Munchkins and moola

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Munchkins and moola

PRACTICAL ADVICE

Every Saturday in Life, you’ll find instructive, helpful news that you can apply to your life.

Uh-oh. In a recent survey, 81 percent of parents said it’s their responsibility to teach their children about money and savings. But guess how many of 13- to 21-year-olds surveyed said that their parents actually did that? Twenty-six percent.

“When kids start getting money in their hands, that’s when you should start teaching them how to handle it,” says Tracy Fors, vice president Marketing and Business Development for Wright-Patt Credit Union. “Figuring out that today’s money decisions have an impact on tomorrow is an extremely valuable life lesson.”

As with other involved subjects (religion, sex), it’s best to impart knowledge and family values in an age-appropriate way. Little ones get little lessons. For college-bound ones, instructions should get fairly detailed extending to matters such as checking accounts and charge cards.

Allowance is a good way to begin for kids to understand and manage money. Some parents say kids learn the value of work by getting allowance as payment for chores. Others say pitching in is expected from all household members and allowance is a thing apart.

But many of those who give allowance with no strings attached also allow children to earn more. “When we gave an allowance, we kept it small so it would not cover all their needs and wants,” says Kathy Stonecash, Springboro mom of four now-grown children. “The kids received a small allowance, and they helped with dishes and chores to earn extra. When they had ten tokens, we went to buy Star Wars guys. That system worked. My fairly-willing helpers had something to look forward to for their labors. It evolved as they aged.”

More important than how you give allowance is teaching your children to handle money.

“Help your children to divide their money into three categories: saving, sharing and spending,” says Fors. Money categories can be kept in separate jars, envelopes, small boxes or other containers; make sure your child is sticking to their plan.

The saving-sharing-spending allotment lasts into adult years.

Middletown mom Teresa Kohl, now seeing her 21-year old son budget his earnings and college spending, made sure he had a money plan as he was growing up. “Michael got one dollar a week. Twenty-five cents went to savings and 25-cents went to what we called his Jesus bank, to donate to worthy causes,” she said. “The rest was to spend.”

Saving

Kohl’s plan was smart, according to experts. “Generally speaking 10 to 50 percent of money should go into savings, to grow for a larger purpose,” Fors said.

Savings goals can be simple and short-term for younger children (think Lego’s Harry Potter Hogwarts set). With older children, talk about long-range purposes such as a piece of electronic equipment, then perhaps a car. Some parents match dollar-for-dollar on large goals. Discuss with your children what they are responsible for with college expenses.

Check with your bank or credit union to see if they have special savings accounts and activities for children.

Sharing

You can impart family values by helping your child share their bounty. Great discussions happen when you explain how you yourself give to others — and listen to your child’s ideas. Do they want to do something about hunger or religious causes or helping others in need?

“Our Middle School students run a small school store and sell pizza on Fridays to the student body,” reports Julie Beall, director of Alexandria Montessori School in Centerville. “They decide what to do with the money. In the past they have used their money to do high ropes courses and zip lines, and support several charities such as the food bank and the Red Cross. Letting them make decisions about spending and sharing is an important part of maturing.”

Spending

Having a reasonable amount of money to spend is the best way to learn how to make consumer decisions.

“Helping children answer the question ‘Will I be satisfied with this purchase six months from now?’ is an excellent way of teaching smart spending,” Fors says.

But parents should be careful to not micromanage. After all, the best way to learn the thrill of worth-it spending — and the agony of a stupid mistake — is to do both while still young.

Teach a child about finding a bargain. “I took my young son to garage sales where he got great bargains on videos, games and small toys,” Kohl says.

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