Talking to Your Kids About Money

Michael Reimann

Many of us just finished our taxes, maybe you even got some money back.

April is National Financial Literacy Month – a time filled with teachable moments. Even before your children can count, they already know something about money: it’s what you have to give the ice cream man to get a cone or put in the slot to ride the rocket ship at the grocery store.

So, as soon as your children begin to handle money start teaching them how to handle it wisely. April 20 kicks off Money Smart Week in Chicago and Michael Reimann, a financial advisor with Ameriprise Financial Services (and father of two) has some quick easy to follow tips for parents on how to teach children about money.

1. Making allowances

When it comes to giving children allowances:

•    Set parameters. Discuss with your children what they may use the money for and how much should be saved.

•    Make allowance day a routine, like payday. Give the same amount on the same day each week.

•    Consider ‘raises’ for children who manage money well.

2. Take it to the bank

Piggy banks are a great way to start teaching children to save money, but opening a savings account in a ‘real’ bank introduces them to the concepts of earning interest and the power of compounding. As an incentive, you might want to offer to match whatever children save toward their long-term goals.

3. Shopping sense

Television commercials and peer pressure constantly tempt children to spend money. But children need guidance when it comes to making good buying decisions. Teach children how to compare items by price and quality. When you’re at the grocery store, for example, explain why you might buy a generic cereal instead of a name brand. And don’t be afraid to let children make mistakes. If a toy breaks soon after it’s purchased, or doesn’t turn out to be as much fun as seen on TV, eventually children will learn to make good choices even when you’re not there to give them advice.

4. Earning and handling income

Older children (especially teenagers) may earn income from part-time jobs after school or on weekends. Particularly if this money supplements any allowance you give them, wages enable children to get a greater taste of financial independence. Earned income from part-time jobs might be subject to withholdings for FICA and federal and/or state income taxes. Show your children how this takes a bite out their paychecks and reduces the amount they have left over for their own use.

5. Creating a balanced budget

With greater financial independence should come greater fiscal responsibility. To help children learn about budgeting:

•    Devise a system for keeping track of what’s spent.

•    Categorize expenses as needs (unavoidable) and wants (can be cut).

•    Suggest ways to increase income and/or reduce expenses.

 

You can meet Michael Reimann in person and get your questions answered while learning new things to celebrate National Financial Literacy Month.

Four Cornerstones of Your Financial Future on Saturday, May 04, 2013 from 9-10AM at
Fox & Hounds
1416 North Roselle Road
Schaumburg, IL 60195

During this complimentary seminar, you’ll learn:

  • strategies you can use that can help you feel more confident about reaching your financial goals.
  • tips on how aligning four key concepts – cash management, protection, investing, and tax planning – can help you bring your dreams and goals more within reach.
  • ways you can identify and correct critical gaps in your current financial plan.

To reserve a spot: call 630.762.6543, email michael.reimann@ampf.com or make your reservations online by clicking here. Now is a great time to not only teach your child about money, but to take a look at your own habits and see if you might be able to save a little, or invest in something that you might not have considered without a little time and energy.

Christine Bachman

About Christine Bachman

Christine Bachman is founder and president of Plan It PR, a public relations and marketing firm. The mother of five shares tips and survival stories in “Play Dates and Power Lunches.” Ms. Bachman started working public relations after a long career in broadcast journalism, which included work as a television anchor, reporter and producer.