BIZTIPS - August 26, 2007

Biz Tips: Never Too Young for Money Smarts
Sunday, Aug. 26, 2007
By Art Hill

Personal money management should be one of the chapters in the owners manual that comes with a new baby. Unfortunately, even the manual that's available in bookstores only covers the first year. Beyond that, parents are on their own.

A special feature "Kids and Money" by Jolayne Houtz appeared recently in the Seattle Times. It was a reminder that good money management is one of those skills we all need, but few of us learned from our parents or share with our kids.

Most parents I talk with don't exactly ignore teaching their kids about money. But many think that because they haven't done a perfect job themselves, the shouldn't pretend to be a financial role model for their kids.

So teens learn to spend from their friends at the mall. They learn about credit cards when they max out the one they got with almost no credit check. They learn about loans when they're buried in student debt before they graduate. Tough lessons, and completely avoidable.

But where do we start? Our grandparents didn't talk about money because that was "private." Our parents didn't talk about money because they never "made it big." Now it's our turn to break the cycle. And that brings us back to the "Kids and Money" article.

According to author Houtz, simple, consistent steps work best. Here are a few.

Match your child's saving dollar for dollar. Like pledges to public radio and television, each dollar brings them closer to their goal, and a match provides a real incentive.

Save toward a specific goal. It doesn't need to be large, especially for younger children. One mother, a certified financial planner, gave her son two jars. One is for earnings -- allowance, chore wages, etc. Whenever money comes out, the receipt for what he buys goes in. The other jar has a picture of something he's saving for. At the end of the week, any money left in the earnings jar gets transferred to the savings jar.

Older children can learn from the website of the National Endowment for Financial Education. Parents can also share the ins and outs of insurance, a home mortgage, and weekly expenses with older kids. It doesn't mean you have to copy your financial statements or W2. It will just takes the mystery out of important areas of their adult lives.

Other tips include explaining how to compare products and prices, the difference between needs and wants, how to wait instead of buying on impulse. Think about setting a slightly higher wage for chores done without reminding. And consider a partial fine or extra work if a chore isn't finished.

None of this is perfect science, but neither is money management. The sooner kids learn that it's just another important skill for making the most of opportunities, the sooner they'll be able to navigate on their own. And that's also a reward for their parents.

Content © 2007 East Oregonian