Magazine article Working Mother

Teaching Kids about Money

Magazine article Working Mother

Teaching Kids about Money

Article excerpt

Angela Amico Olchaskey thought she could use the economic crisis as a springboard to educate her daughter, Kiley, 9, about money, but her plan hasn't worked out so well.

"I'm finding it very hard," admits the Manchester, NJ, legal secretary. "Mainly because I have spending issues of my own." Angela admits that she likes to shop - a lot. So much, in fact, that when she recently took her daughter to see Confessions of a Shopaholic, Kiley turned to her as they left the theater and asked, "Mommy, are you going to have to sell all your Burberry bags?" Angela asked why, and Kiley responded, "Because you're a shopaholic, too." Angela was surprised - and stymied. Was it too late for her to teach Kiley better financial habits since she had flunked the role model test?

The good news is that it's never too late to start a conversation about money with your kids, says Diane Lang, an adjunct professor in psychology at Montclair State University in New Jersey. And if you need to work on your own spending habits, you can suggest you learn how to do this together. "Kids get used to certain habits," she says. "They might be used to getting whatever they want when it comes to toys and clothes, but you can modify that situation at any time." She suggests parents be honest with their children about the need to economize and help them get involved in the family's savings efforts. "Take baby steps with the changes," Lang says. "For example, tell your kids they can take one afterschool class instead of two, and let them pick the class. Don't cut out all afterschool programs."

Lang helps her own daughter, Lauren, 6, get involved with the family's shopping and spending. "I've taught her about money and options," she says. Lauren helps her mom write the grocery list, cut coupons and even pick out the sale items. Setting the right example is key, so work on being a strong role model. "Children learn through observation," Lang says. "As a parent, you don't want to tell your child one thing and do the opposite. This sends mixed signals."

If you're tired of feeling like an ATM, perpetually shelling out money for snacks, CDs, school dances and other extras, start by taking a look at your own spending habits. Next, follow these easy steps to help children of all ages learn to save, become more independent and discover creative ways to generate income.

Give them an allowance

If you decide to pay your child an allowance, experts recommend you consider several factors, including your child's age, your family's income and what the allowance will cover. Using a rule of thumb (such as iSi per each year of age) to set the amount is only a starting point. An allowance of $10 per week may be okay for a 10-year-old, but S15 a week may not be enough for a 15-year-old. You also need to make some realistic judgments about how much money your kids will need as they get older.

Maribea Berry, a readiness manager in Palo Alto, CA, asks her teenage daughters, Elizabeth, 16, and Katherine, 13, to use their allowance to subsidize birthday presents for their friends and special items for themselves. "They earn an allowance for helping around the house and working as babysitters and pet sitters," Maribea says. She sets a limit of $15 that she will pay for a friend's birthday gift. "If they find something that costs more, they must pitch in the extra money for the gift. So far they've been willing to do this."

Kristy Jackson, a career counselor in Sioux Falls, SD, gives her sons, Forrest, 7, and Cameron, 5, an allowance for doing chores like helping in the yard and big cleaning projects. But she also has them do some tasks without payment. "The chores they do for free include recycling, putting away dishes, putting away their laundry and feeding our pets," Kristy says. "We're hoping this helps them realize that families need to work together and that each member of the family contributes to maintaining a nice place to live."

Explain self-control

Gayle Flynn uses a back-to-school budget for clothes to help her younger children, Shannon, 11, and Elizabeth, 9, learn to set limits. …

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