According to a new poll by U.S.-based financial literacy site
When asked, "If you spotted a great item at the mall that you couldn't afford right now, what would you do?" 57% of respondents under 17 said they would "put money aside each month until [they had]the full amount to buy it." Only 6% would charge the item.
Posed with the same question, 42% of respondents 30 to 45 said they would purchase the item with a credit card.
The same survey found teenagers are more likely to save their money than adults.
The push to financially educate our kids may be the result of a troubled economy. But parents should recognize the importance of sound money management skills, regardless of the fluctuations in world markets. Few schools teach the subject in class -- the all-important task lies at home, with mom and dad.
As soon as your children can speak, the conversation about money can start. When they celebrate their fifth birthday, weekly allowance should begin. A fair amount, most experts suggest, corresponds to age - for example, $5 a week for a five-year-old. Then, as they enter their early teens, allowance money can be increased. Allowance is one of the best opportunities to teach your kids about how money works. There's a debate over whether to tie an allowance to chores, doing well in school or good behaviour. Let's end the debate right now. Tie allowance to doing a good job. It's not a bribe - it's a reward.
It's ideal to open a savings account for your child. However, if you feel they are too young, you can create savings accounts at home with piggybanks. Have a piggybank for short-and long-term savings. For example, if your child is earning $6 a week perhaps $4 can be short term savings and $2 long term. This is a great opportunity to talk about goal setting with your children, how much things cost and how to make a plan to get there. Also, consider paying interest on money saved at home and let your kids calculate it to see how fast savings accumulate through the power of compound interest.
Most importantly, when the slightest spark of entrepreneurialism appears, add fuel to the flame. When your daughter says it would be fun to work at the ski hill, tell her why it would be even better to own the ski hill. Set the wheels in motion for big-picture thinking. If there's something your kids want that's not in your budget, don't say we can't afford it - encourage them to start considering what they can do to afford it.
Do your kids a favour when they start earning their own money - encourage them to take 10-15% automatically off all money earned and store it in a high-interest savings account that they can't touch until heading off to school or some other agreed upon time. They won't even know it's missing and they'll be grateful when it comes back to them as a big chunk of change in return for a smart investment.
The opportunity to teach your kids about money is everywhere. The next time you're shopping for groceries compare the cost of brand-name products with similar "no name" items. Then take home the generic product to show your children it's just as great (just don't try this with ketchup - you'll never create a convert).
The next time your kids try to negotiate an advance on their allowance, explain the interest charged on loans and make next week's allowance smaller to compensate. The next time you're getting ready to pay your bills, why not sit down with your children and explain the process? They should know how much it costs to run the household, watch TV and use the computer.
Arming our kids with financial skills and a plan is important not just for the things they can buy but for the experiences they can have, the good choices they'll make and the confidence that will grow. Your kids are learning, whether you teach them or not. Regardless of what you do for a living or how much you have, you owe it to your kids to teach them how to be financially independent - Smart Cookies in the making, if you will.
Angela Self will be writing for Globeinvestor.com weekly. She is one of the founders of the Smart Cookies, a group of five women who specialize in personal finance. They are hosts of a self-titled show on the W Network and the authors of
The Smart Cookies' Guide to Making More Dough. Find out more about them at
Plus: Want to know what the most important number in your life is? Read Angela's take