Jewish World Review June 7, 2007 / 21 Sivan, 5767
Teach children smart money tips that will keep them busy all summer long
By Vicki Lee Parker
http://www.JewishWorldReview.com | (MCT) Many children know how to send text messages and upload photos to MySpace.com, but when it comes to financial matters, they appear far less savvy. When 3,006 seventh-graders at 20 schools across North Carolina were quizzed about credit cards, spending, saving, budgeting and other financial basics, the majority failed. Students scored an average of 47.7 percent, according to the Department of the State Treasurer. For example, only 30 percent knew that savings accounts are not very risky and a third said that credit cards were an extra form of cash.
State Treasurer Richard Moore said the survey results prove that schools should teach saving, budgeting and credit along with the three R's. In 2005, the General Assembly passed legislation requiring a financial literacy curriculum in high schools by the fall of 2007. But the lessons obviously could start earlier.
I talked to some local finance professionals, including Maureen Dolan Rosen, founder of The Cash Management Connection in Chapel Hill and author of "KIDSCASH," and Justin Bock, a former Wakefield Middle School teacher, to find out what you can do this summer to put your child on a financially sound path.
1. Think eBay. Children have a lot of "temporary assets," Bock says, such as clothing that they outgrow, sporting equipment they no longer use or video games they master. EBay is an excellent way to get rid of clutter and learn about the concept of supply and demand. Most children will be shocked to find that they can get only $10 to $15 for a Madden `07 PlayStation game that cost $50 new. Yard sales also teach money basics.
2. Start a business. This can be a neighborhood helper service (washing cars, mowing grass, doing odd jobs) or a pet-sitting service. If the child has computer skills, use them. The couple down the street that just had a baby might be interested in having a Web site set up to share photos. The lemonade stand still works just fine, too. Bock's nephew sold bottled water to the construction workers building new houses.
If the work involves going to a neighbors' home, parents might want to go along on the initial job interview and keep up with when and where the child is working. If the job involves pets, make sure the animal is child-friendly. Parents can show their children how to set up a budget, and the children can be responsible for advertising and scheduling. Who knows where this could lead?
3. Work at home. Have children do odd jobs that are not part of their normal chores, such as cleaning out the attic. Agree on hours to be worked and price. Sign a contract to make it official.
4. Start a newspaper for your street. It can include pictures from birthday parties, birth announcements and short interviews with some of the older residents. Charge 10 cents a paper. Put it online if your child knows how to build a Web page.
5. Sell vegetables and flowers from the family garden. Of course, the child should help in the planting, watering and harvesting.
5 WAYS TO SAVE
1. Open a savings account. Have your child decide what percentage of earnings he or she will save. An incentive to save could be a matching amount up to a certain dollar amount - just like mom or dad's 401(k). Or set savings goals, such as for every $10 saved, the family will contribute $1. This can teach the concept of earning interest. The State Employees Credit Union has an interest-bearing Fat Cat account for children up to age 12. Children can get access to it online to check their account whenever they want. Take children to the bank and have them go through the whole process with the bankers. Show them how everything works, and when they get their first statement, go over it with them.
2. Open a Roth IRA. If your child earns money with documentable income (parents need to keep records of the money earned), they might be able to open a Roth IRA. Contributions can later be withdrawn tax-free and penalty-free if used for educational expenses. Any interest earned will be taxed when withdrawn for those expenses.
3. Comparison-shop. This is a good habit to start young. EBay could help here, too. Children will see that they don't need to buy everything new. They can save a lot of money if they comparison-shop using print advertising or online resources such as PriceGrabber.com or NexTag.com. Consignment shops and yard sales are other tools.
4. Count coins. Get a coin sorter, preferably one with a clear case, because children like to see their money. In saving all their loose change, they quickly realize that every 25 pennies saved is a quarter and that quarters add up to dollars. Ask your child what financial goals he or she has, then help set up a system to reach that goal. Without a goal or a plan, they really aren't managing their money. Have them make a contract with themselves, committing to saving a certain amount toward their goal.
5. Open a 529 college savings account. Allow children to be a part of the process and to help choose their investment strategy. Have them choose a college or two they think they might be interested in, and then go to the college's Web site to find out how much tuition is to give them an idea of how expensive education is. Their own savings can be added to the 529 plan.
5 WAYS TO TEACH
1. Talk. Be honest with your children about your own money mistakes, and then be a good role model. If you're telling them to be careful with their money, do the same. And allow them to make their own mistakes. Nothing teaches good money habits like making mistakes that cost you. Don't bail them out.
2. Grocery shop together. Put your children in charge of picking certain items to buy and help them compare items by the price per ounce. Then have them decide what to buy based on price and quality. Put them in charge of coupons, too, and have them add up all the money saved. If you want, reward them by giving them the amount they saved or a percentage of that amount to put in their savings. Again, you are establishing a saving mentality.
3. Buy stocks. Allow them to choose the companies. This could be a business that makes something they use or like. Have children track the stock and discuss why a stock might be going up or down. There are Web sites that allow them to create mock online portfolios.
4. Play Monopoly and other games. This improves adding and subtracting skills, teaches children how to make change and could lead to a future speculating in real estate.
5. Set up a family store. Have the children choose the items to stock - pencils, video games, stickers. They can earn money (real or tokens) by doing chores or exhibiting good behavior and then spending it in the family store. For younger children, this helps with the concept that things cost money, and they can work on their adding skills. It also helps them learn to keep track of earnings, budget and save.
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Vicki Lee Parker is a columnist for The News & Observer. Comment by clicking here.
Warning: Don't trust the ATM
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