During the school year, the idea of teaching our kids "one more thing" sounds downright impossible. There just does not seem to be enough time to teach our children the critical life skill of how to make wise money decisions. Summertime then becomes the perfect "extra" time to get these lessons started.
n In today's "plastic" world, cash seems like an anomaly. But cash and coins are an integral part of teaching our children good money management skills. So don't start your child on a credit or debit card, even if she thinks she's ready. Use coin and currency first. Seeing the cash and having it on hand will not only teach your child the value of money but also teach them when money is gone, it's really gone.
n If you haven't already done so, now is a good time to set up a savings account for your child. Offer to match their contributions into their piggybanks or savings accounts. Matching your child's savings will help keep her motivated and focused.
n Teach your children about the importance of setting goals for their money choices. When a child sets a goal, he gets a clear picture of what he is working toward. Help your child set reachable short- and long-term goals by having him draw a picture of the goal or write down the goal and keep it in plain view so he always knows what he is working toward.
n Often, our kids "want, want, want" without considering what they "need, need, need." Tell your kids to make a list of their immediate wants and hold onto that list until a holiday, birthday or special treat comes due. When the time comes, ask for the list. Frequently, your kids will see they have a list of things they no longer want. This exercise in delayed gratification will help your children grow into successful, money savvy adults.
n Give your kids opportunities to earn money rather than always having it handed to them. Children have an entrepreneurial spirit, so help them start a business, whether it is babysitting or walking a neighbor's dogs. The money they earn will hold more value than the money they are given, reinforcing the idea of smart spending.
n Donating is a smart money choice to teach children, but deciding where to make donations can be a daunting task. Help your children help others by initiating a simple conversation about what your children love-animals, sports, reading. From there, you can narrow it down to organizations working in those areas-an animal shelter, sports program or library. Remind your kids they can also put the "do" in donate by sharing their time and talent as well as their money.
n Children are keen observers of our behavior. They may not listen to what we say, but they watch what we do. Instinctively, children understand that our behavior is more genuine than our words. Knowing this, only model what you want your children to absorb. Pay bills on time, use cash rather than credit whenever possible and take your kids with you to make savings deposits.
n Set up an allowance that covers some expenses you cover for your child today. Let him manage that money and learn what it feels like to have only so much cash and when the money is gone, it's really gone. Allowance is the first step toward learning how to take personal responsibility for money decisions and budgeting.
n Teach your children to budget by giving them actual experience. Show them how to budget for one specific want or need using their allowance money. Help them think about what they may want or need, then help them allocate the funds accordingly. This technique will teach both budgeting and the value of money.
n Investing can be a bit risky, but also very rewarding. Sit down with your children and pick a company that makes or sells a product or service they enjoy. Next research the company together. Check out the company's annual report and any sales goals. Also make sure to look at its competitors. Finally, determine how you will track the company's performance in the market. Don't let your child get discouraged if she doesn't do well immediately. The point of these initial investments is to teach, rather than make lots of money.
Cut out this list and make a date with your partner to talk about these tips. Pull out your family calendar and assign one tip to each month. Split the months up and assign five to yourself and five to your spouse. Then, take the calendar and the tips and make a date to discuss this plan with your kids.
Let them know that for the next 10 months, you are going to work with them on one money lesson a month. Get the kids involved and let them pick out some months where they will help or even lead the lesson.
Breaking the lessons down to one a month will make this process not only easier to start, but much easier to finish.
Susan Beacham is the founder and CEO of Money Savvy Generation, a financial education company that provides innovative products and services to help parents and educators teach children the basic skills of personal finance, www.MoneySavvy Generation.com. E-mail her at susan@MSGEN.com.