This is a guest post from Lisa, a mother of two small children. Lisa's always on the lookout for practical suggestions for teaching kids about money. I figured a recent Kiplinger's article was right up her alley.
Kiplinger's Personal Finance recently published an article called “The Last Word on Kids and Cash” by Janet Bodnar. The article is divided into seven age-appropriate sections, each with its own specific suggestions for teaching kids about money. (Ages 6-7, for example, are “time to start an allowance”.)
My son just turned five, so I read the first section most critically. While I agreed with Bodnar's basic goal of teaching young children that money buys things, some of the information in that section was optimistically simple.
Obviously every kid is different, but with a child who is already asking for things at the store, we've moved on to an allowance, which Bodnar suggests for slightly older children. As she says, “Kids will spend unlimited amounts of money as long as it's yours.” I think most of them start early.
With the discussion of an allowance comes the controversial question of whether it should be tied to chores. Bodnar doesn't tie chores to an allowance, but she gives her children the opportunity to earn money by doing extra jobs around the house. Get Rich Slowly readers have commented on this in past posts:
- Using an allowance to teach kids about money
- Saving with Albert: Teaching a four-year-old the value of money
The article proceeds through the age groups with suggestions for steadily increasing the responsibility a child has for his or her money. Bodnar addresses issues such as online allowance accounts, ATM cards, VISA debit cards, and checking accounts. She advocates for teens using a cash-based ATM card, but suggests withholding credit cards until the senior year of college.
Overall, the article is sensible; in fact, it reflects a great deal of my own experience in learning to handle money. A lot has changed in 20 years, however, and I wonder what parents of tweens and teens think of the suggestions:
- Do teens feel social pressure to have a credit or prepaid debit card?
- How much allowance do you give your early teenager in the years just before he or she can get a job?
- Do you think sticking with cash and a checkbook all the way through college is a good idea? Has anyone had success teaching kids about credit cards earlier?
Previously at Get Rich Slowly, Lisa has shared career advice for college graduates, how to find great deal on eBay, and how to teach a four-year-old the value of money. Thanks to Sara V. for the suggestion!