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The Online Advisor - June 1998
How to Teach Your Children About Money and Financial Matters
Sometimes we learn best by making mistakes, then vowing not to make the same ones again. If you believe this is true about learning to handle money, then you should let your children make financial mistakes while they still have you to fall back on.
You begin their education by giving them an allowance. How much? Of course, you'll have to consider the number of children and your own financial situation. The younger the child, the smaller the allowance, and the more often it's paid.
As the child gets older, raise the allowance and increase the responsibility. Expect teenagers to cover bus fare, school supplies, movies, video rentals, clothes, and presents for friends - and make the allowance fit. Talk it over with other parents so you don't get out of step.
Tip: Pay the allowance by check to teach your child about banking, and pay early in the week to encourage saving for the weekend.
Another idea: Let your child sit in on family spending decisions, comparison shop, talk about service contracts and warranties, sales and property taxes, and interest rates. You might even help a teen buy shares in a mutual fund. Let your teen try his or her own tax return before you offer too much assistance.
Finances complicate our lives, but they're part of adult life, and you're (almost) never too young to learn.