Teach Your Children Well

Question of the week:My parents were terrible teachers and role models when it came to money. I have my own kids now and don't want to make the same mistakes. What should I be teaching them about money? --C.P.

Dear C.P.,

Given the complexity of personal finance and investing nowadays, it's a constant challenge for parents to prepare their kids well to manage money on their own. Unfortunately, it seems that many young adults are really not prepared at all--according to the Consumer Bankruptcy Project, a staggering 94,000 people under the age of 25 declared bankruptcy in 2001.

We asked members of the Armchair Millionaire community for their opinions on what's most important to teach kids about money and heard a wide range of ideas. Here are just two:

"Children need to learn about delayed gratification and goal setting, and to be given money choices early in life." --Ken

"Teach your children that they only need ONE credit card. And teach them how to use it wisely and pay it off each month." --Michelle

Kids today--and especially teens--have more money than ever before. That means it's more important than ever to instill sound financial habits from an early age. My guide provides some of the basics you should be teaching your children at every age level.

The Armchair Millionaire's Guide to the Important Financial Lessons

• Preschoolers. By the age of three, most kids start to become curious about money and how it works. This makes it an ideal time to model good spending habits. For example, when you take your preschooler along to the grocery store, show them that you plan what you're going to spend by using a shopping list. Many older preschoolers will want to start saving money. Help them get started by setting up a savings account for them. Many banks will waive their fees for children's accounts.
• Elementary school age. By this age, your child will be keenly interested in money and how to get more of it. Provide an allowance so that they can have an income of their own in order to learn their own real-life money management lessons. Let them make mistakes-they can't do a lot of damage at this age. They'll learn just how far a dollar goes, and will begin to learn how to prioritize their spending. Many older kids in this age group will want to start earning their own money. Help them out with simple money-earning ideas.
• Pre-teens. By the time they hit middle school, kids these days have become full-fledged consumers and are ready to start learning how to make good spending choices. If you think your child is ready at this age, provide a monthly clothing and entertainment allowance. They will either learn how to make a budget, or learn to do without that pair of hip new sneakers. It also gives you an opportunity every month to talk over their financial successes and mistakes.
• Teens. This is your last good opportunity to prepare your child with financial life lessons. Make sure they don't leave home for good without knowing how to balance a checkbook, what using a credit card really costs, the power of compounding interest and the basics of common sense investing.

THE BOTTOM LINE: Kids learn about money in two different ways: though their own experience and from watching their parents. Set your children up for financial success by grounding them in positive experiences and by being the good model they need.

Comments

[Polo Outlet]

Ralph Lauren is the leader of worldwide popular brands without doubt, [url=http://www.mypolooutletonline.com]Ralph Lauren Outlet[/url] offers comfortable and fashionable clothing both for men and women. Buy [url=http://www.mypolooutletonline.com]Ralph Lauren Outlet Online[/url] and enjoy the beauty, fashion yet comfort!