Experts urge parents to teach children about money

Apparently, the heads of AIG, Bear Stearns and Lehman Bros. never got allowances when they were growing up.

Apparently, the heads of AIG, Bear Stearns and Lehman Bros. never got allowances when they were growing up.

If they had, they would have learned to use their money – and presumably their shareholders’ money – more responsibly.

That’s what the word is from professionals in the business of teaching children about money.

Most people agree that children should be given the responsibility of managing their own money, and while many suggest an allowance, there also was support for chores, lemonade stands and the like. The most important thing, all agree, is to talk to your kids about money.

“It doesn’t matter if your family is low-income or high-income,” says Erin Scheithe, financial-education director for the North Carolina Bankers Association. “Everyone at any income level needs to be honest and open about how money is earned and spent and saved . . . People of all socioeconomic classes have trouble with debt.”

Kids who don’t get “the talk” from their parents will get their cues from the media, or from their friends at school, says Stacey Sherman, head of Family Life By Design, which coaches families in family management and financial literacy.

If your children equate having lots of stuff – like the family down the block with the movie room – with being wealthy, you may need to talk about debt. How you get it and the consequences.

And if you don’t have that conversation, they’ll pick up your feelings about money from watching how you spend and from the little things you say or don’t say, Sherman said. The message received may not be the one you want to send.

Of course, that leads to another rule for parents: Walk the talk.

If you preach fiscal responsibility to your kids, they’ll certainly catch you in the act of straying.

Sherman considers money an emotional issue fraught with the baggage we bring to it from our own childhood.

Sherman points to the book Rich Dad, Poor Dad: What the Rich Teach Their Kids about Money – that the Poor and Middle Class Do Not (by Robert T. Kiyosaki and Sharon L. Lechter) as an example.

When your child expresses a desire for something, do you say, “We can’t afford it”? If you grew up in a poor or a middle-class family, you might. A better option? “Let’s figure out how we can afford that.” One closes the door for opportunity, Sherman said. The other opens it.

Scheith also suggests talking to children about priorities when they express a desire for something.

“Rather than saying we can’t afford the new Wii game, say, ‘We’re saving $100 a month so you can to college,’” she says. “The difference between wants and needs is a fundamental lesson.”

Some tips to help you get started:

l Learn where you are in the financial learning curve. If you don’t feel comfortable talking to your children about money, it might be because you were never taught yourself.

l Check local community colleges for continuing-education courses on budgeting and investing, as well as area parks and recreation programs.

l Start the talks early. Explain where money comes from and where it goes: lights, heat, food. Explain what an ATM is (i.e., not free money).

H H H

Here are some resources for children, parents and teachers:

l Jump$tart Coalition for Personal Financial Literacy: This one is a clearinghouse for K-12 personal-finance educational materials. Geared toward parents but with some activities for children.

l A favourite is www.jumpstart.org/realitycheck, which is a quiz. Kids answer questions about how they expect to live when they get older: Eating out or at home? Buying CDs and movies? Public transportation or car? The site then calculates how much they’ll need to earn per hour to achieve that lifestyle. (www.jumpstartcoalition.org)

l Institute of Consumer Financial Education’s Children and Money: Information on saving, spending and credit info for both kids and their parents. (www.financial-education-icfe.org/children—and—money/index.asp)

l Investing for Kids: Designed by and for high-school students. It includes quizzes, tutorials and a stock-market simulation. (library.thinkquest.org/3096/index.htm)

l Stock Market Game: An electronic simulation of Wall Street trading for students in grades 4-12, sponsored by the Securities Industry Foundation for Economic Education. This one is for teachers. (www.smg2000.org/)

l Money Chimp: For middle school and up – parents may find it helpful as well. It offers explanations of what’s going on now in the economy as well as how to read an annual report. The graphics explain finance and an interest calculator and a get-out-of-debt calculator. Follow the links to learn how to calculate compound interest. (www.moneychimp.com/)

l Raising Financially Fit Kids by Joline Godfrey (Ten Speed Press, $19.95). Covers 10 specific money skills a child can master by the age of 18 and gives parents a step-by-step approach to raising habitual savers and smart money managers.

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