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Teaching your kids the value of a dollar

Brenda Pollock, a financial counselor, discusses ways help teach your children about budgeting.

PORTLAND, Maine — A recent study found that one in four U.S adults with children under 18 said their parent provided no money lessons as a child. When it comes to money, what you don’t know can hurt you.

Children benefit from learning how money works. When do you start to teach your kids about money?

  • Begin talking about money at a very young age. Place a glass jar in your home where everyone can see it. When you have spare change, ask them to place it in the money jar and remind them that you are saving money.
  • Demystify the relationship between work and money. It’s important to teach them where money comes from. When we work, we get paid. When we don’t work, we don’t get paid.
  • When your kids are a bit older, I recommend giving examples of if someone earns “X” amount of dollars per hour, it will take “X” number of working hours to pay for certain purchases.

When it comes to kids and money, do you recommend giving them an allowance?

  • Yes, but be clear, consistent, and stick to it. The goal is to motivate them to do a few extra age-appropriate chores around the house as an incentive to purchase those I want vs. need purchases. Keep in mind:
  • You want them to feel good about earning money.
  • You want to encourage them and applaud their success.
  • It will teach them to SAVE towards a bigger goal.
  • It will give them independence allowing them complete control over their money.
  • Teaches them fiscal responsibility.

 Once they learn where money comes from, you believe in teaching your kids three principles: 

  • I believe in labeling one piggy bank Savings, one Spending and one Giving.
  • Giving them chores and allowance for completing them is important. Encourage your child to set some money aside for themselves first. Remember our Pay Yourself Campaign of paying yourself 10% of your income. That’s what goes into their saving piggy bank and periodically, go into your credit union or your bank to make that deposit.
  • Put some into spending piggy bank but remind them, once that piggy bank is empty, it’s empty. This is one lesson that best learned under the safety of your roof.
  • Giving is one of the most important piggy banks because you’re teaching your kids they can make a difference. Find some charity, whether it’s the animal shelter or food pantry, and let them feel the impact of helping others. That’s invaluable.

You also recommend discussing the family budget at the dinner table.  

  • Absolutely. These talks should be kept casual but make it a point, once a month, to discuss the family budget. They will see how you handle all of life’s bills or unexpected issues that come up from time to time. Talk about:
  • Minimizing spending the following month to pay for an unexpected bill.
  • Discuss how much money you are able to add to your emergency fund.
  • Talk about paying down debt and how much money you will save.

Kids are like sponges. The goal here is to discuss money issues as a family without stigma or any negativity.

More and more financial institutions are now issuing debit cards for teenagers on their parent’s account. Could this lead to overspending and running up debt?

  • I know Evergreen has introduced a program so teens as young as 13 years old, can have their debit cards on their own accounts with a parent responsible for any potential overcharges.  When they’re 18, it converts into their own account and their parent can be removed from the account.

Is that something that make parents nervous and is 13 too young to have that much financial responsibility?

  • Here are a few things to consider:
  • Teaching your teenagers how to manage a debit card can reduce the risk of teen getting into trouble with credit card debt. You’re sharing the basics of how debit cards work. You’re better off teaching them young so they can learn how to use a debit card responsibly. 
  • It forces teens to learn firsthand how to keep tabs on their spending.
  • They can only spend the money they have in their account.   

When comparing colleges what should be considered?  

Be sure to consider how much each school would cost. Search for the “net price calculator” on college websites to see how much each costs when including other expenses besides tuition. But don’t let the price tag discourage your child. Explain how much more college grads earn than people without college degrees, making it a worthwhile investment. Compare costs of in-state versus out-of-state college.

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