Huddleston Tax Accountants CPA Tax Issue: Children

Give your children a good financial education

Schools teach children some financial lessons, but if you want your kids to pick up good money skills and become financially responsible adults, you should give them some training yourself. Consider the following suggestions.

Set a good example. Children frequently do as you do, not as you say. Keep your own financial affairs in order, and your children will likely emulate your good habits.

Talk about it. Three or four years is old enough for money lessons. Start with the names of coins and bills; then go on to how much each is worth. Let your child pay for things at the store.

Give an allowance. An allowance teaches your child an important lesson for living in this country: work means money. A steady allowance for steady work is best. Extra pay is okay for extra work. Decrease the frequency (but increase the amount) for older children. Less frequent payments force your child to budget.

Allow mistakes. At its most basic level, money is about making choices. Children who never feel the pain of their poor financial choices are less likely to learn how to avoid making them again. The cost of mistakes only goes up over time. If Junior wants to spend his whole wad on a video game, let him. It will be a while before he can afford another big purchase. That's a good lesson in deferring gratification.

Encourage saving. Piggy banks are good for young children, but graduate them to a savings account as soon as their maturity allows. About the time they understand interest payments, they usually have enough money to meet the minimum deposit of a better-earning money market account.

Teach money management. Specific lessons might range from how to compare interest rates on savings accounts to the pros and cons of mutual fund investing. But there should be one common element to all of your teaching in this area: money doesn't take care of itself.

Talk with grown children, too. Many people feel uncomfortable discussing family finances with their children. However, sharing some information with your grown children can make things more comfortable for everyone.

Discuss your financial goals with your adult children, and let them know your plans for your retirement years. It's often a good idea to involve adult children in some or all aspects of your estate planning. Your particular family situation should dictate how much information you share and with whom.

If you would like assistance with your financial concerns or teaching finances to your children, please call. We're here to help.

copyright 2005