You teach them the value of hard work and the importance of telling the truth, how to be a loyal friend and a good citizen. But you might be overlooking one of the most important lessons you can teach your children to help ensure they do well in life – financial literacy.
Several studies seem to indicate that many kids just aren’t getting the message about smart use of money and credit. A recent study by Sallie Mae found that the average credit card debt for college seniors is $4,100, and that 84 percent of all college kids have at least one credit card. Other studies have found credit card use on the rise among high school students as well.
Teaching kids about money and responsibility is an interactive, team effort, experts agree. Tactics that parents may find useful include:
1. Giving children a weekly allowance and helping them establish goals for their money, including saving some, investing a portion, donating some and spending a few dollars as well. This approach gives kids firsthand experience with how money will work for them when they’re adults.
2. Teaching them to be little bargain hunters. Parents should shop with children and help them understand how to stretch their dollars by looking for sales, comparison shopping, and avoiding impulse or advertising-driven buying decisions.
3. Instilling in children the value of saving. Teach them early to put a little away from all money they receive. Open a bank account with them and give them incentive to save by pledging a matching contribution for every dollar they save. And lead by example. When extra money comes into your hands – from a work bonus or gift – take your child with you to the bank to deposit the money into your savings account. Even such financial luminaries as Warren Buffet are getting involved. Buffet has lent his name and expertise to the Secret Millionaires Club initiative, a website and series of webisodes that strive to teach children financial literacy and entrepreneurship. Visit smckids.com/intro to learn more.
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