The Value of Teaching Personal Finance Basics to That Poweful Little Consumer in Your House Ca$h-Wise Kids

Article excerpt

Advertising. It pops up everywhere like an outbreak of dollarweeds.

Much of it is aimed at kids, and it's no wonder. Children and teenagers wield a substantial amount of consumer power.

Advertisers know it. Even the children know it.

In 1999, advertisers spent $12 billion targeting children, according to Visa. In that same year, teenagers spent $141 billion, up from $122 the year before, according to Working Mother magazine.

Do parents stand a chance?

"Parents, I find, don't have confidence in themselves," said Janet Bodnar, a senior editor at Kiplinger's Personal Finance Magazine and the writer of "Dr. Tightwad," a nationally syndicated column. Bodnar was in Jacksonville recently promoting her new book, Dollars & Sense for Kids (Kiplinger, $17.95).

"They think they're up against the media, and they're up against the kids' peers. They think they can't compete with that. But believe it or not, you can."

According to a recent study by the Jump$tart Coalition for Personal Financial Literacy, teens whose parents talked to them about money had a greater knowledge of personal finance basics such as saving, investing and budgeting.

But parents shouldn't wait until their kids are teenagers. The key is to make learning fun and start talking about money as early as possible, as soon as kids are old enough to start asking for it.

"By the time they get to be in kindergarten they start asking you about it," Bodnar said. "They'll see things on TV and they'll start asking you about it and asking if they can have it. If they want to go to McDonalds and you say, 'Well, I don't have any cash,' they'll say, 'Well, just go to the money machine and get some.' "

"Well, when you think about it, that's all they know. They see you go to the little machine and push these buttons and money comes out. Tell them it's like a piggy bank."

The lesson: You can't get money out unless you put money in.

When you're walking through the grocery store, make a game out of comparing products and prices. Ask them which roll of toilet paper is the cheapest, for example. Compare the number of sheets on each roll.

The lesson: Comparing prices is important and some things aren't worth their price. On the other hand, sometimes it pays to spend a little more for better quality.

"I make it a point when I go grocery shopping to let my daughter hold the coupons," said Dawn Lockhart, director of Consumer Credit Counseling Service, a division of Family Counseling Service. "It's a symbolic thing. She knows that with that coupon we're going to save money, and because we saved money we'll be able to go out for pizza the next night."

While watching television, encourage kids to scrutinize commercials and advertising. Do fast-food hamburgers really look as tasty as they look on television? Did you notice the fine print or fast talk at the end of that commercial for that hot new toy?

If you're watching an athletic event, say a basketball game or football game, talk about careers and salaries. Why do people choose the jobs they choose. Why do basketball players make more than teachers? Should they?

It's called value-based money management.

"It's sort of giving them an little idea on where your family stands on things and what your values are," Bodnar said.

Board games are another fun way to make learning about money interesting for kids, Bodnar said.

"The Game of Life is one that my kids really like," she said. "It teaches them a lot about different kinds of things, tuition for college and buying things."

Monopoly is a family favorite, even for younger children.

"We used to change the rules to make it easier for them," Bodnar said. "Of course now they have Monopoly Junior, too. But we used the regular Monopoly. You could buy whatever you landed on and build houses on whatever you owned. …