Talking with our children about money is about as difficult as teaching them not to be afraid of the blue monster under the bed, especially if you are not all that confident with your own money management skills. However Mary Karges and Eulalie Scandiuzzi of Seattle's Moonjar, assure us that if you consistently follow these 9 basic practices, starting as soon as the words "I want" emerge, you will experience great satisfaction seeing your kids develop sensible financial habits that will serve them well throughout their life.
1. Get the conversation about money started early and use tools. Start talking with your 4- and 5-year-olds about money concepts. Keep in mind that many kids are hands-on learners, so using tools, such as containers for allotting their dollars (or cents), will better help them learn concepts.
2. Develop a system of allowance and stick with it. Whether you follow a "learn-to-earn" format where children earn allowances through performing small chores or a "family-as-community" format where a stipend is given, stick to a regular schedule and avoid giving advances. Allowance is an opportunity to let kids interact regularly with money.
3. Teach your child to save money. Work with your kids to establish an ongoing system of saving. Help them to determine how much to save, setting short- and long-term goals, then discuss where the non-savings should be spent and shared.
4. Set goals and prioritize. Use pictures to help them visualize their goals and then prioritize what they're saving for, what they want to spend their money on, and with whom or with what they want to share their money.
5. Money is a means, not an end. Money represents the power and freedom to purchase or give as you see fit. Discussing the difference between wants and needs with your kids, as well as working with them to set goals, will help overcome the desire for instant gratification and provide good opportunity to determine values.
6. Don't be too critical of the choices children make. They will have different values and mistakes are a fine way to learn. The important thing is that they save, invest, spend and share with goals in mind and that they see the value of small but steady saving habits.
7. Encourage giving or youth philanthropy. Help your children understand that they are part of a larger community through discussions about sharing their money and/or donating their time to causes of their choosing.
8. Mutual funds are great gifts. Purchase a mutual fund for your child for special occasions such as birthdays or special accomplishments. Children love receiving mail, so have the statements addressed to the child and review the account values regularly with them.
9. Be a good role model. We all know our kids are keen observers of our behavior. As with many parenting experiences, this can be a good opportunity for you to improve your own habits. Even if it's new behavior for you, show your children that you are doing the things that you are teaching them. Let them in on your bill-paying habits, saving goals and how you decide if, when and where to make charitable donations.
Check out moonjar.com for tools, curricula and family giving guides.
