With consumers' debt levels high and their savings rate low, piggy banks may mean more these days for children than they ever did before.
Less than 30 percent of young Americans are given the opportunity to take as much as a week's worth of course work in money management or personal finance in high school, according to the Young Americans Center For Financial Education.
Experts stress teaching children about money well before high school.
Peggy Houser, a certified financial planner in Denver, began teaching her granddaughter about money when she was 2.
Her granddaughter had a pocketbook of coins, and they pretended they were at a store. After that practice, they went to a toy store.
"The next thing we did is I would let her pay for things to get the idea that you have to pay for things," Houser said. "That's the first thing they don't understand."
At 5, her granddaughter opened a savings account with her birthday money. Houser stressed letting the child do things each step of the way and not doing it for the child.
"You make every single thing a learning experience," she said. "Take them into the situation."
She said that just like a school teacher, adults should talk to children about the money-related activity before going out, do the activity and then go over what they learned.
Her granddaughter is now 19, in college and thinking about starting her own business.
Learn While Shopping
Dollars and cents know-how doesn't have to be a formal lecture. That approach is likely a turn-off.
Janet Bodnar, author of "Raising Money Smart Kids" and deputy editor at Kiplinger's Personal Finance, said parents don't want to rush things.
"I think it's a very natural process," she said. "There are so many natural opportunities to do this."
Bodnar said it could start at age 5 or 6 by explaining where money comes from on the way to the store.
"The bank is like a big piggy bank for mom and dad," Bodnar said. "It gives them a simple minute lesson without getting complicated."
Bodnar said adding shopping rules are financial lessons.
She said parents should let their children know that before going to the store, they have to bring their own money. It heads off a lot of battles.
"If they understand the rules ahead of time, it helps them be better shoppers," she said. "Going shopping is a huge opportunity to teach about money skills."
| Money Teaching Tips |
| Determine the right allowance. Send the right money messages. Buy a piggy bank. Don't miss an opportunity for a lesson. Have kids open a savings account. Handle money mistakes carefully. Adjust the conversation as they age. Be open about your investments. Talk about college early. |
| Source: Financial Planning Association |
Money Smarts Through The Years
Experts stress extending money-related lessons with age-appropriate activities.
Preschool: Bodnar said preschoolers need to know that money exists, it can be exchanged for other things, and that there's a difference between nickels, dimes and quarters. Elementary School: Financial literacy expert and CEO of Money Savvy Generation Susan Beacham said to start reading to children about money. Introduce an allowance.Bodnar said an allowance becomes important because children make decisions with their own money. She said to also teach them about the choices they can make with money and that there's more than just spending.Beacham's company makes a Money Savvy Pig bank with four slots -- save, invest, donate and spend.Houser stressed that an allowance must be routine and given regularly. She said parents should not give it and then take it away if a child misbehaves or gets bad grades."It has to be a regular thing or it's worthless," she said. Middle School/High School: Beacham said children who get an allowance can learn to budget."Until they work with cash, they don't understand the value of coins and currency," she said.Beacham said children also should be managing a month's worth of their own expenses and that getting a job is also key.If they don't work, Beacham said, they get used be being on the dole, and then when they get into college, their parents' funds are replaced by credit card spending because they want to live at the same level they did when they lived at home.Bodnar said teens should open a checking account that has an ATM card and they should manage that account before going to college.Houser said having an account with a debit card is a huge motivator to for children to keep enough in the account to cover their spending.The Denver-based Young Americans Bank dubs itself as the nation's only bank for people ages 22 and younger for customers around the U.S. and worldwide. The bank offers age-specific courses and resources.Parents As Role Models
No matter what age or stage the child is on in their financial learning, parents might want to take note that their financial behavior is a model for their children.
"Parents have a lot more influence than they think as far as financial matters are concerned," Bodnar said.
She said if parents have bad money habits and their children are watching, then they need to clean up their act, get debt under control and develop good credit habits.
Beacham pointed out that if parents talk at the dinner table about not paying debt and not having boundaries, their children won't have boundaries. She said parents have to show them that boundaries aren't painful; they're wonderful.
"You're also making a mistake if you don't think your actions speak louder than words," Beacham said.
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