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What is the best way to help your child

become financially successful?

A. Make sure they attend an Ivy League

B. Pay a head hunter to find them a higher-
paying job
C. Teach them about money early and often
How to Raise Money-Smart Children
Rule #1 - Make sure you talk about money as a
But how?
Today’s session will…
• Show you the challenge you’re up against
• Offer some suggestions to get you started
• And ultimately, make you really start to think
about getting you and your family’s financial
future in place
The Other Dreaded Subject

Does talking about money to your children

make you uncomfortable?
• You’re NOT alone – money may even be more
difficult to talk to your children about than sex
and drugs.
– In a survey, parents said they felt more
comfortable discussing sex than savings
with their kids.*

* 2008 Parents & Money Survey Findings, Charles Schwab, March 2008
Why It’s Hard to Talk Money

• These are some of the reasons parents delay or

avoid talking to their children about money:
1. I don’t have good money habits.
2. My parents never talked to me about
3. Isn’t money the root of all evil?
4. Money is just to complicated a subject for
me to discuss.
They’re Counting On You
• Nine states require financial literacy testing.1
• Only seven states require students to take a
personal finance course to graduate.1

National Council on Economic Education, 2007
The Price of Financial Illiteracy
• One out of three teens know how to read a
bank statement or balance a checkbook.  Only
one in five know how to invest. 1
• 56% of students carry four or more credit
cards, with an average balance of $2,864.
• U.S. foreclosures were up 75% in 2007
compared to 2006.

Charles Schwab Teens and Money, 2007 Survey
Washington Post, 2007 citing student loan lender Nellie Mae.
3 2008
The Price of Financial Illiteracy
• JumpStart Coalition For Personal Financial
• High school seniors still lack fundamental
knowledge about money
• Scores are dropping
– Average score was 48.3%, down from 52.4% in the
2005-06 survey
– Only 17 percent felt that stocks are likely to have
higher average returns than savings bonds, savings
accounts and checking accounts over the next 18
• Never happened over 18 year period in history
– Only 40 percent realize that they could lose their
health insurance if their parents become
Source: JumpStart Coalition for Financial Literacy Survey, April 2008
Show Them the Money
• Money is an important part of life – use it to
teach life’s lessons.
– Adding and subtracting
– Independence and making good choices
– Setting goals; delaying gratification
– Empathy and sharing
– Interacting with others; social skills
• Determine your values
about money; make
sure your actions
are consistent.
Show Them the Money

• Create an open dialogue to help instill positive

financial attitudes and behaviors.
• Turn everyday experiences into teachable
money moments.
Money Doesn’t Grow on Trees
• Start teaching before spending.
• Make it a family affair
– Include all members in money discussions
and activities, as appropriate for their age.
• They’ll fall…but help them up, and teach
– Allow children to make decisions.
– Mistakes now with small amounts
of money will help
avoid more costly
missteps later.
Learning Good Cents

• Each stage in your child’s life

presents new challenges and
opportunities for helping them
learn to make good financial
• Like measuring growth in inches,
start setting goals for your child
and track their financial progress.
The Valu e of Mone y…
Age-Appropriate Lessons
Infants & Toddlers
• Time is on your side –
take advantage!
• Looking to Uncle Sam
• Think long-term
– College funding
– Investigate long term
saving options
– Set up an automatic
savings plan
• Help protect their future
Infants & Toddlers

• Lead by example
• As you talk with your child to
develop their language skills,
incorporate “money talk.”
Preschool Years +
(Ages 2-6)
• Making Sure Your
First Steps are in Place
• Practice putting coins
in a Piggy Bank
• Open a general savings account
• Set up a 529 plan
• Allowance Ready?
– All depends on you
– How much?
• Teach good habits by example
Preschool Years +
(Ages 2-6)

• Turn reading practice into
‘reading and money practice’
• Play grocery store/bank
with play money.
• Talk about how family
members work to pay
for food and clothes –
bring your child to work.
• Talk about products on TV
and their costs
(Ages 7-13)

The real lessons begin…

what you can do:
• Start with goals; focus on the long term.
• Educate about the concepts
of earning, saving, spending,
donating and investing.
• Foster your child’s
social responsibility.
• Allowances
• 401 K(ids) –
matching programs.
Allowances: The Issues
When to begin?
• It depends on you and your child –
the idea is to start good habits early.

How much?
• Some parents match the child’s age
or year in school (50¢ or $1)
• Cover their costs
• Chores?
Allowances: The Issues
How often?
• Younger children – weekly
• Teens – bi-monthly

How long?
• When your teen starts to
earn money at a part-time
job, begin reducing your
financial support.
Allowances: The Issues
Allowances Tied to Chores – controversial

Advantage – Kids learn the connection between

money and earning it. An allowance
is earned, not entitled
Disadvantage – If chores
aren’t done, there’s no
money management
lesson. Where do you
draw the line
for chores?
Additional Allowance Tips
• Don’t cave – giving advances will undercut the
idea of a budget.
• Pay on time – it teaches your child that
commitments have to be kept.
• Be flexible – give an allowance bonus or raise
to reward your child for being responsible with
their allowance.
401 Kids
• Match your child’s contribution up to a set-level
• Kids can’t access it until agreed upon age
(ex: 18, 21)
• Invest money in savings, CDs, other
investment options
Younger Tweens
• Explain how a bank works; track savings
• If you give an allowance, teach your child
how to use it.
• Compare prices/quality while shopping.
• Discuss wants vs. needs.
(Ages 7-13)

Earning Your Pay

• Assign unpaid tasks to all family
• Pay for extra household jobs and talk
about expectations for those
• Help them find pay for outside work.
• Show how to keep track of earnings
and expenses for jobs.
• Pay Yourself First
(Ages 7-13)

Learning to Spend
• Allow your child to buy something you
know they won’t like; talk about
making a better choice next time.
• Have them help balance the
• Usage of cash vs. credit
– The Magic Money Machine Myth
Is that Credit or Debit?
• Kids know ATMs give out money, that’s about
it – they’re vulnerable.
• Don’t make the leap from savings to credit.
• Cash is the best learning tool. If you do want to
give them plastic, start with a pre-paid
debit card.
(Ages 7-13)

Saving and Investing

• Talk about the amount to be saved and
what it will be used for.
• The power of compound interest.
• Exploring investments – what
are they, how they work
(Ages 7-13)

Borrowing activities:
• Don’t lend more than your child can
realistically repay and forgive the loan.
• Draw up a contract for any
loan with your child; set up
rules for interest.
• Talk about how to save
for something instead
of borrowing money.
(Ages 7-13)
Help Others Through Donating
• Explain that sharing can include time and
resources or skills, not just money.
• Volunteer together or initiate a
community project.
• During special occasions or
tragedies, remind about
donating to help those
who are less fortunate.
High School Years
(Ages 14-18)

What you can do:

• Open a checking account;
compare options.
• Encourage their
entrepreneurial spirit.
• Set up a financial plan to meet
short- and long term goals.
• Continue saving for college;
match savings
High School Years
(Ages 14-18)

• If they have a job, determine what
they will pay for vs. what you will
• Increase financial responsibilities
(e.g. grocery shopping,
planning/budgeting for a family
• Help them fill out income tax forms.
• Teach how to set and stay within a
High School Years
(Ages 14-18)

• Explain protecting against risk –
life and auto insurance, etc.
• Encourage researching major
• Talk about safe debt levels.
– Calculate how long paying off a
large debt at the minimum
payment would take
– Discuss college financing options
The College Years
(Ages 19-22)

What you can do:

• Address dangers of credit cards
• Caution about preserving savings
• Encourage to “pay yourself first”
• Explain good and bad debt
• Help with asset allocation
Financial Yardstick
• Have you started talking
about money?
• Are you setting a good example?
• Have you helped your child
set up a plan for saving,
spending and sharing?
• Is your child involved in
discussions about money?
• Do you give praise for
good decisions?
Financial Yardstick
• Are you letting them
make mistakes?
• Have you started a
college fund?
• Do you have short- and
long-term goals for teaching your
child about money?
• In need easy to follow-suggestions?
Ou r F utur e

Our Children

Our Responsibility
Caution: Moms & Daughters

• Women are achieving significant

success and wealth but still face a
number of financial hurdles.
Did you know…?
• Based on demographic information
alone, it’s likely women need to be
more financially prepared than men.
But why?
Reality Check

• Women:
– Live longer than men1
– Earn about 25% less than men2
– Leave the work force for longer
periods and are more likely to
work part time3

National Center for Health Statistics, 2008
U.S. Census Bureau, 2007
Maternity Leave and Employment Patterns of First-Time Mothers:, 1961–
2003, Feb. 2008
Mistakes Smart Women Make

• Not getting involved in family finances

• Not preparing for life’s changes
• Not setting financial goals
• Not making investments
• Procrastinating savings
• Getting into debt
Break the Cycle

• Get involved in family finances and

understand your own financial picture.
• Help your daughter understand that
she will need to plan for her own
financial future.
• Start a saving sooner, rather than
later, is the best way to prepare for
life’s changes and longer life spans.
Slotted-Piggy Bank Approach

• A four-slotted piggy bank can be a helpful tool

to teach the basics of asset allocation.
– Penny the Pig
• Helps teach that money has four uses –
saving, spending, investing and donating.
• Tape a picture of “a want” to the pig to make
the connection with setting a goal and saving
for it.
Answering Tough Questions

Q: Why can’t I…?

Rather than say “we can’t afford it,” or
“because I’m the parent,” be specific and
explain your reason.
Q: Are we poor or rich?
Find out why your child is asking. Use the
question to explain how you’re managing
your money.
Answering Tough Questions

Q: Can I have more money?

Rather than just saying, “no” (which should be part
of your answer), discuss what went wrong with
their budgeting.
Q: Why does my friend get a bigger allowance?
Rather than giving a raise, talk about your family’s
financial goals and overall budget.