In recent years, more states have placed a focus on personal finance education in our nation’s schools, but only 13 states require that a personal finance course be taken as a high school graduation requirement according to the National Council on Economic Education. Although that’s up from seven states in 2007, there’s still much to be done. BlackEnterprise.com and Ylisa Sanford Seymour, CFP Senior Financial Advisor at Ameriprise Financial Services Inc., created some tips to help parents instill the value of money in their children and help them grow into fiscally responsible adults.–LaToya Smith
“The earlier you start, the more moneywise children you’ll have,” says Seymour.
As early as age five, use play money like Monopoly so that they understand that purchases require an exchange at a certain value.
Show them how to sort coins and teach them their value.
Share utility bills to show them the direct impact of their behavior, such as leaving lights on or running water when it’s not in use.
Use the grocery store as a learning tool. Make a grocery list and get kids to cut and organize coupons with you, review the weekly store circular for savings.
“In order to raise smart money children, you have to instill that there are certain things they need to do as members of the household,” says Seymour. “But there are extra things that they can do to earn money.”
Create chores they can do to earn money. For example, making your bed or setting the table are things you do as a contributor to the household, but cleaning out pet cages, raking leaves or doing things that are above and beyond the basics is an opportunity to earn money.
Suggested allowance amounts can be figured out using age division (For example: they earn half their age each week. 5/2=$2.50/week) but for older children who are capable or raking leaves, babysitting, cleaning out the gutters, etc. the wage should be based on the work that’s being done.
“My mother made me save 50 cents, give 25 cents and spend 25 cents,” Seymour recalls. “My charitable inclination was equal, but my savings was twice that.”
Open a bank account with your child. Check your local credit unions and regional banks for kids savings programs.
Teach them how to fill out deposit forms, make sure they see their passbook being stamped and explain bank statements.
Designate a percentage of their earnings for saving, charitable giving and spending. Giving can also include giving an item such as a toy to someone less fortunate for every new toy they get.