Thursday, July 20, 2006

Kids & Purse Strings

This is an interesting piece from Take Care America. Great tips about parenting and money lessons.
Here is the text:

"Purse-String Children: Fostering Financial Independence

Take Charge America Offers Tips on Teaching Your Children How to Make Sound Financial Decisions

"If I want this and give me that are phrases frequently uttered from the mouth of your child, it may be time to cut the purse strings. Fostering financial independence at a young age can pay off big time in the future…literally.

Mike Sullivan, director of education for Take Charge America, a non-profit credit counseling company, says it is important to teach younger children and teenagers the importance of making sound financial decisions at an early age.

“Money management skills are learned by examples that are set from parents, as well as through practice,” Sullivan said. “Helping kids build money management skills can prevent them from falling into debt later in life.”


Visa USA has coined the generation of teens and twenty-somethings now entering the workforce, Generation Plastic, or Gen P. Sullivan points out that this nickname wasn’t earned through shrewd money-saving skills.

“Many people think it is no big deal to purchase frivolous items on credit cards. Reversing this type of thinking pattern will prevent a lot of financial heartache in the future when interest rates and fees start accumulating,” Sullivan said.


There are things parents can do now to ensure their children’s financial success in the future:

*Give younger children an allowance and let them learn how to spend it. Keep in mind that an allowance must be earned, not expected. If you have chores that are normally included around the house, do not include those as part of the allowance. Select chores that are considered above and beyond the minimum. If your child does not complete these extra chores, do not automatically give them allowance money. Moreover, do not give your child extra money for personal spending outside his or her allowance. Budgeting money is just as important as earning it.

*Suggest older teens get part-time jobs. Teens are less likely to have a lighthearted attitude toward money once they understand how hard it can be to earn an income. Consider reducing or eliminating allowance at a certain age in order to encourage your teen to get a part-time job.

*Provide extra opportunities to earn money. As your children get older and more capable of taking on work outside their daily chores, offer them the opportunity to make money from projects you would normally pay someone else to do, such as light yard work, or extra cleaning.

*Start a savings account in your child’s name. This will help your child learn the basics of banking and they will be able to watch their account grow, or shrink, depending on how they manage money.

*Take your child shopping. Use this as an opportunity to teach your child how to shop on a budget, take advantage of sales and use coupons. Set a budget before you go, make a list of items that are needed or wanted and help your child prioritize and make decisions.

*Go half-and-half. If your child wants an expensive item, compromise and offer to pay half. This can help a child learn the significance of hard work, while valuing a parent’s earning power.

*Do not use money as a source for rewards or punishments. Money is not something children (or adults) should feel they deserve or are entitled to as a result of behavior. Teaching your child to associate work and money, rather than expectations and money, will help them gain financial independence.


A new, nationally-renowned financial curriculum, developed at Montana State University and sponsored by Take Charge America, is helping teachers and parents tackle this tricky topic in an entertaining way. The Family Economics and Finance Education (FEFE) lesson plan is free. It can be downloaded at Family Finance

About Take Charge America

Founded in 1987, Take Charge America, Inc. (TCA) is a non-profit 501(c)(3) organization headquartered in Phoenix, AZ. TCA is committed to helping consumers gain control of their finances and offers a variety of services including education, budget and financial counseling, and when necessary, debt management."


Miss Money said...

I’m declaring a state of emergency on Financial Literacy! The numbers speak for themselves. Last year more students filed for bankruptcy than graduated from college and teens admit to spending 98% of what they make instead of saving it. Our society has created a self-serving, entitled generation that expects more for less.

In the US, every 7 seconds someone across America drops out of school (that’s over 1 million students every year). Translation—only 53% of all high school seniors graduate from high school and the one third that do graduate do not have the skills to do anything other than minimum wage work. Today the U.S. ranks 24th in the world in math, the average college student graduated with over $19,000 in debt, and the average in credit card debt is $2,700.

Parents need to prepare their children for the reality ahead and need to lead by example because financial accountability takes years of discipline and hard work. And if you don’t teach your children or grandchildren anything—teach them that. Coming September 1st Money Made Simple. Stay Tuned.

Frugal Duchess: Sharon Harvey Rosenberg said...

I totally agree.

Here is a release I received a but financial education

"Financial Words of Wisdom for Students from TransUnion’s

You’ve researched the best laptop and figured out your perfect major, but are you prepared to tackle debt as you head off to college this fall?

"Between the student loans required to finance skyrocketing tuitions, the credit card offers filling your new mailbox and many new temptations for your limited dollars, it’s very easy to graduate feeling like you minored in debt: the average federal student loan debt among graduating seniors is more than $19,000, and the average credit card debt among graduating seniors is $3,262.

To help you make the most of your newfound financial freedom Lucy Duni—Director of Consumer Education for TransUnion’s—is available to share advice for students and their parents, including:

Learning Credit Basics— Understand what’s in a credit report, what influences your credit score—and why you should care about both.

Navigating credit card offers— Make sure you sign up for a card for the right reasons. Don’t be lured by offers of free gifts, and read the fine print to understand the terms of your card.

Establishing good credit habits— Graduate with a high credit score as well as a GPA. This will position you to borrow money when you need it down the road for grad school, a car loan or a mortgage.

Creating a spending plan— Learn how to budget and spend within your means. Just because you have a new credit card doesn’t mean you should spend money you don’t have.

Figuring out educational loans— There are a host of loan options for students and their parents. Be sure you’re getting the best deals possible."