Teaching Kids the Financial Facts of Life (continued)

One topic of debate is whether it’s OK to pay for basic chores around the house, such as cleaning up the bedroom or taking care of the dog. “Some experts believe that paying for chores is a way to help children understand that if you want money you need to work for it,” says Judith Cohart, director of education for the non-profit National Foundation for Credit Counseling in Silver Spring, MD. “But many others believe it’s only reasonable to expect children to help out as members of the family. They also say an allowance is for teaching money management, not for bribes or punishment.”

When it comes to jobs outside of the home, parents need to be especially careful. Example: An older teenager who has an after-school job for less than 10 hours a week may learn good business skills, earn some extra money and still have enough time for studies and socializing. But a teen working more than 20 hours a week could have problems keeping up in school and could be losing out when it comes to family and friends.

4. Play “show and tell” while you manage your own money. If you expect your kids to become responsible with their money, and yours, you have to practice what you preach. Serve as a good example of what it means to save, spend wisely and share with others. You’ll make more of an impression on your children if they can see and hear what you’re doing to manage your money. Here are a few suggestions.

Around town: Take your child to the bank, visit different departments (be sure to include a stop by the big, shiny vault), and even explain a bit about how money deposited in insured accounts is protected by the government against loss. Take your child along as you shop for the best values in everything from clothes to cars. Volunteer together on behalf of a local charity and show that helping others is important and meaningful. Dianne Dodson, a Los Angeles-based bank examiner for the FDIC’s Division of Compliance and Consumer Affairs, also suggests that when you use your credit card you also use it as a teaching tool. “Credit and charge cards are probably the most recognized forms of credit to young people,” says Dodson, who recently won a local volunteerism award for teaching inner city youth about financial responsibility. “Parents can explain that credit provides a way to buy now and pay later. But they should also explain that it’s important to pay your credit card bill — and all your bills — on time, or you can face interest charges or even be denied credit in the future.”

Around the house: Let your child perform simple tasks associated with preparing deposits or investments, paying bills or balancing the checkbook. He or she also can help you clip coupons or check the sales advertised in the newspaper. Have family discussions about where to go on the next family vacation, how much it might cost, and what needs to be done to afford it. If you have a problem with a product or service, your child can help you send off a complaint letter to a company or consumer protection agency. Discuss your charitable contributions and ask your child to help you prepare them, even if just by stuffing checks into envelopes.