"My mom was the negotiator in our family. To her, price tags were mere “suggestions.” As kids, we witnessed her haggling prowess in furniture shops, clothing stores, yard sales, car dealerships, you name it. Now as her adult children, my brother and I are conditioned to always ask for a discount. We don’t always prevail, but the instincts are there.
The fact is that parents play an enormous role in educating their kids about money. Starting as early as kindergarten, there are ways parents can start planting the seeds to help their children adopt healthy relationships with money today and forever. Here are four tips:
1. Talk It Out
Communication is key. A new survey by TD Bank finds that 55% of families are speaking with their children more often about money matters. That makes sense, given the recession, but I hope it will become an ongoing trend. Educating your children on simple things – like how a savings account works, how to write a check, how to save money on a weekly basis – can go a long way. They may not realize the value of your lessons now but as they become adults they will reflect on what you taught them. It will shape their relationship with money.
And for parents of college-aged kids: When you call Junior to check in about life on campus, inquire about his expenses and budget. Keep your kids on their toes, so they know there will be consequences if they choose to run wild with money. Insist that you’re there to offer advice and guidance, but not necessarily a bailout. That’s right: Instill some fear. It worked on me.
2. Teach By Example
You can talk the talk, but you also have to walk the walk. Kids are extremely observant. Make sure that you engage your kids when you cut coupons, haggle (as my mom often did) or comparison shop. Show how you balance your checkbook, whether on paper or online. Also, use cash in front of your kids when possible. Modern kids grow up almost never seeing cash used at the register; that means they risk never actually seeing money run out. Cash limits spending - that’s a great thing for kids to witness.
3. Tie Allowance to Out-of-the-Ordinary Tasks
I think it’s helpful to set up an allowance for your child, but it should be tied to above-average duties. Making your bed, for example, shouldn’t be rewarded with money. Cleaning out the garage or helping mom organize her home office, on the other hand, is more deserving of cash. This sends the message that you need to work hard to make money.
Also: If you decide on a consistent weekly allowance, discuss how that money will be used by your child. Is this money for social activities with friends? Or is this money going to go toward his monthly cell phone bill - or clothes? The amount you allot should reflect how the money would be used, and both parties - parent and child - need to be on the same page.
4. Encourage Automatic Saving
If your working-age teen manages to get a job, step in and make sure that he or she is automatically saving a percentage of each check - perhaps 20% or 25% automatically. My dad did this with me when I started working at the local diner in high school. He collected my paychecks and cash tips, and every Saturday we’d go to the local credit union to make deposits in my personal savings account.
As the parent, here is where you can really make an impact: Help your teen set up a savings account, and show him or her how to track the account online. It might help to pick a goal (e.g. tennis lessons, a car, college), so that the money saved has meaning and he or she will be encouraged to save.
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