A personal finance blog dedicated discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance.


Wednesday, October 20, 2004

Kids & Money

One of the best gifts we can give our kids is a solid understanding of the handling of money. Unfortunately, most parents do not talk about money with their kids, leaving the kids to either follow in their parent's footsteps (whether good or bad) or fend for themselves. This can be a recipe for disaster.

So, what's a proactive parent to do? First off, get an education. There is a wealth of resources on the internet that can help parents teach their kids about money. One such site is iVillage's "kids and money" website. They have put together a very nice website, full of articles and information that should be of interest to parents. Another nice website is David McCurrach's Kid' Parents of older kids will especially like the Kids' Making Money section.

Secondly, parents should help their children come up with their own budget. Understanding and practicing the "live within your means" philosophy can put kids on the highway to financial success. Because the child can see where their money comes from and where it goes, they get a sense that money is very real and very important.

Finally, once the child has come up with a budget, parents should help them set some goals to work towards. Perhaps it's a new bicycle or a Playstation. Let the child decide. Then, figure out how much the goal is going to cost (remember to add sales tax). Write down the amount and decide on how much money the child is going to put towards that goal each pay period. Then, make them stick to it. Fulfilling that goal will show the child the power of goal-setting and hopefully help them start a habit that will last a lifetime.

I urge ALL PARENTS to start teaching their kids proper money management skills. It just might save your child from committing some serious money mistakes.

Good luck!