Money Matters: Teach your children how to manage money, Part Three
As your children grow, so may the contents of their piggy bank, which means it may be time for a trip to the real. YNN's Tara Lynn Wagner has more in part three of her special "Money Matters" series, "Teach Your Children."
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With credit cards and online banking, direct deposit and mobile apps, kids these days rarely see us using cash.
"So, they believe that money is an infinite resource, it’s an endless supply," says Linda Descano, President and CEO of Citi’s Women & Co.
Which is why you should take a page from the dad in Mary Poppins and take your child to the bank.
"Nothing makes it tangible like when you come in and start showing them physically taking money and putting it in," says Descano.
And not just any money -- their money, the allowance or birthday money they've hopefully been saving in a piggy bank. The perfect time to open that first savings account?
"I recommend taking kids between six and 12. Because this is a time when they still don't have to write any checks or pay bills but they need to understand the link between actual dollars or change and someone on the other side holding on to that and where it goes," suggests Carmen Wong Ulrich, President of ALTA Wealth Management.
Knowing how to save money is important. But knowing how to spend it is important too. With kids in elementary school, it's time to give those new math skills a practical purpose.
"Walk into a store with your child, tell them what your budget is and give them, empower them to help you figure out what your choices are," says Amy Rosen of Network for Teaching Entrepreneurship.
"Say $10, you are in charge of the notebooks. Or $10, we need to get you two shirts or one shirt or whatever that is. Basically getting them to look at the price tag, have an idea of what that is and how much they have left if they get it," suggests Wong Ulrich.
Money experts say setting a limit forces kids to make choices -- a reality they'll likely encounter time and again in their adult lives. And if they do want something beyond the budget, offer them another choice: They can buy it with their own money.
"When it is their money and they have to decide whether they are going to use their money for it, all of a sudden it is a different sense of accountability," says Descano.
"I think the epiphany for the child is, 'Hmm, maybe I don't want that.' And that's a great lesson. That's a wonderful lesson for a child to realize. 'I didn't really, really want it as much as I thought I did,'" says Beth Kobliner, author of "Get a Financial Life."