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Talking to kids about money
It's never too early to teach value of a buck
Published Thursday, August 23, 2012 2:12 pm
by Jada Grandy

“Money doesn’t grow on trees!" Generations of parents reiterated this adage to kids eager for a little extra spending money. Today, instead of getting “Aw, shucks,” and eye rolls in response, parents are likely to hear, “Can we go to an ATM and get some?” 

Jada Grandy

This is the challenge facing parents in America today. With the prevalence of online banking, children no longer see their parents balancing a checkbook, recording transactions in a ledger, or doing a simple task like visiting the inside of a bank.  All this consumer-driven convenience may be a good thing, but it can eliminate daily opportunities for parents to be personal finance teachers. 

So, what are parents to do?  Here are some tips:

1) Start early. The earlier parents start conversations with kids about money, the better. Begin by explaining to toddlers why Mom and Dad go to work every day. Explain that they work hard at their jobs so their family has money for their house or apartment, food, car, and toys.  Allowances for older children can work if regular payouts are truly the result of children accomplishing their tasks. 

2) Discipline with extras.  Parents love to shower their kids with toys and gifts simply because they can. But reserving extras as rewards for good behavior and recognition for hard work plants the seed that money and the things it can buy are the result of a positive action.  

3) Saving and setting goals.  Kids and teens who want something special — like a treasured cell phone – can be encouraged to make a plan to earn and save the money to pay for it.  Incentives such as parents chipping in a percentage of the total cost can be a good way to encourage the goal and the plan to achieve it.

4) Budget.  Learning how to budget is a vital skill for teenagers and adults alike. Playing games or doing an exercise at a store can be helpful — and fun. If a teenage girl loves to shop, assign her a task to buy a complete ensemble outfit for herself on a set budget. It will help her to prioritize items that are essential and to find creative ways to accomplish her goal with a set amount.  It also will help educate her about sales tax and hidden charges.   

5) Banking basics.  Many banks have student checking accounts. Parents may consider opening one with their kids and enabling them to manage it. Maintaining an account — including regular balancing — will teach kids that money needs to be managed at all times so that it doesn’t manage them.

6) Financial realities. Giving teens an appreciation for what things actually cost is crucial. Cell phones cost more than just the price of the phone.  There are often monthly usage charges for calls and texts. Billing children for even a portion of the monthly costs teaches them the true price of the things they have. 

7) Plastic primer.  While under their roofs, parents should encourage their children to only purchase things they have saved up for and can pay for in full. But as they reach the age of college and beyond, it’s important for parents to have conversations with their children about the dangers of credit use, especially interest charges, and the negative impact on their credit score if credit cards are not used properly.

8) The truth about taxes.  Taxes will assuredly be a part of your children’s lives—not only filing them once they get their first job—but also paying them.  Point out the line items on their paystubs between their gross and net income.  Parents can show their children their mortgage statement and explain the portion they pay in property tax. 

9) Charity = Caring.  It may be hard to convince a teenager working a job or doing chores for spending money to appreciate charitable giving.  But seeing parents giving and witnessing the satisfaction it brings, as well as the real help it offers, can underline that giving often its own reward.

10)  Keep talking. Encourage your kids to come to you about money questions and keep the lines of communication open.  Mistakes your kids make—like overdrawing an account or not paying back a debt—are opportunities for them to learn and grow.

“Understanding personal finance and having the discipline to manage a budget and save for the future are key factors toward achieving personal life goals”, says Grandy. “Also, reaching individuals at an early age is very important and that’s why Fifth Third now has financial empowerment programs geared toward kids and teens in place with Charlotte Mecklenburg Schools in addition to our community and workplace programs for adults.”


Jada Grandy is senior vice president of community affairs for Fifth Third Bank in North Carolina
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