Inglewood Today 9/5/08 - Inglewood Today
Level With Kids About Money

By Veronica Mackey

In hard times, it's enough to keep track of expenses and cut out the fluff in your budget.   But there's another matter that demands attention as well:  Helping young family members deal with the "economic monster in the closet."

Generally speaking, when it comes to explaining your family's financial situation, the sooner, the better.   However, one needs to consider the age, timing, extent of hardship and other factors.   Equally important, is the use of creativity and age-appropriate techniques.   An AOL article advises:  "Don't be afraid to encourage creativity.  Developing entrepreneurial traits often begins with inspiration at home."

The need for financial literacy has never been greater.   Sadly, it is a subject seldom talked about in school.   Kids are trained to be employees instead of entrepreneurs.   Their natural inclination to create and build is often stifled in the classroom out of the need to "be still" and "pay attention."   Sadly, a lot of initiative is killed and kids grow expecting others whom they perceive as more powerful to take the lead and run things.   When faced with financial challenges as adults, they lack knowledge and skills to stay afloat.

  Explaining your family's financial situation and giving your kids responsibility early gives them confidence and an ingrained understanding of the money cycle.  It can save them from financial hardship and help them survive.  Here are a few guidelines.

  Dismiss the notion that money is only grown-up stuff.   Money issues are not sacred.   Kids need to know how to handle money, and what to do if they have problems.   Like sex, parents ignore the money talk, then wonder why their kids get into trouble later.

Financial experts recommend showing kids your check book and bills to help them conceptualize where money comes from and how it is spent.   Explain what checks are used for and the basics of buying on credit.   Explain to older kids what recession and foreclosure means.   Help them to make sense of the world in which we live.

Get them involved.   Have the kids help you clip coupons, prepare a meal budget and grocery list.   Take them to the store with you and let them select a few items based on a budget that you give them.   Get creative!   Have a contest to come up with the best ways to save money., a discount tracker service, compares prices of common items.

  Be honest.   Be direct with children during the financially difficult times.  Don't try and shield them from everything.   They need to know that there are exterior things that can happen that they may have to deal with.

Try and give kids an allowance so they will understand limits.   Prepaid debit cards are a good way for teens to learn the credit system.   Teach them how to manage expenses.   One mom gave her three-year old en­velopes marked save, spend and give.   It has become a habit.   Rather than just give them everything they want, teach kids to save for a new bike or trip to Disneyland.

Think entrepreneurship.   Running a lemonade stand, babysitting or mowing lawns do more than put a few bucks in kids' pockets.   It builds work ethic, which will stay with them for a lifetime.   If your kids are complaining about not having the things they want, and they are old enough to work, challenge them to come up with ways to bring in money.   Have them tap into their skills and talents and find ways to produce revenue.

Seeing an idea through from start to finish promotes pride and confidence.   It is also a safety net during times of economic scarcity because it forces them to create money instead of just complain about it.