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Money Talk Pays Off For Kidsby Jane Schorer MeisnerAdd this to the list of a parent's embarrassing moments: Your 4-year- old-the center of attention at his birthday party-rips open his birthday cards and shakes them upside-down to see how much cash flutters out. You might want to move quickly onto serving the cake and ice cream, making a mental note to later explain to the birthday boy the meaning of "discreet." But don't fret about whether you're raising a greedy child. Instead, pat yourself on the back for instilling at an early age the concept that money has value. Teaching money lessons to kids ranks high as one of those subjects many busy parents would rather avoid. Ironically, "financial literacy" is an area of increasing importance in our society-and one that too many adults haven't yet mastered. Michael McAuliffe, a certified credit counselor and president of Family Credit Counseling in Oak Park, Illinois, advises clients from all walks of life-including successful doctors and lawyers-who share one common denominator: They have gotten into financial trouble because they never learned money management skills in school or from parents. What's more, talking openly about money matters is often considered taboo in families-a subject to be avoided. "I've got friends who will tell their kids, 'I experimented with drugs when I was your age,' but they won't tell them, 'I make $40,000 a year,' " McAuliffe says. "I don't understand why no one wants to tell their kids what their mortgage is, what their rent is, what their car payment is. It shouldn't be a secret." In fact, experts agree that honest discussion about money should begin at an early age. Even very young children can be taught to save by dropping coins into a piggy bank. By watching and discussing TV commercials with parents, they can begin to understand the principles of marketing. By being given "assignments" at the grocery store, they can learn about unit prices, and choosing between brands. As they grow older, receiving allowances gives them opportunities to practice budgeting and money management. Furthermore, McAuliffe suggests teenagers should be involved in the family's budget meetings. "They should know how much it costs to run the household. When money comes out of the ATM, they should know what actually went into getting the money in there," he says. McAuliffe's primary concern, though, is that kids learn about credit. "Credit is an important pan of our culture now," he says. "Children do need to understand it because they are going to need credit. They'll need credit cards. They'll need to build their credit history in order to get a mortgage." Long before the young consumers enter high school, they need to know that credit is not free money, McAuliffe says. Interest rates can be extremely high, and missed payments can mean a late fee of $35 or more. "We live in an instant gratification culture," McAuliffe observes. "We want things, and we want them now. Young people in their early 20s want everything their parents have. They don't realize it takes time." To convey a sense of the cost of credit, McAuliffe recommends that parents teach even young children that credit has a cost. If you loan your child money-even if it's only until you get home from the store and the child can get to his piggy bank-assess a small interest charge. Don't deduct the loan from allowances; instead, give a child her allowance, then have her pay what is owed. Genetics VS. environment Despite a parent's best efforts, a child's personality will still play a part in his or her money management style. Just ask Janet Bodnar, a.k.a. "Dr. Tightwad," who writes a syndicated column on the Internet (www.kiplinger.com) about kids and money. Her resume includes being the author of Dollars + Sense for Kids (1999)-and being mother of three children, ages 17, 15, and 11. "The kids are very different, which I think would be typical of any family," Bodnar says. "The older two tend to be very careful with their money. The younger one is a very chatty kid and a live wire. I think that extends into money. He talks about it more, is a bigger spender, and is more interested in earning money." If you have children who are very well organized in schoolwork and other areas, they'll probably be well organized financially, Bodnar says. If they're disorganized, theyll have disorganized money habits. "Parents, though, can make a difference by trying to impose a system on this chaos," she stresses. "You may not be able to change his behavior totally, but you may be able to help him get organized." Make sure your child has a place to keep money-in a wallet, rather than loose in a pocket; in a bank or a box, rather than tossed on a dresser top. As they get older, require them to write down how they spend their money. "If you start an allowance at age 6, kids can be responsible for their own baseball cards or Pokemon cards," Bodnar says. "Parents are within their rights-even their duty-to say, 'This is how we expect you to manage this money.' Not down to the penny, but maybe they can save half, and with the rest they'll be expected to handle their own clothing and entertainment expenses. If a teenager is earning $100 a week and can spend it on whatever they want, that's not reality." The values of a dollar Bettie B. Youngs of Del Mar, California, a counselor and author of several books on parenting and values, including Gifts of the Heart (1996), agrees that parents should set firm guidelines on how kids spend their money, including their saving and tithing habits. She suggests that parents teach their kids that 10 percent of what they have should always be given for the care of others. "If you don't do it and don't start teaching them young, you can count on your child not having that as a goal and a principle." Giving kids a role in family money matters is how they'll learn the association between money and quality of life, Youngs says. Allow them to make some choices about how the family should spend their weekend recreation money, so they'll realize that money can provide rewards for hard work. Also, teach them that while money is a necessity, it must be kept in perspective. "You just can't live without it," Youngs says. "But do I live to work, or work to live? Basically, you want to say to go 50 percent on both of them." Article Reprinted Courtesy of Better Homes and Gardens 
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