Six Ways to Teach Kids about Sensible Spending

Have you talked to your children about the value of money and the importance of managing it wisely? All parents hope that their children will grow up to make prudent use of their money, yet few actually spend time talking to them about how to accomplish these goals, a new study has found.

According to the American Institute of CPAs, parents are more likely to have talked with their children about good manners, smart eating habits, the importance of good grades, the dangers of drugs and alcohol and the risks of smoking than about sensible spending. If you’re not sure how to get started with your kids, the California Society of CPAs (www.calcpa.org) has this advice.

Don’t Wait

Even young children are able to understand what it means to build—or save—towards a goal, such as a toy or trip to an amusement park. Parents can help by encouraging their children to set aside money they receive for birthdays or holidays to save up for a special purchase. Older children can save money earned from afterschool or weekend jobs, and parents can give younger kids small jobs to help them earn money.

Make It Fun

Help your children create colorful charts that monitor their progress or illustrate the chores they can do around the house to earn money. Suggest that your child draw a picture of what he or she is saving for and use it to decorate the piggy bank or jar holding the savings.

Turn It into a Family Project

Talk to your children about the steps you take to save toward long-term goals or to cut down on your expenses. You can involve them by giving them a grocery list and asking them to find coupons for the items on it. Figure out how much the coupons have saved your family and “reward” them with a portion of the savings.

Understand their Priorities

Long-term objectives, such as saving for college, likely won’t mean as much to your child as more immediate goals, such as a new bike or a night out with friends. So, while it’s a good idea to show them their college savings account statement and discuss how and why you contribute to it, remember that they will get more excited about shorter-term rewards.

Repeat Often

Dealing with financial issues is part of everyday life for adults, which means there are a lot of teachable moments available. Talk to your children about how you manage your money, including your efforts to save for short-term goals, like the family’s annual vacation, and long-term objectives, like college or retirement. Point out some of the ways you save money each day, such as bringing a brown-bag lunch to work or carpooling with co-workers. This kind of dialogue helps introduce them to good habits that will last a lifetime.

Stand Your Ground

Of course, your children won’t have much motivation to save if you buy them a toy whenever they ask or pull money out of your wallet whenever they want to meet friends for pizza. Although it can be hard to say no, keep in mind that by doing so you are helping them to learn how to budget and about the value of delayed gratification.

Consult Your CPA

To be a good role model for your child, it’s a good idea to ensure that your own financial house is in order. That’s where your local CPA can help. Turn to him or her with all your financial questions.

The Money Management columns are a joint effort of the AICPA and the California Society of CPAs as part of the profession’s nationwide 360 Degrees of Financial Literacy program.