PARENTING: Never too early to learn about money

BY JONATHAN HUNLEY

Published: September 25, 2008

Children can learn money lessons, too.

As Wall Street begins to look more like Skid Row, I’m glad that my son isn’t old enough to understand the financial world.

For one thing, it’s good that he can’t do the math and figure out that the amount of money in his college savings account has dwindled to where it would only buy a cup of joe at Starbucks — provided you add a couple of bucks to it.

Kidding aside, though, this recent unpleasantness made me wonder about the best methods for teaching children about money.

So, when I should have been searching for ways to generate college money, I instead decided to see what experts had to say on the matter.

Here’s what I found:

Forbes.com put it best: “If you can teach your child the difference between needs and wants, how to budget and how to save, your child will know more than many adults. But if you get it wrong, your child is likely to join the millions of Americans who rack up huge credit card debt and get stung each month by stiff interest payments.”

Exactly. So how do you go about doing this?

Many money-teaching Web sites advocate giving an allowance when your child is old enough to understand what it means. It can teach both saving and budgeting.

“Break the weekly allowance into bills and coins that will allow a small child to actually place the money in boxes, piggy banks or envelopes labeled … school, clothes, entertainment and savings,” Forbes advised.

The next step for older kids can be savings accounts and checking accounts. Sure, it’s great if you’re loaded and can just dole out wads of cash whenever your kids desire, but, even if you are, allowing your children to manage their own money teaches them responsibility.

And, ironically, once they understand a few things, children frequently exhibit an “instinctive conservatism,” according to CNNMoney.com.

“Instant gratification aside, once they learn they can buy things they want with money — e.g., candy, toys — many children will begin hoarding every nickel they can get their hands on. How this urge is channeled can determine what kind of financial manager your child will be as an adult.”

Speaking of adults, another easy lesson to teach is just being a good money manager yourself. Parents are usually the first example kids get for, well, everything. So if you have a healthy attitude about, and habits concerning, money, your kids probably will follow in your footsteps, no matter how much money you spend on shoes.

“Setting a good example is the most effective way to teach your kids about money management,” according to Forbes.com. “If they see you doing the right things with money, chances are they’ll follow your example.”

Which means my son may well end up being just as cheap as me.

On the bright side, though, at least he probably won’t be asking your kid for a loan.

Fredericksburg resident Jonathan Hunley is a columnist for Media General’s Stafford County Sun, and father to a 2-year-old son.

http://www.staffordcountysun.com, Stafford, VA

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