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How To Be A Financial Mentor to Your Children
By Kerby T. Alvy, Ph.D.
It has always been a good idea for parents to teach children the value of money and how best to spend it. Now, it appears, that this type of financial mentoring by parents is more than a good idea - it is a necessity!
Consider the following which came from a variety of sources;
* 79% of high school students have never taken a course on personal finance.
* More than half failed a basic quiz evaluating their knowledge of financial management.
* 94% say their parents are their primary teachers on financial matters.
With those alarming statistics in mind, parents, grandparents and other caregivers need to begin teaching children about the importance of saving and investing, as well as how money can be used to make a difference in this world through charitable giving.
Children appreciate such guidance and will be in a much better position to control their financial destiny if they learn to make it a habit for every dollar they earn or receive as a gift to:
GIVE - 10% to a charity of their choice
INVEST - 10% to build their fortunes
SAVE - 10% for the future, and
SPEND - 70% for everyday expenses.
This basic concept can be taught to your children very early in life by getting them separate piggy banks for each purpose. With whatever they are given or earn, distribute it into different banks as the 10/10/10/70 ratio indicates.
The Mommie (Money Mama the Smarter Piggy Bank) Piggy Bank has been created by Lori Mackey (the kids and money expert) just for this purpose. The piggy bank is handmade and constructed in such a way that there are four coin slots over different sized parts of the bank each with their own compartments, which helps to make the 10/10/10/70 ratio vividly apparent and easier to understand.
Lori also put together a beautifully illustrated book that can also be used in teaching young children the importance of saving, investing, giving, and making wise decisions about spending money. It is called Money Mama and The Three Pigs. The book is accompanied with a read-along CD narrated by children. It presents these basic financial literacy ideas in ways that even children as young as two can begin to grasp.
Both these products as well an allowance chart that has instructions on how to determine what a child should receive (along with examples of daily chores) are available on the Center for the Improvement of Child Caring website ( http://ciccparenting.org/CatalogItemList.asp?c=98&cid= ) or by calling 1-800-325-2422.
Summing up, here are 13 specific things you can do to be a financial mentor to your children.
* Begin early in teaching your children the value of money.
* Use four piggy banks in which your children can keep their money - one bank for monies they will spend for themselves, one for saving, one for investing, and one for the money they will give to charities, causes and disaster relief.
* Teach them about saving and interest.
* Teach them about investments.
* Teach them about charities and causes they can support and about other ways they can use their money for humanitarian purposes.
* Have your children earn their allowance.
* Teach them how to generate other sources of money.
* Discuss the purchases your children want to make with their money and help them make wise decisions.
* Give and read books on financial literacy to children.
* Give and play games with your children about financial literacy.
* Orient them to financial literacy websites for children.
* Draw their attention to your own budgeting, checking, credit card, saving, investing and giving activities.
* Involve your children as your assistants in managing household finances, saving, investing and giving.
About the Author
Kerby T. Alvy, Ph.D. is a nationally and internationally respected authority on parenting and parent training. He is the executive director and founder of the Center for the Improvement of Child Caring in Studio City, CA. The center has a variety of parenting books, videos and other products available on its Web site http://www.ciccparenting.org On his blog, http://www.EducatedParenting.com, Dr. Alvy addresses a variety of parenting topics, issues, and trends. Dr. Alvy is available as a consultant, speaker, and media guest. For more information, go to http://www.DrAlvy.com To sign-up for Dr. Alvy's free Effective Parenting Newsletter, go to http://www.ciccparenting.org and click on "Add Me".
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