1.Start talking now and never stop (Yes if you have a one day old, or even just pregnant, I DO mean you)

2. Admit your mistakes, and try to talk about how to avoid them with your kids. Buyers remorse, share with the kid, discuss return options or donations. Cutting cable to pay of debt, talk about how you got in it (medical, stupidity, job loss, whatever, TALK!)

3. Enforce certain habits just as you would brushing teeth, from saving 20%(10 long term, 10 retirement) to donations, to always checking for a sale or coupon...if you want a habit to stick help them practice (and lots of that practice)

4. let em try out those wings...once you have reduced the available income by 30% (give or take, saving donation ect)..let em buy the junky trinket or name brand shoes..it is their money, not yours. Mention how soon you think it will break, or how much cheaper the same shoe with no swoosh is, but let them fall, and be there to pick em up. Much better to do it now than after college when the available fall is soooo much greater (there is a reason we learn to walk when short and in diapers! cushioned, and not far to fall, money isn't so different)

[FrugalFish]

Like most things with kids, I think it's best to teach by example. I also think that children have to make some of their own mistakes, so better to start early so they can learn on cheaper mistakes- i.e. the cheapy thingamawidget broke and the child learns to be more cautious about how they spend their hard gotten money.

I know so many people who are very private about money, even towards their kids. You don't have to tell them everything, just enough to give them working knowledge. I am also always surprised by how many parents manage their childrens' money for them; they decide that something is a bad use of the money and won't allow them to use their allowance, gift money, etc on the item. I think a disappointing purchase teaches kids much more about being wise with money. Many of the people who make this mistake are naturally frugal people, they mean well, but ultimately miss the mark.

A few years ago one of our friends decided to teach his demanding teenage daughter about the family finances- seeing that she always wanted him to buy her things. Once he got done being very open with the family finances- what came in and what went out- she looked at him very earnestly and asked him how he ever managed to make ends meet. It paid off for him because then she understood how little extra there really was and she stopped bugging him a bit.

CC and young people are my biggest fears for my DD (who is a toddler). When she gets to be a teenager, I will extend her a $500 line of credit from the Bank of Mom. This credit will have all the same sorts of fees, penalties, interest rates, due dates, etc. that a real CC does. Maybe she can learn about credit the easy way from me rather than from some predatory CC snake when she finds herself off at college.

Fishy

[mwgr5]

The other posters covered great ideas.

I think just exposing your children to investing and finance in any way at a young age is great. Also, it is important to be a good financial example for your children, as many learn financial habits from parents.

[Lori63]

Our Credit Union is holding a class for kids 15+ and I am having DS2 go. It's just a one time session and if he picks up anything it will be worth it (it's free).
The above posters pretty much say what I would say.

[jedi]

I came across this book:

"Raising Money Smart Kids: What They Need to Know about Money and How to Tell Them" by Janet Bodnar

Perhaps it might interest you.

[Daniel_Shop]

Very good advice Princess,

I will take those tips for my own family

[neatdesign]

I don't have kids, but I recently learned how my brother and his wife have started teaching my 6-year-old nephew about money. Their approach sounded really smart to me.

They give Jacob $2.50 per week for allowance, but there are conditions:

1) He must give 25¢ to his church (10%)
2) He must put at least $1.00 into savings
3) Anything remaining is "fun money" that he can spend any way he wants
4) If Jacob wants something, then he has to save up for it himself; he's not to rely on his parents chipping in to help him buy something

Jacob has already learned the hard way that he must really THINK about how he wants to spend his money, and that everything has a price. My brother told me that Jacob blew through money he got for his birthday in March, and then was disappointed when he didn't have anything left over to buy something he really wanted several weeks later. So he is learning not only to save but also to BUDGET whatever fun money he has so that he gets the most out of it.

I overheard Jacob talking to my sister-in-law about wanting to buy a certain DVD. She told Jacob that he'd have to save up his fun money if that's what he wanted to buy. He asked how much the DVD costs, and she said it was probably around $15. He thought for a second, then said that he didn't know how long it would take for him to save up that much money, but he knew it was a really long time. (Remember, he's six -- even two weeks is a long time to him!)

My SIL then said, "Well, I'll make a deal with you: If you work really hard to save up half of the DVD price, then we'll pay for the other half." (She had to explain that one-half would be $7.50.) He got very excited and said he couldn't wait until he got his next week's allowance so he could start saving for this DVD!

BTW, they don't give him an allowance just for existing! Jacob has chores he's got to do around the house, and he can actually earn more money by doing certain "extra" chores (like helping his dad wash the car). He's not required to do these extra chores, but he's learned that by working harder, he gets a bigger reward.

~ Jenney