Raising Money-Wise Kids

Here are some suggestions for raising money-wise kids from, of all places, Schwab. Their suggestions:

• Give your children an allowance and encourage them to use it for their discretionary purposes. It's one thing for a child to say, "Mommy, I want that toy." It's quite another for her to reach into her own pocket to pay for it. This teaches her how to place value on money. And when they get to age nine or 10, you can use the allowance to teach them about budgeting and making choices.

• Talk with them about financial trade-offs. Explain why you're forgoing an expensive vacation in order to put some money away for the future, for example.

• Give them an incentive to save. One way to do this is to match their savings dollars. For example, you might add fifty cents to every dollar they put in their savings accounts.

• Let them help with simple household financial management. At the grocery store, for example, have your kids comparison shop for paper towels. Older kids can help you with the administrative tasks of bill-paying, so they can see how much money it takes to run a household.

• Teach them to be generous. Help them find a charity or cause they care about, and encourage them to give their time as well as their money, through volunteer opportunities.

My thoughts on each of these:

1. We don't have an official allowance policy, but it's time we get one. Even without an allowance though, our kids seem to do ok when it comes to generating money (birthdays, grand parents, payments for special tasks around the home, etc.)

2. We talk about financial trade-offs all the time. We also mention financial consequences (like those resulting from hanging off a moving garage door.)

3. I especially like the savings matching idea -- especially since our kids are going to pay for part of their college expenses.

4. We have worked with our kids a lot to comparison shop (I know, no surprise there, huh?) and it seems like they are starting to "get it."

5. We're hitting a home run on this one. Our kids regularly give away 20% or so of what they collect. We even have to "watch" my daughter or she'll give it all away. ;-)