How to educate kids on money matters

Some experts’ advice on imparting fiscal responsibility to your little ones:

• Don’t teach, just talk. “You don’t need to be the teacher, just talk to them,” said JumpStart’s Levine. “That will raise their awareness and pique their curiosity.” If you don’t know the answer to one of their financial questions, research it together.
• Get them a piggybank – or a spending account. It’s a better method to practice spending than a credit or debit card, and it creates a mechanism to get them saving. When the Froehle children received their first communion, three-quarters of the money they received went into their savings account. “We show them how much money they have in the bank and that encourages them to put even more in there,” said Froehle.
• Give them a goal. Levine recommends having them save for something they want, no matter how young they are. Start younger children by having them save for a toy that they could purchase with a couple weeks worth of allowance.” If you start with saving for a bike, that might take a whole year’s allowance and they may not make it that long,” she said. “Starting small still teaches delayed gratification and the concept can then be applied to bigger, costlier things when they’re older.”
• Monitor their use of plastic. If you’re going to give them a debit or credit card, teach them how to use it, Levine said.  "You don't give a child a musical instrument and then say, 'Plunk around on this for a while a see if you can learn to play. There has to be teaching and practicing.” Sit down with them to go over their monthly statements, and talk about issues like interest rates and the importance of paying on time.
• Have a “Family Money” night. The NEFE encourages families to have a night where everyone sits down to discuss all financial issues from planning family vacations and holiday gift-giving budget to what home improvements and credit card charges to make. "Pull out your credit card statements to show what’s being put on the plastic," said the NEFE’s Neiser. "All these decisions involve the kids too, so increase their awareness level of the issues and they’ll have a higher appreciation of why you keep saying, ‘We can’t afford it.' "
• Tone down the consumerism. Show them the value of discounts and sales. "I don’t buy clothes to excess, I go to sales racks, I clips coupon, anything to save money," said Froehle. "I try to set good savings examples and I think my children have learned to do the same through me."
• Use extracurricular activities. Besides school and the home, there are other places to learn about money. The Girl Scouts, Boy Scouts, and the Boys and Girls Club offer financial literacy lessons. The Money Camp, a weeklong day camp, teaches the middle- and high-school set about basic financial literacy (it also offers home-based lessons). Campers learn about investing, savings, credit, stocks and bonds, and real estate. The final day of camp is spent on field trips to retailers, banks and investment firms. Contests earn play money that kids can trade for prizes.
• Turn them into investors and donors. Talk to them about the stock market and how they can invest. "If they want a McDonald’s Happy Meal for the toy, tell them there’s a way to own a piece of McDonald's," said Neiser. "Then they can understand how and why the company markets toys to boost profits, and that may also make them understand — and become more skeptical about — corporate marketing strategies." Making charitable contributions can also help them understand how money can improve the lives of others by meeting needs instead of just wants.
• Make them work for it. The typical start is assigning chores for allowance, but as they get older encourage them to look outside the house for work, such as dog-walking and mowing lawns. Foster emphasizes the importance of part-time jobs for teenagers. “We found that working part-time as teenagers was the number one common denominator among financially successful people. Getting a check every pay period makes them understand the importance of taxes and managing money wisely.”

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