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We Are All Financial Stewards by Mindy Sitton-Halleck

“Human beings have the remarkable ability to turn nothing into something. They can turn weeds into gardens and pennies into fortunes.”
~ Jim Rohn

Do you have children who are old enough to keep coins out of their mouths? Then it’s not too early to start teaching them about the more practical uses of money.

A look at today’s economy reveals a long-neglected need for solid financial guidance. Learning how to manage money is a critical step in becoming a responsible adult, but unfortunately very few high school seniors have even an elementary grasp of the financial concepts involved in managing a checking account. Credit is considered a source of income for many, and its overuse has led to out-of-control debt, bankruptcy and even foreclosure.

As parents we can usher in a new era of responsibility. By spending just 30 minutes a week teaching children the basic principles of money management, we can sow the seeds of financial stewardship that will empower them throughout their lives. We can prepare them for adulthood in our global economy with self-confidence and a better understanding of the world they live in.

1. Start early. When children are young you can introduce them to money in fun ways. Create math games that incorporate the basics: five pennies equal a nickel, four quarters equal a dollar, and so on. Be active and engaged in your lessons. You can find a lot of ideas at www.moneyinstructor.com/games.asp or www.usmint.gov/Kids/games/.

2. Talk about it. If you don’t talk to your children about money and all the other things that influence their lives, who will? Use everyday situations to discuss how you budget your income to pay monthly bills, save for holidays or vacations, and how they can help. Check out www.pioneerthinking.com/homeeconomy.html for a list of practical ways children and teens can economize around the house. If they can help cut the electric bill from the previous months from, say, $150 to $130 by reducing their own usage and reminding other family members to do the same, reward them the difference. The first time.

3. Give ownership. To really understand money, children must have some of their own. Even if it’s only a few dollars a week, let them decide how to use it. They may choose to save it for a rainy day or blow it on candy. Whatever their decision, it will come with lessons about managing money: either pride in seeing their piggy bank grow, or the real cost of instant gratification.

Use a weekly allowance as a motivator, reward system and way to establish good money habits. Start with a dollar for each year of age. Decide on appropriate ways for your child to earn money, through chores, extra jobs or other opportunities. Giving children money for nothing can easily create an entitlement attitude and does not help them learn responsibility. Create a chart of household tasks and what you are willing to pay for them (Laundry = $3.00, Dishes = $2.00, Vacuuming = $5.00, etc.) Visit www.bankjr.com/classroom with your children and introduce them to ways they can produce income, budget it, save it and share it.

4. Break down basic principles. Teach one key financial principle per month. Create a calendar and teach budgeting one month, maintaining a savings account the second, philanthropy the third, and so on. Children will not become incredible money managers overnight, so give them time. Great Web sites for fundamental financial information for kids from ages 5 to 18 are www.prosperity4kids.com and www.younginvestor.com.

5. Help with goal-setting. Help your children chart their future by having them write down their objectives. Teaching children how to reach small goals now prepares them to accomplish bigger ones later. If your teenage daughter’s goal is to buy $60 concert tickets, ask her what her plan is for buying them. Is there anything she can do to earn her own money instead of relying on you? Have her calculate how much money she will need to earn in the weeks before the concert to reach her goal, and how she might earn it. (Babysitting? Yard work? Extra chores?).

6. Promote saving. When children save their own money for special things, they feel pride and ownership. Learning to delay gratification is a good thing. Say your son wants a new bicycle. Teach him to save part of his allowance for the bike, while still keeping some money available for ice cream or going to the movies. That way he will begin to understand the principles of both short-term saving and long-term saving.

Let children watch their money grow. When they’re young, give them four jars; one for ice cream money, one for school supplies, one for savings and the fourth for their favorite charity. I once had a client whose five-year-old daughter had a jar dedicated to saving kittens at a shelter. That child glowed with self-assurance, knowing she donated $10 a month to feed kittens. That kind of confidence lasts a lifetime.

When they’re older, accompany them to the bank to open a savings account.

7. Show how to budget. As with goal-setting, budgeting instills self-discipline in handling money. Encourage your children and teens to make a list of the things they want, how much each will cost, and how much they’ll need to save for them. Whether it’s a new pair of jeans or tuition for driver’s ed, having a budget will help them track their progress, restrain impulse spending and achieve their goal. Visit the personal finance section at www.money.cnn.com for great budgeting plans and so much more. It’s one of my favorite money management sites.

8. Get real about plastic. Avoid using credit and debit cards whenever possible. As tempting as they are, plastic cards teach false values. Children learn by example and they will learn nothing significant about money if they don’t see you using any. If you give yourself a budget of $100 a week, for example, then take that cash out of the bank, and only spend what you have in your wallet.

Show them that you have your own savings account, some cash on hand, and a reserve account. Let them know that when the stove goes out, you have the money to replace it without having to use credit. Witnessing firsthand the importance of keeping emergency funds available will teach children the value of saving and preparing for unexpected expenses, like a broken skateboard wheel.

All of the above being said, however, credit used with discretion can be invaluable. When you pay off credit balances on time, businesses are more willing to help you obtain larger, often necessary loans for things like a home, car or education. Teach children that credit is not free money; it is a loan that must be repaid and will cost them more than the amount they borrowed. Only when they have a plan to pay back their debt should they consider using a credit card or taking out a loan. Use the calculator at www.bankrate.com/brm/cgi-bin/apr.asp to figure out the real cost of charging a $300 video game console.

9. Let them blow it. When your children get into financial trouble, the worst thing you can do is pick up the tab. If they have to suffer the consequences that result from carelessness or impulse buying, they will learn from these mistakes and, hopefully, make more conscious choices in the future.

10. Model philanthropy. Ingraining in children the critical importance of charitable giving and volunteerism in building a better society should be a fundamental goal of all parents. Check out www.markmakers.org, www.kidscaring4kids.org and www.generousgiving.org for ways to foster the habit of sharing.

There are many more Web sites available that focus on the financial literacy of youth. At www.jumpstart.org/links.cfm you will find links to all kinds of age-relevant information.

Check out NEFE (National Endowment for Financial Education) at www.nefe.org. NEFE’s teen resource bureau, www.ntrbonline.org, is a great storehouse of information for teens with lots of questions about finances.

Visit Wells Fargo’s www.handsonbanking.org site where your kids can learn how to write a check, create a budget and more. Are your kids interested in investing? See www.sharebuilder.com for education, and their ‘Any Dollar Amount Tuesday’ investment opportunities.

As parents, we must recognize that passing on a healthy relationship with money is important to our children’s future and peace of mind. Money problems can occur when financial management skills are never addressed. Commit to teaching your children these skills and discussing them for at least 30 minutes once a week. If you’ve trained them well, your teens won’t see the credit card offers arriving in the mail as a means to instant gratification. Teaching your children about money, as well as credit, can be a fun experience, but most important, a priceless lesson. We are all financial stewards. The fate of the next generation is in our hands.Start planting now and watch the seeds of responsibility grow.

Mindy Sitton-Halleck is a 25-year veteran of the mortgage industry. She has taught finance, credit repair, budgeting and home buying classes in the Seattle area since 1992. She is currently a freelance writer who lives in Bothell with her husband.

©2009 Caliope Publishing Company