Dr. Kristin Schaefer-Schiumo| Manhasset NY

The Parent Trap

Don't underestimate the importance of the Bank of Mom and Dad when it comes to teaching your children about money. The truth is, you can't rely on your children getting lessons about money from school. While most states now include a personal finance course in their K-12 education, only 17 states require it. But, even if you live in one of those states, parents are still the Number 1 influencers of their children's money habits. As a parent, early and consistent involvement is key in helping your children avoid financial mistakes as young adults. But remember, involvement doesn't mean lecturing! As with many other lessons, if we try to influence through lecturing we find we are tuned out. Instead, help your children put knowledge into action. Walk them through the financial decisions you make as a family, involving them in the process wherever you can. Here are a few suggestions from everyday life that may be helpful to you:

  • 1. Take your children to the grocery store. Let them be a part of making a list and comparing unit pricing. Disguised as family fun, you are also teaching your children about planning and budgeting.
  • 2. Talk to your children about how you save for an item. Let them know you don't just run out and purchase a $500 bike; instead, you plan and save for it. As children become a little older, have them plan and save toward a goal as well. Whether a pair of sneakers or s computer, let them experience saving their own money toward part or all of their wished for item.
  • 3. Formalize savings beyond a piggy bank. Open bank accounts with your children. Make regular trips with them to the bank to deposit their savings. The dollar amount is not important here. It is the process of saving, preferably toward a goal. Children who save toward a goal do better at saving!
  • 4. Use cash whenever you can. This teaches young children about bills and coins, and how far money will go. As children grow older, it reinforces the notion of the overall "money pie." You are saying, "This is what we have and we have no more iTunes money, treat money, etc for.this month."
  • 5. Resist the urge to step in and financially rescue your children. If they don't have enough for that bike, or that game then they need to wait. This reinforces saving and budgeting. Of course, if you have agreed to give them a set amount toward something in advance, then by all means do so.